Social network economy leaving business behind

Resistance and disbelief apparently these are the real reactions of many companies confronted with the seemingly unstoppable rise of social media. "Many don't want to believe things are changing as substantially as they are," says Jeff Quipp, president of Search Engine People in Toronto. He should know. As someone who advises companies on online strategy, he's familiar with the fears and doubts that prey on business minds. They worry about not getting it right, about how to manage potential crises and about what might be said of them. It's as basic as that. But, as is becoming increasingly clear, social media are not a passing phase. Companies fretting over their online strategy would do well to take a deep breath and project themselves into the not-too-distant future. In truth, the information age is just getting warmed up. "By 2020, we'll have a completely connected economy," says John Sviokla, vice-chairman of Chicago-based Diamond Management & Technology Consultants. "The big trends will be "persistent social networks and augmented reality, with the Internet connecting more and more things". At its most basic level, this means that information will be literally all around us, accessed via increasingly sophisticated mobile devices equipped to recognize tagged objects, places and people. Throw in augmented reality technology and you have that same information whether from selected social networks or other sources displayed over a live feed of the real world. Word of mouth will become more organized. Consumers will be able to point their devices at products or places and access information from friends or like-minded people, with the additional possibility of identifying where they are at that moment. They also will be able to leave geo-tagged reviews wherever they go. "Issues could literally haunt places," says Quipp. In turn, consumers will be targeted with tailored advertising based on information they have provided to online networks. "Right now, you put up a poster for a couple of weeks and it remains static," says Sylvie Daniel, a researcher at Laval University focusing on augmented reality. "In future, posters viewed through mobile devices could change in real time to take consumer preferences into account." Consumers may have lapped up commercials on their flickering TV sets in days gone by, they are unlikely to remain passive before the forthcoming onslaught of laser-sharp advertising.

"People give enormous amounts of information to social networks. But, they will always have opinions and these will circulate in raw format at rapid speed," says Daniel's colleague, Thierry Badard. Business needs to start planning for the connected economy now, says Sviokla. A former professor at Harvard Business School, he has long studied the impact of technology on business and describes what is happening now as the development of "an interstate highway system for the mind." "You gotta plan for that," he says. Overall, experts foresee an unprecedented rise in consumer power, more dramatic than what has been seen so far with the advent of the Internet. Quipp predicts an "integrity revolution. It'll no longer be about separating clients from as much money as possible. It'll be making sure you deliver beyond expectation." Companies should start building "feedback loops" to ensure customers' concerns are dealt with systematically. "It's possible, even if you have the best intentions, that you haven't created the processes to keep people happy," he says. Quipp advises companies to start by listening to what is being said about themselves and their competitors. The next step would be trying to facilitate two-way conversations with clients to improve relationships. For small companies, this could take a couple of hours a week. Julien Smith, Montreal-based co-author of Trust Agents, a book advising companies on how to build influence online, says people want interaction to be genuine. In a world of short-attention spans, he thinks it important that companies dedicate some time to their online presence each day even if not for long.

Integration in the Network Economy

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The advent of the global network connecting millions of computers throughout the world has brought sweeping changes to the way we conduct and conceptualize business. One of the leading pundits on the network economy, Sun Microsystems CEO Jonathan Schwartz, said in an April 2005 blog entry, "As more of the world participates in an open network, more and more valuable IP is being created across the globe ... An open network is eliminating the price of distribution as a barrier to entry or opportunity."1 In this case, Schwartz is talking about the delivery of software and computing power, but the same lesson applies to the shifting landscape of B2B integration. The very existence of a pervasive network mandates electronic business integration to compete, because companies that participate in the network garner insurmountable operational advantages. The network changes how people frame their ideas about how the world operates, compelling companies to think of themselves as part of a global community. Standards-based business process integration and automation offer greater returns today than at any time in history, with lower barriers to entry than ever before. Our era of pervasive networking has enabled all companies to carefully synchronize the processes and information they share. And as business has expanded and evolved with the network, the need to work closely with trading partners is more critical today than it has ever been. The network has linked the global marketplace together and facilitated a move from vertical integration to distribution of function and outsourcing, making supply chain operations a core competitive advantage for companies across industry.
The Benefits of Integration

Companies that efficiently integrate processes with other members of their supply chain beat competitors to market and are more agile in the marketplace. By integrating ordering, logistics and other facets of distributed business, companies gain advantages that include visibility, realtime management and faster cash realization. Business process integration also has a critical impact on inventory levels and costs. There are only two alternatives to implementing rigorous and visible order management processes between trading partners: excess inventory or excess time spent.

Perhaps the most valuable benefit of business process integration today is the automation that can be achieved. The gains from reduction in cycle times, inventory costs and increases in productivity through automation are easily measured on the bottom line. The level of technical sophistication, standards and best practices supporting business process integration make such projects an easy win in terms of quick realization of returns, and automation leads to high data integrity and workforce efficiencies that have far-reaching impact. Business process integration and automation now encompass more processes, touching on diverse needs such as logistics, customs, payments, ordering and others. Standards-based business process integration has spawned a scalable system, capturing the "network effect" in which new connections benefit from the best practices and technical infrastructure of previous implementations.
Integration in the Network Economy

Multinational companies such as IBM and Hewlett-Packard were vertically integrated in the '80s and focused on core manufacturing businesses. In the late '80s and early '90s, they became distributed entities around a design company. Now that the four walls have dropped, the supply chain problem has become infinitely more complex. It isn't just the large companies who have become distributed and networked; their network of trading partners has too, turning the global marketplace into a complex web of connections. The advent of the network mandates that all companies think critically about the processes and information flowing through their entire supply chain, not just in and out of their own enterprise. In the network economy, the connections are as important as the nodes. In the era of the Internet, we are seeing an expansion of the global business network built on Web services, driving the cost of integration for even the smallest business to the price of a personal computer and a network connection. For example, RosettaNet's Automated Enablement initiative, ratified in March 2006, provides forms on the Internet to small- and mid-sized supplier

companies that translate input directly into extensible markup language (XML) business messages compliant with RosettaNet standards. RosettaNet is the leading organization in XMLbased B2B process standards. Essentially, all global infrastructure is in place to connect all companies to the global supply network, with benefits determined by only how well the companies utilize the network.

In the last decade we have begun to reach critical mass in the network that has driven not only the need for but also the value in standards. There are only thousands of large- and medium-sized companies in the world, and nearly all of them are wired for automated B2B e-commerce in some way. The Internet and Web services are now allowing the expansion of the network to the next, much larger tier, enabling small companies to leap off current progress to rapidly integrate. The value of the network is that starting a business relationship today is more about plugging in than building out. In the high-tech industry, business process integration has been an extremely effective methodology to promote efficiency and data integrity in the supply chain. E-payment initiatives in financial services and adjacent sectors have also tracked heavy returns through earlier cash realization, streamlined crediting operations and fewer man-hours spent on transactions. Accounts payable transactions typically cost between $25-$50 to process manually, and this compounds with costs associated with payments stalling for up to a week in the financial supply chain. E-payment solutions can deliver between $500K-$900K in annual benefits to the average company.2 Many Asian countries are pursuing initiatives with support from industry, and strong initiatives exist throughout the region. Another example of effort flowing to pain points in the network, standardized e-customs solutions help alleviate bottlenecks in a region that houses many states and authorities. In Malaysia, Intel has been able to speed customs clearance from two days to just an hour.
The Evolution of the Network

Integration in the Network Economy

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Electronic business messaging and process integration began with large companies, where the need was greatest, and more specifically in retail and manufacturing industries. Integration began in response to the pain of managing numerous transactions, copious information, and a variety of trading partners. As these large companies became distributed networks of companies, the need grew exponentially. And now the Internet has spawned a new generation of business integration. Business messaging started in the '60s in the road and rail transportation industry, and outlandish examples could take you still further back.3 But electronic business messaging standards have their roots in X.12 EDI, created by the American National Standards Institute (ANSI) in the early '80s and still widely leveraged to this day. That and the EDIFACT standard developed under the United Nations have contributed to most other standards. EDI standards were born out of the high-tech, automotive and retail industries and addressed forecast, order, cash (i.e., purchase and delivery), without incorporating marketing, engineering or product development. XML, combined with a pervasive network and other underlying standards, has been essential in providing a new way to create robust standards that can evolve for the unique needs of an industry or supply chain challenge. XML's hierarchical and evolutionary characteristics, along with its widespread use, make it a great facilitator of e-commerce standards.
Achieving Net Work

Over $3 trillion in business is transacted annually based on EDI standards. It's hard to predict the processes, information, and companies that will make up the global supply chain in 20 years, but the advent of the pervasive network and Web services will drive adoption through the entire supply chain and into new avenues of efficiency. We are living and working in the midst of a reverse-catch 22. The network is demanding integration by providing clear returns, and increased integration is driving up the value of joining the network. The etymology of the word network means "something reminiscent of the construction of a net," but its meaning could just as easily be understood as "the net of the work," or the path of least resistance.4 The network enables us to construct an efficient system, devoid of data redundancy, operational errors and human mishaps. It's "two heads are better than one" to the nth degree. With technical infrastructure in place, business process integration is a change agent for companies. The challenge with implementing standards is getting internal process in order; the business messaging is the easy part. Today, through collaboration, companies have created

results that no company could have produced alone. The collective efforts of companies around the world have created a broad repertoire of e-business process standards that seamlessly integrate trading partners and act as building blocks for new business models. References:
1. Jonathan Schwartz. Blog for Sun. April 2005. 2. "End-To-End E-Payment Solutions Give Best ROI." EPaynews.com, 25 May 2004. 3. Roger Clarke. "Electronic Data Interchange (EDI): An Introduction." Business Credit, October 2001. 4. Keith Briggs. Etymology of the Words Network, Net and Work." keithbriggs.info/network.html, 2004.

Paul Tearnen is vice president of Standards Development for RosettaNet, a nonprofit consortium dedicated to the collaborative development and rapid deployment of standards-based, global supply chain solutions. He is also vice president of Technology at GS1 US, a not-for-profit organization dedicated to the adoption and implementation of standards-based, global supply chain solutions. As vice president, Tearnen is responsible for overseeing the teams that develop open system architectures and XML and Java engineering for GS1 US and its three subsidiaries - EPCglobal US, RosettaNet and 1SYNC. He is recognized for his expertise in information technology mangement, software development, operations management and customer service and support.

ICT/NETWORK ECONOMY
Businesses and governments that are able to effectively employ information and communication technologies find more sophisticated and efficient ways of managing their external relationships and communications. This growing ICT usage helps form the critical mass of electronic transactions which supports a networked economy, both in terms of the network size and the demand for associated goods, services, labor and policy reform. ICT Employment Opportunities. A thriving job market for ICT professionals provides added incentive for growth of ICT adoption, training programs and overall use of information and communication technologies within the economy. The retention of technical workers becomes an important competitiveness issue for the community. Business-to-Consumer (B2C) Electronic Commerce. Online retail options enhance consumer choice and access to products. They also allow businesses to reduce costs associated with physical infrastructure and to augment their marketing outreach and public relations via a dynamic communications channel.

Click to assess your networked ECONOMY Readiness

Business-to-Business (B2B) Electronic Commerce. When businesses move their dealings with other businesses online, they can often communicate more easily at lower costs, hold smaller inventories, and process billings and payments more quickly, among other advantages. Moreover, networked businesses are likely to explore new business models, including dynamic business partnerships and radical market restructuring.

Governments can take advantage of information and communication technologies to improve connections with their constituents, including using the Internet to post information online and to offer interactive services for the public. Governments can also lead by example and become a catalyst for the networked economy by investing in information and communication technologies for their internal use, leading to more efficient operations and the creation of a local market for ICT equipment and services. Relationships with government contractors and procurement mechanisms can be streamlined by putting them online. ICTs can make government activities more transparent to citizens and other observers.
E-Government.