Managing Compliance Risks in B2B Integration Through Service Level Agreements (SLAs), Part 2

This blog post is the second in a series highlighting how to manage compliance risks for service level agreements for B2B integration. Read Part 1 HERE.

Managing Data Errors and Exception Risks

In our last post, we discussed the compliance basics of service level agreements (SLAs) and how you can better manage the risks associated with them. Now, let’s turn to one of the more crucial pieces of the risk management puzzle: controlling the quality of your data.

Successful B2B integration relies on the sending and receiving of transaction data that is complete and accurate. Without complete and accurate data, order fulfillment, invoicing, and other downstream business activities cannot effectively occur.

Can Accurate Data Streamline Transactions?

Data validation processes determine whether data sent to (outbound) and received from (inbound) trading partners is accurate and complete. When you use industry standards like X12 or EDIFACT EDI, validation checks ensure data conforms to standard content, structure, and usage. And when using XML, flat file, or other partner-specific formats, predetermined document schemas validate data, at a minimum.

Inbound data requires additional checks to determine whether data conforms to the requirements of target applications, such as Enterprise Resource Planning (ERP) systems. If the data does not meet these requirements, data exceptions occur in downstream applications. This adds to the time needed to resolve questions and complaints from trading partners, who think they’ve been sent good data. This also results in increased operating costs and, from the partner’s perspective, unpredictable response timeframes, which can result in penalties. Situations like this most commonly occur with entry-level B2B integration outsourcing.

You can simplify exception processing and accelerate the resolution of trading partner questions and disputes by performing both B2B and application-level validation in the B2B Middleware layer. This not only lowers operating costs, but also reduces errors and delays that can lead to performance penalties and/or poor vendor scorecard ratings.

Automation: The Easier Way to Resolve Exceptions

In most businesses, the high volume of data exchange between trading partners can only be monitored through an automated system. That’s why automated validation and exception handling in B2B middleware is so important. It makes it possible to monitor exceptions – not just data exceptions – but also communications, file and database access, and application integration exceptions.

To resolve an exception, you must first have information about its nature, location, and cause. Resolution can be easy, or it can sometimes be more complex. It might involve simply retrying a failed communication step, or going back to a trading partner or application data source and resolving a data quality issue, then reprocessing the data that failed. A delay in any one of these steps – exception detection, diagnosis, and resolution – increases operating costs, unpredictability, and the chance of disrupting downstream business.

  • The first and arguably most important step in managing exceptions is detection. Your B2B solution should provide the ability to identify the kinds of errors you want to be notified about and issue notifications that include enough information to locate and diagnose each exception.
  • After detection, comes diagnosis. All B2B solutions generate logging data for diagnosing exceptions. But rapid diagnosis also depends on the ability to filter and drill down on log data for both process and data exceptions.
  • The final exception-handling step is resolution. The most important capability needed for resolution is the ability to isolate and reprocess or resend only the data that was not processed successfully.

By implementing these exception-handling tools, you should notice faster resolutions and responses, lower operating costs, and avoidance of downstream business disruptions and penalties.

Addressing and Managing SLA Acknowledgements and Responses

When errors are detected in inbound data, trading partners should receive a specialized message alerting them to the error. These notifications are known as acknowledgements. There are a few potential problems with acknowledgements that can impact SLA compliance if not managed.

  • The first is failing to send outbound acknowledgements on-time. For example, if inbound processing fails before reaching the acknowledgement step and the outbound acknowledgement isn’t sent, your trading partner has no information about what happened to the data they sent.
  • A second problem occurs when data you send to a trading partner isn’t acknowledged. The acknowledgement might be missing because the partner never sent it, or because it arrived but you can’t locate it.
  • The third problem occurs when acknowledgements arrive later than expected. Late arrival can be determined based on service level agreements or trading history with partners.

Unmanaged problems with acknowledgements and responses are risks to compliance, not just because they may violate SLA terms, but because they can delay and disrupt downstream business activities, like filling orders, dispatching service, or sending invoices.

Late outbound acknowledgements can mostly be avoided by using events and timed schedules to trigger inbound processing within the window agreed with your trading partner. You can detect missing inbound acknowledgements by linking (“reconciling”) acknowledgements with the outbound data they belong to. And finally, late acknowledgements are detectable by simply filtering log data for unreconciled outbound transmissions that are beyond a given age.

Data Error and Exception Risks in B2B Integration
The above table summarizes the main data error and exception risks in B2B integration. B2B integration practitioners generally understand these compliance risks, but controlling them requires specific prevention and mitigation remedies. When evaluating B2B middleware or services, it is critically important to verify that your solution provider provides tools for managing these risks – or manages them directly – in ways that meet required service levels.

While managing SLA compliance risk remains critical to a healthy trading partner relationship, it’s important to remember that no business achieves perfect service level compliance 100% of the time. However, you can begin mitigating your compliance issues by ensuring the accuracy of your data transactions, and you can achieve this by selecting the automation solution right for your business.

In our next post of this series, we’ll explain how you can identify and manage both latency and visibility risks for healthier trading partner relationships. If you don’t feel like waiting,¬†feel free to download our “Service Level Agreements for B2B Integration: Managing Compliance Risks” whitepaper to learn more.

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  1. Pingback: Managing Compliance Risks in B2B Integration Through Service Level Agreements (SLAs), Part 3 | Business Integration Blog

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