In the late 90's it was said that 'The Network is the computer,' meaning that a single computing device, by virtue of its inclusion on the internal network or the Internet, increased its value by orders of magnitude. The computer's value proposition changed completely once it was part of the network. Today the same is happening with entire businesses. The idea of the network organization model is not new, but with the mature Internet, this business model has started to flourish. What is a Network Business. Well, here's a perfect example. Company ABC licenses research from a major university. Funded by venture capital they create a product prototype, in this case a laboratory instrument. They outsource additional design, the software development, the manufacturing and the supply chain maintenance. They also outsource consumable inventory and order management. What's left? Sales and Marketing and managing the network of partners and vendors who together bring the product to market. The key to managing the network is collaboration. Not collaboration as some touchy-feely new found way of doing business. But collaboration as the necessary quick, decisive, mostly automatic communications that must happen correctly in the network in order for orders to be filled, customers billed, service issues rectified, vendors notified of drop ships and of course the movement of cash from one end of network to the other. For companies participating in networks where the business depends on the quality of communications in the network, there is a tremendous argument to be made that you can no longer afford to run on proprietary, in-house systems. Yes, the debits and credits are yours to manage and analyze, but its the transactions that generate the debits and credits that you need to open judiciously to the network. Vendors for example, responsible for manufacturing, should be able to log in and see the orders that have been approved for them. As they fulfill, Company ABC should see what shipped and when. After all, you can't expect the customer to contact your vendor about shipping details. So how does this happen when the network runs on-premise closed systems? A flurry of emails and faxes go back and forth, all of them manually done by a staff that must manage a thousand details for each customer. Efficient? You're kidding right. Fraught with human error? But of course. You are expected to do business today at the speed of light. How is it possible when the process starts with someone standing at a fax machine. I have written often in the past, here and here, about software applications with the network, the Internet, at their core. Phil Wainewright has also jumped into this discussion on Software as a Service and the network. Everyday, as with Company ABC, I see a new reason to believe that the network company is the business model of the future. The next step is to help these network businesses understand the compulsory need for network applications like NetSuite, for example. In a future post I will talk about how NetSuite answers the call for the network business. |
