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The future of business transactions is in the cloud

This article explains the issues and challenges around traditional B to B trading processes, the limitation of ERP packages and how the internet as a cloud could make it possible to work together much more efficiently.

Still reliance on paper processes

Until today businesses have been sending trade information (orders, invoices,  payments, etc) from company A to company B and have been storing this data across different  systems. Over the past decade there have been huge improvements in automating internal processes, but as soon as transactions go outside the company they go back to ancient paper processes. ERP and accounting solutions have been concentrated on internal processes but have not been very successful in offering solutions that really allow for working together more efficiently with the outside world. A typical example of the current situation is that companies print data from very well structured ERP systems onto unstructured paper documents that are then being re-entered manually in another very well structured system. All the same data, in all kind of different systems, and not useable outside the company’s walls.

 

Replication of data

Next to the above, the sending and storing transaction data from A to B brings many complications. Why do we need to replicate somebody else his/her data before we can use it?
Just think of a sales order in a B to B business, at how many places is this sales order information stored? Well, first of all at the buyer side in multiple systems, then in the web shop, then in the ERP system, then in the logitical system, then in the invoicing system, then in the credit management system and then hopefully the order is paid and completed in a bank system.

This current way of working is first of all not very efficient and leads to errors but most importantly stops business to make fully use of the data they, or their business partners, already have.  The next step in efficiency is only to be made if we successfully integrate internal and external processes and move beyond merely automating existing processes. It is time to re-design supply chain processes centered around new technological possibilities and changed user behavior (think e.g. mobile & social media).

In my vision business transaction data can be used and re-used much more efficiently, we however need to look completely different at messaging and ownership of data.

 

The opportunity of the cloud

The internet as a cloud (IP based & location independent) and the fact that we are always connected to it makes it possible for companies to use one (1 ) central set of transaction data (so not multiple) and re-use this data where and whenever needed in their business relations, whether this is inside or outside their own organization. Instead of copying data from a system and sending this out on paper or email, there can be one central and leading set of transaction data for both sender and receiver. The local (ERP or accounting) system needs only a copy of the data, if needed at all in the long run.

For all trading parties involved a transaction can be created (born), grow, change and eventually be pensioned off in the cloud. It becomes a living object. A transaction will be started by one party and this data lives on from the proposal, to the order, to the invoice and eventually to the payment.

One version of the truth

The cloud makes it finally possible to re-use data where possible and have one version of the truth. All it takes is to think a little differently.

The key point here is to move from file centric to transaction centric.
In my ultimate cloud data exists only once, in one place, wherever that is. The cloud makes it possible that companies don't have to store the same transaction data anymore in multiple systems. If the transaction data is in the cloud and accessible via the internet, why do all these systems not look at the same set of data?
Imagine, one set of transaction data and one version of the truth that is accessible to whatever person or system needs it….

Feel free to contact me for futher discussion.

Tonnis de Boer

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