What is the Return on Investment (ROI) on B2B?
Source:BtoB B2B(2010-11-07)Categories:[B2B News] Keyword: B2B
Through B2B, the integrated companies operate efficiently on a real time basis, which has a direct impact on their bottom line. The return on investment for B2B is extremely high — often 5 to 15 times more, with a payback period measured in months, not years. The ROI on B2B comes from the increased operational efficiency and reduced costs that are achieved by streamlining, automating business processes, reduced cycle time and supply chain automation.
How do you measure the ROI on B2B? Well, there is a right way and a wrong way to measure ROI. The wrong way to justify B2B e-business is by measuring the time representatives save in reduced paper work, or in revenue the company saves by slicing the need for data entry. The right way is to measure the quantum of reduction in operational and developmental costs.
B2B represents opportunities to increase revenues through decreased communication, reduction in operational and development costs and automated supply chain and customer relationship management, resulting in higher profit margins. It dramatically reduces human intervention in business processes for faster, more reliable and more profitable transactions. The benefits of B2B, lower costs, reduced inventory levels, faster time to market and better-informed decisions.
A company should calculate the implementation and ongoing costs associated with the project including software, hardware, system e-business and future production support expenses. These cost estimates should be carefully examined to determine the return on investment for the proposed solution. Every company wants to be considered forward thinking, but revenue, not technology, is still the king in the corporate world. Beware of any overly ambitious initiative spearheaded by the IT department.
Though many software vendors claim an out-of-the-box solution to B2B, the truth is that implementing a B2B solution can often be a laborious, expensive undertaking.
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