Technology Adoption Report:
Business Networks
Underwritten, in part, by:
Andrew Bartolini, Chief Research Officer
Christopher J. Dwyer, Research Director
Ardent Partners
September, 2014
Technology Adoption Report: Business Networks
1
The demands of today’s marketplace require that businesses continue to advance and improve by
promoting better communication and collaboration among stakeholders and by layering greater
intelligence into their core processes. Business networks, which sit at the intersection of many
procurement and financial processes, promote collaboration between the two groups by helping to
automate common business processes, like P2P, and enable next-generation business practices, like
supplier collaboration. Business networks have risen as a powerful means for businesses to connect
with core partners, foster business relationships, automate key procurement and financial activities,
and provide key stakeholders with the necessary visibility to help forecast and plan for the future. For
some, these networks now serve as the primary point of convergence between different procurement,
finance, and supply chain related initiatives.
Ardent Partners’ Technology Adoption Report on Business Networks presents current adoption figures
for this solution and future projections based upon a series of primary market research efforts
conducted over the past 18 months and the insight and experience of the report authors who have
tracked the evolution of business networks since their inception.
From Portals to Global Connectivity: The Rise of Business Networks
Business executives of all stripes desire technology
solutions that not only automate key transactional or
tactical processes, but also provide a gateway to nextgeneration capabilities that can help gain true competitive
advantages over peers in the general marketplace. Across
the spectrum of enterprise-level goals and objectives,
technology continues to play a critical role in helping key
stakeholders improve their processes, especially with the
advent of cloud-based software, and positively impact productivity and results within core
corporate functions. For procurement and finance leaders, the evolution of supplier portals and
networks into what are now commonly referred to as “business networks” has played a central
role in how many groups have transformed their functions into well-oiled and effective machines
that drive value and support corporate initiatives. Business networks have risen in stature,
however, due to one main advantage over other platforms: connectivity in an interactive business
world.
In the consumer market, connectivity is an accepted component of daily life whether it is
connections to friends and peers via social networks or connections to music, movies, and
entertainment via smart phones and tablets, etc. It is this type of thinking that has begun to drive
the notion of pure connectivity in the business world, with enterprises seeking solutions that link
their trading partners and can foster relationships, improve communication and collaboration,
drive visibility, and, of course, improve tactical and strategic business activities.
©2014 Ardent Partners Ltd.
www.ardentpartners.com
Technology Adoption Report: Business Networks
As Ardent Partners research shows, the adoption of business networks signals a transformation in
both the procurement and finance industries in that professionals in these two functions realize
the value of the connectivity, insights, and visibility afforded to them via business networks.
2
The Stage for Business Networks: Then…and Now
The evolution of networks has followed a long path over the past two decades. Originally
conceived as buy-side transaction enablers, many
business networks in the market today have
moved far beyond that original mission. Because
Business Networks, Defined
these networks enable multiple trading partners
Ardent defines a “business network” as a
to engage on the same platform, value can be
web-based platform that enables
generated for multiple constituencies on the
interconnected buyers and sellers to
buyer and supplier sides. This story began almost
trade, communicate, and collaborate
twenty years ago.
with each other. There are a variety of
True supplier enablement was born in the late
business network types that target
1990s with the advent of supplier networks,
specific markets, users, and processes.
which offered much more than the existing oneMost of these networks share a many-toto-one electronic connections that supported
many ability to connect participants and
single document transfer. These networks
a value proposition that promotes a
enabled many-to-many connectivity (that were
shared infrastructure and common
web-based), which facilitated and automated key
standards.
procurement and financial transactions including
Business networks typically enable
the procure-to-pay process. The surviving
automation in three key areas: 1) simple,
supplier networks evolved their focus and
connected information-sharing (i.e.,
expanded their capabilities and are now
remittance data) between buyers and
commonly referred to as business networks.
sellers, 2) direct, electronic links between
Today, business networks represent a
enterprises that facilitate and speed
sustainable evolution in the world of business-totransactions like purchase orders and
business interconnectivity in that not only are
invoices and, 3) support communication,
core transactions enabled on their platforms, but
collaboration, and third-party services in
more of the deeper financial management
support of the partner relationship.
capabilities, such as forecasting, analytics, and
cash management, are increasingly available
from many networks for users to leverage. These networks also represent a sharp shift in the
procurement and general finance technology landscape by centralizing trading partner
communication, data, information, and collaboration alongside their transactions.
©2014 Ardent Partners Ltd.
www.ardentpartners.com
Technology Adoption Report: Business Networks
Technology Adoption Insight I: Market Adoption Rates
3
Ardent’s technology adoption reports research current adoption rates for key technology
solutions in the supply management arena. In 2014, Ardent finds that there is a “fair” penetration
rate for business network technology in the marketplace today (Figure 1).
Figure 1: Business Networks – Current Adoption Rates
All Enterprises
21%
Large Enterprises
Small and Medium Enterprises
24%
14%
© Ardent Partners - 2014
Ardent Partners research has found that 21% of all enterprises currently utilize business networks
in some capacity. While this figure may seem low in comparison to other “hot” technologies in
business today, it is important to remember that business networks are a “second-level” solution
that require other technology applications or on-ramps in order to be properly accessed and used.
It is also important to remember that even the most mature supply management solutions, like
eProcurement and eSourcing, have been adopted by only slightly more than half of all enterprises
today.
But, while not yet widely-adopted, business networks have, nonetheless, captured the attention of
the supply management marketplace, including many procurement, accounts payable, and
shared services professionals. In fact, a recent Ardent Partners survey of roughly 200 of these
professionals found that:
•
55% believe that business networks will eventually become the main platform for trading
partners to conduct business
•
73% believe that business networks enhance collaboration between buyers and suppliers
•
75% agree that business networks are beneficial to buyers and suppliers
•
54% agree that business networks are an increasing source of new business for suppliers
•
49% agree that business networks are increasingly likely to adopt social network features
©2014 Ardent Partners Ltd.
www.ardentpartners.com
Technology Adoption Report: Business Networks
Market Size Insight: Adoption in SME and Large Enterprises
4
Beyond presenting the overall adoption rate of business networks by all enterprises in the market
today, Figure 1 (above) also contrasts the level of business network utilization by large enterprises
(defined by Ardent as those enterprises with annual revenues greater than $1 billion) with that of
small and medium enterprises (“SMEs”) (defined by Ardent as those enterprises with annual
revenues under $500 million). Business network adoption rates differ within these two segments
for several reasons, including on the “buy-side” where there are lower SME adoption rates of
enterprise-level supply management solutions such as applications like eProcurement and
ePayables solutions, which serve as the on-ramps to business networks and on the “supplier-side”
where large enterprises tend to focus on enabling their largest suppliers first.
The Impact of Business Networks
Globalization and highly-evolved supply chains, better levels of visibility, and connectivity to the
“extended” enterprise have been critical elements of maintaining and improving competitiveness.
Traditionally, supplier enablement and participation has been the biggest hurdle to advancing
B2B connectivity; as a result, many enterprises find themselves connected to a small percentage of
their suppliers. This has to change going forward since the competitive nature of business today
demands that enterprises be more aware of their supply chains and work to better engage,
interact, and communicate with a much larger percentage of their suppliers. Simply put,
connecting businesses to transact and interact electronically is going to drive the next wave of
value for the enterprise and business networks, which, in concert with cloud technology, will lead
the charge towards a new era of enterprise technology centered on connecting businesses to
each other and enabling easier and more efficient communication and interaction across entire
supply chains.
As discussed later in this report, Ardent Partners predicts that adoption rates of business networks
will continue to rise. This is due, in no small part, to the fact that users of business networks report
a positive impact across a range of activities central to both the procurement and accounts
payable functions, including those described in Figure 2 below where current users of business
networks report on the key activities and functions across the P2P processes that have seen a high
or moderate impact from the use of these platforms. These include:
•
•
Purchase orders (“PO”) are where “the rubber hits the road” in the buyer-supplier
relationship. These transaction documents communicate what is needed, when, where,
and at what price. Business networks facilitate the transmission/routing of the orders from
buyers to their suppliers as well as any change orders and related documents and
communication regarding them. A near-unanimous level (99%) of network users state that
networks benefit their PO process.
Invoicing, the back end of a P2P transaction, is another key business process that directly
links trading partners (buyers and their suppliers). Removing paper remains the top
©2014 Ardent Partners Ltd.
www.ardentpartners.com
Technology Adoption Report: Business Networks
5
•
priority for accounts payable organizations so business networks, which can help
automate the invoice process, help drive efficiencies while enabling better visibility. Here
too, a near-unanimous level (96%) of network users state that networks benefit their
invoice process.
Ardent’s ePayables research points to the pay phase of its ePayables Framework as the
often-overlooked last mile of a larger holistic procure-to-pay process As seen in Figure 2
below, 95% of network users report a high or moderate impact on their B2B payments
process from business networks.
Figure 2: Processes that See a High or Moderate Impact from Business Networks
99%
96%
95%
© Ardent Partners - 2014
88%
68%
Purchase orders
Invoicing
B2B Payments
Supplier catalog
mgmt.
Collaboration
In 2014, a network of connected businesses is not a new innovation; the value lies in what these
connected businesses are able to accomplish via the network. As more enterprises make the move
to eInvoicing and ePayments, the volume of transactions going through these networks will grow
significantly. Businesses that are part of a network or multiple networks will also begin to extend
their usage of networks (e.g., conduct more of the P2P process through the network).
Enterprises are currently driving value from networks within the P2P framework, as 88% of
companies have experienced a higher or moderate impact from these solutions in regards to
supplier catalog management. Not be considered a veiled attribute of the modern business
network, the impact of supplier catalog management goes beyond simple transactional
procurement. Today’s business networks enable true, enhanced spend management by offering
catalogs that contribute to proper contract lifecycle management and tight alignment with
greater corporate cost savings initiatives. Pre-approved and centralized supplier catalogs available
within business networks not only foster advanced visibility and spend management, but also (as
with other aspects across the procurement and financial spectrums) automation of key processes
within P2P programs.
©2014 Ardent Partners Ltd.
www.ardentpartners.com
Technology Adoption Report: Business Networks
Technology Adoption Insight II: Solution Selection Criteria
6
Research conducted by Ardent Partners over the past five years has captured the market
preferences for supply management solutions and helped develop an understanding of the
solution selection criteria of enterprises that have turned to business networks to support their
procurement and financial operations. In 2014, the top six solution selection criteria for business
network adoption in prioritized order are:
•
•
•
•
Cost for buyer (transaction and access fees) – There are two types of costs associated
with business networks: a monetary cost for most, and an opportunity cost for all. The cost
may be seen as a subscription or license fee to a solution or solution suite that enables
network access or it may be direct transaction fees paid by buyers and/or sellers. Today,
the fees have not chased too many participants away from networks as the cost of
processing a PO or invoice is dramatically lower when using a network. But cost has
increasingly become an important consideration when selecting a network.
System integration capabilities. Business networks touch perhaps more internal systems
and business units than any other enterprise technology, in that procurement, sourcing,
treasury, finance, and other key stakeholders all have a “play” in how these networks link
to the interconnected world. It is critical for any enterprise that is looking to adopt a
business network to understand which specific integration aspects are enabled; with
visibility a prime concern, it will be crucial for finance and executives to require integration
between the network and supply management solutions as well as ERP and other financial
back-end systems.
Collaboration and communication enablement. “Collaboration” has become the hot
flavor on the business executive’s crowded plate. P2P leaders now realize the
collaboration opportunities that exist before them and are responding by developing
better relationships with their P2P peers, internal stakeholders, and suppliers.
Procurement and accounts payable can come together to harness the intelligence derived
from business network-led analytics and data to paint a vivid picture of total cash flow,
business liquidity, and spend under management, as well as assist in greater corporate
planning, budgeting, and forecasting. Likewise, trading partners can utilize networks to
communicate and collaborate around specific transactions and share information and
awareness to improve collaboration and communication in new areas
Number of existing and active suppliers in the network. When it comes to networks,
size matters. The bigger the network, the higher the “match rate” (the percentage of an
enterprise’s suppliers that are currently active on a given supplier network) is likely to be
for an enterprise. The effort and time to on-board suppliers is significantly reduced with a
higher match rate so having current suppliers already transacting on a network is viewed
as a strong plus. Current users point to the number of existing and active suppliers within
the network as a prime solution selection criterion prior to adoption. Additionally, a higher
©2014 Ardent Partners Ltd.
www.ardentpartners.com
Technology Adoption Report: Business Networks
•
7
•
number of participants enabled on a network increases the odds for an enterprise to find
its ideal match for new opportunities as well.
Cost for suppliers (transaction and access fees) - And, while the direct cost to the buyer
has become an important consideration when selecting a network, there may be other
real costs generated from network usage that are not immediately apparent to the buyer.
For example, supplier fees for network usage (transactions) and access can drive some
suppliers to try to recoup those fees by increasing prices and/or slow the general supplier
on-boarding process.
Ongoing support for network-based services and functionality. The current evolution
of business networks may expand the “reach” of procurement- and financial-based
capabilities, however, some enterprises express interest in the myriad services and
functionality enabled by today’s networks. For both buyers and suppliers, ongoing
support is a key criterion for selecting a business network, as the total return on network
implementation can sometimes depend on the communicated support structure of a
network solution.
Future Growth and Outlook for Business Network Adoption
The success of cloud-based technology and the desire for enterprises to transact, communicate,
and collaborate digitally (rather than manually) have contributed to the growth of business
networks and more P2P leaders’ interest in using them. Since enterprises of all sizes will continue
to develop more complex webs of interdependent supplier and partner relationships (to ensure
greater competiveness and results, better product development and customer satisfaction, and
faster and more concrete innovation), Ardent expects the business network marketplace and
those in it to continue to grow.
Figure 3 (below) presents Ardent Partners’ future outlook for business network adoption. These
estimates are based upon Ardent’s analysis of its recent market research on current network usage
and adoption trends, as well as the explicit and implicit intentions of non-network users today and
the impact of these solutions on the key procurement and finance processes and larger business
objectives.
Figure 3: Actual (A) and Estimated (E) Adoption of Business Networks (All Enterprises)
2014 Adoption Rate (A)
2015 Adoption Rate (E)
2016 Adoption Rate (E)
21%
24%
29%
© Ardent Partners - 2014
©2014 Ardent Partners Ltd.
www.ardentpartners.com
Technology Adoption Report: Business Networks
8
The current landscape of supply management technology dictates that organizations do whatever
they can to drive visibility, drive efficiencies within tactical measures, and provide an automated
gateway from which to collaborate and conduct business. Business network adoption is expected
to grow by almost 15% over the next year (to 24%) and by nearly 40% over the next two years (to
29%), sparked by:
•
•
•
•
An increased focus on collaboration between procurement and finance, collaboration
between trading partners, and collaboration between businesses on a general scale.
The role of “Big Data” in how finance forecasts, budgets, and plans for the future, as
intelligence from business networks can drive true value in understanding the current and
expected financial health of the greater enterprise.
The need for bigger and better efficiencies within the tactical measures of procurement
and finance, such as invoicing, payment, purchase order management, and supplier
negotiations/communications, and;
Requirements that revolve around the “connectivity” of all business leaders, functional
units, and their suppliers and partners.
Business Networks in 2015 and Beyond
Ardent’s research has shown an increased interest in business networks and an increase in overall
business network adoption and usage. As a result, competition in the business network arena is
heating up with different network providers adopting different strategies and developing
different capabilities in an attempt to win market share. The value that the leading networks
deliver today is significant, but Ardent Partners believes that even larger opportunities exist as
networks expand their scope and capabilities while still continuing to grow their core businesses
aggressively. Specifically, Ardent expects that over the next few years the leading networks will
leverage partner ecosystems and organic development to:
1. Aggressively expand the number and type of business processes, documents, and information
that they support including:
a. Complementary process areas like supply chain (logistics, inventory management,
etc.) and more complex financial areas like trade finance and financial risk
management
b. New process areas that could fall under a shared services center or business process
outsourcing (HR, IT, accounting, payroll, etc.)
c. Complex spend categories like contingent workforce management and real estate and
facilities
d. Deeper and more robust data capture with more analytical and predictive capabilities
2. Begin to achieve a true network effect in their core P2P and supply management process areas
as evidenced by:
a. Fast growth in transaction volumes
©2014 Ardent Partners Ltd.
www.ardentpartners.com
Technology Adoption Report: Business Networks
9
b. A flourishing ecosystem of third-party service providers that drive innovation and
value across the network (similar concept to Apple’s App store)
c. The availability of network participant performance and operational benchmark
statistics
d. Advanced sales and marketing capabilities designed to accelerate new customer
acquisition
e. Build more social networking features into their existing offerings to close the gap
between the way consumers communicate, collaborate, and share information and
the way that businesses do these things with other businesses.
The investment by existing network providers in these areas and the development of new
capabilities and networks is what will make this space an interesting and important one to watch
over the next few years. The speed of business and innovation will propel network growth causing
many new and expanded capabilities to reach the market much sooner than otherwise expected.
This means that consideration of a network’s ability to scale and advance, as well as its road map,
become important considerations in the network selection process.
©2014 Ardent Partners Ltd.
www.ardentpartners.com
Technology Adoption Report: Business Networks
Sponsor Overview: Hubwoo
10
www.hubwoo.com
Hubwoo connects companies by providing comprehensive spend management and collaborative
business process automation solutions for both goods and services, in the cloud, through The
Business Network. Hubwoo’s solutions
1999
integrate with any ERP or procurement Founded
system, providing an easy-to-use HQ
Paris, France
solution
which
drives
adoption,
205
Employees
compliance and savings.
Hubwoo is the operator of one of the
world’s largest business networks,
providing a host of complementary
source-to-pay services and solutions.
Hubwoo is based in Paris, France, and
has a global presence with offices in
North America, Asia, and throughout
Europe. The Hubwoo stock is publiclytraded on the NYSE Euronext exchange
(Ticker: HBW). With a global focus and
global client base, Hubwoo, nonetheless,
has a strong US presence and focus
where it’s CEO, executive team, and
many of its just over 200 employees are
based. Hubwoo reports that it has more
than 150 international enterprise buying
customers with over 100 million catalog
items, and around 300,000 daily users
based in more than 70 countries.
Geographic
Presence
Global; offices located in North America,
Europe, and Asia
Solution
Delivery
Cloud
Solutions
The Business Network
Catalog Management
Complex Services Procurement
Invoice Process Management
Spend Management Applications
150+ enterprise buying customers with
Total Customers more than 100 million catalog items and
300,000 daily users in more than 70
/ Users
countries
Industry
Segments
Multiple
Total Network
Participants
1 million plus
2013 Network
Transaction
Volume
Over $8.5 billion and 14.5 million
documents
Notable
Customers
BASF, Honeywell, Shell, Microsoft,
Nationwide, CONSOL Energy
From its initial start in 1999 as a
Commerce One marketplace that then merged and transitioned to become an SAP partner and
provider of a cloud-based set of SAP solutions that linked to a network platform to its position
today as the operator of one of the largest open global business networks and collaborative
source-to-pay process automation, Hubwoo has shown itself to be an adaptable and resilient
company that is able to evolve its business model to the needs and opportunities of the time.
Hubwoo is now increasing its resource and focus proportion on its open network strategy,
partnerships with large technology firms such as GEP, and its own proprietary offerings including
its network called “The Business Network by Hubwoo,” which now boasts more than 1 million
registered businesses. Hubwoo generates more than half of its total revenues from the network.
The expansion of its business network has enabled Hubwoo to develop solutions focused on
supporting both procurement and accounts payable customers as well as supplier organizations.
©2014 Ardent Partners Ltd.
www.ardentpartners.com
Technology Adoption Report: Business Networks
APPENDIX
ABOUT ARDENT PARTNERS
11
Ardent Partners is a Boston-based research and advisory firm focused on defining and advancing
the supply management strategies, processes, and technologies that drive business value and
accelerate organizational transformation within the enterprise. Ardent also publishes the CPO
Rising and Payables Place websites. Register for exclusive access (and discounts) to Ardent
Partners research at ardentpartners.com/newsletter-registration/.
ABOUT THE AUTHOR
Andrew Bartolini, Chief Research Officer, Ardent Partners
Andrew Bartolini is a globally-recognized expert in sourcing, procurement,
accounts payable, and supply management. Andrew focuses his research and
efforts on helping enterprises develop and execute strategies to achieve
operational excellence within their procurement and finance departments.
Andrew is also the publisher of CPO Rising, the first independent media site
written for and about Chief Procurement Officers and other supply
management executives (www.cporising.com).
Advisor to CPOs and leading solution providers alike, Andrew is a sought-after presenter, having
lectured and presented more than 150 times in seven different countries. Over the past decade,
Andrew has benchmarked thousands of enterprises across all facets of their sourcing,
procurement, accounts payable, and supply management operations and his research is currently
part of the Supply Chain/Management curriculum at several US universities. He actively covers the
technology marketplace as well as trends in sourcing, procurement, supply management, and
accounts payable and has been published or quoted in leading business publications including
The Wall Street Journal, Business Week, Investor’s Business Daily, Forbes, and Fortune, as well as
the major trade publications focused on supply management.
Prior to becoming an industry analyst, Andrew developed, packaged, deployed, and used supply
management solutions on behalf of enterprises in the Global 2000 while working for Ariba and
Commerce One. Additionally, his experience in strategic sourcing (where he managed sourcing
projects totaling more than $500 million in aggregate client spend), business process
transformation, and software implementation provides a ‘real-world’ context for his research and
writing.
Andrew has been named a “Pro to Know” by Supply and Demand Chain Executive three times and
holds a B.A. in Economics from The College of the Holy Cross and an M.B.A in Finance from Indiana
University. He welcomes your comments at [email protected] or 617.752.1620.
©2014 Ardent Partners Ltd.
www.ardentpartners.com
Technology Adoption Report: Business Networks
Christopher J. Dwyer, Research Director and VP of Operations, Ardent Partners
12
Christopher J. Dwyer is considered a premier thought leader in the world
of supply management and a renowned expert in contingent workforce
management, travel and expense management, and meetings/events
management. He evangelizes the evolution of complex spend
management and has written hundreds of research reports and
interviewed, advised, and benchmarked thousands of end-user
professionals and executives in regards to their complex spend
management operations over the last eight years. Christopher joins Ardent from the Aberdeen
Group, where he spent more than seven years tracking the progression of complex category
spend management strategies and solutions while helping to educate the global market. At
Aberdeen, Christopher led Aberdeen’s Global Supply Management practice and oversaw and
contributed to the company’s coverage of procurement, strategic sourcing, spend analysis,
ePayables (accounts payable automation), and supplier management.
Christopher was recently named an “Analyst Superstar” by HRO Today magazine for his work in
the contingent workforce management industry, and was also recognized by Supply and Demand
Chain Executive Magazine as a “Pro to Know.” Christopher leads Ardent’s coverage of complex
spend management, including the evolution of contingent workforce management, T&E expense
management, and all other complex categories of spend and provides research and advice so that
end-user organizations can enhance their capabilities and competencies and make the smart
decisions that will ultimately improve their performance. He welcomes your comments at
[email protected], on LinkedIn (www.linkedin.com/in/christopherjdwyer), or Twitter
(@cjd_ardent).
©2014 Ardent Partners Ltd.
www.ardentpartners.com
Technology Adoption Report: Business Networks
RESEARCH METHODOLOGY
13
This Ardent Partners’ Technology Adoption Report on Business Networks presents current
adoption figures for this solution in the market today and future adoption projections based upon
a series of primary market research efforts (focused on supply management including sourcing,
procurement, and accounts payable) conducted by Ardent Partners over the past 18 months.
These research efforts captured the responses of more than 1,000 supply management
professionals who shared their experiences, preferences, usage, and intentions as it relates to
business networks. This report was also informed by the insight and experience of the report
authors who have researched, evaluated, and tracked the evolution of business networks since
their inception.
Industry Standard “Fine Print:” The information contained herein has been obtained from sources believed to be
reliable. Ardent Partners, Ltd. disclaims all warranties as to the accuracy, completeness or adequacy of such information.
Ardent Partners, Ltd. shall have no liability for errors, omissions, or inadequacies in the information contained herein or
for interpretations thereof. The contents expressed herein represent Ardent Partners’ best analysis at the time and are
subject to change without notice.
© 2014 Ardent Partners, Ltd. All rights reserved. Reproduction and distribution of this publication in any form without
prior written permission is forbidden. Solution providers and consultancies should take special note that Ardent Partners
reserves the right to seek legal remedies including injunctions, impoundment, destruction, damages, and fees for any
copyright infringement (which includes but is not limited to usage in company collateral, presentations, and websites)
in accordance with the laws of the Commonwealth of Massachusetts and the United States.
©2014 Ardent Partners Ltd.
www.ardentpartners.com