Companies that have been unable to overcome supply chain disruption are finding their revenue and profitability are both impacted, according to the 2022 State of Ecosystem and Application Integration Report, which was released on March 1.
Losses are Increasing
Losses are mounting at an increasing rate, the study showed. While 85% of companies say they are losing money to integration issues related to their supply chains, nearly a quarter of companies (24%) are losing $500,000 or more.
More worrisome, an increasing number, 14%, say they are losing over $1 million per year, up from just 10% each of the prior two years, reflecting a 40% year-over-year uptick.
What is causing these mounting losses? According to the survey, it is largely coming from outdated integration systems and poor business-process integration with their ecosystems. Due to a lack of end-to-end business process visibility, about half (49%) of all businesses don’t really know what’s happening at key integration points across their business transactions. More fundamentally, companies are split over whether it’s their own integration technology or process shortcomings or that of their business partners that are really to blame.
Problem Onboarding New Business Partners
Beyond the financial losses, the amount of time it takes to onboard new business partners is also increasing.
In 2021, 45% of integration experts surveyed said it took between one week and one month to onboard a new supply chain partner, up from 37% the year before. And 42% say it is taking over a month, up from 36% the prior year. These delays directly impact revenue, vendor scorecards, and customer satisfaction. The root causes for these delays can be found not with poor partner performance, but internally with the companies themselves, where outdated legacy or homegrown applications, overreliance on manual processes, or too much custom code are hindering partner onboarding for over 50% of businesses. Additionally, the dwindling availability of skilled talent was cited by 37% of respondents as yet another top challenge impacting partner onboarding.
“Among business leaders surveyed, supply chain disruption was viewed as second only to cyber threats as the greatest external risk to their business. Yet many companies are perplexed over how supply chain disruption can be overcome,” says Tushar Patel, CMO of Cle, said in a statement. “They know more automation is needed for supply chain agility, but some still question whether their problems originate internally or with business partners. ‘Is it them or is it us?’ they wonder, and this uncertainty is stalling investment decisions for some organizations. Meantime, they’re bleeding profits and damaging important business relationships.”
The good news is an increasing number of respondents believe that modern cloud-based solutions for B2B integration can help them remedy the situation. Sixty-nine percent – up from 66% in 2020 and 63% in 2019 – believe ecosystem integration technology can deliver cost savings and boost their bottom line. And 4 out of 5 companies (81%) claim they have begun or will begin migrating their integration capabilities to the cloud over the next 12 months, for its greater data security and control.
What Is Ecosystem Integration?
Ecosystem Integration is a new category of software, principally for supply-chain-driven companies, where a single cloud-based platform is used for file-based, EDI, and application integration to optimize end-to-end integration processes across a dynamic network of trading partners, applications, suppliers, customers, and marketplaces. Ecosystem Integration takes the best of B2B integration and iPaaS technologies and combines them with a layer of visibility that empowers organizations to optimize business processes and quickly resolve errors when they occur.
Ecosystem Integration is seen as driving cost savings while leveraging automation to give companies the agility and control needed to outsmart supply chain disruption and create value for their business in myriad ways:
- More than half (54%) believe Ecosystem Integration can help them improve their performance against Service Level Agreements (SLAs) and reduce violations (24%).
- About half see automating end-to-end integration to eliminate manual processes (51%) and integrating new applications more quickly (47%) as driving the most value for their business ecosystem.
- For about one-third of respondents, replacing legacy integration solutions (36%) and having a flexible and highly available integration architecture (33%) is important.
- Additional benefits expected from Ecosystem Integration are faster order processing (43%), happier customers (42%), and fewer lost orders (26%).
“The chronic challenges of 2021 made it apparent that supply chain issues were in large part due to a lack of agility which could have allowed companies to rapidly sense and intelligently respond to any type of disruption.” Patel continued. “The survey results show it is no longer a question of whether or why companies should invest in ecosystem integration technology; it’s now a question of how and when. Organizations need to wake up and take immediate action, and ecosystem integration gives them the best choice for where to begin.”