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Understanding the Depth and Breadth of the Business Opportunity

Understanding the Depth and Breadth of the Business Opportunity

A quick dip into your favorite English dictionary will tell you that the word collaborate derives from the Latin cum laborare, which simply translates to "labor together." While this is a fine sentiment, in a business context one must consider more than the simple etymology of the words. Had I occasion to pen the dictionary definition of electronic business collaboration I might simply state: "Electronic Business Collaboration: a business model driving a broad spectrum of efficiency gains predicated on the support of open, distributed technology infrastructure."

Many of the articles in this journal will discuss the "hows" of Web services technology, the leading offering in open, distributed Internet technology. This article will consider the possibilities afforded by this technological evolution.

The pervasive spirit behind initial Internet-based electronic commerce efforts was to drive suppliers to lower their prices principally by pitting them against one another in what approximated lowest-bidder auction scenarios in pure trading marketplaces. This model suffers from a number of fundamental limitations. The most obvious is the fact that driving prices downward has inherent boundaries beyond which no supplier can sustain a viable business model.

A model that yields greater efficiency gains driving both revenue growth and reduced costs across a wide cross-section of business activities promises to deliver a much more sustainable and valuable proposition. When all participants across the "value chain" share in such efficiencies, the impact becomes fundamental across entire industries.

The Depth of the Business Opportunity
Electronic business collaboration drives the efficiencies associated with electronic automation and streamlined information management across a broad spectrum of common business activities. Companies have long engaged in diverse cooperative activities, from jointly developed products and information sharing to price negotiations and shared projected demand forecasts, which make up some of the essential elements of successful inter-business interaction. Effective collaboration, therefore, has a fundamental dependency on process alignment and information sharing across partner systems.

The electronic business collaboration model provides value in two basic ways:

  • Drives revenue growth
  • Improves cost efficiencies
Given such lofty claims, it is best we consider each in turn.

Drives Revenue Growth
Revenues frequently are highly sensitive to time constraints. The ability to effectively execute and deliver on planned business activities can have significant impact on projected and realized revenue streams. Through better management of the overall process comprising a complete set of related business activities across partners, electronic collaboration improves the overall business lifecycle and time-to-market.

A key component of effective process management is the capacity for managing change, adaptive process management if you will. Electronic collaboration makes the task of identifying bottlenecks, modelling alternatives, seizing new opportunities, and implementing rapid effective change across even complex systems a possibility.

Considering the broad array of cooperative business activities that can be impacted positively through electronic collaboration, even incremental gains across each category can result in impressive overall returns.

Improves Cost Efficiencies
A readily recognizable competitive advantage across industries is the ability of any company to effectively manage its costs and overheads. A streamlined operation that is capable of minimizing buffer or backlog either in goods/inventory or better customer and partner interactions is likely to realize a more cost-effective business structure.

Collaborative technologies deliver increased availability of critical business information to the parties that most need that information. Timely information can be applied to aid the reduction of costly buffers and the prevention of costly backlog, or simply to remain one step ahead of potential problems or inefficiencies in dealing with customers and partners.

Again, even incremental gains compound value across the broad spectrum of business activities that combine to effect full business systems.

It is the combined effect of both driving revenue growth and operational efficiency gains that make the electronic collaboration model such a strong value proposition for those that choose to engage it.

The Breadth of the Business Opportunity
So far this discussion has generalized the application of electronic collaboration across business activities without considering these activities in any detail. Here I will bring into clearer focus concrete examples of common business activities and consider the value proposition of the electronic collaboration model.

Consider collaborative product prototyping, design, and development. Effective manage-ment of the entire process leading from prototyping to development generates a competitive advantage by creating products in less time, at less cost, and with fewer defects.

Given the nature of this type of endeavor, a few key areas of cooperation can be immediately spelled out: the need for shared design and production information, and the requirement that change, both incremental and fundamental, can be accommodated through simulation and/or active process redesign. The electronic collaboration model considers and aids these very types of demands.

The same benefits can be realized throughout a broad spectrum of outward-facing applications employed by business systems. Consider the advantages of the timely and targeted availability of pertinent information considerate of all parties involved in collaborative planning, forecasting, and replenishment activities. Effective international trade and transport logistics can be greatly facilitated through high information availability and adaptive process management.

As a final example, let's consider the demands that arise following a business merger or acquisition. A critical task likely to follow is the alignment of business activities between the two business entities. The ability to not just colocate but also to seamlessly align these activities is essential both where cost is concerned and in the requirement to present a unified front for the resultant business entity. With no guarantees that business process or IT infrastructure will be compatible, a flexible model is required to permit rapid alignment. Again, collaboration rather than tight integration delivers the most expedient option.

Collaboration has and always will exist between businesses regardless of industry. Electronic business collaboration describes a model where such collaborations are facilitated through an evolution in technology and infrastructure permitting inter-enterprise process automation, adaptive process management, and rapid data and information sharing. Such IT advances when applied to business can help drive revenue growth and improve operating efficiencies for all parties involved.

The Web services computing model is delivering the framework for the technology infrastructure and tools required to facilitate the essential loose technology coupling between businesses necessary for open, dynamic yet secure electronic collaborations. An article I wrote for the preview issue of Web Services Journal, entitled "Electronic Business XML: Making Web Services Work for Business" provides concrete discussion detailing exactly how Web services computing technologies are being applied to address the types of business needs considered here.

More Stories By David Russell

David Russell is CTO and co-founder of Bind Systems (www.bindsys.com), asoftware vendor developing Web Services technologies to enable collaborative electronic business. Bind Systems develops the BindPartner Business Collaboration Platform. Mr. Russell is lives and works in Dublin, Ireland.
[email protected]

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