B2B Connectivity for Direct

Exemplary sells software that tries to provide value by automating the often messy and time-intensive processes associated with creating purchase orders for direct materials and moving them between companies. The idea has merit, and the company's understanding of the issues is good, but with only one customer live, Exemplary needs proof points.

The Product

Collaborative Xchange or cX is a backbone system that collects purchasing transactions from back-end systems, holds them, and pushes them out by the best available means to suppliers.

The best-available method will depend on the supplier. Like other systems, cX can distribute the order via fax, e-mail, a web page, EDI, or server-to-server.

cX also takes return communications, such as ASNs and pushes them into the back-end system. The return communication can come in any form, but some communications (like fax and e-mail) are simply monitored, not received by the system. A buyer must retype the contents of a fax into the system, for instance.

Value

The value of automating procurement is not insignificant. Much time now is lost in printing out POs and faxing them; checking that the fax got there, and distributing return faxes. If the process can be speeded up, there are three basic kinds of value to be gained:

• Time saving because the delivery of the PO is automated.
• Lead time reduction, because the delivery happens more quickly.
• Less time and money spent correcting errors (e.g., less premium air freight) or suffering because errors went uncorrected (unplanned down time).

Clearly, the better connected the supplier is, the greater the benefit. Exemplary's server-to-server capabilities (in partnership with WebMethods) and EDI capabilities may be the most attractive to large companies, even though only a few suppliers will be able to take advantage of them.

Assessment

POSITIVE: People who work in purchasing departments like automated, guaranteed delivery of purchase orders. The ERP companies offer fax delivery, in many cases, but they haven't thought through the whole process, and consequently, there is room for a product that does this better. Particularly when there are multiple ERP systems and high volumes of order delivery, there is a real need for this service. We are unable to assess the quality of the product, but the heritage of the company, its heavy investment in technology, and the knowledge of its senior people all bode well.

The great strength of the product is its integration with the back-end systems, which makes the lengthy process of approving and printing out POs more efficient.

NEGATIVE: The lack of process-level automation and the inability to do much with return faxes or e-mails limits the benefit. Segmenting suppliers is a good way of focusing effort so as to get the maximum benefit, but there is also a benefit to making this the single point of access for all suppliers. The reported cost is relatively high, though for large companies, the ROI should be there.

We believe, however, that most companies interested in automating these processes should focus as much on the costs associated with expediting, changing, and correcting orders as on the costs of generating and distributing them in the first place. Exemplary is less good in this area.

BOTTOM LINE: Process automation of direct procurement is a need for many companies, and Exemplary's ability to integrate with multiple back-end systems will prove interesting to companies that are interested in moving in this area. The lack of process-level automation limits the total value available from the package, and the limited customer base increases the risk.

A longer version of this report is also available.

For other SRM company assessments, see our archive.