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Your Business May Be Part of a Network — But Is It Truly Connected? Accelerate Competitive Advantage with a Business Network Strategy

by Rolf Schumann | SAPinsider

April 1, 2008

While business networks are key to competitive advantage, they need to enhance, not detract from your core business. This article offers suggestions and examples of how to avoid getting bogged down in maintaining your business partner network, and instead focus on your business’s key differentiators.
 

Rolf Schumann
Chief Technology Officer EMEA
SAP AG

What is the one defining factor that makes your company unique and successful within its ecosystem? Perhaps it is your emphasis on the consistent quality of your products. Or maybe it's the depth of knowledge your staff brings to the services you provide.

The one thing that should not be your unique value proposition, however, is how you connect and communicate with partners in your business networks. While the role that your company plays within its networks will become a fundamental source of differentiation in a commoditizing global economy, the means by which you connect with your partners is not.

These connections represent the "how." Your unique value proposition — what makes your company successful — should be the "why." You must focus on the "why" and turn the "how" over to those best suited for it.

If every company in the world had to figure out from scratch how to connect with others in its business network, every network would consist of a hodgepodge of technologies, standards, and relationships and nothing — nothing — would ever reach the customer.

By partnering with a business-ready network, you have immediate electronic access to your business partners. No additional third-party software is required to enable end-to-end trading partner integration; instead, your organization builds integration out with the same functionality as your existing business process platform. Such a network resolves data incompatibilities, enabling the universal integration of all participants regardless of data format, communications protocol, or current electronic trading capability.

Remember What's Most Important: Reaching Customers

Simply providing products and services is no longer enough to compete with enterprises around the globe. Companies are realizing that differentiation can only be achieved through well thought-out, end-to-end solutions for the customer base.

No one company can do this alone. A network of business partners is needed to operate in a connected and collaborative mode. Only by combining the products and services of a business network's participants in creative ways — and leveraging each other's market access and infrastructure on a global basis — can new market opportunities be unlocked. So how do you achieve this?

Enhance Corporate Agility Through Business Process Outsourcing

For a growing number of organizations, outsourcing non-core activities to external providers — known as business process outsourcing (BPO) — is becoming an attractive, cost-effective alternative, especially in a global, networked economy. By outsourcing non-core business processes, such as payroll or procurement, companies can focus more on core competencies, free up valuable resources to drive growth and innovation, and become a concentrator1 within their business network.

B2B communication services are a prime example of a non-core business process. Just as you wouldn't invest in building your own telecommunications network to make a phone call, you would never take it upon yourself to build a B2B services network. Organizations are much better positioned to take advantage of the economies of scale and knowledge of an industry expert. SAP has tightly aligned with Crossgate, a business network enablement company (see sidebar), to provide our collective customers with industry-leading enablement and performance management services that meet their strategic BPO goals and generate sustainable business benefits: reduced costs, lowered risks, and improved process quality.

Crossgate's Business Network Enablement Offerings at a Glance

Crossgate's new B2B 360° Services for SAP solutions give customers instant access from their SAP system to a Business-Ready Network of more than 40,000 pre-integrated business partners on the platform.

Crossgate's Business Network Enablement Services cover all partner integration topics, including traditional electronic data interchange (EDI), XML industry standards, outbound e-invoicing, inbound OCR and fax recognition, SMS, email, GPS, spoke units, and CAD/CAM.

Additionally, Crossgate's Self-Service Community Client is designed to address even the smallest of trading partners, since working with smaller partners has traditionally involved highly manual processes. This solution allows supply chain and procurement executives to automate the "last mile" of their partner ecosystem and eliminate processing gaps and costs.

From a visibility perspective, Crossgate and SAP are able to provide actionable analytics within the supply chain as well as guidance on managing the performance of your business network.

By using delivery platforms based on SAP technology, Crossgate solutions can integrate more easily within SAP customers' IT landscapes. Platforms are based on the latest versions of market-leading SAP applications and are deployed in a cost-effective and standards-compliant way. For more information, please visit www.B2B360.com.

Business Networks Require an Open Business Process — and IT — Platform

Before selling a single product or service, companies must — as part of their business strategy — define their business network transformation game plan.

Business network transformation, regardless of its shape and maturity, describes the transition from internal to external networks, from an intra-enterprise to an inter-enterprise mindset. In a networked economy, organizations must remove inefficient, broken processes, which cause visibility gaps and paralyze innovation and adaptability. Leaders can gain competitive advantage from the real-time operational data derived from a fully integrated business network, but more importantly they will be able to act faster than their toughest competitors in response to customer and market changes.

How does this translate for IT? SAP's business process platform — which comprises SAP NetWeaver plus SAP Business Suite applications plus the SAP Composite Application Framework — enables companies to gain competitive advantage through process know-how that's exposed by the company's back-end systems in the form of enterprise services. These services are reusable building blocks for internal and cross-industry applications.

And for electronic data exchange, Crossgate's Business-Ready Network is built on this same concept. Enterprises don't have to reinvent the wheel and create technical data mappings for each new project. Instead, SAP customers can connect once to the Crossgate network and instantly be connected to everyone in their business community (see sidebar).

The Crossgate Model in Practice
Case Study: Preh, an Automotive Supplier

Automotive supplier Preh specializes in innovative mechatronics solutions for leading OEM partners and industrial clients. Preh operates worldwide and employs 1,900 people in Germany, Portugal, France, the US, and Mexico.

In 2004, the Preh Group, which had been using an internal solution, outsourced its entire EDI operation to the Crossgate B2B platform. It chose Crossgate because it has become a virtual standard in the automotive industry, and many of Preh's OEM partners were already aboard. Using Crossgate's B2B 360° Services, Preh communicates directly with its partners via the Crossgate Business-Ready Network based on SAP NetWeaver Process Integration (SAP NetWeaver PI).

The Preh Group and some 50 business partners were integrated on the Crossgate platform in less than three months. Even better, Crossgate took care of the administration work, made contact with partners, and managed the changeover process; Preh had no outages of its EDI operations during or after the changeover.

According to Preh, outsourcing its EDI function to Crossgate has resulted in time and cost savings. Unlike its previous internal solution, the company today only pays for the data transferred. Software costs and larger adaptations, which would interfere with the IT architecture, are a thing of the past. And every new company that joins the network is instantly accessible to the entire network community as an EDI partner.

As a result, companies can manage communication and collaboration within business networks — and thus business network transformation — cost-effectively, providing not only optimized end-to-end processes, but also the agility to change them quickly.

Companies that master these skills (the "how") and then maintain focus on their unique value proposition (the "why") will be catapulted onto the world stage as undisputed leaders in delivering customer value.



1 For a description of a business network concentrator, see "Business Network Transformation: IT's Next Great Opportunity to Shine"
by Philip Lay and Geoffrey Moore in this April-June 2008 issue of SAP Insider (www.SAPinsideronline.com).


 

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