By James M.

Dorsey

COLUMN

Leveling the Playing Field

marketing director for multinational Siemens AG, Adrian Honeys responsibility is to ensure that vendors across the globe understand his companys core values and competitive edge. Thats no mean task. Siemens works with some 2,000 independent vendors selling competing products, including those of Siemens, in 85 countries and a multitude of languages. Siemens complex product range and multi-layered vendor network that includes sophisticated large resellers as well as less mature small and medium-sized partners doesnt make things any easier. Mr. Honeys dilemma is hardly unique. Most multinationals operating across continents and covering much of the worlds geography face the same issues. So do government officials and company executives seeking to establish common standards for business integration across borders that demarcate often vastly different legal and fiscal regimes as well as cultural, linguistic, protocol and infrastructural differences. The complexity and difficulty of integration is evident even in markets that vary far less from one another than those in Europe and Asia. Even between Canada and the US, issues exist in privacy and national security, says Patrick Hung, a professor at Canadas University of Ontario Institute of Technology. For Dennis Gaughan, vice president of AMR Research Inc., Mr. Honeys successful tackling of the problem constitutes a notable case study. In research published in July, Mr. Gaughan analyses how Mr. Honey worked with The Netherlands-based syndicated content provider Tie Holding NV, an AMR client, to begin to get a grip on the problem and to demonstrate the benefits of business integration not only to Siemens but also to its partners in terms of reduced processing costs and greater market penetration. Were seeing a shift towards looking from end to end. Big companies feel the pain first. They typically have the most complexity and biggest challenge. Smaller and medium-sized companies take a more cooperative approach towards tackling the problem, Mr. Gaughan says. The global market for business-to-business business integration remains a niche market. Experts estimate the market at no more than $1 billion. A small group of vendors, including TIE, are benefitting from an inclination on the part of corporations to outsource the management of their business integra-

tion processes. Success for business nowadays is related to the level of the sophistication of management, says Luis Maia Carneiro, coordinator of Net-Challenge, a European Union and Chinese funded effort to create trans-national standards as well as the software to implement those standards for collaborative business networks that would enable small and mediumsized enterprises. Net-Challenge hopes to change the paradigm, initially in the textile, footwear and machine tool industry with a horizontal rather than a hub approach built on TIEs Kinetix Platform for business networks. In doing so, Net-Challenge would create a more level playing field on a peer-to-peer basis, particularly in Europe where the vast majority of companies are small and medium-sized enterprises Greater efficiencies and a more level playing field notwithstanding, standardization of business integration may have a less than anticipated effect on the profitability of smaller companies and pricing for consumers. That is where some experts say governments have a role. William Wang, an information management specialist at New Zealands Kelburn Parade Victoria University of Wellington, compares cross border business integration to free trade agreements (FTAs). While many countries nowadays sign FTAs, consumers do not usually feel a reduction in their cost of living. Put in other words: breaking down boundaries, brings opportunities to some and takes away benefits from others, Mr. Wang says. That understanding may be the most advanced in Europe, which so far has invested the most in efforts to standardize business integration and facilitate integration of processes between companies. Chinese participation in Net-Challenge highlights Europes grasp of globalization where production of components in low cost economies needs to be tied in to the high-tech producer of sophisticated products. Says Mr. Carneiro: You need to communicate with the real world.

James M. Dorsey was a foreign correspondent for more than 30 years for The Wall Street Journal and other publications. Today Mr. Dorsey is a columnist, media entrepreneur and international affairs consultant to strategic communications, security and water companies as well as investment funds.
TIE ~ 1/2009 ~ P7