Business Networks: Leviathans Of The Deep

James Marland

Business Networks Are the Leviathans of the Deep

Business Networks: Leviathans Of The DeepI received a Facebook update from a friend who took a picture of a whale in San Francisco Bay, and in the background was a mighty container ship. My comment to her was that the ship was in its own way just as much a thing of wonder as the humpback in the foreground.

Just as the Net and deregulated telephony spelled the death of distance for telecommunications, containers spelled the death of distance for manufacturing. The following is an extract from an article in Wired Issue 7.10 (Oct 1999), which I remembered reading a dozen years ago and recalled when I was writing the blog about the time to get to critical mass.

At its heart, ocean shipping is a network business, just like airlines and telecommunications. Passengers, bulk goods, data – all three represent uniform-size cargo, shooting through global transport and sorting systems 24/7/365. Viewed this way, airline seats, data packets, and 40-foot shipping containers are much the same – commoditized units for carrying content.

Each carries its own kind of header, known as a bill of lading, which  identifies its contents and owner and directs its progress. On a single ship,  thousands of containers are headed to different end destinations. Dangerous  cargo, such as chemicals, is segregated; refrigerated containers are placed  near the ship’s power supply. Some containers are piled high up on the ship and  some ride low, but all are strategically stacked to minimize a ship’s loading  and unloading time in port.

So it’s not surprising that container shipping has enjoyed its own network effects since its early years in the ’50s. As more ports and ships carried containers, the benefits of being a container shipper or port grew. As more ports came online, carriers were able to expand their containerized fleets. And containers brought untold economies to shipping from the start, causing costs to drop steadily – and with them margins.

By breaking down cargo into standard units, greater amounts could be more efficiently pushed through a network.

Both leviathans of the deep move silently and unremarked among us.

The containers hid the complexity of the network, to the uninitiated they seem to be mere dumb boxes. But as the Wired article explains, the information systems around them provide intelligence.

Business Networks can often appear to be just dumb boxes. You put a document in, and it is received at the other end. But this is to miss the point of the intelligence of the network. The information about each document (its “bill of lading”) describes the document, who it is for, what standards it meets, how it is to be read, validated and verified.

For example, a Business Network may know that an invoice must be linked to an existing contract, and that the prices and quantities must be within a certain tolerance with respect to that contract. If not, the invoice can be sent back by the Network as failing one of these business rules. This is equivalent to a customs officer opening up a crate to verify the contents with the manifest.

For the casual whale watcher, who idly sees a ship in the background the complexities are hidden. But like the Container Network, Business Networks are doing much more than they seem. Sure, guaranteeing delivery of a document safely and reliably is a necessary condition. But that sets the standard too low: it would be as though Maersk promised “no shipwrecks”.

Business Networks can offer much more than their EDI ancestors (who are in the “no shipwrecks” business). Business Networks are opening the documents, inspecting their contents, checking the “manifest”, and are looking for damage or fraud.

So next time you are idly looking at containers at Southampton, Rotterdam or Shanghai think about the information containers of the Business Network. Like the whale in Michelle’s picture, they move quietly in the deep.


About James Marland

James is responsible for defining and rolling out strategies for the Network with particular focus on Europe. He joined Ariba at the launch of the Ariba Network in 1998 after previously being a Solution Consultant at SAP America. In addition he has held the position of Director of Algorithms at Vendavo, an SAP Partner in the area of Pricing. He has a Bachelor of Science degree in Mathematics from Southampton University. Follow James's twitter feed at @JamesMarland