greater innovation through closer...

GREATER INNOVATION THROUGH CLOSER COLLABORATION

COLLABORATE to INNOVATE

Exploring the Impact of Business Collaboration on Innovation and Performance

NETWORKBPI™


2© 2009 CMO Council All Rights Reserved.


Introduction

Summary of Key Findings

Detailed Findings

Advisory Board Perspectives

Contributed Commentary from Sterling Commerce

Contributed Commentary from AT&T

Sponsor Profile

About the BPI Network and CMO Council

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Contents




IntroductionToday, we live and work in a highly interconnected world. Global interdependence has become a definitive economic reality. The flow of goods, information and capital across borders is accelerating at an astounding pace. World exports grew from about 40 percent of global production in 1990 to more than 55 percent in 2004, according to the World Bank. Cross-border listings on world stock exchanges have also increased rapidly. Non-U.S. listings on the New York Stock Exchange doubled from about 8.5 percent in 1994 to 17 percent at the end of 2003 and, as of June 30, 2009, there were some 3,100 foreign listings on the world’s 52 leading exchanges. Nearly all Global 2000 companies now derive more than half of their sales from international markets.

For most companies today, borderless business is far more than a statistical abstraction. It reflects a new way of doing business. In a 24x7 interconnected economy, corporations are relying more heavily on outside business partners to innovate and deliver products and services, drive critical business processes and ensure seamless experiences for customers around the world. As a result, companies of all sizes and across all industries are seeking to redesign the way they do business in order to integrate a diverse mix of suppliers, partners and vendors more tightly into the fabric of their business. To do so, companies are seeking to transform the way they connect, communicate and collaborate across complex interconnected networks of customers, suppliers, business partners and vendors. If improving and integrating internal enterprise processes and systems was the mandate of business in the 1990s, today those requirements extend far beyond corporate boundaries.

“If there is a rating system of one to ten, and ten is the most critical in running your business, I would say our dependence on our suppliers is something in the eight to nine range.”

– John Viele, Vice President, Procurement, WellPoint, Inc.

The Collaborate to Innovate study, conducted by the Business Performance Management (BPM) Forum and the Chief Marketing Officer (CMO) Council, takes a new look at the state of business collaboration in the early 21st Century. Our findings make it abundantly clear that cross-company collaboration is more vital, complex and global than ever before. Many executives now see improved connections across business partners and customers as critical to their competitive position. It is not simply a matter of driving cost efficiency through the use of low-cost suppliers or extending the reach of their sales capabilities through domestic and overseas distributors and resellers. Integration and collaboration across extended networks of partners is impacting core customer value and experience, and the capacity to innovate across processes, products, services.The study also demonstrates, however, that most companies are struggling to optimize their collaborations with partners and almost universally believe there is a significant deficiency in the way they integrate information exchange and processes across their partners’ networks.

Sponsored by Sterling Commerce and AT&T, Collaborate to Innovate is based on an in-depth survey of more than 400 executives and managers whose companies do business around the world. Some 36 percent of respondents represent companies with revenues of more than $1 billion. In addition to our quantitative survey, we conducted 23 qualitative discussions with leading academic experts and executives with major global corporations who are deeply involved in supply-side and demand-side value chain partnership management and development.

“If a company is not collaborating with their partners and its competitors are, they’re going to be left behind. The competitors will have the advantage.”

– Lisa Ellram, Professor of Distribution Management, Miami University




Summary of Key FindingsGrowing Complexity of Partner Networks Our interactions with executives in the Collaborate to Innovate study create a compelling mosaic of a highly interdependent and interconnected global marketplace, in which companies increasingly focus on their core strengths and competencies while relying more heavily on a diverse array of partners, service providers and vendors to do the rest. Business partnerships that executives view as critical to business success reach across every facet of a company’s operations and processes – from suppliers and vendors, to warehousing and logistics, distributors and resellers, retailers, technology partners, IT consultants and outsourcing firms, tax and legal services, marketing agencies, and contract manufacturers. All of these external partner resources were viewed as vital by at least 25 percent of our survey respondents.

Many companies see themselves at the hub of their own business network, but also say they are participating in the business networks of other companies. On the one hand, they are organizing, managing and collaborating with partners and vendors to coordinate their own value chain to customers. On the other, they are interacting in other networks that have their own set of customers. This intricate web of interdependencies is elevating the need for improved and agile cross-company integration and coordination, and for the creation of what we refer to as “Business Collaboration Networks.”

“We’ve expanded a lot to get closer to our customers… In ten years, we’ve gone from two bi-coastal distribution centers to six.”

– John Goione, Manager Supply Chain Systems, BMW North America

Business Collaboration Networks harness the shared knowledge, competencies and resources of all participants in a value chain to deliver greater efficiency and improved customer experience. The formation, evolution and interactions of such networks need to take place at the speed of business. In today’s fast-changing global marketplace, companies are challenged as never before to keep pace with shifting customer and competitive demands. They want to move rapidly and nimbly to bring the right set of partners together to meet new customer needs and opportunities around the world. More than half of executives in our survey say their partner networks are becoming more global, complex and distributed, and 40 percent say their networks are diversifying to respond to new opportunities. As a result, the need for greater adaptability and flexibility is one of the leading factors driving companies to seek to optimize and transform their Business Collaboration Networks. Even more critical, respondents say, are competitive pressures to improve productivity and performance and customer demands for greater speed and visibility into supply and delivery chains.

Struggling To Keep Pace Numerous forces are driving the move toward greater global integration and interdependence. Reduced trade barriers, deregulated capital flow, greater global consistency in protection of intellectual property, reduced transportation costs, the rapid development of emerging country markets and growth of new business competencies and companies within those regions – all these are significant factors in creating a more global




networked economy. But perhaps no force has had a more powerful influence on business networks than the rise of the Internet as a ubiquitous platform for anywhere, any time communications, information exchange and transactions. The Internet has broken down long-standing barriers to collaboration and made partnering more feasible and efficient, even for companies and teams separated by long distances and numerous time zones. Most companies are tapping into new Internet-enabled technologies, such as web conferencing, instant messaging, e-rooms and shareware to drive greater efficiencies and value in their partner and customer relationships.

“In the future, I think, we will have more of an integrated collaborative work experience… We won’t have to schedule video conferences with people around the world. We will simply click a button and they will be there. Social media is really the future of collaboration.”

– John Johnson, Strategy & Innovation, PepsiCo

Yet, optimization and transformation of Business Collaboration Networks are most definitely a work in progress for the vast majority companies doing business today. In fact, while corporations are embracing a new model of increased cross-company value creation and interdependence, their information exchange systems, business processes and practices are struggling to keep pace. A mere 6 percent of respondents to our survey currently believe they are highly effective in integrating, coordinating and optimizing their business partner networks.

Business executives are clearly aware of the failures and inadequacies of their current capabilities and practices:

Only five percent of respondents say they currently have end-to-end data and process integration across their partner networks, although 51 percent report at least some level of integration with select partners.

Some 64 percent of respondents say they have either no ability or an unsatisfactory ability to extend and leverage their internal systems to selling and service partners.

Some 75 percent say they have no ability or an unsatisfactory ability to extend and leverage their internal systems to suppliers and outsourced service providers.

Only 30 percent of respondents say they are effective in sharing customer data and insights with partners to enable innovation.

“A lack of trust (in one’s partners) causes companies to insert extra assets all over. For example, they will have extra inventory everywhere and more suppliers than they need.”

– Lisa Ellram, Professor of Distribution Management, Miami University

Pressures to Improve CollaborationExecutives understand the limitations and inefficiencies in their current capacity to communicate, connect and collaborate with critical members of their value chain, and most seem determined to transform or at least make improvements in their Business Collaboration Networks. Even in a difficult economic environment, the vast majority of companies – nearly three-quarters of those surveyed – are currently investing in new programs and systems to optimize the way they collaborate with partners.

When asked to name the most important ways to improve interactions and transactions with partners and customers, the most frequently cited needs were improved data




exchange and system integration (57 percent), faster resolution of business problems (45 percent), automation of shared business processes (41 percent), and education and training (33.6 percent).

Pressure to raise productivity and performance is the most frequently mentioned driver for improvement in collaboration across partner networks, cited by 60 percent of survey participants. Respondents point to significant levels of cost inefficiency in many areas of their value chains, beginning with supplier and vendor relationship management, but also prominently including global procurement and sourcing, product lifecycle management, transportation and warehousing, customer handling and support, and product design, configuration and packaging.

Yet cost efficiency is by no means the only factor. Customer demands for improved visibility, the need for greater flexibility in addressing market opportunities, increasing global interdependencies and the move toward co-innovation with partners and customers are all major drivers in efforts to improve business collaboration and integration. A greater reliance on outside companies to drive innovation and customer engagement requires new levels of trust, information sharing and integration among partners. It is therefore all the more concerning that so few companies (30 percent) rate themselves highly when it comes to the exchange of customer insights with partners.

Business Collaboration and the Customer Experience“Our customers are asking more of us. They are demanding that we are world-class in all of our activities, which ultimately is driving us to enhance our relationships with suppliers.”

– Tom Larkin, Chief Operating Officer, Supply Management, Credit Suisse

Competitiveness can no longer be defined by a business’s individual competencies. Increasingly, it is determined by how successful the business is in integrating and collaborating with other companies to create value and differentiated customer experiences. Indeed, very few companies believe they can go it alone. Some 93 percent of those participating in our survey say business partners are either very important (68 percent) or important (25 percent) to their customer experience and competitiveness. Nearly 60 percent believe partners are essential to delivery of products and services. Seventy percent say they rely heavily on suppliers and outsourced service providers to meet customer needs. In addition, 55 percent say they either rely heavily or expect to rely heavily on demand-side partners to meet customer requirements.

“You get your (business) requirements for your customers. They are the ones ultimately asking for improved collaboration.”

– Jamie Crum, Director of Indirect Strategic Sourcing & Supplier Diversity, United Rentals.

With customer experience now frequently defined by complex networks of partners, seamless integration becomes even more vital. Customers themselves understand this need and frequently demand greater integration and visibility into partner networks. In fact, four of 10 participants in the Collaborate to Innovate study say that their customers are pressuring them to provide greater visibility into their business networks.

Highly efficient business networks and integration with customers delivers multiple direct benefits. Among the most valuable benefits identified by executives are faster problem resolution




(54 percent), improved service and support (51 percent), better innovation of new products and services (44 percent), reduced cost of customer support and handling (43 percent), and transactional speed and accuracy (31percent).

Collaboration for Better InnovationA significant percentage of survey participants, 23 percent, point to a move within their companies toward co-innovation as a major driver to transform their ability to collaborate more seamlessly with partners. We believe this move toward co-innovation will become an even more powerful driver in the years ahead. Companies will increasingly look beyond their own corporate boundaries in an effort to accelerate and improve innovation and differentiation. To quote Michael Dell in an article in the Intelligent Enterprise, “Collaborative R&D between IT buyers, vendors and partners is central to future innovation.” And the future is arriving quickly: nearly 40 percent of study participants believe their partner networks are already contributing significantly to innovation, insight and customer value. And as mentioned above, product and service innovation is seen as one of the primary benefits of business network transformation.

Companies are increasingly moving toward a more open and collaborative network model that embraces the ideas and innovative capacity of both customers and partners. Co-innovation goes beyond the development of products and services, however, and also includes reliance on partners to drive substantial improvements in key business processes. Outsourced services providers are no longer viewed simply as an opportunity to take cost out of a process. Increasingly, companies must look at outsourcing business functions, not simply as a means of running those processes in the same way as before, but at a lower cost. They must look to partners to transform processes to world-class status.

ConclusionIncreasingly core go-to-market processes, customer experiences and business value are being determined by how seamlessly a company can integrate and collaborate with its customers and a diverse set of business partners. In a more global, interdependent and networked economy, the development of more adaptive, open and diverse Business Collaboration Networks is therefore essential to competitive success.

Much work lies ahead for companies seeking to transform their Business Collaboration Networks to address this brave new way of doing business. Few companies have achieved the levels of integration needed to satisfactorily accelerate and optimize business processes and information exchange with partners and customers. The capacity, and perhaps willingness, to share customer insight and information to drive better innovation and customer experiences is still very much a work in progress. Nonetheless, our data indicates that positive changes, in fact, are underway at many companies and that executives and managers are sensitized to the need and the opportunity. The great majority of executives we polled say their companies are making investments to drive improved cross-company collaboration and integration.

We hope the insights and findings of Collaborate to Innovate spur more companies to consider the possibilities.




Executives are nearly unanimous in the belief that their partner networks play an essential role in their companies go-to-market, customer and competitive success.

Q01 How important are business partners to your company’s go-to-market processes, customer experiences and competitive position? (Select one)

68%25%

6%

1%

Very important

Important

Somewhat Important

Not Important

Detailed Findings




Partner interdependence extends across a broad spectrum of functions and business relationships. Not surprisingly, customers are widely perceived to be a company’s most vital business partners. In addition, seven of 10 respondents say suppliers and vendors are critical to their success. Yet respondents identify a wide range of vital business partners. Chief among these are technology partners, distributors and channel partners, warehousing and logistics service providers, IT consultants and integrators, marketing and communications agencies and professional service providers.

Q02 Select the critical external resources with which your organization currently has vital business partnerships? (Check all that apply)

Customers

Suppliers and vendors

Technology partners

Distributors/Resellers/Channel Partners

Warehousing/transportation/logistics services

IT consultants, integrators and outsourcing firms

Marketing and communications agencies

Professional service providers (tax, legal, etc.)

Contract manufacturers

Retailers

Business process outsourcing providers

Print, graphics and web services

Teleco, ISPs and hosted data centers

Call center and help desk contractors

Third-party field service organizations

Industrial design/product development partners

Billing, transaction and back-office services

Other

79%

72%

56%

51%

48%

43%

34%

32%

32%

26%

26%

26%

22%

17%

16%

15%

15%

2%




In today’s complex web of interconnected vendors and partners, businesses frequently act as both the organizers of their own business networks and participants in other companies’ cross-company networks. Almost half of all respondents view their companies as both partner network organizers and participants. Nearly 40 percent see themselves primarily in the driver’s seat, although this percentage seems high when you consider that 80 percent of respondents identified their customers as vital partners.

Q03 How do you view your company’s position relative to its network of business partners or enabling ecosystem? (Select one)

40%

46%

14%

Both an organizer of our own network and a participant in others

At the center, organizing our own network of business partners

Participating as a business partner in other companies’ networks

A very large percentage of companies, nearly half, aspire to become increasingly at the hub of their partner networks. Only two in 10 said they would become more involved in the partner networks of other companies.

Q04 Where do you view your company’s position relative to its network of business partners in the future? (Select one)

32%

47%

21%

No Change

Increasingly at the center organizing our own network of partners

Increasingly participating as a partner in other company’s networks




Business Collaboration Networks are becoming more essential, complex, global and value-added for many companies participating in this study. Nearly 60 percent describe these networks as essential to delivering products and services, and more than half say they are becoming increasingly complicated and internationally dispersed, as they diversify to meet new business opportunities. Nearly 40 percent say partner networks are contributing significantly to innovation, insight and value.

Q05 How would you characterize the state of your business partner network today? (Select top three)

Essential to delivery of products and services

Becoming more global, complex and distributed

Diversifying to respond to new opportunities

Contributing real innovation, insight and value

Adapting to dynamic sourcing requirements

Adding business processes

Well-established but not very nimble or adaptive

Needs more accountability and transparency

Operationally challenged with vulnerabilities

Downsizing or consolidating in tougher times

Draining productivity and performance

Negatively impacting the customer experience

Other

56%

53%

39%

38%

28%

27%

21%

19%

18%

13%

4%

2%

1%




Companies recognize they have a significant need to improve the way they collaborate and connect with partners. Only 8 percent say they are highly effective in doing so today, and 43 percent admit to needing to make improvements.

Q06 How do you rate your company’s effectiveness in integrating, coordinating and optimizing your business partner network? (Select one)

Highly effective

Effective

Needs improvement

Ineffective

46%43%

8%

3%

The need to continue to innovate and optimize collaboration across partner networks appears to be a significant priority. Even in a difficult economic environment, nearly three quarters of respondents say their companies are investing in programs and systems to optimize collaboration.

Q07 Is your company currently implementing programs or systems to improve collaboration quality and efficiency across your network of partners?

73%

27%

Yes

No




A vital need to extend internal systems and processes across partner and customer networks is a major finding of the Collaborate to Innovate study. Respondents say cross-company integration of information systems and automation of business processes are two of the most important ways to optimize their partner interactions. The need to accelerate time to problem resolution is also seen as critical by many executives, as is improved education and training.

Q08 Select the critical external resources with which your organization currently has vital business partnerships? (Check all that apply)

Improve data exchange, system integration and accurate information sharingFaster resolution of business problems, issues and discrepancies Automation or streamlining of shared business processes

Education and training

Higher levels of coordination between internal and external partner groups Faster and more accurate transactions and business agreements

Overcoming geographic, language and cultural divisions

Enhance processes for co-innovation around products and services

On-boarding of new business partners

Speed and assurance of communications about product requirements

Integration between internal and external enterprise systems

Common protocols, data formats and application modules

New applications using secure browser-based and web-hosted platforms Greater deployment and networking of mobile and field force technologies

Other

58%

44%

41%

33%

28%

25%

21%

19%

18%

16%

15%

12%

9%

7%

3%




Operational inefficiencies are widespread across partner networks. Although respondents were allowed to name only the three functions most in need of improvement, nearly a quarter or more identified eight different top choices as their primary targets. Supplier/vendor relationship management and global procurement and sourcing topped the list.

Q09 In what operational areas of your value chain could your company most increase productivity, reduce costs, and eliminate redundancy or waste? (Select top three)

Supplier/vendor relationship management

Global procurement and sourcing

Transportation and warehousing

Product lifecycle management

Product design, configuration and packaging

Customer handling, interface and support

Sales, acquisition and set-up of new accounts

Order management and fulfillment

Distribution and reselling/retailing of products

Manufacturing and assembly

Customer billing and transaction processing

After-market support and service

Outsourcing or offshoring of operations

Other

44%

37%

27%

26%

26%

25%

23%

21%

18%

16%

15%

14%

13%

4%




Very few respondents believe their companies have gone far enough in optimizing their information systems and processes across their partner networks. Less than 6 percent say they now have end-to-end integration across their value chains, and only 51 percent say they have achieved integration with even select business partners. Just 10 percent believe data and process integration is not a major business issue.

Q10 How would you describe the current level of data integration and business process automation between your company and its business partners?

13%

50%

10% End-to-end integration and automation across value chain

Integration with select partners, but still a work in progress

Area of need and concern with substantial investments planned

Major need, but lack budget or management buy-in to improve

Not a major business issue or concern

20%

7%

As partner networks become more vital and integral to customer engagement and innovation, the ability to effectively share customer data and insights with partners becomes increasingly important. Yet either because of unwillingness or inability, far too many companies are failing in this critical area of partner collaboration. Less than a third of respondents said their companies are even effective in sharing customer information.

Q11 Rate your company’s effectiveness in sharing customer data and insights with business partners to drive innovation?

35%

26%

4%

30%

5%

Highly effective

Effective

Mostly effective

Needs significant improvement

Ineffective




In a more globally interdependent, complex and fast-changing business world, in which customer expectations and demands are on the rise, companies are feeling growing pressure to be agile, adaptive and productive in the way they interact and collaborate across partner networks. Executives point to a wide range of forces that are driving the need for better integration with partners. Chief among them are competitive pressure to improve productivity and performance, the need for greater flexibility, and customer demands for speed and visibility within the supply and delivery chain.

Q12 What is driving the need to improve and optimize the way you communicate, connect and collaborate with critical members of your value chain? (Select top three)

Pressure to improve productivity and performance

Customer demands for speed and visibility in the supply and delivery chain

Need for increased adaptability and flexibility

Increased global business interdependencies

Greater market and demand volatility

Rising complexity of trading relationships

Move toward co-innovation with partners and customers

Faster product development cycles

Heightened reliance on outsourced providers

Growth of Internet commerce

Increasingly distributed decision-making

Rise in number of partners

Other

60%

40%

36%

32%

31%

25%

23%

22%

13%

12%

10%

9%

2%




The global recession is putting significant pressure on business partnerships. More than half of respondents say it has created greater uncertainty and hesitancy within their partner networks. Surprisingly only half indicate the recession has significantly softened customer demand. Some 20 percent indicate it has impacted credit and financing terms.

Q13 In what operational areas of your value chain could your company most increase productivity, reduce costs, and eliminate redundancy or waste? (Select top three)

Created uncertainty and hesitancy

Softened customer demand

Constrained operations

Slowed interactions and transactions

Reduced pricing and margins for goods

Impacted credit and financing terms

Raised inventory issues

Lowered sourcing costs

Compromised vendor/supplier relationships

Shut down sources of supply

Other

51%

49%

41%

28%

27%

22%

20%

17%

14%

7%

5%

Customer connectivity and intimacy are seen as essential or important to 95 percent of survey respondents. Unfortunately, this customer imperative has yet to be satisfactorily addressed in the way companies integrate partners into their customer interactions and value proposition.

Q14 How important is customer intimacy, connectivity and community to your company’s value proposition and competitiveness?

Essential

Important

Somewhat Important

Not important at all

64%31%

4%

1%




Better integration of partners across customer interfaces will deliver improvements in both the customer experience and the cost of customer handling, according to respondents. More than half say it would both reduce time to problem resolution and improve overall service and support. Approximately 44 percent say it would lead to better product and service innovation.

Q15 What do you see as the benefits of a highly efficient and tightly linked business partner network that is well integrated to your customer interfaces? (Select top three)

Faster time to problem resolution

Enhanced customer service and support

Better innovation around products and services

Reduced cost of customer support and handling

Transactional speed and accuracy

Greater trust across the value chain

Improved production and inventory management

Fewer mistakes in order fulfillment

More responsive trading partners

Other

55%

52%

45%

42%

30%

28%

25%

22%

12%

2%

Customer demands for greater transparency into the supply and delivery chain is a significant driver of improved partner integration. Nearly four in ten respondents report customer pressure to improve visibility into their networks.

Q16 Are your customers asking for greater visibility into your supply and distribution network?

61%

39%Yes

No




Customer satisfaction and brand experience are frequently dependent on partner interactions, making better collaboration with selling and service partners critical to customer retention and growth. Unfortunately, few companies believe they have optimized the effectiveness of these partners in meeting customer needs.

Q17 Does your company rely heavily on selling and service partners to meet customer needs?

46%

42% Yes

No

No, but expect to become more reliant in the future

12%

Q18 Estimate the number of demand-side partners in your company’s Business Collaboration Network.

1-50

50-100

100-300

300-500

500-1,000

More than 1,000

48%

21%

14%

4%

4%

9%

Most respondents report 50 or more demand-side partners in their business networks. Almost 10 percent say they have more than 1,000.




There is a major need to improve the speed and efficiency with which demand-side partners respond to customer demands.

Q19 How quickly and efficiently can these partners respond to customer demands?

Very rapidly and effectively

Somewhat quickly and effectively

Unsatisfactorily

This is a major problem

75%

15%9%

1%

A lack of system integration across demand-side partner networks appears to be a major limiting factor in meeting customer needs and optimizing customer experiences. A mere 29 percent indicate they have a significant ability to extend internal systems to empower these partners.

Q20 Does your company have the ability to extend and leverage its internal systems to selling and service partners to move the right product, to the right customer at the right time?

Yes

Yes, but limited to too few partners

No

No, but planning to

47%

9%

26%18%




Insufficient data and process integration are viewed as the leading obstacles to better performance across the demand chain. The lack of a single system that can provide visibility across all demand-side partners and difficulty in managing and automating shared business processes are equally significant challenges. Respondents point to complex product offerings as also aggravating performance problems. Nearly 40 percent of executives believe that it would be too costly to implement a system that could adequately address these challenges.

Q21 What are the challenges in integrating demand chain partners into a cohesive, high-performing value chain network? (Select top three)

Lack of a single platform to provide visibility across the demand chainDifficulty managing and automating shared business processes

Complexity of product offerings

Too costly and difficult to implement an adequate solution

Demand chain partners lack technology sophistication and systems

Partners not cooperative

Demand chain too distributed and diverse to manage

Partners change to quickly

55%

49%

45%

38%

26%

21%

17%

12%

Few companies can address customer demands without the heavy involvement of suppliers and outsourced service providers. Yet, most companies still lack the ability to effectively integrate these partners into high performance business value chains.

Q22 Does your company rely heavily on suppliers and outsourced services to meet customer needs?

71%

29%

Yes

No




Almost half of all respondents reported having 50 or more supply-side partners, underscoring the complexity of bringing products and services to market in today’s globally interdependent business environment. Some 12 percent say they have more than 500 such partners.

Q23 Estimate the number of supply-side partners in your company’s Business Collaboration Network.

1-10

10-25

50-100

100-200

200-500

500-1,000

More than 1,000

21%

26%

19%

12%

8%

6%

9%

As with the demand chain, a lack of system integration across supply-side partners appears to be a major limiting factor in meeting customer needs and optimizing customer experiences. Only 28 percent indicate they have a significant ability to extend internal systems to connect and collaborate with their supply-side partners.

Q24 Does your company have the ability to extend and leverage its internal systems to suppliers and outsourced services providers to more effectively drive business performance and customer value?

Yes, definitely

Yes, but limited to too few partners

No

55%

25%20%




The challenges limiting integration of supply-side partners mirror closely the obstacles on the demand side. Insufficient data and process integration are again viewed as the leading obstacles to better performance. Respondents again also point to complexity of product offerings as complicating performance issues. Some 35 percent of executives believe it would be too costly to implement a system that could adequately address these challenges. Almost one-third also point to a lack of technology sophistication among partners as a significant problem.

Q25 What are the challenges in integrating supply chain partners into a cohesive, high-performing value chain network? (Select top three)

Lack of a single platform to provide visibility

Difficulty managing & automating shared processes

Complexity of product offerings

Too costly and difficult to implement solution/s

Supply chain partners lack technology sophistication and systems

Suppliers not cooperative

Demand chain too distributed to manage

Partners change too quickly

57%

52%

40%

34%

33%

19%

15%

14%




Demographics

Q26 What level are you within your company?

CEO

Other C-level

Managing Director

Vice President

Director

Manager

Staff

7%

21%

8%

18%

18%

24%

4%

Q27 What best describes your company’s industry sector?

Information Technology

Electronics and miscellaneous technology

Professional Services

Retail

Wholesale/distribution/logistics

Telecommunications

Manufacturing

Financial Services

Packaged Goods

Life Sciences

Transportation

Consumer Durables

Pharmaceuticals

Food and Beverages

Energy

Media and Publishing

Automotive

Government

Education

Aerospace & Defense

Insurance

Chemicals

Construction

Utilities

Travel and Hospitality

Entertainment

Other

11%10%7%6%6%6%6%5%4%3%3%3%2%2%2%2%2%2%2%1%1%1%1%1%1%0%9%




Q19 What are your company’s annual revenues?

Under $50 million

$50-$250 million

$500 million-$1 billion

Over $1 billion

36%

23%

18%

23%

Q29 Number of employees in your company?

Under 50

51-100

101-500

501-1,000

1,001-5,000

5,001-10,000

10,001-20,000

20,001-50,000

More than 50,000

18%

8%

13%

12%

18%

9%

6%

7%

9%

Q30 Where is your company headquartered?

North America

Europe

Asia Pacific

Middle East

Africa

Latin America

65%

24%

6%

1%

2%

2%




Q31 In which regions does your company currently operate? (Select all that apply)

North America

Europe

Asia Pacific

Middle East

Africa

Latin America

79%

62%

50%

32%

27%

35%




Advisory Board PerspectivesMarc GordonVice President of FinanceBest Buy

As the VP of Finance at Best Buy, one of the most recognized consumer electronic retailers with over 3,000 stores around the world, Marc Gordon believes that vendor understanding of consumer demand is the single biggest area for managing both the supply chain and product development. “In the preservation of profits, the better we understand consumers’ needs, the better we can predict demand, the better we can give our vendor partners or business partners insights as to where consumer behavior is going.”

Gordon notes that Best Buy is the intermediary between the consumer and the manufacturer – the company tries to find ways to knit consumers insights into manufacturer behavior. “We as the retailer have the face-to-face experience with the customer that allows us to gather the insights as to what features, which elements of the products sell well with the customer. In the retailing industry, understanding your consumer is first and foremost, and I think through collaboration and having those customer insights through behavioral patterns, really helps both us and the manufacturer sharpen our game.”

The importance of staying in lockstep with manufacturers when it comes to consumer demand has never been more critical to retailers says Gordon. “What’s become apparent to everybody in our industry is the need to keep each other appraised of how the consumer is behaving. I think the rapid downturn that most businesses, especially consumer facing, saw in the past year, it’s increasingly critical that the manufacturers and the retailers such as ourselves, clearly communicate the trends we’re seeing and make sure we adjust accordingly.”

“When we accelerate communication between us and the manufacturers, we allow ourselves flexibility to both adjust up and down on a very short-term basis.”

Gordon believes research and development around new product development as well as overall supply chain efficiency are some of the biggest opportunities for improvement at Best Buy. “In the technology business, you’re only as good as the latest product that you’ve introduced. I think to the extent that we can use customer insights to generate the needs for new products, manufacturers can turn those needs into R&D and actually be able to meet those customer demands.”

“I think another opportunity is in our supply chain and how we can be more effective and more efficient in moving product. A lot of our product is long lead time. It’s a long manufacturing cycle time to the extent that we can work with manufacturers in real-time ordering and delivery of product. It helps preserve our profit, as well as the manufacturer’s, as well as it takes costs out of the supply chain.”

Gordon notes that Best Buy’s partners are extremely critical to its company’s go-to-market processes, customer experience and competitive position. “We serve consumers directly. It’s important that we have the right products in the right places at the right times, as this is true for all retailers. And even more important is our products, the products we sell are primarily technology driven, and for us to compete viably, we need to have the latest and greatest technology at the right prices, but not too much of it because at the end of the day it’s a bit like retailing perishable produce in that its shelf life is limited.




John GoioneManager, Supply Chain SystemsBMW North America

At BMW North America, John Goione heads the systems and processes for six regional spare parts distribution centers that cater to nearly 600 BMW automotive and motorcycle dealerships across the United States. “My job within the parts logistics division of BMW North America is to make sure the systems are running and the business processes are being adhered to, or at least enhanced, as we move forward.”

Recently, BMW North America has been tasked with reengineering their processes to stay competitive among the bigger automotive manufacturers says Goione. “In an effort to try to standardize, not necessarily centralize, some of these processes, we undertook a very large reengineering project that included replacing our supply chain systems. Since we’re one of the little guys on the automotive manufacturers block we have to be nimble, but at the same time we must have process discipline as well.”

Over the last few years, BMW’s supply chain has evolved both in terms of strategic importance, geography and complexity. Goione says that BMW now buys 20 percent of their parts from locally sourced vendors and has gone up exponentially as far their distribution network. “We’ve expanded a lot to get closer to our customers. When you look at one of the final steps in the supply chain, it’s us, the OEM manufacturer to the retailer to our dealers. In ten years, we’ve gone from 2 bi-coastal distribution centers to 6.”

Goione points out that one of BMW’s biggest opportunities is more visibility with domestic suppliers. “I’d like us to get closer to our suppliers from a replenishment standpoint. If I knew better when my product was arriving from the vendor, perhaps I could schedule my shifts and handle my resources differently. It would give us a more even flow of supply, which is always good in a chain.”

The economic downturn has had a negative domino effect on the automotive industry – as the big three automotive manufacturers stumble, so do the suppliers which in turn affects even the stealthiest automotive companies whose orders get stopped because assets get frozen notes Goione. “The health of the suppliers is paramount to all automotive manufacturers.”

One of the biggest challenges that the automotive industry is facing are costs says Goione. “In this economic climate right now, investment, running costs and integration costs are going to be a concern now. This industry has shrunk there is no denying that – so every penny is getting looked at two, three times before it’s getting spent.”

Goione recommends that companies not only focus on integrating new technologies but analyze the pieces of their supply chains and look for the weak links. “At the end of the day there are technologies and systems out there that are going to help you get better at being able to clearly collaborate and innovate, but until you know where your weak points are, I don’t think putting in a system is just the be all, end all.”




Michael HugosCIO at LargeCenter for Systems Innovation [c4si]

As a recognized industry expert and noted author in business and IT agility and supply chain management, Michael Hugos believes that innovation is the art of doing old things in new ways. “Most innovation is figuring out how to use existing things in new ways, putting a new spin on something, combining it with something else you hadn’t thought of before, and then presto, something new happens that you didn’t expect.”

Hugos thinks that consumer product companies are the most challenged at leveraging innovation to evolve products in ways that target specific groups of customers. “The lowest price producer in a way drags down the market for everybody else. Unless your company is the biggest, most efficient producer in a given market, competing on price is a losing game. Companies have to find ways to make products more valuable by adding new features that target the needs of specific groups of customers. If you can successfully differentiate your product then you don’t have to compete on price alone.”

Hugos also believes that exchanging data in a simple real-time manner is a big dilemma that companies encounter while trying to achieve greater visibility across their supply chains.

“Companies in the western world have implemented very good, very powerful solutions but they only address the supply chain operations that happen within an individual company’s four walls. Those systems don’t make it easy for companies to exchange information with their suppliers and their customers.”

The difference between real-time instantaneous and real-time hourly or daily refreshes, is night and day, when it comes to cost and complexity says Hugos. “Real-time is a relative matter. If I’m running a supply chain, I don’t need split second information. Theoretically I could get it, but it wouldn’t make my operations any better. If I get an hourly or even every 24-hour snapshot that would be adequate and much better than what most companies have now.”

“Supply chain disciplines are driving people to focus more and more on that one thing they do really well, and share information in real-time with all the other people in their supply chains, and collaborate in such a way that everyone gets to do what they do best and therefore have a chance at maximizing their own profit.”

Hugos recommends to executives who want to improve business performance and customer experience by optimizing their supply chain that they focus on having transparency which he considers one of the hardest challenges to accomplish. “Transparency in financial markets makes financial markets work. If financial markets are not transparent, if we don’t believe the data, what happens? We’re suffering the consequences of that as we speak. Supply chains are no different than financial markets. We must be frank about what’s happening with suppliers, with partners – we must be open about performance.”

In summing up his final points, Hugos notes that social media, business intelligence and simulation modeling will be the technologies to most significantly impact business collaboration over the next few years. “If everyone can see the same data via web-based real-time business intelligence systems, if everyone can be communicating in real-time via email, IM or over the phone about what they’re seeing transpire – it will start to create a certain dynamic where people are motivated to collaborate and collectively improve their performance. When everybody can see what’s happening as it happens, and if everybody has a positive stake in the outcome, then people will just naturally start working together to improve operations, and as they do, they can see the effects of their efforts in real-time and it sets up a reinforcing feedback loop that drives people to get better and better.”




Tom LarkinChief Operating Officer, Supply ManagementCredit Suisse

Tom Larkin is the COO of the supply management organization at Credit Suisse, a global Swiss tier one bank. Working on the supply side, Larkin helps to design the supply strategies.

“I handle the sourcing activities for the different areas, tool integration and tool enhancements. Currently we are working to get the company more automated which will help us to build stronger relationships with our suppliers.”

While a large portion of Credit Suisse’s top suppliers fall into the IT category, the bank also has quite a few non-IT partners, like consulting and recruiting firms as well as real estate and law firm partners.

Larkin notes that it’s the bank’s customers who are driving and shaping the need for improved collaboration with its partners. “Our customers have begun to ask more of us. They are demanding that we are world class in all of our activities (regulations, reputation, sustainability, green procurement), which is ultimately driving us to enhance our relationships with our suppliers.”

Larkin says that Credit Suisse is actively involved in new programs to improve operational effectiveness and responsiveness through more integrative business processes, information flow and coordination with their partners. “We built a similar structure to the GE Black Belt program to improve efficiencies. Right now the group is in the midst of putting together a supply chain module to enhance the supplier relationships. It will increase the portal from the source through the procure-to-pay and it will streamline that cycle between ourselves and our key partners.”

Larkin says that the banking industry is seeing the same benefit that other industries have found in making these types of improvements. “If you look at the turn of the century, the pharmaceutical industry was the last major sector that began to realize that they needed to make the inroads in their supply chain and get transparent over their total spend on both the direct and indirect side with their suppliers. The banking industry has built on the successes of other industries and started to do this in the last five to seven years. Having a more transparent supply chain helps a company understand what they’re spending and why, which in turn allows them to make better investments.”

Larkin notes that transparency is the biggest improvement area for Credit Suisse as well. “We need to understand the cost effectiveness for our bank and take a real look at what we are spending.”

Larkin says that suppliers are extremely important to Credit Suisse. “A supplier is somebody that you want to partner with. A vendor is someone you pay a bill to because you bought something. A supplier is someone that is actually going to help support the growth of your organization.”

Larkin’s biggest recommendations to other companies is what he calls keeping it KISS. “Keep it KISS – keep it simple stupid. By this I mean talking and actively listening to key stake holders. In my experience there is no need to create a rocket ship to cross the street if all you need to do is cross the street. A lot of companies try to have the biggest and baddest software provider or Internet relationship owner, but in my experience all it really comes down to is what you actually need versus what is going to be your return on your investment. So keep it simple.”




Bill O’ConnorChief Operating OfficerFood Science Corporation

At Food Science Corporation, a provider of quality formulations in the nutritional supplement industry for both human and animal needs, Bill O’Connor serves as Chief Operating Officer and is responsible for ensuring that the company and its partners are following processes accurately from a Federal Food & Drug (FDA) compliance perspective while maintaining efficiency to make certain that orders are received to customers in a timely fashion. “We’re working with our partners to ensure that they do what they say they’re going to do and that they do it as fast they say they can do it. We work closely with them to make sure that from a compliance perspective, the product meets or exceeds the specifications that we lay out, and from an audit perspective to ensure that it’s the proper product.”

O’Connor points out that its partners are highly critical to Food Science Corporation’s go-to-market process, customer experiences and competitive position in the market. “It’s important that our partners deliver the product on time as we run a ‘just in time’ inventory process at our company. As a result, we cut our audit times pretty close so that when the delivery of the product comes in, it’s timed just about when we’re running out of the product. If we do not receive product from our partners in a timely manner, we will have unhappy customers and we can’t have that.”

As a result of reorganizing Food Science’s finished good area, O’Connor notes that the company saves approximately $85,000 annually in labor costs. “We made a number of different improvements in this area. In fact, the individual steps that a picker or a packer takes used to be about 4,000 steps per day and now because of our reorganization efforts they only take 2,000 steps which is a significant difference.”

O’Conner says that with the business growing rapidly, Food Science Corporation is looking to deploy new technologies that will enable them to become faster and more efficient on the supply chain front. “We purchased and installed an MRP system in 2005, and because we’re a smaller company, we do a fair amount of tasks manually. We’ve made some progress but next year we plan to strive towards having processes become less manual at our company and more automated. By being more automated, we can do it faster and do it without human error.”

“There’s a balance in that measuring versus managing because you don’t want to become paralyzed in measuring a lot of things and having it not prove to be beneficial on the business side.”

In finalizing his thoughts, O’Connor suggests that other executives who are looking to improve their business performance and customer experience look to competitors, partners and vendors as learning tools. “Collaborating and learning from my vendors, my partners, my customers – looking at them as resources – has been one of the most valuable methods to gathering critical business information.”




Mark MillarManaging DirectorM POWER Associates Limited

With over 20 years of global supply chain management services experience, Mark Millar – Managing Director of M POWER Associates Limited – believes there are several challenges with increasing visibility into progressively more complex supply chains. “In order to achieve greater visibility across extended supply chains, we must focus more on the aspect of collaboration between the key players and stakeholders across the entire supply chain.”

There are three key factors influencing a company’s supply chain as a result of the economic downturn according to Millar. “The velocity, the volatility and the need for increased visibility are all being emphasized in the current economic environment. The need for speed – the Velocity – of our supply chains and how fast goods and information can move up and down the supply chain has become even more critical – in order for us to respond in a timely manner to the large variations in demand that we’ve been seeing. Secondly, the significant but unpredictable fluctuations in supply and demand have introduced increased Volatility that is impacting supply chains on a local, regional and global basis.”

“Thirdly, there’s an increasing need for improved Visibility – required more and more on a real-time basis – into what’s happening throughout the extended supply chain. This is proving to be immensely challenging in the current economic environment – impacted by both the velocity and volatility factors, but also due to the lack of sophistication in collaboration throughout our increasingly complex and globalized supply chains.”

Millar also observes that the growing number of different partners and stakeholders involved within a supply chain further compounds the challenges of trying to gain full visibility. “We know that even within one organization at a single location, individual departments often operate on a silo basis. If you then take an intra-organization perspective and include several subsidiaries in different geographies, then you have expanded the number of silos that are frequently sub-optimized and not fully synchronized from a holistic supply chain perspective. Further extrapolate this silo approach inter-organizationally across multiple different enterprises – with different agendas and priorities – in different countries with different cultures – then the real challenges of true collaboration become even more apparent.”

The technological hardware platforms and software applications required to gain greater visibility across extended value chains already exist, but the real challenges lie within organizations’ reluctance to be fully transparent with their suppliers and related business partners says Millar. “What inhibits companies from gaining greater visibility across extended, complex supply chains is the organizational barriers that businesses instinctively build in order to protect their proprietary information. We need to work on breaking down some of these barriers and get to a more collaborative and sharing approach – particularly as it relates to the data that needs to flow across the technology infrastructure throughout the whole supply chain.”

Millar recommends that executives seeking to improve business performance and customer experience by optimizing business collaboration should fully empower their employees, thus enabling them to adopt and implement collaborative arrangements, partnerships and agreements with partners and stakeholders up-and-down the supply chain. “Empowerment involves both the responsibility and the accountability for making things happen. Companies must stop being over-protective with their data. They need to find a way to cooperatively share their information with their key partners across the entire supply chain.”




In striving for an effective and efficient supply chain, Millar advises that it is imperative to analyze external customer satisfaction metrics as well as the internal business metrics – both of which are critical for success and will ultimately impact business performance. “We must be monitoring the customer satisfaction metrics, which relate to customer service, on-time delivery and availability of product. And we must also counterbalance this with performance management of internal business metrics such as return on investment and working capital. As an example, consider the trade-off between the costs of holding sufficient inventory – internal working capital measurement – in order to be able to satisfy customer demand – external customer satisfaction metric. Optimizing the balance between these critical, often conflicting metrics remains the key to success.




Edgar BlancoExecutive Director SCALE Latin AmericaMIT Center for Transportation & Logistics

Edgar Blanco’s current role as the Executive Director of MIT’s SCALE Network in Latin America finds him focusing his research on emerging markets, humanitarian operations and the design of energy and carbon-efficient supply chains.

Blanco looks at three key areas of supply chain management including strategy, environmental leadership and operations in emerging markets. “I look at how companies think through all of the different trade-offs and decisions they have to make as they choose how to structure and work with their partners in their supply chain.”

Blanco says that companies should think of a supply chain as a key mechanism in achieving leadership for the long run in multiple areas, including environmental aspects. “With the economy the way it is, companies are able to really sit down and look back at all of the investments that they have made over the years, allowing them to innovate some of their supply chain practices rather than following the flow.”

Blanco says that “the flow” is sometimes referred to as best practices, which companies tend to copy/adopt from one another, but which do not always match their supply chain strategy.

“Companies need to take advantage of these times and go back to the drawing board and ask themselves, “Are we making the right investments for the future? Are we reevaluating how we reach our customers? How do we configure our cost structure and our global supply chains?”

The fragility of the supply chain system has been exposed, according to Blanco. He feels that this could be temporary or long term, and that for each company it means something different.

Blanco focuses on the opportunities and challenges that companies face as they develop supply chains in emerging markets such as Latin America, China and India.

“This economic crisis has highlighted the importance of supply chain managers, both as consumers of significant financial resources as well as the creators of financial value within a corporation. Supply chain managers, for example, have an important say in the structure of a contract, the structure of supplier relationships or the structure of their inventory position. They have a very critical role in the asset management of a company and as such, this link has become stronger because of the financial crisis.”

Certain industries tend to be ahead in the supply chain game even in a fallen economy. “CPG product companies tend to be very driven towards cost efficiency due to the high competition in the industry. Retail companies often have programs that drive operational efficiency due to the fact that they usually have tens of thousands of items, causing them to re-think the current supply chain system on a regular basis. Internet companies have sort of become the poster child for innovation on the process side as they have rethought old models using new technologies. So every industry has its niche when it comes to supply chain.”

Blanco recommends companies reach out to other companies in different industries when looking for new collaboration techniques. He encourages looking around and talking to people. He recommends interacting with Universities, not only because of their potential knowledge, but also because they usually have access to many more people in the field.

“You never know where your next idea is going to come from, so you should open the space for lateral thinking. Make sure that your team works with other people from within the organization that oversee other functions, because they can often learn a lot from them.”




Collaboration is very important according to Blanco. “The one thing that I always get back to when I think about collaboration is about finding these different perspectives of whatever you’re doing. Everybody has a job, they have a function to play, they have a role to play, and you tend to box whatever you have to do in this context of what your objectives are, your metrics are, so it’s very hard to break free of those boundaries. As you work with other partners – meaning within your company or across companies or across industries – you start seeing other points of view, and this collaboration eventually makes the process of innovation and interaction between companies much more efficient, much more innovative and fresh simply due to the multiple points of view.”

Blanco says that collaboration is not always essential, but it is always beneficial. “If you are a local isolated company, or a very dominant company, you may get away without collaborating and still do okay. But most companies, and in particular the companies that we work with here at MIT CTL, tend to be very global, with lots of partners, lots of complexity, lots of products. Collaboration is the only way they have to maintain all of these processes relevant and fresh, especially as environments become more volatile.”




Robert McAdooVice President of Worldwide Business SystemsParker Hannifin Corporation

As Vice President of Worldwide Business Systems at Parker Hannifin Corporation, Robert McAdoo is responsible for the planning and deployment of business applications for supply side activities and helping to make decisions in terms of managing their supply base.

McAdoo notes that Parker Hannifin’s network is evolving and changing in terms of scope, geographic distribution and complexity. “Over the last several years, our supply base has become geographically diverse yet we’ve consolidated the supply requirements into a smaller number of suppliers. Another aspect that is also changing quite rapidly is how much information we draw from our suppliers and then correspondingly provide to our customers.”

Parker Hannifin is currently taking an integrated approach with suppliers to improve overall supply chain efficiency and responsiveness says McAdoo. “We provide our suppliers an ever-increasing amount of information about our products that we’re buying from them and about our requirements. Correspondingly we provide an ever-increasing amount of information to our customers regarding inventory levels and lead times.”

McAdoo notes that to a certain extent customers are driving the need for collaboration among its partners. “Customers are asking for more visibility into the supply chain, they’re looking for more customized solutions and looking for faster transactional speed and lower price.”

“At Parker, the opportunity is in speeding up how quickly we can take a piece of raw material and turn it into a product that a customer wants to buy. The payoff for us is lower inventory and more sales.”

McAdoo believes that excelling in partner collaboration and communication is a key competitive advantage because it gives the company the ability to fulfill customers’ needs quickly at lower costs.

The biggest challenges in synchronizing and collaborating across a company’s partner networks is a combination of two factors – lack of trust between the supplier and buyer and poor information sources observes McAdoo. “We believe in setting up linkages between our systems and the supplier and customer systems to improve our interactions with partners.”

Parker Hannifin currently has systems and platforms in place that primarily focus on speed of production. “We are a fairly internally-centric development organization so many of our software platforms are developed within our company. From these platforms spawn supply chain requirements in terms of what we need from our suppliers in order to fulfill our customer orders. Our customers and suppliers interact with us through a portal that basically gives us a window into our back offices.”

McAdoo also adds that customer expectations have changed Parker Hannifin’s IT infrastructure. “Customers have strengthened the argument for more streamlined transactions and digitizing all of the transactions between us.”

McAdoo believes the ability to share information through some sort of collaboration window will be the trend and the technology to significantly impact business collaboration over the next few years. “My ability to see more what’s happening on my suppliers’ manufacturing floor and them in turn being able to see more clearly with what is happening in my order entry platform will allow the supply chain to be driven collaboratively by all of the available data.”




McAdoo suggests to executives who want to improve their business performance and customer experience is by getting closer to suppliers and customers through system linkages. “Companies used to gather customer intelligence by having salesmen call and conduct some investigation to gather the necessary data. It’s about implementing an operational platform that enables collaboration with suppliers and customers to obtain and to give information electronically.”




John JohnsonStrategy & InnovationPepsiCo

John Johnson leads a team at PepsiCo that is striving to build an innovation capability that includes a process, structure, framework and culture. His team focuses on what they call their “big bets,” which are those things that have a game-changing impact at PepsiCo. In addition to building an IT innovation competency, the Business Information Solutions (BIS) organization is also building an Innovation Center. The BIS Innovation Center’s purpose is to provide an environment conducive to fostering brainstorming and ideation. The Center will also serve as a briefing center to showcase the new innovative solutions. The Center will be open to employees and strategic partners. A major part of PepsiCo’s innovation collaborative network is leveraging the expertise of strategic partners and suppliers.

Johnson says that PepsiCo’s partners are absolutely critical in the keeping the company’s customers satisfied and maintaining its competitive position in the CPG market. “We have to leverage our partners and they have to leverage us. We both need each other to be successful. I strive to develop partnerships rather than simple vendor relationships.”

Johnson says that the bottom line focus should always be PepsiCo product customers. “We conduct a significant amount of market research that enables us to understand what our customers really want. Our goal is for us to turn those insights into foresights so that we have to proactively prepare for what is coming and what the customer wants.”

“Sensing” is a term that Johnson developed when focusing on areas with true business value. “Sensing is to understand the unmet needs of a business. Generally speaking, executives often spend too much time focusing on the next big thing, which may not necessarily meet the unmet needs of the customer and the business. We need to start by addressing needs, rather than coming up with the next big idea before fully understanding the business scenario we are trying to solve.”

Johnson says that all companies need to also focus on their staff’s needs. This will enable companies to create an environment that makes the best and brightest talent want to come to work for them. “There is a quote that says something approximately forty percent of the workforce is going to retire within the next two years, which means that companies have to prepare for all of the younger people coming out of school and equip them with the right tools. For example, many of these people have been using Macs, rather than PCs. They use Facebook and Skype. Companies need to provide similar corporate type technologies and collaboration tools that have allowed them to be productive in their own lives.”

Like many other companies, the economy has affected PepsiCo from a supplier perspective. Johnson says that many of their suppliers have cut back on staff which has in turn caused a strain on some of their partnerships. “We are looking to keep our partners whole because it helps and affects how we go to market.”

Johnson says that PepsiCo’s sale and profit margins continue to be healthy. “People may not choose to go out to the movies to watch a film, but rather watch a movie at home in order to save some cash. When watching a movie at home they will still go buy a bag of Fritos and a bottle of Pepsi versus going out to eat.”

Johnson says that PepsiCo’s biggest opportunity for improvement is their go-to-market segment. “PepsiCo has grown by acquisition over the years, beginning with the Frito Lay & Pepsi merger. PepsiCo then acquired Quaker, Tropicana, Gatorade and many other




international brands. Each of the brands has its own unique operating model. We now have to look at each company, its culture and processes, and take the best from each acquisition to create a model that is locally relevant and globally consistent.”

Johnson says that the future holds great things for business collaboration. “I think we will have more of an integrated work experience – meaning that instant messaging and video conferencing will be seamless. We won’t have to schedule video conferences with people around the world anymore. We will simply click a button and they will be there. We will be able to instantly collaborate with our colleagues. Social media really is the future of collaboration.”




Leslie K. LambertVP of IT & CISOSun Microsystems, Inc.

Leslie K. Lambert, VP of Information Technology and Chief Information Security Officer at Sun Microsystems, believes that there is tremendous advantage in leveraging partners in so many different physical locations. “It comes down to the level of vigilance you apply to your partners and the effective management of those relationships. We have been able to more easily manage the investment in innovation and design on our side as a result.”

From its earliest days, Sun Microsystems has been outsourcing its external manufacturing and logistics activities says Lambert. “With the exception of Antarctica, manufacturing and logistics activities occur on every continent. We conduct only a minority of our manufacturing down the street with local partners here in the Bay Area. With our developed partnerships across various manufacturing and logistics sites, we have sprung up all over the globe, including in emerging market locations.”

“When you collaborate with partners around the world, you have to make certain that you are fully aware of their capabilities. Sometimes when dealing with partners operating in emerging markets, the level of sophistication required by Sun may not exist. It’s a balance of risk and cost. If it costs too much to make it a perfect supplier model, then the relationship can’t happen because it’s not cost effective to any of the parties involved.”

For two decades Sun has been investing in cloud computing – the logical and physical environment used to create a platform of communication between the company and its partners notes Lambert. “We have been leveraging over time via various secure architectures we use to connect with our manufacturing sites and logistics partners, ensuring effective and secure management with them – the delivery and the quality of our partners’ services and the care that they take with the intellectual property they’re holding for Sun.”

“One of the key reasons that Sun has chosen to outsource manufacturing for so long, and continues to do so, is the incredible capital outlay required to not only start up a manufacturing facility but also to maintain it and keep it state of the art. The particular economies of scale that can be gained by utilizing partners who maximize that 24 hours a day, seven days a week, likely for other high tech firms, as well.”

Lambert notes that Sun delivers sophisticated and innovative products to its customers and these products come staged with components. “The value of our innovation and the inventions that we create are what makes Sun the company it is today. It’s incredibly important to ensure that Sun’s products are built to our high standards, so we put a lot of trust into our partners. And it’s equally as important to maintain customer trust and value.”




Jason XuManager, IT Vendor ManagementSuperValu

At SuperValu, the third largest U.S. grocery retail chain with $45 billion in annual sales and 35 distribution centers, Jason Xu is responsible for handling all of the information technology vendor relationships which include hardware, software and service providers as well as logistic partners.

Xu believes that in order for companies to improve business performance and customer experience by optimizing business collaboration that companies must invest more within vendor management. “With an ever increasing complexity and more dollar value invested with partnering as a value chain, I think executives nowadays need to appoint a special team to handle vendor relationships.”

Xu says that vendor management is not just part of procurement any more because it now emphasizes the complexity of partner relationship management and collaboration across an entire value chain. “Our role within vendor management is to establish and improve our entire organization’s efficiency, lead vendor acquisitions, manage vendor values from our relationship performance perspective, and also optimize vendor profiles. Vendor management teams are the interface between the inside and the outside. We must understand the politics – negotiate externally while still getting ideas sold from within the entire organization.”

In 2006, SuperValu doubled its size from a $20 billion company to a $45 billion company, with the acquisition of Albertsons. According to Xu, the recently hired CEO Craig Herkhart believes the company’s biggest challenge lies in operational efficiency – too many barriers and movement in too many directions. “Mr. Herkhart is trying to transform SuperValu into moving as one and we’ll achieve more efficiency in doing so. He emphasizes centralization, standardization, outsourcing, in-sourcing and off-shoring, so we’re seeing a lot of positive changes with our partner relationships recently.”

Xu believes that the change in operational efficiency is a strategic survival tactic to cope with the current economic crisis “We have to change and improve our operational efficiency in order to cope with surviving this kind of economic crisis – and we really need all of our partners to help us to achieve this.”

The current economic condition is definitely impacting SuperValu’s partners according to Xu. “The retail business is holding up – slightly better than other industries with pricing pressures, but we’re definitely competing more in the low-end value chain instead of high-end merchandising or supermarket area.”

“And at the same time, our IT budget’s been reduced and we have stopped or delayed IT project spend that will not create value for our business. We’re now working to create more value on existing service and infrastructure,” says Xu.

Customer expectation and demands have changed SuperValu’s IT infrastructure according to Xu. “We have a team which is called the User Experience Group. They work with customers directly to test our IT. For instance, we’ve decided to overhaul our online shopping system based upon the feedback we received from this group.”




Jamie CrumpDirector of Indirect Strategic Sourcing & Supplier DiversityUnited Rentals

As the Director of Indirect Strategic Sourcing & Supplier Diversity at the world’s largest equipment rental company, Jamie Crump spends most of her time helping United Rentals collaborate with its partners. “I am responsible for all of the indirect sourcing, which is everything we don’t rent or sell, as well as supplier diversity. I look to see if there are partnerships we can leverage within the direct side of the organization.”

United Rentals relies heavily on their partners to maintain its competitive position in the market, customer relationships and its go-to-market processes. They have several hundred partnerships that they maintain. “Our partners are extremely critical. If the equipment isn’t there, even on the indirect side, that’s our entire infrastructure. If the telephones aren’t operating, the lights aren’t on, the fuel doesn’t come in, there’s no propane or if the vehicles aren’t operating – all of these things severely impact customer service, which is obviously the bottom line.”

Crump says that United Rentals customers are driving the need for improved collaboration with its partners. “You get your requirements from your customers. They are the ones ultimately asking for improved collaboration. Like our own company, they are looking to leverage and we are seeing more in the area of national accounts versus individual locations as they look to decentralize.”

Crump points out that the equipment rental business is a very fragmented market. “You can pretty much go anywhere and order equipment. The difference is in the people you meet and the services you get. We are a large enough company that we are able to leverage. We can get to the right price point, but more importantly, we make sure that your equipment is there when it needs to be there.”

United Rentals has taken advantage of the economic down time by implementing some new technologies. They are working to implement new decentralized service strategies so they are in place when the uptick occurs. Crump says that one of the biggest opportunities for any company to improve their business lies in technology. “Technology is always changing. There is more and more available each year that helps you do better with less, heighten the data awareness and find our where the pain points are for the customer service side of our business.”

Crump recommends that all companies should really open up to others around them. “Take the blinders off. Have an open mind and an open ear. You never know where advice will come from. You need to be able to take a step back and look at everything and anything you are doing day-in and day-out from a bigger picture. This is what will drive dialogue and create collaboration.”




John VieleStaff Vice President – ProcurementWellpoint, Inc.

Wellpoint, the country’s largest health insurance provider with $60 billion in annual revenue, relies heavily on a number of onshore and offshore outsourcing relationships, off-tasking relationships and literally thousands of external suppliers to help them run their business.

According to John Viele, Staff Vice President of Procurement at Wellpoint, there are five sourcing groups and he is responsible for the largest of those groups – IT and business process outsourcing. “I’m trying to get our suppliers to view us as their client of choice. I think for years Wellpoint has attempted to bully its suppliers into giving them lower rates simply because of the amount of money that has been spent with them. I think it’s a backwards mentality and an old school approach.”

“More strategically, I am trying to reduce and rationalize the number of suppliers that we deal with, strengthen our relationships with those remaining suppliers in a way in which we are able to work with one another in a much more productive and mutually beneficial manner. Since being here, I feel the company has made a number of positive strides in achieving those objectives.”

Wellpoint’s network of suppliers is evolving in terms of strategic importance notes Viele. “We are identifying what we describe as our strategic/preferred providers. We’re making certain that we’ve got the proper and appropriate contracts in place with all of those suppliers and that we have all of our most up-to-date terms and conditions. We are working with all of those suppliers to work more directly with procurement as opposed to working directly with the client areas, which has caused a great amount of excessive spend within our organization.”

“We are creating supplier relationship management programs with our key suppliers. These programs involve either monthly or quarterly meetings in which we challenge our suppliers to come to us with ideas and suggestions as to how we might run our business more effectively, thus ultimately driving down our costs and theirs.”

“We also challenge our own internal people to come up with ideas and suggestions that we can take to our suppliers to help them drive down their costs.”

Viele notes that Wellpoint’s biggest opportunity for improvement in operational efficiency is being more intelligent around how they work with their partners. “Partnering is more than just about cost formalities. We need to create clear communication and truly cultivate partnerships with our suppliers.”

Viele recommends that executives looking to optimize business collaboration need to allow partners to actively provide input and listen to what they have to say. “Stop treating your suppliers like rented mules. If you speak to anyone in a procurement role who deals with external suppliers, I’m sure they will speak about partnering, innovation and unleashing the power of suppliers to help drive business. That is what people need to do. Unfortunately no one really does it.”




Brian Hancock Vice President of Supply ChainWhirlpool Corporation

As Vice President of Supply Chain for Whirlpool Corporation, a $20 billion global appliance company, Brian Hancock believes that it’s important to stay close to your customers and focus on keeping things simple. “When you get to the size and scale of Whirlpool, you must keep it simple – painfully simple – so you take out the complexity, yet still have integrated technologies and information, because in the end it’s the customers and consumers that pay.”

Whirlpool believes that its suppliers – from steel and copper companies to its technology partners to the transportation and logistics providers - are essential to successfully establishing its go-to-market processes. “In today’s environment, companies have a lower tolerance for cash hiccups, so inventory becomes key. The way you eliminate inventory is making sure you have a really good demand plan. You build to that forecast and hopefully someone has sold what you built. All of those pieces require collaboration, whether it’s collaboration with a trade partner or collaboration with a supplier.”

Hancock says that understanding the trade partners’ perspective also plays a pivotal role in shaping the need for improved collaboration. “Take for instance, if a partner orders 100 boxes of washing machines – those take up lots of space in their warehouse compared to if it were 100 boxes of toothpaste. We’ve had to really redefine the way we service our customers and determine who will carry what inventory, how we will receive orders, etc.”

Whirlpool is also keen on improving operational efficiency and effectiveness internally says Hancock. “We’ve created a new team called the Integrated Supply Chain Group. Their entire focus is making sure that there are standardized processes and systems that can effectively communicate the changes in the marketplace to people at the lowest possible cost while maximizing availability for products.”

Hancock notes that Whirlpool’s biggest challenge is in their demand forecast to conversion. “Making sure we have good forecasts from our trade partners, then creating a demand forecast, translating that into a production plan, ordering those components, and then the conversion through the manufacturing and assembling process.”

Hancock observes that the rise in on-demand customer analytics and information will begin to significantly impact business collaboration. “I think understanding what consumers are buying versus what we’re forecasting for them to buy allows us to be a little bit more flexible.”

“I think there’s a lot of change coming for us and it’s a matter of how quickly we will be able to respond when either our trade partner or the end consumer changes the way they want to do things,” states Hancock.




Jon HansenWriter & SpeakerProcurement Insights

As a recognized industry expert in e-Procurement, Jon Hansen believes that the real issue with supply chain visibility is the lack of effective collaboration and engagement of all stakeholders both within and external to the enterprise. “Everything starts with collaboration. Visibility can’t happen unless you engage the right stakeholders. There is an obvious breakdown at many companies in the collaboration and communication process that enables them to understand and get a clear view of what their partners and suppliers are doing.”

Hansen emphasizes the biggest challenge that companies are most frequently encountering in trying to achieve greater visibility across their supply chain is the lack of collaboration.

“Time and again we’re seeing that business initiatives are failing because the supply chain department or the purchasing department is not being consulted until after a decision has been made as to what solutions can be implemented or what strategy to pursue.”

Hansen recalls that prior to the economy collapsing, between 85 and 90 percent of all e-procurement supply chain initiatives failed to achieve the expected results, usually at the cost of millions if not tens of millions of dollars. “There’s been an exposure to a lot of the indigenous cracks in traditional thought process relative to procurement … What the economic downturn has done is it has removed the bale of organizations trying to justify bad decisions to one of survival, which means you have to at least begin to embrace the emerging processes and technologies that are out there.”

Companies are increasingly looking to different forms of social media, like Twitter, to engage suppliers and to go out to market to procure goods says Hansen, who himself has a blog called “Procurement Insights” that reaches close to 300,000 monthly syndicated subscribers.

“Social networking and social media is evolving and maturing. And I think the next hurdle when we go past this web 2.0 and even looking beyond the semantic based web 3.0 is the web 4.0 platform, which has intuitive intelligence that will address the process requirements, not just the collaborative requirements of a diverse network.”

Hansen notes that there are no longer hard silos defining functionality between finance, IT and procurement. “The lines are becoming increasingly blurred. You can no longer confine yourself to a functional role, especially one that is traditionally – such as purchasing – seen as an adjunct of finance. It is not just a matter of buying something anymore. It is a matter of what is the strategic importance of what you do? And how does that meld or merge into an increasingly globalized enterprise?”

“The leaders who are more in tune with where the market is going are less inclined to fall upon or call upon the old ways of doing things and more in line of seeing it beyond the realm of it being an IT-or finance-centric project.”

In summarizing his thoughts, Hansen observes that in order for a company to successfully implement a solution that will lead to greater transparency and more efficiency, communication at the most basic level is necessary. “Technology is an extension of a collaborative process. You need to have collaboration in place before you can gauge any solution. So it isn’t technology that’s driving the change. Take software-as-a-service, SaaS is merely an extension or a reflection of the change in collaborative attitudes because it reflects the way in which the real world operates, versus the static or equation-based models that software was originally developed under.”

Procurement Insights




Oliver MarksConsultant & AuthorZDNet

As a seasoned ‘Enterprise 2.0’ consultant and a noted blogger on ZDNet, Oliver Marks is most interested in enterprise collaboration and how it relates to basic communication in business workflow.

Marks believes that companies should be focusing on internal collaboration to achieve greater visibility across value chains and that the biggest challenge facing companies is lack of communication. “I think there’s a breakdown of communication and lack of clarity from senior management all the way down. Without the knowledge and awareness between employees and partners and everybody else involved in the supply chain you can’t communicate – you can’t have effective collaboration.”

Mark notes the importance on how improved business collaboration most benefits companies. “It’s a very, very simple premise that if you increase workforce efficiency, you’re going to lower costs and increase profits. It’s really that simple.”

The current global economic condition is impacting companies’ business networks significantly says Marks. Citing John Hagel and John Seely Brown’s The Shift Index, Mark notes the dramatic changes happening within how supply chain management is being run internationally, specifically in China and India. “Hagel and Brown are seeing significantly different work practices emerging, particularly in China, with tremendous increases in efficiency.”

“What’s happening is innovation blowblack – essentially an outsourced company in China is taking a Western product’s technologies and its workflow patterns and is starting to create their own products. They go from being an outsourced partner to becoming a direct competitor. As we’re coming out of the recession, there will definitely be heightened international awareness around this issue.”

Coupling existing heavy-duty industrial strength technologies that are rather inflexible like Oracle and SAP with lighter weight collaboration technologies will significantly impact business collaboration and increase productivity notes Marks.

“There’s no core – no set patterns – in terms of collaboration between people and between groups of people. It’s much more about observing more carefully how people are working – looking at appropriate workflows and then applying technology that will fit well into those processes.”




Lisa EllramProfessor, DistributionMiami University

As a worldwide top-ten professor of supply chain management, Dr. Lisa Ellram understands the utter importance of business collaboration. “If a company is not collaborating and its competitors are, they’re going to be left behind. The competitors will have the advantage.”

Ellram received her PhD in Logistics from Ohio State University and went straight into teaching upon graduation in 1990. Prior to getting her PhD, she worked in a variety of financial and operational roles. Her primary research has been focused on supply chain relationships, supplier alliances, outsourcing, off-shoring, cost management and service.

Ellram recommends that companies begin collaboration with the suppliers that they have strong relationships with. “Start with the suppliers you trust. Chances are good that you will be successful if you give each other the benefit of the doubt when things go wrong and allow yourselves to learn together.”

The shaky economy has created two extremes when it comes to the collaboration between companies and suppliers. Some companies have taken advantage of the uncertain times by working to build a stronger network of supplier partners while other companies have been focused on only their own sole survival, often ignoring the impact their choices have on their suppliers. “Some companies tell their suppliers, ‘We’ve always paid you in 30 days, but now we’re going to pay you in 60.’”

Ellram notes the automotive bailouts are a perfect example of this. “Actions as such have caused several bailouts in the industry. In situations like these, where automotive manufacturers are in rough shape, they still tend to be in better shape than most of their suppliers. In all cases, automotive manufacturers have received bailouts while their suppliers have not been given the same breaks.”

Ellram says that it is important to treat your suppliers well in times like these because as the economy turns around they will be the ones to remember. The companies that treated the suppliers well in a fallen economy will get good service and those that didn’t will suffer.

Ellram believes the industries at the forefront of implementing programs targeted at driving operational efficiency tend to be able to adapt quickly to change. “Things are changing quickly in industries across the board, and those that are not on top of the industry best practices and their competitors, may find themselves decimated within a couple of generations of product. In the high tech industry it could be a matter of a few months.”

Ellram says that when companies work together in a network they can operate in one of two ways in terms of dealing with their suppliers and customers. She says that they can have one of two philosophies – buffering or building bridges. “Companies that incorporate a buffering philosophy don’t have a solid idea of what’s going on in their network and in turn lack trust. The lack of trust causes them to insert extra assets all over. For example, they will have extra inventory everywhere and more suppliers than they need. Buffering essentially creates inefficiency.”

Ellram recommends that companies on the opposite side of the spectrum work to meet their philosophy of building bridges. The bridge will help to link a company together and allow for information exchange that will help reduce the unnecessary inventory levels and will eventually help to make everything run smoother and safer. “Building bridges is basically what collaboration is.”




Joe SandorHoagland-Metzler Endowed Professor of Practice in Supply ManagementMichigan State University

As Hoagland-Metzler Endowed Professor of Practice in Supply Management at Michigan State University with over 35 years of supply chain experience, Joseph Sandor believes that the cooperative culture is what really earns a company sustainable advantage. “The mutual sharing of risks and rewards between a company and its partners and suppliers is a prerequisite. Unfortunately, most CEOs and CFOs do not have an enlightened view of supply management.”

Sandor notes that the biggest challenge that companies most frequently encounter in trying to achieve greater visibility across their supply chains is primarily cultural and cites General Motors as an example. “General Motors singlehandedly caused about ten percent of their supply base to go bankrupt through heavy handed procurement techniques. And arguably, you would say GM collaborated – but they collaborated in an adversarial way.”

“Corporations are not investing the time or the energy or giving it the attention necessary to collaborate across a supply chain. They are driven somewhat by finance and lawyers and they’re skeptical of relationships. So it’s a cultural change that most Western companies, in particular, find very difficult to make.”

Sandor recommends that companies focus on philosophy, fit and education of senior management. “Technological enablers are always out there, but the ability to embrace vulnerability, to share costing information, to collaborate honestly and fairly, to become a trusted partner in a business relationship is a lot more valuable than any sort of computer linkages or schemes to try to engage people. Without a trust-based business relationship, most of the stuff that happens under the banner of collaboration is never truly successful.”

There are four steps that companies must take in order to improve business performance and customer experience by optimizing business collaboration according to Sandor.

“The first step will sound counterintuitive, but companies need to reduce the number of participants. The whole idea of this collaborative web now where anybody can be my supplier or my customer suffers from the law of numbers. You can only collaborate successfully with a handful of key customers and suppliers. The fewer suppliers, the better. Secondly is a linkage with those suppliers at all levels cross-functionally. Thirdly is senior management’s commitment to improving the network, not trying to optimize just their share of the pie. Lastly and perhaps most critically, is the process of aligning the interests of the partners in the network, not simply enabling their communications.”

Sandor believes what distinguishes best-in-class performers are those people at companies who understand the true cost of ownership and the true values of collaboration.

“We tend to use the word collaboration when we simply mean we’ve expanded our potential base of contacts. The ability to communicate with many more people much faster is not collaboration. It perhaps is a necessary ingredient to be efficient at collaboration, but collaboration ultimately is working honestly and fairly, and jointly sharing the risks and rewards of the network.”




Collaborate to DifferentiateAn Expert Perspective from Sterling CommerceBy Joel Reed,Senior Vice President Product Management and Marketing, Sterling Commerce

According to the findings of Greater Innovation Through Closer Collaboration, leading executives are keenly aware that they must find new opportunities to transform the way in which they communicate, manage and connect their complex relationships with vendors, partners, and most importantly, customers. These business leaders also admit to struggling with the challenges of integrating and aligning their often widely distributed networks of business partners, ranging in levels of sophistication, IT infrastructure and willingness to adopt new processes and solutions.

The study confirms that 21st Century business models have become increasingly dependent on partner networks to shape customer experiences, drive innovation processes and deliver products and services to global markets. Information systems and cross-company business processes, however, are strained to keep pace. Some 68 percent of survey respondents indicate that business partners are essential to their companies’ go-to-market processes, customer experience and competitive position. However, more than half say their partner networks are becoming more global and complex.

In spite of the recognized interdependence of partner networks, only eight percent of executives believe their companies are effective in the way they integrate and optimize their business networks. Ninety-five percent have no end-to-end data or process integration. Many say they are unable to extend internal systems externally, and less than one-third are able to share customer data to innovate with business partners.

These findings highlight the importance of the Business Collaboration Network of customers, partners and suppliers with whom companies connect, communicate and collaborate to drive positive business results for all involved. These “BCNs” have become increasingly complex and globally distributed. As more companies transition from single channel to cross-channel engagements and from local suppliers to global suppliers, the challenge for companies to integrate systems and managed shared processes becomes increasingly difficult.

The three key challenges voiced by the executives involved in this study – globalization, complexity and optimization – have also been observed as mega-influences that every company or organization engaging in business collaboration must take into consideration. By optimizing and transforming a Business Collaboration Network, companies can drive innovation and create a true competitive advantage.

Companies can transform their supply chains into “value chains.” These open collaborative structures allow for greater visibility into the supply chain, simplify complexity and make it easier to please customers. An optimized and transformed Business Collaboration Network also enables a company to take advantage of new opportunities for growth that will drive revenue.




By integrating key business processes and streamlining sales, fulfillment and payment operations with customers, partners and suppliers, a company can:

Enable end-to-end business information exchange and cross-channel collaboration

Deliver a seamless cross-channel customer experience

Increase efficiencies in the delivery of cross-channel selling, fulfillment and payment processes

Enable customer-mandated visibility and insights into the supply chain

At Sterling Commerce, we help enterprises connect, communicate and collaborate with their customers, partners and suppliers with our solutions that connect people, processes and technology. Together, our solutions integrate and streamline key business processes, creating an environment where employees, customers, partners and other constituents can work better together and be more productive and collaborative.

Through the course of our many customer engagements, we have developed a simple list of questions every executive must examine to make sure the Business Collaboration Network is a source of competitive advantage.

1. What Business Collaboration Network exists today for your organization and how is it leveraged to create specific customer solutions?

2. Which companies are filling the roles in your Business Collaboration Network?

3. Does your company serve as the hub and orchestrator of your Business Collaboration Network?

4. Are you engaged as a orchestrated partner of another company’s Business Collaboration Network?

5. Who in your Business Collaboration Network is also in your competitors’ BCNs, and do you understand how your own network compares to theirs?

6. Within your BCN, can you:

Enable seamless integration of key processes with suppliers, trading partners, service partners, financial institutions and other key constituents of your business?

Integrate key business processes seamlessly and securely, with compliance and meet mandates?

Extend and leverage core systems to manage extended supply chains and drive dynamic selling models?

Respond quickly and effectively to every customer demand?

Create seamless processes with your customers to deliver the right product and service to the right place at the right time at the right price?

The Business Collaboration Network is one of the most powerful tools a company has to succeed in today’s demanding yet fluid environment. If a company’s Business Collaboration Network is optimized and transformed correctly, that company will succeed. Those companies who adopt innovative solutions for optimization and transformation of the Business Collaboration Network can accelerate revenue, reduce costs and protect reputations while optimizing the speedy, reliable delivery of a superior customer experience.




Sterling Commerce, an IBM Corp (NYSE:IBM) company, helps companies optimize and transform their Business Collaboration Network to accelerate revenues and reduce costs. More than 30,000 customers worldwide use Sterling Commerce applications and integration solutions to connect, communicate and collaborate inside and outside their enterprise. More information can be found at www.sterlingcommerce.com.

About the Author: Joel Reed is the Senior Vice President of Product Management and Marketing for Sterling Commerce responsible for product management, marketing, , corporate communications and customer experience.

With over 25 years experience directing hardware and software technology companies, Reed has a successful track record of building and growing organizations with a focus on delivering strong business results. During his tenure at Sterling Commerce, he has held leadership roles driving Product Marketing, Industry Marketing and the AT&T Channel relationship. Reed’s previous experiences include Vice President of Business Development and Marketing for NetRegulus Inc., and Vice President of Product Marketing for J D Edwards/PeopleSoft.

Reed earned his Masters of Business Administration from the University of North Carolina at Chapel Hill, and a Bachelor of Science in Ceramic Engineering from the Pennsylvania State University.




5 Best Practices forUnified CommunicationsAn Expert Perspective from AT&T

BackgroundTo meet today’s increasing demands, businesses need to communicate and collaborate more efficiently. Communication needs to be timely and effective, reaching people where and when they want to be reached, at the office, at home or on the go. Collaboration needs

to include a broad sweep of individuals, cross geographic and organizational boundaries and be integrated with business processes. One way to address these needs is with Unified Communications (UC), which brings together the tools of voice, email, messaging and conferencing and integrates them with business applications such as enterprise resource planning (ERP) and customer relationship management (CRM).

UC can improve organizational efficiencies, while simultaneously empowering knowledge workers. The efficiency gains come from the integration and optimization of communication silos, supported by enterprise-wide standards and shared

services. Productivity gains are harder to measure, but there’s a clear intuitive benefit that could be realized by reducing human latency. It might be hard to quantify, but we’ve all experienced the frustration of “telephone tag.” With a UC platform, employees can see who’s available at a glance, before placing the call.

Characteristics of Successful UC ProjectsEnterprises that have begun migrating toward UC have been experiencing some challenges. For UC to be effective, the entire network must be prepared to manage the applications. The more complex the network, the more difficult it is to roll out UC. Limited platform choices and inflexible pricing models are making choices more challenging for network managers. Return on Investment (ROI) for UC is also hard to provide in dollars and cents, as much of the value

Unified Communications integrates multiple communication tools with presence behind a single user interface and contextually embeds communications within key business processes/applications.




comes from improved communications among employees and customers. Early Adopters of UC indicate that successful UC programs share the following characteristics:

They are often inspired by IT, but are always driven by clear business needs – it’s not just a matter of rolling out the infrastructure

They are well supported by existing architectures, and their complexity is acknowledged – programs succeed when they’re supported by detailed plans to manage both technical and organizational change

They focus on the smallest practical set of technology choices to minimize interoperability issues

Five Best PracticesEnterprises that are realizing value from their UC programs are succeeding because they’ve followed some basic, common-sense practices. If your organization is considering a move in this direction, here are five best practices to consider:

1. Define a Guiding Vision that will Lead Toward Increased ROI UC depends on network readiness, network and application convergence and integrated wired and wireless access. It also involves a blending of software and platform capabilities, leaving most enterprises with a multi-vendor solution. Managing the integration of disparate communications tools and dealing with the associated retraining programs also makes for a complex transition. Developing the right strategy requires a long-term view, as well as an understanding of the short-term challenges.

2. Include Sufficient Up-Front PlanningA clear roadmap for a UC implementation can help businesses manage expectations and be sure that time frames are realized. It should recognize that UC is not a software-only concept, and include initiatives aimed at ensuring end-user acceptance. The plan should also consider whether some commodity services might need to be outsourced, so corporate knowledge resources can focus on strategic UC applications.

3. Clearly Align Business and Technical RequirementsPhased migration plans can maximize the value of existing investments in applications, messaging, voice and other supporting infrastructures. Vendor-agnostic product recommendations can help ensure that the design meets an organization’s specific requirements, and UC migration planning should also consider next generation service architectures, such as IP Multimedia Subsystem (IMS).

4. Find the Right Champion for the UC ProgramSome programs emerge from IT and seek to introduce new capabilities. Programs may also emerge from business units seeking to establish UC capabilities to support a new product, service or business initiative. Regardless of the champion, there must be a well-developed integration plan and a realistic level of funding.

5. Establish Cross-Functional Teams to Help Manage the ImplementationThese teams can help deal with the complexity of a “meta-technology” environment that includes many different parts, and can develop a single methodology for planning implementation and introduction. Cross-functional teams can also be invaluable when it comes to communicating the benefits across the organization, as well as to customers, partners and suppliers.




Seeing BenefitsOnce a UC program is under way, reaping the benefits is ultimately up to the users. An enterprise can make all the right decisions and deliver on a well-thought-out strategy and still not benefit from UC. Employees must be willing to make changes in the way they conduct business and communicate. UC can increase the efficiency of virtual teams, while reducing travel time and expenses, and can also eliminate some communication barriers, reduce cycle times and improve the quality of day-to-day communication. UC can support the re-engineering of business processes and accelerate process improvement, but only if process owners are willing to evolve. If not addressed, user resistance to change can be a deal- breaker for an otherwise well-planned UC program.

Despite the great promise of UC, it remains a challenging prospect. Standards are still emerging and different vendors offer different approaches. Independent advice can help companies select the strategies, architectures and deployment plans that make sense for them.

For more information contact your AT&T Representative or visit us at www.att.com/business.AT&T Consulting offers independent and holistic UC services that include strategy, architecture, integration and deployment of UC technologies. AT&T can help enterprises realize the promise of UC using a cost-effective, phased process that includes the evaluation and integration of premises-based and hosted solution alternatives. For more information on UC, visit www.att.com/networkingexchange or contact your account representative.




Sponsor ProfileSterling Commerce, an IBM Corp (NYSE:IBM) company, helps companies optimize and transform their Business Collaboration Network to accelerate revenues and reduce costs. More than 30,000 customers worldwide use Sterling Commerce applications and integration solutions to connect, communicate and collaborate inside and outside their enterprise. More information can be found at www.sterlingcommerce.com

AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the United States and around the world. Among their offerings are the world's most advanced IP-based business communications services, the nation's fastest 3G network and the best wireless coverage worldwide, and the nation's leading high speed Internet access and voice services. In domestic markets, AT&T is known for the directory publishing and advertising sales leadership of its Yellow Pages and YELLOWPAGES.COM organizations, and the AT&T brand is licensed to innovators in such fields as communications equipment. As part of their three-screen integration strategy, AT&T operating companies are expanding their TV entertainment offerings. In 2009, AT&T again ranked No. 1 in the telecommunications industry on FORTUNE® magazine's list of the World's Most Admired Companies. Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at www.att.com




About BPI Network and CMO Council The Business Performance Innovation (BPI) Network is an influential group of senior-level executives driving transformation, process re-invention, organizational innovation, lean operation, and competitive adaptability in multi-national enterprises worldwide. Members of this change-centered affinity network represent companies with combined annual revenues of more than $1 trillion. The aim is to share thinking and advance best practices in how enterprises can "transform to better perform" as they seek to tap more complex, cost-sensitive, growth markets with large, diverse and evolving consumer and infrastructure needs. www.bpinetwork.org

The Chief Marketing Officer (CMO) Council is dedicated to high-level knowledge exchange, thought leadership and personal relationship building among senior corporate marketing leaders and brand decision-makers across a wide-range of global industries. The CMO Council’s 4,000 members control more than $120 billion in aggregated annual marketing expenditures and run complex, distributed marketing and sales operations worldwide. In total, the CMO Council and it’s strategic interest communities include over 12,000 global executives across 90 countries in multiple industries, segments and markets. Regional chapters and advisory boards are active in the Americas, Europe, Asia Pacific, Middle East and Africa. The Council’s strategic interest groups include the Coalition to Leverage and Optimize Sales Effectiveness (CLOSE), Brand Management Institute, and the Forum to Advance the Mobile Experience (FAME). More information on the CMO Council is available at www.cmocouncil.org.

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