A TechCrunch article in March argued that many of the world’s fastest-growing businesses are doing battle for the consumer interface. While the interface is critical, I believe companies like Uber, Facebook, and Airbnb generate their power from the modern digital network and the communities it has created. As a result, their digital real estate is now the most valuable in the world. While achieving that, they haven’t had to rely on supply chains, manufacturers, distributors, or retailers – all of those costs were stripped away by maximizing on the potential of the Internet.
It’s interesting to consider how this digital shift will cause disruption in the business world. I believe it will be in the power of the “business network” – bringing a new level of intelligence to how businesses interact and collaborate with each other and with all their trading partners. We still live in a world where all value chains are not connected, and businesses that are first in creating that holistic link will gain the upper hand.
The problem is, while it often does feel like the future has arrived with the technology at our fingertips, just as often it feels like we’re still living in the past. 77% of invoices are still paper-based. 70% of payments are still handled via paper checks. Invoice exceptions still add days to the cycle.
When you understand how services like Uber enhance the experience of getting a cab – real-time tracking of the driver, knowing the time of arrival, rating the experience, and automatic payments – you can see how the way businesses communicate with each other can be improved in the same way. The business networks story is bigger than a cloud story or simply using the Internet to connect your business. It’s about bringing communities together and making trade more intuitive and satisfying.
Of course, the physical aspects of running a business must still happen in pretty much all industries. In many cases you need to have logistics, you need to manufacture, or you need to operate machinery. Here I’m talking more about how the business network can help departments like procurement – the cost centers – become more strategic and streamlined. We call this collaborative commerce, and it’s the real reason that SAP, for example, is acquiring companies like Ariba, Fieldglass and Concur.
Linking these innovations together is what will emulate the success of the consumer interface in the business world. The majority of CEOs expect much of their earnings growth in the next 5 years to come from technology-enabled business innovations, and one of those innovations will be connecting with partners in new and simpler ways.
A great way to think of the business network – which we’re powering with Ariba – is like Amazon.com for business. Think about the shake-up that’s happened there in terms of the effect on brick-and-mortar retail. This network looks set to change the business world forever in just the same way the digital network and the consumer interface have already changed the consumer world.
Want more insight on the networks that will drive tomorrow’s business? See Business Networks: The Platforms for Future Innovation.