Business Networks: The Evolution and Revolution
Since ancient times, companies of all sizes have evolved in terms of productivity, scale, resources, complexity, channels, trading methods, and partnerships. Slowly and sometimes unnoticeable, such progress has been mostly organic in nature as executives find ways to adapt to changes in the economy, marketplace, society, and best practices.
However, we are now living in an era of several significant economic revolutions that are upending everything we know about the business world at an accelerated pace. Transitioning from the Industrial Revolution from three hundred years ago to the IT Revolution during the mid-late 20th century, and then the Internet Revolution at the end of the 20th century, today’s Network Revolution is creating an entirely new world economy. One by one, each of these revolutions has significantly disrupted the economy and human society to the point that it becomes the foundation for the next wave of change.
What defines a revolutionary transformation
Companies can quickly adjust to evolutionary change, if they follow it. However, there’s always a chance that they are unable to embrace it if there isn’t an opportunity to embody and lead the trend, especially for a revolutionary change.
Take the Network Revolution, for example. As markets become more interconnected and digital, the way people conduct business is transformed. By understanding, participating, and leading this digital economy, companies can enjoy disruptive transformation, rather than being disrupted themselves.
From manual to electronic and Internet-based. As technology continues to advance, companies are no longer constrained by manual production, processing, and distribution. With the emergence of “e-everything,” transactions are managed electronically, processes are automatic, data is stored and analyzed, and e-business applications are created. Plus, the Internet enables information sharing that is instant, broad, deep, and anywhere while commerce is now as easy as a couple clicks.
From an entity and chain to a network. The traditional model for handling supply and demand signifies a mutual relationship among business entities. As the value chain became more complicated, companies developed a linear sequence in the supply chain. Over time, leaders later realized that a single chain – like a line of thread – can be easily broken, and a framework of many chains interwoven into the fabric of the business is much more stable. This approach gave rise to a supply network that contains different paths from one-to-many or many-to-many business relationships. That’s why B2B and B2C enterprises, as well as technology enabled by the Internet of Things, are using this business network concept, connecting different types of entities and functioning in harmony.
From need to reach and fusion. Where there are limited resources and capabilities, earning money to fulfill basic needs (food, water, clothing, and shelter) is the ultimate priority. As living conditions improve, people tend to indulge in their desires more. With the arrival of the digital economy and a massive Big Data environment, proactive outreach is more impactful – allowing companies to fuse internal and external functions, systems, and relationships.
Why the Network Revolution is different from anything else we’ve seen
Technology is undoubtedly the driving force of the business networks, especially with the accelerated pace of solutions for the cloud, mobile, collaboration, social, Big Data, the Internet of Things, integration, and security. Conversely, the need for establishing a networked environment keeps technology moving and advancing – gradually redefining how people, data, companies, processes, and things connect and interact within the ecosystem.
As an inevitable derivative from the business network, the platform model powers network-based ecosystems with the combined strength of networks and data. This approach abstracts real-world scenarios, making the ecosystem and community supporting the product more valuable than the product itself.
If you look at history, companies relied on a physical commerce platform and navigation and transportation systems that serve as a physical communication platform. Fast-forward to the present day, they are now highly dependent on business entities involved in virtual platforms for Internet search, applications, commerce, communication, social media, financial networks, digital payments, among others. As a result, the network becomes dynamic, nonlinear, contextual, transparent, proactive, holistic, and collaborative.
Research from McKinsey & Company shows that networked enterprises that use collaborative technology to connect processes to customers, suppliers, and partners outpace their peers in nearly every category of business performance. And as the networked ecosystem is increasingly supportive and sustainable, each single entity becomes more meaningful.
How business networks are disrupting everyone
Even though the Network Revolution has just started, Ariba, an SAP company, as well as FieldGlass and Concur, now part of SAP, by taking the revolution wave, already made their standalone networks the leaders in respective areas. Even more, technology that enables networked economy with integrated platform-based and application-driven business networks delivers truly significant impacts and real transformation. For instance, the three networks form a core business network on SAP HANA Cloud Platform. By connecting with other clouds – such as the customer’s human capital management, financials, and enterprise environments – with mobile and Web technology at the forefront, this technology represents the significant strength of the digital economy.
Furthermore, the business network links together computers, humans, social media channels, machines, and financials. This blended ecosystem is generating vast opportunities in business and commerce and reinventing the global economy. The key is getting ahead of this revolution of all things digital to seize the advantages of disrupting transformation.
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