Smart Business Networks
                  Enable Strategic Opportunities
                           Not Found In
         ...
Technology And Business Strategy
        Have A Mutual Impact On One Another
       Technology inspires strategy
         ...
Smart Business Networks

       Networks will be competitors
       Brand will be attached to the
       node
       The n...
Smart Business Networks

          Based on
               Understanding the fundamental principles
               which m...
Smart Business Networks
     We believe that information
     integrates humans and
     machines in networks
          En...
Smart Business Networks
        Not just an opportunity
            Cisco
            Dell
        Sometimes a necessity
 ...
Xerox Understood Implicitly The Need
         To Form A Smart Business Network

        To reinvent the way business is do...
Business Networks

           In the future,                Supply Chain Vs.
           business                       Sup...
Smart Business Networks

           Those networks need to:
                Look smart through the goods, products,
      ...
Information The Enabler For An SBN

        Information is a necessary, but not sufficient
        qualifier of a smart bu...
information integration
        Information integrates humans
        and machines in networks



        We introduce a c...
6 Levels of Information Integration for


             Even the simplest integration, which allows
             for inform...
6 Levels of Information Integration
        The first three levels
        1. Access,
        2. Transaction
        3. Di...
Create Value => Innovative Products,
        Services, Solutions And Experiences




                                     ...
Level               Value Proposition Enabled         Simple Example


                           Convenience             ...
Value in Convenience
      Savings: Information that saves you resources –a combination of
      time, money, or effort.
 ...
Value in Transparency
      Trust: Customers and suppliers looking into your system
      believe and therefore trust the ...
Value in Introduction or Referral
      Finding Customers: Organizations save time, resources
      and are willing to pay...
Transaction
     Information is used to set a context for
     defining and executing a transaction
          Dell redefin...
Digitization
     The process of using
     information technology to
     replace, enhance or
     substitute for physica...
Digitization Impact




                                       •Players Card
                                       •Money...
Digitization
       Can redefine an industry or distribution
       mechanism
            Digital delivery –Apple ITunes
 ...
Digitization: Self-Sufficiency
     We can provide for self-sufficiency
     by enabling people to do on their
     own wh...
Digitization
          The topic of digitization is an incredibly
          important emerging phenomenon.
               ...
6 Levels of Information Integration
     The second three levels
      4. Virtual Organization,
      5. Collaboration Net...
Common Goals
         Partner Collaboration Innovation
     This is achieved through the
     integration of information
 ...
A dynamic set of companies
         That come together for a time                     Virtual
         based and opportuni...
Committee or Team?




      So we agree on new lighting as the solution!                       2
                        ...
Learning environment
      sharing resources to create value




                      Multiple Virtual         Organizati...
A set of companies who                                Collaboration
     share a short and long
     term roadmap or visio...
3
                                                                         1

CSE & Enterprise Systems Center,   & Smart B...
Innovation
       A Web that evolves to build                      Network
       and deliver value through
       product...
Level               Value Proposition Enabled         Simple Example


                             Standards             ...
Six Levels of Information Integration for Business Competitiveness

                                                      ...
Virtual Organization
                         Characteristics
     Opportunity-driven, information enabled
     Widen capa...
Collaboration Network
                       Characteristics
          Seamless and borderless integration of resources
  ...
Collaboratory Success Factors
       Shared vision                    Agreed upon explicit
       Implicit versus Explicit...
Network Business Transformation: Driving Forces

    Agility & Mass                 Dynamic Nature of              Opportu...
Conclusion Regarding SBN

         We live in an increasingly digitized and
         networked world, and the old ways of ...
Thank You
                                   Roger N. Nagel
                          Wagner Professor and Senior Fellow
 ...
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Smart Business Networks

  1. 1. Smart Business Networks Enable Strategic Opportunities Not Found In Traditional Business Networks Professor Roger Nagel Senior Fellow for Creative programs Enterprise Systems Center Lehigh University Bethlehem, Pennsylvania 1 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  2. 2. Technology And Business Strategy Have A Mutual Impact On One Another Technology inspires strategy Transparency Virtual organization Reverse auction Strategy inspires technology ERP,SCM,CRM E-commerce E-meetings E markets 2 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  3. 3. Smart Business Networks Networks will be competitors Brand will be attached to the node The node is a network & vice versa AIRBUS is a node (OEM) within a supply chain as well as a network of subordinate entities Ebenezer & Fairview Health System 3 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  4. 4. Smart Business Networks Based on Understanding the fundamental principles which motivate customers, suppliers Allows management to see and create new value propositions Using information integration To enhance and redefine the value of communication and relationships in business 4 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  5. 5. Smart Business Networks We believe that information integrates humans and machines in networks Enabling them to collaborate and to function in a way that empowers the creation of value and the achievement of goals 5 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  6. 6. Smart Business Networks Not just an opportunity Cisco Dell Sometimes a necessity Xerox Print & distribute Distribute & print o Required an SBN » Apple, IBM, ATT, Adobe, Kinko's, E&Y, … 6 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  7. 7. Xerox Understood Implicitly The Need To Form A Smart Business Network To reinvent the way business is done The company had realized that the market of the future could not be served by its traditional business network Because it was lacking key partners in the areas of network communications, information integration and cooperation across traditional business lines Xerox thus transformed itself into a network business operating as a node in a smart business network. 7 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  8. 8. Business Networks In the future, Supply Chain Vs. business Supply Chain networks instead of individual Process Vs. Process business organizations will be the Product Vs. Product competitors Source UPS 8 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  9. 9. Smart Business Networks Those networks need to: Look smart through the goods, products, services and experiences they provide and Be smart in terms of how the individual members coordinate, collaborate, innovate and organize themselves 9 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  10. 10. Information The Enabler For An SBN Information is a necessary, but not sufficient qualifier of a smart business network, The simple existence of information in a business network does not render it any “smarter” The key factor is how information is used, or, integrated into the business network The concept of information integration is therefore central to understanding smart business networks 1 0 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  11. 11. information integration Information integrates humans and machines in networks We introduce a classification system that we define as levels of information integration 1 1 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  12. 12. 6 Levels of Information Integration for Even the simplest integration, which allows for information access, Creates new strategic advantage, by offering “convenience” to clients who find it valuable At each of the six levels we define several value based factors similar to convenience Provide a brief example of a company that used the value proposition to redefine or significantly change the way business is done in its industry 1 2 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  13. 13. 6 Levels of Information Integration The first three levels 1. Access, 2. Transaction 3. Digitization These levels are about what a business network can do to be perceived as smart The network appears smart to the outside, because it assimilates and integrates information To create value through innovative products, services, solutions and experiences 1 3 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  14. 14. Create Value => Innovative Products, Services, Solutions And Experiences k In this context, Companies or tw ne the business na Consumers ei network itself is 6 Billion? Node Charisma d No a node that is Employees How N th ….. Tier 2nd Tier 1st Tier Prime CISCO Tier many? part of a larger Ne network, Saleslink Saleslink Venture tw ork Teradyne Teradyne Venture in namely its Altera Altera Foxconn Foxconn CHINA eHub SCI SCI FL, MX, PN a no de Ascom marketplace. Ascom OCP OCP Broadcom SJ, MX TX Merix Broadcom Merix Cypress Cypress Infineon Infineon Delta Delta IBM IBM Honeywell Honeywell JDSU JDSU Network Charisma Recursively Embedded 1 4 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  15. 15. Level Value Proposition Enabled Simple Example Convenience Amazon Access Transparency FedEx Introduction & Referral Google Customization Dell, Cisco Transaction Facilitate market Covisint, EBAY Transaction Convenience EZPass Digital delivery ITunes “Distribute and Print” E-Stamps, Kinkos Digitization Facilitate Interactivity WebEX, N-Gage Provide self sufficiency Airline check in SBN appears smart to the outside, because it creates value 1 through innovative products, services, solutions and experiences5 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  16. 16. Value in Convenience Savings: Information that saves you resources –a combination of time, money, or effort. Empowering: Information arms you to do something you could not have done easily or at all. Fewer steps: One or a few interactions provide the information you need rapidly. Mistakes: Prevents you from making an uninformed or bad decision. Self Service: Reduce your reliance on others people, organizations or processes. Full Service Solution: Details are handled for you in your context creating a solution. Knowledge: Information arms you with the ability to enhance decisions and their value. Trust : Information provides peace of mind 1 6 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  17. 17. Value in Transparency Trust: Customers and suppliers looking into your system believe and therefore trust the information you provide them. Trust Empowers: Relationships are based on trust and with trust care enhanced Fewer steps: Transparency allows for the automation of interaction and elimination of time wasting and awkward human coordination to share information Mistakes: Prevents you from making mistakes when information is reentered from one system into an other. Knowledge: Transparent access to information arms you with the ability to make informed and timely decisions which can increase value. 1 7 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  18. 18. Value in Introduction or Referral Finding Customers: Organizations save time, resources and are willing to pay for the ability to get interested customers. Google gets paid by the sire they refer you to based on an auction Fewer steps: Referral speeds the process of finding resources and is of value Mistakes: Getting to a verified correct source can avoid making errors or using bad information Knowledge: Sharing expertise is providing a consulting service, referrals create value through this mechanism 1 8 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  19. 19. Transaction Information is used to set a context for defining and executing a transaction Dell redefined the way business is done in its industry by using an SBN to offer customers “customized products” eBay uses virtual transaction space to facilitate network markets “Transaction convenience” in transportation networks is provided to clients through E-ZPass (windshield based transponder) at toll booths 1 9 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  20. 20. Digitization The process of using information technology to replace, enhance or substitute for physical processes, resources and delivery systems 2 0 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  21. 21. Digitization Impact •Players Card •Money Reader •Payment Slip 2 1 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  22. 22. Digitization Can redefine an industry or distribution mechanism Digital delivery –Apple ITunes Distribute & print – E-Stamps Facilitate interactivity – N-Gage Provide self sufficiency Airline o Book, buy, select seat, check in 2 2 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  23. 23. Digitization: Self-Sufficiency We can provide for self-sufficiency by enabling people to do on their own what used to require trained professionals. Consider for example Making travel reservations Printing and sharing photographs Editing movies, etc 2 3 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  24. 24. Digitization The topic of digitization is an incredibly important emerging phenomenon. The creation of strategic value, The reinvention of the way business is done, The shift of power from traditional business networks to SBN’s using digitization Is only just beginning 2 4 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  25. 25. 6 Levels of Information Integration The second three levels 4. Virtual Organization, 5. Collaboration Network 6. Innovation Network These levels are about what a business network can to do to act smart in the way its partners coordinate collaborate innovate organize themselves . 2 5 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  26. 26. Common Goals Partner Collaboration Innovation This is achieved through the integration of information with the people, cultural and organizational issues that Source could otherwise prevent the Cisco network from being smart. Virtual Organization The transition from one Phase Transition level to the next requires a major paradigm shift Collaboration Network that should not be taken Phase Transition for granted. Innovation Network2 6 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  27. 27. A dynamic set of companies That come together for a time Virtual based and opportunity driven goal Organization Relationships vary from formal to informal, They need to practice working together to learn to communicate, share information, and IP etc. Moderate interaction Limited scope of activities Limited collaboration Many fail over trust issues 2 7 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  28. 28. Committee or Team? So we agree on new lighting as the solution! 2 8 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  29. 29. Learning environment sharing resources to create value Multiple Virtual Organizations Value circle 2 9 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  30. 30. A set of companies who Collaboration share a short and long term roadmap or vision Network and focus significant resources on value producing Intensive interaction Committed and involved in the goals and success of all collaborators Marketing Extensive Information Supply Customer Sharing Chain DNPS Relationship Collaboration Integrated Infrastructure Product R & D Network Financing facilitates both people and information Manufacturing networking 3 0 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  31. 31. 3 1 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  32. 32. Innovation A Web that evolves to build Network and deliver value through products & services, solutions & experiences or creates & manages networks of suppliers A network of partners in innovative seamless relationships Agile and use a variety of infrastructures to optimize for each client 3 2 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  33. 33. Level Value Proposition Enabled Simple Example Standards Rosetta Net Virtual Global Alliance One World Organization Franchise Holiday Inn, Hertz Collaboration Hub DuPont Collaboration Node & Network Charisma Cisco Network Swarm Effect Visa, Master Card Network Economy Li & Fong Innovation Dynamic Teams Agile Web of PA Network Virtual Reality Acheron’s Call Act smart in terms of how the individual members 3 coordinate, collaborate, innovate and organize themselves 3 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  34. 34. Six Levels of Information Integration for Business Competitiveness Project data Look Smart Convenience & Trust Info Access Transactions Look Smart Self Sufficiency & Enriched Relationships Digitization Be Smart Partner Collaboration Innovation Virtual Organization Collaboration Network Innovation Network 3 4 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © PRTM Source: 2005 Lehigh University Networks
  35. 35. Virtual Organization Characteristics Opportunity-driven, information enabled Widen capability --one stop shopping Reduce concept to cash cycle time Reduce design conceptualization time Cooperating to increase competitiveness Inside the companies in teams and task forces Outside the organization in “webs” of suppliers and customers 3 5 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  36. 36. Collaboration Network Characteristics Seamless and borderless integration of resources without organizational lines Virtual vertical integration organized Dynamic organizational structure Inter-enterprise business/production systems Intensive, interactive, collaboration within and among companies Greater value potential than the sum of the collaborators value producing capabilities 3 6 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  37. 37. Collaboratory Success Factors Shared vision Agreed upon explicit Implicit versus Explicit R3A Outcomes each player Risk needs Reward Values & Ethics Responsibility Ethical agreement Accountability Trust criticality Intellectual property Time it takes agreements Short cuts Quality understanding 3 7 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  38. 38. Network Business Transformation: Driving Forces Agility & Mass Dynamic Nature of Opportunity for Customization Customer Challenges Information Based Collaboration Complexity Of Products Opportunity to create value in innovative ways Need to manage complexity (Simple interfaces on complex products) Innovation as a Networks of Modules Competitive Differentiator In Value Creation Network Competitors Emerging Opportunity Derived from Pull by Customers for The Emerging Understanding Solutions & Experiences of Networks 3 8 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  39. 39. Conclusion Regarding SBN We live in an increasingly digitized and networked world, and the old ways of doing business need to be re-examined in light of smart business networks. We have presented information integration as central to such networks, and discussed six levels of information integration The purpose of this presentation is to stimulate the thinking and imagination of the reader. 3 9 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks
  40. 40. Thank You Roger N. Nagel Wagner Professor and Senior Fellow CSE Department & The Enterprise Systems Center at Lehigh University 200 West Packer Avenue Bethlehem, Pennsylvania, 18015 (610) 758-4086, (610) 868-0402 [fax] rnagel@Lehigh.edu 4 0 CSE & Enterprise Systems Center, & Smart Business Roger N. Nagel © 2005 Lehigh University Networks

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