Lots of interesting happenings in the B2B integration space – some funding, an acquisition and a little battle aiming to bootstrap its way to stardom.

EDI-hpic1 Recently IBM announced its acquisition of Sterling Commerce – Colleague Ray Wang does an, as-always, excellent job of giving a quick perspective. Some key points from Ray’s post:

On May 24th, IBM surprised the market with its $1.4B, all-cash, definitive agreement to buy Dublin, Ohio based Sterling Commerce from AT&T.  Sterling Commerce was purchased by SBC Communications in 2000 for its strengths in B2B integration.  As an AT&T company in 2005, they acquired Yantra for its supply chain fulfillment and distributed order management solutions (DOM).  In 2006, the company acquired Nistevo for transportation management systems (TMS) and in 2007 bought out Comergent, a leader in selling and order management solutions.  Sterling Commerce currently employs 2500 people and has 18,000 customers around the world.

I’ll not add to Ray’s analysis but it interests me since recently I spent an hour or so with Ian Sweeney, CEO of billFLO (more on them here and see disclosure here ), an early stage start-up working in the accounts payable workflow space. Originally billFLO was focused on what I called being the “Babel fish” of data – providing invoice integration between distinct accounting applications.

When they first launched I was a little dismissive of billFLO, unhappy that there was any need for a service that would “translate” invoices between systems – SaaS is all about disintermediation, anything that doesn’t add to that is less than ideal. Since that time however, billFLO has expanded their offering and they now focus on providing workflow control over accounts payables – in effect it’s a lightweight version of what Sterling Commerce are doing – but targeted for a lower tier of customers. Similar in many ways to bill.com, a more widely known company that has just secured another round of funding (more on that below)

This is a real recurrent theme for SaaS offerings – on so many levels we see cloud solutions democratizing software and bring technology to an entire class of business that formerly wouldn’t have had the resource to use the tools.

I asked Ian what his view was on the applicability or otherwise of EDI for small businesses. His response was interesting:

We recognized relatively early on that EDI on its own isn’t that compelling for small biz. Generally speaking, they don’t want to have to “deal with bills”. That translates to “let me manage the bills to meet my goals, with the minimum of effort on my part”. Managing bills is actually quite an involved process, even for the small guys. We simplify it by creating a central repository for the bills to arrive to (bills can be a machine readable billFLO invoice or simply a pdf).  The bills can then be routed to anyone in the company to be approved (i.e. to answer the questions: are they billing us for the right stuff?) and for payment to be authorized (“there are 10k in approved bills, is it ok to spend the 10k?”). The data is then synchronized automatically with the accounting system, an audit trail is stored for every invoice and an archive of every invoice is also created.

The space is sufficienctly promising for the VCs behind Bill.com to invest in another round. Bill.com’s Series C netted $8.5M, funding that, according to CEO Rene Lacerte, will be used to:

accelerate our tremendous growth while continuing to build out what we think is a very unique solution for SMBs and CPA firms who need to drive more efficiency into their day-to-day financial tasks of paying vendors and getting paid

In terms of some statistics, just bill.com alone is reporting that monthly recurring revenue, total number of customers and unique paid vendors all increased by over 800% in 2009.  Meanwhile, SMBs managed over $500 million in bills last year using Bill.com. The extra funding, matched with their recent inclusion on the Google Apps Marketplace, should see those figures continue to improve.

Putting aside the specific area these guys play in, it is heartening to see this trickle down effect and tools becoming available to business that formerly couldn’t afford to use them. It’s the reason I do what I do – I believe that these tools are genuinely enabling and can make a difference to the world.

Accounts payable workflow may be a dry topic, and seemingly unimportant, but it’s an indication of the step change occurring out there.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

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