By Boris Felgendreher, Director of Corporate Marketing EMEA for GT Nexus
The cloud is revolutionizing the way small and medium enterprises are engaging with large, global manufacturers and retailers. A new generation of cloud-based global commerce platforms has enabled “technology leapfrogging” and is leveling the playing field of global commerce.
The concept of technology leapfrogging has been around for a while. It refers to the adoption of state-of-the-art technology in areas where prior technology had not been adopted. More simply, it describes the phenomenon of countries, markets, industries and people skipping, or leapfrogging entire generations of technology.
For example, people in many parts of the developing world went from having no telephones at all to the wide-spread ownership of mobile phones – skipping the age of fixed landlines altogether. I find this fascinating: People who have never owned a telephone landline or PC are now posting to Facebook. They missed out on early connectivity enabled by dial-up modems and DSL. But now they are online – mailing, posting, selling and buying - thanks to cheap mobile networks, phones and apps.
Global Commerce is Leapfrogging to the Cloud
We see a similar trend in global commerce. Many small suppliers in Asia have never had the IT budgets and technology to really benefit from globalization. The biggest benefactors of globalization – large, multinational corporations - leveraged their technological advantage into dictating standards and forcing suppliers into their rigid technology requirements. As a small garment supplier, you either had to make investments in the software and infrastructure that would allow you to collaborate with the large fashion retailers in Europe and the US or lose out on business. So, many simply did lose out.
The rise of cloud technology is beginning to change all of that. Today, companies don’t need big IT budgets to buy and maintain expensive hardware and software. They can simply plug into a cloud-based collaboration platform to receive orders, secure financing, organize transportation or receive payments. No multimillion dollar enterprise software systems required. No need to log into x-number of proprietary portals for each customer, each service provider or each bank.
A new generation of medium, small and even micro-sized enterprises in emerging markets can now literally go from having no internal IT systems at all to being able to tap into state-of-the-art business software and collaboration tools that just a few years ago were exclusively available to the most well-funded and tech-savvy organizations in the world.
By leapfrogging to a cloud network, these companies are skipping the dark era of expensive and complicated enterprise software and are dramatically enhancing their chances of success in global commerce.
Empowering Small and Medium Enterprises in Emerging Markets
With cloud technology, small suppliers in developing markets can start collaborating with the likes of Adidas, Nike, Abercrombie & Fitch, Levi’s and GAP on one platform with no upfront investment in expensive software systems.
Cloud technology now offers small enterprises access to low-cost financing through banks directly on the platform. They can collaborate with customers to extend payment terms, receive early payments in exchange for invoice discounts, eliminate letters of credit and automate payment reconciliation. These are complex business processes that require multi-enterprise collaboration and synchronization. Making them accessible and affordable not just to top-tier players but all the way down the supply chain reduces barriers-to-entry and creates greater economic diversity.
The Networked Company
The strong push towards using the cloud for global trade does not only benefit smaller players, though. Future growth for large, global manufacturers and retailers will come from emerging markets in Asia, Latin America and Africa. Many global companies have to adopt local sourcing, local manufacturing and local customer support strategies to service a rising new class of demanding customers in these emerging markets.
But moving into new markets requires access to vast supply networks that are capable of delivering goods with speed and agility. It requires the introduction of new partners with different systems, data formats, languages and time zones.
For thirty years, global companies have tried to manage global commerce with conventional enterprise software systems like SAP, Oracle and others. But while these systems have been widely successful in managing internal processes like HR, CRM, Production Planning or Accounting, they haven’t delivered well on the promise of being able to let companies engage with outside customers and trading partners in a scalable manner.
So, ironically, as divergent as the paths of, let’s say, a small garment supplier in Bangladesh and a major US fashion retailer have been from a technology perspective. Both find themselves in a similar spot now. One missed out on conventional enterprise software systems altogether – because of lack of resources. The other spent millions and millions on software licenses, installations, upgrades and armies of consultants to implement inward-facing enterprise software. Only to find out that the modern company has to operate as a network and not as a silo.
In both scenarios, a commerce platform in the cloud is the answer.
A Cloud-Based Utility for Global Commerce
Several trends are starting to converge to create the perfect storm that will change the face of global commerce operations. Leapfrogging to the cloud, the importance of emerging markets and the need to become a networked company: These trends are giving rise to a new cloud-based utility that will connect trading partners from the smallest supplier to the largest multinational and will level the playing field of global commerce.