Integration Platform as a Service (iPaaS) platforms help organizations to integrate their software systems, both within the organization and with buyers and suppliers.
The number of applications, services, and platforms that businesses contend with multiplies as business operations are digitized. Ideally, data would flow between software systems without friction. The data in a business’s customer relationship management software should be available to its marketing automation platform. Order data from a supplier’s eCommerce store should make its way to a buyer’s eProcurement platform automatically.
Unfortunately, there is no widely adopted data exchange standard, which leaves business data siloed, limiting the ability for businesses to automate data exchange and communication within and between businesses. IPaaS empowers organizations to integrate their internal software systems with each other and with the systems of external organizations.
The B2B Integration Dilemma
Many of the most consequential advances in modern procurement are the result of digitization and automation. Within organizations, businesses rely on software—primarily SaaS platforms—for accounting, enterprise resource planning, eProcurement, customer relationships management, marketing automation, stock keeping, and more.
Each of these platforms digitizes a business process that was once paper-based, or that, at best, relied on the exchange of unstructured data in PDFs and Word documents. Unstructured data is a little better than paper documents where data availability, transparency, and exchange is concerned.
The potential for integration is among the most exciting consequences of digitization, and it goes beyond internal integration. The ideal is seamless data exchange with external organizations, including buyers and suppliers. EProcurement platforms such as Coupa and Jaggaer have revolutionized small and medium business procurement. EProcurement reduces expensive and error-prone document handling within organizations. It centralizes data and gives businesses insight into spending and supplier relationships. It helps organizations to minimize rogue and tail spending by enforcing procurement policies and best practices.
For these reasons and more, B2B buyers have enthusiastically adopted eProcurement. Moreover, they prefer to do business with B2B suppliers with the ability to integrate with their eProcurement platforms for features that depend on data exchange, including PunchOut catalogs and B2B order automation.
But there is a problem: much of the software that organizations have adopted is incompatible. EProcurement, spend management, and enterprise resource planning application vendors typically develop solutions to the challenges in their niche without regard for the broader ecosystem. Where there are informal standards (EDI, cXML), there are at least several competing data formats and protocols, often developed in-house by vendors who are motivated to stick to their home-grown solution.
Even today, when REST APIs are ubiquitous, there is still no universally adopted data exchange format, even for a limited domain such as PunchOut catalogs.
IPaaS Bridges The Buyer-Supplier Divide
The lack of compatibility creates a dilemma for eProcurement users. They can embark on an expensive program of custom integration projects, or they can fall back on manual data entry, which is also costly and error-prone.
Suppliers are often faced with buyer demands for integration and procurement automation. An inability to meet those demands sours relationships and gives an advantage to competitors who can.
IPaaS solves the integration problem by simplifying the process of integrating platforms that would otherwise be incompatible. It does so by acting as a middleware layer between buyer and seller platforms. An iPaaS platform consumes data from one software system, translates it, and delivers it to another software platform.
Consider the case of a B2B supplier and buyer. The supplier offers catalogs via a popular eCommerce application: WooCommerce, Magento, or any of the dozens of B2B eCommerce solutions on the market. The buyer manages procurement with an eProcurement platform such as Coupa. The buyer wants to access the supplier’s catalog from their eProcurement platform. They want order data from the eCommerce application to transfer to their eProcurement platform as a requisition order automatically. And, once a requisition is approved, they want a purchase order to be created automatically in the buyer’s eCommerce platform.
With iPaaS, the integration necessary to achieve this sort of automation is straightforward. The iPaaS cloud service already supports integration with both WooCommerce and Coupa. It consumes the data exchange formats of each platform and performs a two-way translation, allowing the software relied on by both sides of the transaction to “talk” to each other.
Most important, the iPaaS acts as a universal translator: when the supplier wants to integrate with a different buyer using a different eProcurement platform, the process is just as straightforward. IPaaS scales in a way that custom integration does not.
Without iPaaS, the integration of eProcurement platforms and eCommerce applications is possible but expensive, time-consuming, and demanding of a level of technical expertise that many suppliers and buyers do not possess.
For buyers, iPaaS is attractive because it reduces the cost of integration and allows a larger proportion of its suppliers to be integrated. Buyers who rely on custom integrations typically only integrate top-line suppliers, which leaves a long tail of unintegrated suppliers, often with more total transactions than those that are integrated. Widespread integration eliminates the cost of manually processing thousands of individual transactions.
For suppliers, iPaaS benefits include accelerated procurement cycles, greater insight into customer relationships, reduced manual data keying, and improved customer retention.
The best iPaaS platforms support the exchange of a comprehensive set of structured procurement data, allowing for features such as PunchOut catalogs with requisition order automation, purchase order automation, eQuotes, eInvoicing, and more. IPaaS offers a complete procure-to-pay automation solution at a fraction of the cost of ad-hoc custom automation.
IPaaS helps organizations to forge deeper, stronger, and longer-lasting relationships between suppliers and buyers. It reduces the cost of integration, and it contributes to the streamlining and optimization of procurement processes by allowing businesses to maximize the benefit of process digitization.
About the Author: Brady Behrman is the CEO and founding partner of PunchOut2Go. As an entrepreneur with experience and proven track record in building technology businesses that focus on client success innovation, Brady and his team help organizations of all sizes around the globe adapt to the ever-evolving, complex B2B Commerce & eProcurement technologies.