Two GTM Vendors Voice Their Views
Linda Olster, Product Marketing Manager at Precision Software, a GTM division of QAD Inc. said:
“I would say that the downturn in the economy should be a catalyst for companies to look for more efficient and effective ways to deal with global trade. There may be a slowdown in the overall volume of imports/exports, but that doesn’t change the regulations that either already exist or are being enacted as we speak for customs and security measures. For instance, think of United States (US) Automated Export System Trade Interface Requirements (AESTIR), Germany’s ATLAS Export information technology (IT) system for import and export customs procedures, US 10+2 Security Filing, the Lacey Act for regulating exports/imports of animals and wildlife products, and many other similar regulatory requests for compliance and trade documentation.
Even if sourcing and distribution patterns change for many companies due to transportation costs (i.e., moving sourcing from China to Mexico or South America and vice versa), the complexity of importing/exporting stays the same (or increases in the case of some South American countries). Whether it’s pro-forma invoices, commercial invoices, or dealing with SISCOMEX (Brazil’s customs) and Maquiladora-required reporting, there are constantly new or shifting regulations to understand and incorporate into a business. Utilizing a rules-based system that automates documentation output and customs declarations, provides advanced information for clearance of goods and provides the right content for compliance checks ensures that organizations have the tools in place to:
* a) know that they are compliant; and
* b) scale and/or change business models quickly and smoothly.
Another area to consider would be advantages of Free Trade Agreements (FTA’s such as North American Free Trade Agreement [NAFTA] and Central American Free Trade Agreement [CAFTA]) and how this plays into GTM… We should see (and have already from a number of our customers) a desire to automate this cumbersome and time-consuming processes, especially as more and more importers should want to take advantage of reduced/zero rates of duty.
Finally, the “greening” of the transportation network should also be considered a feature for GTM. With the ability to calculate landed (delivered) costs in order to track profitability, companies can proactively design distribution networks, as well as engineer product to maximize cost reductions and minimize their carbon footprint.”
Another of Precision’s product managers, whose name I did not get (my apologies), added this:
“I think that Linda hit a good point about the GTM applications when she mentioned the likelihood of change in trading patterns that will be a side-effect of the current financial turmoil, but I think that it is even more important then that. Until the global financial community gets it bearings and is able to instill some degree of confidence, local governments are going to be pressed to keep the local populations employed.
Depending on how deep the recession gets, this could have a big dampening effect on global trade. If unemployment soars, you can expect to see knew-jerk reactions in the form of increases in tariffs and duties.
But, and here is the key, all this is CHANGE, and the more CHANGES you have, the more companies are going to need what we offer, i.e., a rule-based system that is dynamic and capable of coping with change. If we see this type of scenario unfolding, we would do good to reach out to our installed base and help them deal with it.
So far as the “green” side goes, I am not so optimistic. When it comes to jobs vs. trees, green is going to be harder to sell. Again, depending on how deep this crisis gets, you may see green issues getting a lower level of priority, at least for the next few years.”
On the other hand, below are the comments from Alex Thompson, VP of Product Strategy at TradeBeam:
“Among the drivers for GTM adoption, there are cross currents arising from the recent credit crunch and the anticipated recession that will follow, with some trends favoring adoption of GTM software, and some trends negatively impacting its adoption. The expected overall net result is that GTM applications will do well in a down global economy, much as all forms of cost-cutting initiatives perform more favorably in tight markets where businesses are more conservative and cost-conscious.
Below is a summary of some high-level anticipated impacts:
Positive Impacts:
* Increased focus on global supply chain efficiency initiatives, and their ability to improve the bottom line;
* Companies will focus on improving the state of their existing global supply chains, which often have immature, inefficient processes, as opposed to taking on new, expensive initiatives such as manufacturing network redesign. GTM software implementations and related process redesign are relatively low cost, easily deployed projects, with tangible impact, compared to long-term infrastructure projects;
* Government security programs such as the US “10+2″ program, will force companies to either adopt GTM solutions or experience a deterioration of supply chain efficiency and working capital positions. These security programs make GTM adoption a requirement, which will cause GTM projects to win out over other discretionary corporate projects;
* L/Cs will increase as a percentage of global transactions for a short time (reversing the long-term trend of decreasing L/Cs) as exporters will choose to adopt them as the least risky global payment method;
* Global supply chain finance (SCF) networks offering payables discounting and other financing methods may see an increase in adoption, as suppliers will seek low cost credit alternatives, and banks will be eager to lend against the balance sheets of companies with strong credit ratings; and
* Companies will put in place systems to take advantage of savings from FTA’s, which have proliferated in recent years, whereas companies have not put in place tools to manage them effectively.
Negative Impacts:
* Decrease in overall volume of global trade, as demand shrinks in key markets like the US;
* Overall decrease in discretionary project spending for importers and exporters;
* Mergers and acquisitions (M&As) resulting from a downturn, which may delay new project implementations; and
* Banks’ reluctance to engage in any new form of financing that may be perceived as risky.
The net result is that, in spite of the negative impacts to global gross domestic product (GDP) and the level of foreign trade during an anticipated recession, GTM solutions will perform better than other software and large infrastructure projects in the medium term.”
The ERP Giants’ Threat?
In my opinion, the GTM vendors’ futures are as cloudy as anyone else’s. In the near term, their businesses will likely suffer too, especially since manufacturing is swinging back to the US for some commodities due to freight costs and because global business will slow down overall. However, I still believe that global macroeconomic conditions are favorable for international trade, so that these vendors’ businesses will remain sound.
What is in question here though is whether these vendors need to be standalone. I know that the SAP GTS solution has come a long way (while Oracle is reportedly working on launching its own GTM product down the track), and with all the sales and use tax solutions being embedded within enterprise resource planning (ERP) systems (some from vendors like ADP TaxWare, Avalara, and Vertex), GTM has always seemed like the ultimate province of the ERP vendors to me. In am not quite sure of the real value of having it outside the ERP system at this point.
Linda Olster, Product Marketing Manager at Precision Software, a GTM division of QAD Inc. said:
“I would say that the downturn in the economy should be a catalyst for companies to look for more efficient and effective ways to deal with global trade. There may be a slowdown in the overall volume of imports/exports, but that doesn’t change the regulations that either already exist or are being enacted as we speak for customs and security measures. For instance, think of United States (US) Automated Export System Trade Interface Requirements (AESTIR), Germany’s ATLAS Export information technology (IT) system for import and export customs procedures, US 10+2 Security Filing, the Lacey Act for regulating exports/imports of animals and wildlife products, and many other similar regulatory requests for compliance and trade documentation.
Even if sourcing and distribution patterns change for many companies due to transportation costs (i.e., moving sourcing from China to Mexico or South America and vice versa), the complexity of importing/exporting stays the same (or increases in the case of some South American countries). Whether it’s pro-forma invoices, commercial invoices, or dealing with SISCOMEX (Brazil’s customs) and Maquiladora-required reporting, there are constantly new or shifting regulations to understand and incorporate into a business. Utilizing a rules-based system that automates documentation output and customs declarations, provides advanced information for clearance of goods and provides the right content for compliance checks ensures that organizations have the tools in place to:
* a) know that they are compliant; and
* b) scale and/or change business models quickly and smoothly.
Another area to consider would be advantages of Free Trade Agreements (FTA’s such as North American Free Trade Agreement [NAFTA] and Central American Free Trade Agreement [CAFTA]) and how this plays into GTM… We should see (and have already from a number of our customers) a desire to automate this cumbersome and time-consuming processes, especially as more and more importers should want to take advantage of reduced/zero rates of duty.
Finally, the “greening” of the transportation network should also be considered a feature for GTM. With the ability to calculate landed (delivered) costs in order to track profitability, companies can proactively design distribution networks, as well as engineer product to maximize cost reductions and minimize their carbon footprint.”
Another of Precision’s product managers, whose name I did not get (my apologies), added this:
“I think that Linda hit a good point about the GTM applications when she mentioned the likelihood of change in trading patterns that will be a side-effect of the current financial turmoil, but I think that it is even more important then that. Until the global financial community gets it bearings and is able to instill some degree of confidence, local governments are going to be pressed to keep the local populations employed.
Depending on how deep the recession gets, this could have a big dampening effect on global trade. If unemployment soars, you can expect to see knew-jerk reactions in the form of increases in tariffs and duties.
But, and here is the key, all this is CHANGE, and the more CHANGES you have, the more companies are going to need what we offer, i.e., a rule-based system that is dynamic and capable of coping with change. If we see this type of scenario unfolding, we would do good to reach out to our installed base and help them deal with it.
So far as the “green” side goes, I am not so optimistic. When it comes to jobs vs. trees, green is going to be harder to sell. Again, depending on how deep this crisis gets, you may see green issues getting a lower level of priority, at least for the next few years.”
On the other hand, below are the comments from Alex Thompson, VP of Product Strategy at TradeBeam:
“Among the drivers for GTM adoption, there are cross currents arising from the recent credit crunch and the anticipated recession that will follow, with some trends favoring adoption of GTM software, and some trends negatively impacting its adoption. The expected overall net result is that GTM applications will do well in a down global economy, much as all forms of cost-cutting initiatives perform more favorably in tight markets where businesses are more conservative and cost-conscious.
Below is a summary of some high-level anticipated impacts:
Positive Impacts:
* Increased focus on global supply chain efficiency initiatives, and their ability to improve the bottom line;
* Companies will focus on improving the state of their existing global supply chains, which often have immature, inefficient processes, as opposed to taking on new, expensive initiatives such as manufacturing network redesign. GTM software implementations and related process redesign are relatively low cost, easily deployed projects, with tangible impact, compared to long-term infrastructure projects;
* Government security programs such as the US “10+2″ program, will force companies to either adopt GTM solutions or experience a deterioration of supply chain efficiency and working capital positions. These security programs make GTM adoption a requirement, which will cause GTM projects to win out over other discretionary corporate projects;
* L/Cs will increase as a percentage of global transactions for a short time (reversing the long-term trend of decreasing L/Cs) as exporters will choose to adopt them as the least risky global payment method;
* Global supply chain finance (SCF) networks offering payables discounting and other financing methods may see an increase in adoption, as suppliers will seek low cost credit alternatives, and banks will be eager to lend against the balance sheets of companies with strong credit ratings; and
* Companies will put in place systems to take advantage of savings from FTA’s, which have proliferated in recent years, whereas companies have not put in place tools to manage them effectively.
Negative Impacts:
* Decrease in overall volume of global trade, as demand shrinks in key markets like the US;
* Overall decrease in discretionary project spending for importers and exporters;
* Mergers and acquisitions (M&As) resulting from a downturn, which may delay new project implementations; and
* Banks’ reluctance to engage in any new form of financing that may be perceived as risky.
The net result is that, in spite of the negative impacts to global gross domestic product (GDP) and the level of foreign trade during an anticipated recession, GTM solutions will perform better than other software and large infrastructure projects in the medium term.”
The ERP Giants’ Threat?
In my opinion, the GTM vendors’ futures are as cloudy as anyone else’s. In the near term, their businesses will likely suffer too, especially since manufacturing is swinging back to the US for some commodities due to freight costs and because global business will slow down overall. However, I still believe that global macroeconomic conditions are favorable for international trade, so that these vendors’ businesses will remain sound.
What is in question here though is whether these vendors need to be standalone. I know that the SAP GTS solution has come a long way (while Oracle is reportedly working on launching its own GTM product down the track), and with all the sales and use tax solutions being embedded within enterprise resource planning (ERP) systems (some from vendors like ADP TaxWare, Avalara, and Vertex), GTM has always seemed like the ultimate province of the ERP vendors to me. In am not quite sure of the real value of having it outside the ERP system at this point.
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