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The Networked Economy
The document discusses the benefits of embracing the networked economy, emphasizing that organizations can achieve key corporate objectives such as increasing revenue and reducing costs through collaboration and technology. Companies utilizing business networks are noted to be 50% more likely to be market leaders, with significant productivity improvements reported. It also offers insights into how organizations can start their networked economy initiatives and the advantages of partnering with Ariba.
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The Networked Economy
- 1. Positioning Yourself toWin in The Networked Economy October 2012
- 2. Agenda • Challenges that organizations are facing today • Why is it important to embrace the Networked Economy Business Benefits Examples of companies benefiting from it today • How to plan your Networked Economy Initiative • Why partner with Ariba? • Q&A 2 © 2012 Ariba, Inc. All rights reserved.
- 3. Key Corporate Objectivesare Unchanged Increase Revenue Reduce Costs Increase Working Capital Turns Optimize Capital Expenditure 3 © 2012 Ariba, Inc. All rights reserved.
- 4. But How toAchieve These Objectives Has Evolved Community Technology Capabilities 1980’s 1990’s-2000’s Today Desktop OS Backoffice OS Inter-Enterprise OS “Employee Productivity” “Enterprise Productivity” “Value Chain Productivity” 4 © 2012 Ariba, Inc. All rights reserved.
- 5. We are alreadyseeing productivity improvement in our personal lives Shopping Finance Communication & Collaboration Research 5 © 2012 Ariba, Inc. All rights reserved.
- 6. Analysts believe thatBusiness Networks will dramatically enhance productivity and value of organizations -- Buyers -- -- Suppliers -- -- Partners -- “Increase worker “Contribute up to Companies using productivity by $1.3 trillion in business networks are 20-25%” value to reducing requisition to businesses” order cost by 33%* “The social economy: Unlocking value and productivity through social technologies,” McKinsey Global Institute, July 2012 * Supplier Networks v2.0: A Look at Commerce in the Cloud, “Aberdeen Group, April 2012 6 © 2012 Ariba, Inc. All rights reserved.
- 7. Organizations embracing business networksare 50% more likely to be market leaders A Networked Enterprise – one that uses collaborative technology to connect internal employee efforts to customers, suppliers, and partners. Customers Suppliers Partners The Networked Enterprise is 50% more likely to: Be a Market Leader Gain Market Share Achieve Higher Margins Increase sales Source: “The Rise of the Networked Enterprise”, December 2010, McKinsey; Jacques Bughin and Michael Chui 7 © 2012 Ariba, Inc. All rights reserved.
- 8. Why are NetworkedBusinesses Winning? “Collaboration speeds you up and gets you to market…Today that advantage is really decisive.” “Collaborate to Win,” CFO Research, 2012 8 ** Ariba Confidential© 2012 Ariba, Inc. All rights reserved.
- 9. Benefits for buyers Ariba Discovery SOP for every Cut costs in A/P by 75% 8 week go live for APC and PO sourcing project Processing 90% of global spend Automation to extend PeopleSoft 16% average savings through Ariba Network 400+ suppliers enabled Added P2P, Invoice, Discount Mgmt. Enabled VAT legal compliance 300+ catalogs enabled 700 suppliers enabled – with 92% Improved on time payment to >95% Phase 2: Invoice Automation actively transacting…within 1st year Simplified and streamlined non-PO $4.5 billion enabled over the Capturing discounts on 15% of spend invoice processing – achieved 96% Ariba Network and >17% of suppliers touchless invoicing Avg. discount APR of 37.5% (tops Captured pre-negotiated discounts BIC ~23%) $1 million savings run rate…and growing 9 © 2012 Ariba, Inc. All rights reserved.
- 10. Benefits for Sellers Faster Payment Lower Customer Service Costs eInvoicing eliminated rekeying, resulting in Reduced manual intervention and errors, 83% lower error rate which reduced DSO lowering processing costs from $8 to $2 by 75% per purchase Reduced average DSO 5.6 days when Reduced Purchase order process from using the Ariba Supplier Network several weeks to a few hours Increase Sales Higher Customer Satisfaction Gained 65% of its new clients directly as a Gained e-business compliance resullt of its Ariba connection. 80% of by joining Ariba as a premium supplier business now comes thru Ariba Network Grew 300% in an account in 3 years while 99% customer retention rates – (10 to saving the customer hundreds of 15% better than industry average, per thousands in spend – a true win-win Forrester) and 30% growth in accounts 10 © 2012 Ariba, Inc. All rights reserved.
- 11. You could benefitfrom the networked economy too Pick Your Starting Point Assess Readiness Gain Executive Sponsorship Begin the Journey Focus on Operational Excellence 11 © 2012 Ariba, Inc. All rights reserved.
- 12. Why partner withAriba? 12 © 2012 Ariba, Inc. All rights reserved.
- 13. Q& A For more information contact your Ariba salesperson Suggested reading: “The social economy: Unlocking value and productivity through social technologies,” McKinsey Global Institute, July 2012 “Supplier Networks v2.0: A Look at Commerce in the Cloud,” Aberdeen Group, April 2012 “Collaborate to Win: Creating Competitive Advantage in a Networked Economy,” CFO Research, 2012 13 © 2012 Ariba, Inc. All rights reserved.
Editor's Notes
- #6 Show of hands: how many people have made a purchase from Amazon.com within the last month? Describe processAnd, how many have paid your bills without ever touching an envelope or a paper statement?That is because is our personal lives we have embraced social technologies and networks to save time, get exposed to a larger breadth of product options and eliminate some of the errors that were inherent in paper transactions.Story or personal example (mail forwarding)
- #7 Now, let’s see a show of hands of people whose companies are using similar technologies to receive the same benefits in a business setting?Networks have transformative potential…McKinsey talks about the value of both internal and external networks in a report it published this summer. Networks can increase worker productivity by 20-25% and contribute up to $1.3 trillion in value to businesses, according to McKinsey. And Aberdeen Group, in a recent report, found that companies using business networks reduce requisition to order time by 28% and cost by an average of 33%. Let’s hear what others have to say about the value of networks…(launch video)
- #8 So why should businesses care about being networked? Enterprises benefit from business networks in very tangible ways. According to McKinsey, not only are networked businesses 50% more likely to be market leaders but also achieve higher market shares, drive higher margins and increase sales.Aberdeen confirms this citing benefits for networked companies including establishing stronger supplier relationships which yield a 33% increase in the rate of suppliers meeting capability/performance thresholds and a 12% higher rate of on time delivery. Think about how, as a buyer, this impacts your ability to put more product on the shelves … therefore, driving top line revenue as well as saving costs.
- #9 Networked Enterprises are gaining a competitive advantage, not only because they are reducing costs by increasing productivity and efficiency, but also because they are able to compete in a world where speed and risk management are critical.Social technologies enable businesses to share information – increasing transparency and therefore knowledge. Michael Fauscette, an analyst at IDC speaks to this point in recent works. To quote Fauscette, in the old days of command and control there was a common saying “knowledge is power.” People protected information because it made them more valuable. Today, according to Fauscette, knowledge sharing is power.Ultimately, through transparency of information with partners, suppliers and customers, your business can innovate more quickly, collect valuable market research real time that helps you make decisions such as where to invest for growth. So, networked businesses see significant top line benefits as well as bottom line impact.Let’s hear from a couple of them directly…(launch videos)
- #10 Ariba is the world’s business commerce network. We have solutions that help you buy better, sell faster and manage your invoices, payables and working capital more effectively. There are people in this room and people around the world who can talk to you about what your challenges and opportunities are as well as help you identify the right place to start (or continue) your journey to become a networked enterprise.Whether you want to identify sources of supply more quickly or you have a mandate to identify a more diverse base of suppliers, Ariba can help you.Whether you are looking for new business or just looking to increase your wallet share with an existing buyer on the Ariba network, Ariba can help you.And, whether you are looking to take simply take paper out of your process or looking to optimize your DPO and discount program, Ariba can help you.The comprehensiveness of our network, its ease of use, open architecture and two sided business model mean that all participants benefit from using it. By providing a common platform for all businesses to discover, connect and collaborate Ariba enables greater visibility, productivity and innovation impacting your top and bottom line.
- #11 Review the sell side benefits
- #12 So, the logical question at this point is how do I become a networked enterprise so that I can position myself to receive the resulting benefits?Embracing social technologies and business networks is not like implementing a new software application. It requires fundamental change within an organizationFinding a business network that is open – one that connects to your existing systems - one that incorporates not just technology but community and capabilities – information from peers, expert or third party data, enablement skills and best practices know howChange management is essential. McKinsey says, “Success…will depend on transforming organizations and cultures…it will require the ability to create trust…it enables new relationships and group dynamics.” Executive support is a must to make this cultural changeChanges the skills required to do jobs…focusing more on higher order tasks and thinking…more analysis, teaming and collaborationEnsure that you start in a place where you can make an impact but don’t think about it as a project, instead view it as a journey.
- #13 The largest and most comprehensive network that is helping companies derive these benefits is Ariba.Our combined Networks create a business commerce community of nearly 1 million trading partners, exchanging over 60 million invoices, and transacting over $300 billion in spend annuallyOur customers and prospects get immediate benefit from an increased community of buyers and sellers. This means improved supplier matching and onboarding success increased value from global Ariba expertise with offices in 40 countries over 200 professionals dedicated to supplier onboarding and success Support services in 40 countries speaking in 18 different languages – (example xxxx in Europe, NA, Brazil, etc.) Ariba customers also benefit from the expanded value of the best solutions
- #14 Now we’ll open it for questions. I do, however, want to encourage everyone to take advantage of a free assessment tool that Aberdeen Group has created that can help you gain insight into where you stand on your business network journey. We have these assessments available at the registration desk so please stop by and take one on your way out today.Now, for questions…