The Value of
Smart Business Networks:

Experiments and Experiences
               Eric van Heck
               Rotterdam S...
Smart Business Networks
          in the Cloud




2
Menu
•   Motivation and Introduction

•   Business Case:
     – Thebigword – Translation Services

•   What Smart Business...
4
Smart Business Network Participants




          www.sbniweb.org
5
SBNi 2008: Beijing, China




    Tsinghua University
    Alibaba
    British telecom
    Cordys
    Elsevier
    IBM
    ...
SBNi 2004, 2006, and 2008
and Special Issues in JIT (2005) and DSS (2009)
Introduction
•   Smart Business Networks as New Competitive Business Model

•   Smart Business Networks will cooperate and...
One example:


•   TheBigWord: Translations at fast speed
Thebigword: Translation Services in the UK
(Chris Holland et al, 2005)
Thebigword: Translation Services in the UK
(Holland et al, 2005)
•   Global Scale to international customers

•   In wide ...
Web Services in the Translation Market:
Translations available within 48 minutes
(Holland et al, 2005)



                ...
What is different?
•   Network

     – TheBigWord links 4,500 “mother tongue” linguists to clients
       worldwide

•   A...
Definition of a Smart Business Network


     ...An IT-enabled platform for dynamically
        linking different business...
What are characteristics of the new business
network approach? (Van Heck & Vervest, 2007)
What Are Critical Components?

1. Customer Interaction

2. Modularity : Product / Process / Network

3. Information sharin...
1. Customer Interaction

•    Customers are searching online

•    Customers are buying offline/online

•    Customers are...
2. Modularisation

•    Combine modular products (Customer Interaction) with a
     modular organisation (Asset Configurat...
The end customer designs
      the (virtual) organisation and value chain

           Product modules          Organisatio...
3. Information Sharing / Network Horizon

•   Research focuses on:
     – Bridging Positions in Business Networks
        ...
The bridging position


• Bridging position in a network
  connects actors who are not
  directly connected to each
  othe...
Why does a bridging position strengthen?
•   A firm must have information
    about the business network to
    strengthen...
Results (Van Liere, 2007)

•   Network positions change:
     – Network horizon
     – Network horizon heterogeneity
     ...
You can download the PhD dissertation at:
https://ep.eur.nl/handle/1765/1
4. Network Structure:
    Product Development Task Networks
    (Dan Braha & Bar-Yam, 2005)




.




    Network of infor...
Such PD Task Networks consist of:
(Braha & Bar-Yam, 2005)
•   Tasks executed by actors (design teams or engineers)
•   Inf...
Networks are everywhere
Structural properties
      Path length
 Clustering coefficient
  Degree distribution
   In- (out-...
5. Network Orchestration

•    The one that is interacting with the customer

•    The one that is combining the modules

...
6. Business Operating System


•   Quick Connect, and Disconnect
•   Embedded Business Logic
•   Goal Directed Service Com...
The Network Business Operating System
Contains the Overall Business Logic
                            business network act...
Example : Cordys Platform
Research by John Collins, Wolf Ketter, and Maria Gini –
Winners of the SBNi award 2008.
Conclusions
•   Smart business networks will emerge in high speed markets

•   Critical components:

    Customer Interact...
In: Communications of the ACM,
Vol. 50, Nr. 6, p. 29-37, June 2007
Value of Smart Business Networks
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Value of Smart Business Networks

  1. 1. The Value of Smart Business Networks: Experiments and Experiences Eric van Heck Rotterdam School of Management Erasmus University Email: evanheck@rsm.nl www.rsm.nl/evanheck RSM Alumni Event – February 12, 2009 © Eric van Heck, 2009.
  2. 2. Smart Business Networks in the Cloud 2
  3. 3. Menu • Motivation and Introduction • Business Case: – Thebigword – Translation Services • What Smart Business Networks Should Be Able to Do? • Some Critical Components: – Network Horizon – example Delta Lloyd – Network Structure – example PD Tasks Networks – Business Operating System – example Cordys – Advocate Agents – example Trading Agent Competition • Conclusions
  4. 4. 4
  5. 5. Smart Business Network Participants www.sbniweb.org 5
  6. 6. SBNi 2008: Beijing, China Tsinghua University Alibaba British telecom Cordys Elsevier IBM Tsinghua Science Park 6
  7. 7. SBNi 2004, 2006, and 2008 and Special Issues in JIT (2005) and DSS (2009)
  8. 8. Introduction • Smart Business Networks as New Competitive Business Model • Smart Business Networks will cooperate and compete to fulfil customer needs • What is different? – Competitive advantage created by the network not the individual organization – Acceleration of network’s ability to combine and act – Intelligence embedded in the smart business network captured in the business operating system – Real business opportunity with a thorough understanding of the science
  9. 9. One example: • TheBigWord: Translations at fast speed
  10. 10. Thebigword: Translation Services in the UK (Chris Holland et al, 2005)
  11. 11. Thebigword: Translation Services in the UK (Holland et al, 2005) • Global Scale to international customers • In wide variety of industries including financial services, technology, manufacturing, travel, and retailing • Adaptation to local markets (customers’ preferred language) • Employs approx. 4,500 “mother tongue” linguists • Innovative use of IT to support every aspect of its operations
  12. 12. Web Services in the Translation Market: Translations available within 48 minutes (Holland et al, 2005) Content Content Dealing articles Language versions authored at06:30 available at07:30
  13. 13. What is different? • Network – TheBigWord links 4,500 “mother tongue” linguists to clients worldwide • Acceleration – Fast translation process – from hours to minutes • Intelligence embedded – Standardized linkages and processes • Business – Science – Business architecture and web services
  14. 14. Definition of a Smart Business Network ...An IT-enabled platform for dynamically linking different businesses having different ‘capabilities’ to build a ‘networked business enterprise’ with innovative business strategies for competing in the changing markets and environmental conditions..... Bhusnan Saxena, MDI Gurgaon, India, 2008 14
  15. 15. What are characteristics of the new business network approach? (Van Heck & Vervest, 2007)
  16. 16. What Are Critical Components? 1. Customer Interaction 2. Modularity : Product / Process / Network 3. Information sharing / Network Horizon 4. Network Structure 5. Network Orchestration 6. Infrastructure: Business Operating System
  17. 17. 1. Customer Interaction • Customers are searching online • Customers are buying offline/online • Customers are designing products/services • Customers are forming networks to discuss products and services
  18. 18. 2. Modularisation • Combine modular products (Customer Interaction) with a modular organisation (Asset Configuration)... • ... resulting in the end customer designing not only the product but the whole (virtual) value chain
  19. 19. The end customer designs the (virtual) organisation and value chain Product modules Organisationmodules A1 A2 B1 B2 Customer Core C1 C2 demands Firm D1 D2 E1 E2
  20. 20. 3. Information Sharing / Network Horizon • Research focuses on: – Bridging Positions in Business Networks • Why does a bridging position of the focal firm strengthen? – Network Horizon • What is the impact of network horizon? – Weakening of positions • How sustainable are bridging positions? • PhD Research Project Diederik van Liere supported by Delta Lloyd
  21. 21. The bridging position • Bridging position in a network connects actors who are not directly connected to each other • Firms in bridging positions are more likely to: – Access diverse information and opportunities – Broker the flow of information and resources among firms – Control projects that bring Bridging position network participants together
  22. 22. Why does a bridging position strengthen? • A firm must have information about the business network to strengthen its a bridging position • Network horizon: the completeness of information a firm has about the business network • Network horizon of these Bridging position companies determines the intensity of competition for bridging positions • Differences in network horizons between companies we refer to as network horizon heterogeneity
  23. 23. Results (Van Liere, 2007) • Network positions change: – Network horizon – Network horizon heterogeneity • Differences between firms in terms of their network horizon determine the intensity of competition for bridging positions – Resource similarity between partner firms • Firms with similar resources are more likely to shift their network position because they are taken advantage • Overall conclusion: The most valuable network position is the least sustainable
  24. 24. You can download the PhD dissertation at: https://ep.eur.nl/handle/1765/1
  25. 25. 4. Network Structure: Product Development Task Networks (Dan Braha & Bar-Yam, 2005) . Network of information flows between tasks of an operating system development process. This PD task network consists of 1245 directed information flows between 466 development tasks. Each task is assigned to one or more actors (“design teams” or “engineers”) who are responsible for it. Nodes with the same degree are colored the same.
  26. 26. Such PD Task Networks consist of: (Braha & Bar-Yam, 2005) • Tasks executed by actors (design teams or engineers) • Information flows • Design iterations delay the time required for product development • Complex networks are scale-free networks e.g. robust to random failures of nodes, but vulnerable to failure of highly connected nodes • Complex networks are dominated by a few highly central tasks
  27. 27. Networks are everywhere Structural properties Path length Clustering coefficient Degree distribution In- (out-) degree
  28. 28. 5. Network Orchestration • The one that is interacting with the customer • The one that is combining the modules • The one that is designing the products • The one that is organizing the financial flows • The one that is organizing the logistical flows
  29. 29. 6. Business Operating System • Quick Connect, and Disconnect • Embedded Business Logic • Goal Directed Service Composition • Use of Advocate Agents • Business Network Visualization and Dashboards
  30. 30. The Network Business Operating System Contains the Overall Business Logic business network actors invoke performance monitor customer the dashboards and transaction dashboard report business operating system process intelligence management partners ERP CRM HR Proc ESM functions - applications PeopleSoft Siebel SAP Ariba w orkflow Tivoli
  31. 31. Example : Cordys Platform
  32. 32. Research by John Collins, Wolf Ketter, and Maria Gini – Winners of the SBNi award 2008.
  33. 33. Conclusions • Smart business networks will emerge in high speed markets • Critical components: Customer Interaction Modularity : Product / Process / Network Information sharing / Network Horizon Network Structure Network Orchestration Infrastructure: Business Operating System • Working together in a smart way by using product and process modules, fast connect and disconnect capabilities, advocate agents, network visualization and dashboards.
  34. 34. In: Communications of the ACM, Vol. 50, Nr. 6, p. 29-37, June 2007

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