sourcingfocus.com speaks to Nick Parnaby, Vice President of Extended Enterprise Solutions at GXS about the implementation of cloud-based solutions and his predictions for the evolution of cloud-based technology.

Nick has spent over 16 years helping businesses to improve their supply chain, procurement and B2B processes. In 2005 he co-founded RollStream™, the first cloud-based technology platform specifically designed to manage trading partner communities, inspired by Web 2.0 user experience and usability seen in consumer-oriented social software. Nick has implemented cloud-based solutions in B2B for managing process and information management at some of the world’s largest corporations and brands, and is regarded by industry analysts as a subject matter expert in supply base management, B2B community management, sourcing and procurement and supply chain optimisation.

Can you tell us more about some of the GXS partnerships and collaborations that you have been involved in?

Certainly - Our second customer at GXS was Tesco in the UK and they came to us because they had an issue wherein they had thousands of suppliers that they needed to reach for rolling out a new Oracle system in 2006. Their challenge was they had about 12,800 suppliers on their Goods not for Resale catalog which was not as optimised as their Goods for Resale side of the business, and there were maybe four or five thousand active suppliers placing purchase orders at any given time, but they just didn’t have the visibility of information on the site.

Tesco UK approached us, having already spoken to Oracle and Microsoft who had quoted around £1.5 million just to get it started, and wanted to know about more cost-effective and Software-as-a-Service options. We completely revamped their supplier registration process, automated it from the point where a buyer makes the decision to work with a supplier onwards and streamlined the entire work flow. We created a profile in the cloud, like LinkedIn if you will, just for the Goods not for resale side – so they got a complete overview of the process in the cloud, and visibility of not only the master data, but everything from documentation, the legal and regulatory stuff, corporate social responsibility risk checks.

It was great for them because it cut their process down by about 60%. We also worked with a multi-national pharmaceutical company. They had a big issue with supply chain risk, and they had a huge programme called Responsible Procurement. They were looking a 450 procurement people across the business, 48,000 suppliers – it’s a giant community. We came in as a community management tool for their Biologics Division, and could deliver very measured, surgical communications, and make a risk assessment of the supply chain using simple secure survey tools or financial health relatedinformation collected from suppliers, and from that they could come up with and execute a strategy of mitigation based on the level of risk. We were probably the first to market using community management for supply chain.

From your experience of SaaS, how do you envisage cloud evolving?

I think there are all sorts of things happening. Number one – a lot of companies have embraced it. At GXS I find myself working a lot with banks and financial institutions and they look at it differently. They’re still very concerned with security, so I see a lot of hybrid solutions emerging in the cloud, where the data is behind a firewall. Every time we deal with customers who are concerned about the sensitive nature of their data they are very worried about the safety of the cloud. There are a lot of potential customers who shy away from the cloud, almost once bitten twice shy, because in the past we haven’t been able to offer what they need, and there are some businesses who I suspect will never be ready for the cloud but I do see a hybrid approach emerging over time.

Following on from cloud, what do you see as the top three topics or outsourcing trends at the moment?

I think one of them is the space that GXS sits squarely in the middle of, which is managed services for Business Process Outsourcing around B2B. We’ve seen a huge shift in our revenue moving away from traditional tools. I’ve also seen some Salesforce automation that has been outsourced, some customer service operations, the States are outsourcing lead generation and the front end of the sales process. I’ve also seen classic BPO for purchasing re-emerge where organisations on the indirect end of the business outsource almost their entire spend.

Can you give me some examples of best practice of GXS in B2B collaboration?

We spend a lot of time obsessing about community management, and technology is just one side of the equation. We sell it as Software-as-a-Service-as-a-Service because you can’t just leave a piece of technology in somebody’s hand and expect them to adopt it and get mass adoption across the board. Recently we did a big roll out with a big supermarket chain. They came to us and said “we really want to do this but we’re worried about how to create this massive community of 5,700+ suppliers and be able to reach people systematically.”

We advised that it is imperative to use best practice and call every single one of them. An analysis of the contact information shows that contact numbers are often fax numbers, incomplete emails, generic mailboxes, and we found that about a fifth of the contact information is irrelevant. You have to put services up front and contact the initial point of contact and establish a relationship with them. It sounds so basic, but if you don’t do it, you won’t reach the people you need to. The other thing we’ve found is that in sourcing procurement when you’re rolling out legal and regulatory compliance it’s not like marketing when you’re happy with a 45% response, you want 100% or near enough. We find you need four or five reminders to get around a 70% response rate. We spend a lot of time coaching the procurement professionals and the support teams underneath them to go the distance. For GXS best practice is really managed services on B2B.

What does the future hold for GXS, what do you have in the pipeline?

I also see a move towards buying more SaaS applications on top of the network, for example a lot of people are using tools which afford them visibility into all their transactions in order to provide better customer service, or for better compliance because they want to grow their business into multiple countries. A lot of people come to GXS because they want to grow but struggle to get over the invoices going back and forth and dealing with different compliance regulations between the countries. We’re going to ramp up our services side with all of the tools in a managed services package. We’re already global but there is opportunity for us to make inroads into China.