Sunbury, United Kingdom — January 27, 2009 — GXS™, a leading provider of business-to-business (B2B) e-commerce solutions, today launched a methodology for identifying the total cost of ownership (TCO) of managing a B2B program in-house versus outsourcing to a managed services provider, like GXS. The current economic environment is forcing many companies to cut costs while maintaining the same or better functionality. The GXS TCO methodology enables companies to definitively establish whether B2B outsourcing can lower their spend on B2B e-commerce operations. The model takes into account all costs and resources associated with B2B and provides companies with a detailed cost comparison for both avenues. A new white paper outlining the methodology for measuring TCO and the costs associated with establishing and maintaining a B2B program is available now at http://www.gxs.co.uk/.
To ensure a financially sound model based on actual customer results, GXS contracted an independent vendor with in-depth experience in TCO and Return on Investment (ROI) modeling, Hobson and Company, to create it. Hobson interviewed multiple existing clients of GXS Managed Services to establish and confirm B2B-related expenses. Hobson also tested the model with additional customers and applied it to their deployment. Doing so helped the firm not only determine all the costs associated with B2B, but also helped established the immediate and long-term cost savings achieved by several existing customers. For example:
- an energy company saved nearly $1.7 million in the first year alone using GXS Managed Services ($2.3 million on-premise costs versus $649,000), an immediate cost savings of 72 percent;
- by year three, a large consumer products company is anticipated to realise a cumulative savings of $500,000 using GXS Managed Services, a benefit growing to $1.2 million by year seven;
- by year three, another company is anticipated to realise a cumulative cost savings of $3 million; and
- by year seven, that same company is anticipated to save $7.4 million by reducing full time employee requirements for B2B from seven to one.
The model is not limited to pure TCO measurements. The methodology also helps customers establish Present Value of their B2B spend. Present Value provides an assessment of future cash flows in today’s dollars over a specified period of time and is an indicator of how much value an investment or project adds to the company. Finally, the model provides an itemised view of B2B program cost to demonstrate where the opportunity for cost-savings is greatest.
“The decision to outsource B2B or keep it in-house is one that companies in nearly every vertical industry consider at some point. In the current economic environment, even the traditional outsourcing skeptics are considering managed services,” said Steve Keifer, vice president of industry and product marketing. “We wanted to make it easy for companies to make a decision by helping them definitively establish whether B2B outsourcing will save them money in the short-term and the long-term. This new TCO methodology not only provides cost comparison, but also helps customers discover the hidden costs sometimes associated with conducting B2B in-house and Present Value calculations that can accelerate decision making.”
The cost-benefits of GXS Managed Services are multi-fold. According to one customer, “We saw a 50% reduction in planning time, a 30% reduction in business manager time, and 60% reduction in solutions delivery time by moving to GXS’s managed services solution.”
As a “true” TCO comparison, this tool considers many factors and costs beyond just hardware, software and infrastructure. It also accounts for the costs associated with mapping, trading partner implementations, change management, program management, personnel hours, trading partner and internal training and operational expenses, all of which are carefully examined to provide the most accurate determination of TCO. The findings from the application of this methodology follow on a research study conducted by the Stanford Global Supply Chain Management Forum on the overall benefits of B2B outsourcing. The study found that companies deploying B2B outsourcing experience a return 245 percent greater than their annual investment and a 62 percent improvement in customer satisfaction. With many businesses seeking ways in which to cut operational expenses, GXS now can help businesses address the perceived risk and costs of B2B outsourcing, while also providing them with specific business benefits and ROI.
GXS Managed Services is a comprehensive B2B outsourcing solution that provides companies with the people, processes and technologies necessary to maintain complex B2B e-commerce programs. With B2B outsourcing from GXS, companies can build and grow B2B networks without making additional investment in hardware, software or human resources. XS has more than 40 years’ experience in B2B e-commerce as well as 20 years’ experience in supporting full-service B2B outsourcing programs. GXS Managed Services customers represent a variety of industries including consumer products, financial services, high tech, manufacturing and retail. More than 200 companies currently use GXS Managed Services around the world, including BB&T, Henkel, Miller Brewing Company, Shinhan Bank, Sun Microsystems and WHSmith. GXS provides customers with world-class B2B program management including trading community management, global supply chain visibility, transaction management, data translation, systems administration and supplier performance reporting. Additional resources on the TCO methodology, including downloadable images and an interview on Trading Grid Radio, can be found at and http://www.flickr.com/photos/gxsflickr/.
GXS is a leading global provider of B2B e-commerce solutions that simplify and enhance business process integration and collabouration among trading partners. Organisations worldwide, including 75 percent of the Fortune 500, leverage the on-demand services on GXS Trading Grid® to extend supply chain networks, optimise product launches, automate warehouse receiving, manage electronic payments and gain supply chain visibility. GXS Managed Services, GXS’ B2B outsourcing solution, empowers customers with the expertise, technical infrastructure and program support to conduct B2B e-commerce with trading partners globally.
Based in Gaithersburg, Md., GXS has an extensive global network and has local offices in the Americas, Europe and Asia-Pacific regions. GXS can be found on the Web at www.gxs.co.uk.
All products and services mentioned are trademarks of their respective companies.
For further information please contact:
Denise Oakley, Director, Marketing Programmes International GXS
Tel – +44 (0) 1932 776408 / +44 (0) 7768 537 481 Email: email@example.com