smart business networks
DESCRIPTION
TRANSCRIPT
CSE & Enterprise Systems Center,Lehigh University
1
Roger N. Nagel © 2005& Smart Business Networks
Smart Business Networks
Enable Strategic Opportunities Not Found In
Traditional Business Networks
Professor Roger NagelSenior Fellow for Creative programs
Enterprise Systems CenterLehigh University
Bethlehem, Pennsylvania
CSE & Enterprise Systems Center,Lehigh University
2
Roger N. Nagel © 2005& Smart Business Networks
Technology And Business Strategy Have A Mutual Impact On One Another
Technology inspires strategyTransparencyVirtual organizationReverse auction
Strategy inspires technologyERP,SCM,CRME-commerceE-meetingsE markets
CSE & Enterprise Systems Center,Lehigh University
3
Roger N. Nagel © 2005& Smart Business Networks
Smart Business Networks
Networks will be competitorsBrand will be attached to the nodeThe node is a network & vice versa
AIRBUS is a node (OEM) within asupply chain as well as a network of subordinate entitiesEbenezer & Fairview Health System
CSE & Enterprise Systems Center,Lehigh University
4
Roger N. Nagel © 2005& Smart Business Networks
Smart Business Networks
Based on Understanding the fundamental principles which motivate customers, suppliers
Allows management to see and create new value propositions
Using information integrationTo enhance and redefine the value of communication and relationships in business
CSE & Enterprise Systems Center,Lehigh University
5
Roger N. Nagel © 2005& Smart Business Networks
Smart Business Networks
We believe that information integrates humans and machines in networks
Enabling them to collaborate and to function in a way that empowers the creation of value and the achievement of goals
CSE & Enterprise Systems Center,Lehigh University
6
Roger N. Nagel © 2005& Smart Business Networks
Smart Business NetworksNot just an opportunity
CiscoDell
Sometimes a necessityXerox
Print & distributeDistribute & print
o Required an SBN» Apple, IBM, ATT, Adobe, Kinko's, E&Y, …
CSE & Enterprise Systems Center,Lehigh University
7
Roger N. Nagel © 2005& Smart Business Networks
Xerox Understood Implicitly The Need To Form A Smart Business Network
To reinvent the way business is done The company had realized that the market of the future could not be served by its traditional business network
Because it was lacking key partners in the areas of network communications, informationintegration and cooperation across traditional business lines
Xerox thus transformed itself into a network business operating as a node in a smart business network.
CSE & Enterprise Systems Center,Lehigh University
8
Roger N. Nagel © 2005& Smart Business Networks
Business Networks
In the future, business networksinstead of individual business organizations will be the competitors
Product Vs. Product
Supply Chain Vs. Supply Chain
Process Vs. Process
Source UPS
CSE & Enterprise Systems Center,Lehigh University
9
Roger N. Nagel © 2005& Smart Business Networks
Smart Business Networks
Those networks need to: Look smart through the goods, products, services and experiences they provide and Be smart in terms of how the individual members coordinate, collaborate, innovate and organize themselves
CSE & Enterprise Systems Center,Lehigh University
10
Roger N. Nagel © 2005& Smart Business Networks
Information The Enabler For An SBN
Information is a necessary, but not sufficient qualifier of a smart business network,
The simple existence of information in a business network does not render it any “smarter”The key factor is how information is used, or, integrated into the business networkThe concept of information integration is therefore central to understanding smart business networks
CSE & Enterprise Systems Center,Lehigh University
11
Roger N. Nagel © 2005& Smart Business Networks
information integrationInformation integrates humans and machines in networks
We introduce a classification system that we define as levels of information integration
CSE & Enterprise Systems Center,Lehigh University
12
Roger N. Nagel © 2005& Smart Business Networks
6 Levels of Information Integration for
Even the simplest integration, which allows for information access,
Creates new strategic advantage, by offering “convenience” to clients who find it valuable
At each of the six levels we define several value based factors similar to convenience
Provide a brief example of a company that used the value proposition to redefine or significantly change the way business is done in its industry
CSE & Enterprise Systems Center,Lehigh University
13
Roger N. Nagel © 2005& Smart Business Networks
6 Levels of Information IntegrationThe first three levels1. Access, 2. Transaction 3. Digitization These levels are about what a business network can do to be perceived as smart
The network appears smart to the outside, because it assimilates and integrates information To create value through innovative products, services, solutions and experiences
CSE & Enterprise Systems Center,Lehigh University
14
Roger N. Nagel © 2005& Smart Business Networks
Create Value => Innovative Products, Services, Solutions And Experiences
In this context, the business network itself is a node that is part of a larger network, namely its marketplace.
1stTier
2ndTier
PrimeN thTier
EmployeesHow
many?
….. Tier
Consumers6 Billion?
Companies
eHub
TX
FL, MX, PN
SJ, MX
SCISCITeradyneTeradyne
SaleslinkSaleslink
FoxconnFoxconn
VentureVenture
AlteraAltera
AscomAscom
BroadcomBroadcomCypressCypress
Delta Delta HoneywellHoneywell JDSU JDSU
IBM IBM InfineonInfineon
MerixMerixOCP OCP
CHINA
CISCO
Node i
n a ne
twor
k
Network in a node
Recursively EmbeddedNetwork Charisma
Node Charisma
CSE & Enterprise Systems Center,Lehigh University
15
Roger N. Nagel © 2005& Smart Business Networks
Level Value Proposition Enabled Simple Example
Transaction
Access
Digitization
AmazonFedExGoogle
Dell, CiscoCovisint, EBAYEZPass
ITunesE-Stamps, KinkosWebEX, N-GageAirline check in
ConvenienceTransparencyIntroduction & Referral
CustomizationFacilitate marketTransaction Convenience
Digital delivery“Distribute and Print”Facilitate InteractivityProvide self sufficiency
SBN appears smart to the outside, because it creates value through innovative products, services, solutions and experiences
CSE & Enterprise Systems Center,Lehigh University
16
Roger N. Nagel © 2005& Smart Business Networks
Value in ConvenienceSavings: Information that saves you resources –a combination of time, money, or effort.Empowering: Information arms you to do something you could not have done easily or at all.Fewer steps: One or a few interactions provide the information you need rapidly.Mistakes: Prevents you from making an uninformed or bad decision.Self Service: Reduce your reliance on others people, organizations or processes.Full Service Solution: Details are handled for you in your context creating a solution.Knowledge: Information arms you with the ability to enhance decisions and their value. Trust : Information provides peace of mind
CSE & Enterprise Systems Center,Lehigh University
17
Roger N. Nagel © 2005& Smart Business Networks
Value in TransparencyTrust: Customers and suppliers looking into your system believe and therefore trust the information you provide them.Trust Empowers: Relationships are based on trust and with trust care enhancedFewer steps: Transparency allows for the automation of interaction and elimination of time wasting and awkward human coordination to share informationMistakes: Prevents you from making mistakes when information is reentered from one system into an other.Knowledge: Transparent access to information arms you with the ability to make informed and timely decisions which can increase value.
CSE & Enterprise Systems Center,Lehigh University
18
Roger N. Nagel © 2005& Smart Business Networks
Value in Introduction or ReferralFinding Customers: Organizations save time, resources and are willing to pay for the ability to get interested customers.
Google gets paid by the sire they refer you to based on an auctionFewer steps: Referral speeds the process of finding resources and is of valueMistakes: Getting to a verified correct source can avoid making errors or using bad informationKnowledge: Sharing expertise is providing a consulting service, referrals create value through this mechanism
CSE & Enterprise Systems Center,Lehigh University
19
Roger N. Nagel © 2005& Smart Business Networks
TransactionInformation is used to set a context for defining and executing a transaction
Dell redefined the way business is done in its industry by using an SBN to offer customers “customized products”eBay uses virtual transaction space to facilitate network markets“Transaction convenience” in transportation networks is provided to clients through E-ZPass (windshield based transponder) at toll booths
CSE & Enterprise Systems Center,Lehigh University
20
Roger N. Nagel © 2005& Smart Business Networks
The process of using The process of using information technology to information technology to replace, enhance or replace, enhance or substitute for physical substitute for physical processes, resources and processes, resources and delivery systemsdelivery systems
Digitization
CSE & Enterprise Systems Center,Lehigh University
21
Roger N. Nagel © 2005& Smart Business Networks
Digitization Impact
•Players Card•Money Reader•Payment Slip
CSE & Enterprise Systems Center,Lehigh University
22
Roger N. Nagel © 2005& Smart Business Networks
Digitization
Can redefine an industry or distribution mechanism
Digital delivery –Apple ITunesDistribute & print – E-StampsFacilitate interactivity – N-GageProvide self sufficiency
Airline o Book, buy, select seat, check in
CSE & Enterprise Systems Center,Lehigh University
23
Roger N. Nagel © 2005& Smart Business Networks
Digitization: Self-SufficiencyWe can provide for self-sufficiency by enabling people to do on their own what used to require trained professionals.
Consider for example Making travel reservations Printing and sharing photographs Editing movies, etc
CSE & Enterprise Systems Center,Lehigh University
24
Roger N. Nagel © 2005& Smart Business Networks
DigitizationThe topic of digitization is an incredibly important emerging phenomenon.
The creation of strategic value, The reinvention of the way business is done,The shift of power from traditional business networks to SBN’s using digitization
Is only just beginning
CSE & Enterprise Systems Center,Lehigh University
25
Roger N. Nagel © 2005& Smart Business Networks
6 Levels of Information IntegrationThe second three levels4. Virtual Organization, 5. Collaboration Network6. Innovation Network
These levels are about what a business network can to do to act smart in the way its partners
coordinate collaborateinnovate organize themselves
.
CSE & Enterprise Systems Center,Lehigh University
26
Roger N. Nagel © 2005& Smart Business Networks
Common Goals Partner Collaboration Innovation
This is achieved through the integration of information with the people, cultural and organizational issues that could otherwise prevent the network from being smart.
The transition from one level to the next requires a major paradigm shift that should not be taken for granted.
Virtual Organization
Collaboration Network
Innovation Network
Phase Transition
Phase Transition
Source Cisco
CSE & Enterprise Systems Center,Lehigh University
27
Roger N. Nagel © 2005& Smart Business Networks
A dynamic set of companiesThat come together for a time based and opportunity driven goalRelationships vary from formal to informal,They need to practice working together to learn to communicate, share information, and IP etc.Moderate interaction
Limited scope of activities Limited collaborationMany fail over trust issues
Virtual Organization
CSE & Enterprise Systems Center,Lehigh University
28
Roger N. Nagel © 2005& Smart Business Networks
Committee or Team?
So we agree on new lighting as the solution!
CSE & Enterprise Systems Center,Lehigh University
29
Roger N. Nagel © 2005& Smart Business Networks
Learning environmentsharing resources to create value
Value circle
Multiple Virtual Organizations
CSE & Enterprise Systems Center,Lehigh University
30
Roger N. Nagel © 2005& Smart Business Networks
FinancingFinancingProduct R & DProduct R & DDNPS
MarketingMarketing
Supply Supply ChainChain
CustomerCustomerRelationshipRelationship
CollaborationCollaborationNetworkNetwork
ManufacturingManufacturing
A set of companies who share a short and long term roadmap or vision and focus significant resources on value producing Intensive interaction
Committed and involved in the goals and success of all collaboratorsExtensive Information Sharing Integrated Infrastructure facilitates both people and information networking
CollaborationNetwork
CSE & Enterprise Systems Center,Lehigh University
31
Roger N. Nagel © 2005& Smart Business Networks
CSE & Enterprise Systems Center,Lehigh University
32
Roger N. Nagel © 2005& Smart Business Networks
A Web that evolves to build and deliver value through products & services, solutions & experiences or creates & manages networks of suppliers
A network of partners in innovative seamless relationships Agile and use a variety of infrastructures to optimize for each client
InnovationNetwork
CSE & Enterprise Systems Center,Lehigh University
33
Roger N. Nagel © 2005& Smart Business Networks
Level Value Proposition Enabled Simple Example
CollaborationNetwork
Virtual Organization
Innovation Network
Rosetta NetOne WorldHoliday Inn, Hertz
DuPontCiscoVisa, Master Card
Li & FongAgile Web of PAAcheron’s Call
StandardsGlobal Alliance Franchise
Collaboration HubNode & Network CharismaSwarm Effect
Network EconomyDynamic TeamsVirtual Reality
Act smart in terms of how the individual members coordinate, collaborate, innovate and organize themselves
CSE & Enterprise Systems Center,Lehigh University
34
Roger N. Nagel © 2005& Smart Business Networks
Look Smart Self Sufficiency & Enriched Relationships
Look Smart Convenience & Trust
Virtual Organization Innovation Network
Info Access Transactions
Digitization
Project data
Collaboration Network
Source: PRTM
Six Levels of Information Integration for Business Competitiveness
Be Smart Partner Collaboration Innovation
CSE & Enterprise Systems Center,Lehigh University
35
Roger N. Nagel © 2005& Smart Business Networks
Virtual Organization Characteristics
Opportunity-driven, information enabledWiden capability --one stop shoppingReduce concept to cash cycle timeReduce design conceptualization timeCooperating to increase competitivenessInside the companies in teams and task forcesOutside the organization in “webs” of suppliers and customers
CSE & Enterprise Systems Center,Lehigh University
36
Roger N. Nagel © 2005& Smart Business Networks
Collaboration Network Characteristics
Seamless and borderless integration of resources without organizational lines
Virtual vertical integration organized Dynamic organizational structureInter-enterprise business/production systems
Intensive, interactive, collaboration within and among companiesGreater value potential than the sum of the collaborators value producing capabilities
CSE & Enterprise Systems Center,Lehigh University
37
Roger N. Nagel © 2005& Smart Business Networks
Collaboratory Success FactorsShared visionImplicit versus Explicit
Outcomes each player needs
Values & EthicsEthical agreement
Trust criticalityTime it takesShort cuts
Agreed upon explicit R3A
RiskRewardResponsibilityAccountability
Intellectual property agreementsQuality understanding
CSE & Enterprise Systems Center,Lehigh University
38
Roger N. Nagel © 2005& Smart Business Networks
Network Business Transformation: Driving Forces
Network CompetitorsEmerging
Agility & MassCustomization
ComplexityOf Products
Dynamic Nature of Customer Challenges
Need to manage complexity(Simple interfaces on
complex products)Networks of Modules
Opportunity for Information Based
Collaboration
Opportunity to create value in innovative ways
Innovation as a Competitive Differentiator
In Value Creation
Pull by Customers forSolutions & Experiences
Opportunity Derived from The Emerging Understanding
of Networks
CSE & Enterprise Systems Center,Lehigh University
39
Roger N. Nagel © 2005& Smart Business Networks
Conclusion Regarding SBN
We live in an increasingly digitized and networked world, and the old ways of doing business need to be re-examined in light of smart business networks. We have presented information integration as central to such networks, and discussed six levels of information integrationThe purpose of this presentation is to stimulate the thinking and imagination of the reader.
CSE & Enterprise Systems Center,Lehigh University
40
Roger N. Nagel © 2005& Smart Business Networks
Thank YouRoger N. Nagel
Wagner Professor and Senior Fellow CSE Department &
The Enterprise Systems Center at Lehigh University 200 West Packer Avenue
Bethlehem, Pennsylvania, 18015(610) 758-4086, (610) 868-0402 [fax]