It Takes a Business Network to Knock Down the last Bastion of Inefficiency: Optimizing the Value Chain
The networked economy is top of mind for many market observers as company struggle to master rapidly changing customer requirements, volatile economies, and fierce competition. Futurist Don Tapscott believes that technological advancements are reinventing business around a new era of openness. In this Ted Talk, he talks about the four principles of an open world: collaboration, transparency, sharing, and empowerment. Tapscott’s point is that the open world brings freedom and unprecedented opportunities. It’s no wonder business networks are becoming more valuable. Real-time connections across a company’s ecosystem of partners have the potential to change entire business models and transform industries.
I had a recent conversation (click here for the full interview) about business networks with Tim Minahan, Senior Vice President of Global Network Strategy and Chief Marketing Officer at Ariba, an SAP company. He told me that networked enterprises are fifty percent more likely to be market leaders than companies not using these technologies. Here’s how he sums up the benefits of business networks:
“Enabling collaboration across a digitally connected community of global businesses overcomes the last bastion of inefficiency: the value chain. To integrate once as a buyer or seller in order to discover, qualify, engage, collaborate, and transact with one million other connected companies is very powerful. It’s not about technology. It’s about the activities, transactions, and relationships that are being fostered in the community.”
The results of companies already participating in business networks are clear. A global industrial manufacturer running SAP software reduced transaction processing costs by seventy percent after putting ninety-eight percent of its supplier transactions through Ariba. On the sell side, a baked goods company was immediately exposed to new business opportunities with Global 200 customers, and within one month won a million dollar contract. After automating transactions on Ariba, a fast-growing mobile marketing company used discounted payment options to speed up invoicing. With faster payments, the company was able to lower its cost structure, and used the increased cash to hire new developers.
For SAP customers, integration with the company’s enterprise resource planning (ERP) software is only the beginning. In the future, Minahan sees greater opportunities to combine business network data with SAP HANA, SAP’s in-memory computing solution, as well as the expansion of customers’ use
of mobility and analytics from SAP.
It’s been said that the cornerstone of innovation can consist of one brilliant idea. But business networks make a compelling case for the value of a different kind of innovation where the power of many comes together to create something not possible before. Most businesses understand that collaborating
securely beyond the firewall is a given. Market leaders simply cannot afford to not participate in business networks. In a hyper-connected global business environment, value chain efficiency is the new customer currency.