What are the benefits of business networks?

The rapid growth of B2B e-commerce is commanding a lot of attention these days. Analysts project it to reach US$ 6.7 trillion globally by 2020, and companies everywhere are engaging with it at deeper and more sophisticated levels than ever before. In a joint presentation with Dinesh Sharma on how hyperconnectivity is reshaping the world, I shared some insights on how business networks are helping to drive this transformation.

Many companies recognize the bottom- and top-line gains business networks can deliver: lower costs, greater operational efficiency, better working capital management, reduced risk, stronger compliance, increased sales and market share, and wider profit margins. However, the payoffs in using business networks go far beyond traditional savings and revenue growth. By providing game-changing capabilities that support a quantum leap forward in collaboration, business networks are allowing companies to achieve “uber benefits” in five key areas:

1. Business networks enable innovation. For example, Henrik Larsen, Vice President, Group Procurement – Sourcing and Indirect for shipping giant A.P. Moller-Maersk Group, recently explained how his company leverages Ariba Network to turn procurement into a proactive strategic enabler that ensures “every dollar spent is spent professionally.” Network technology also helps Maersk work more closely with suppliers and trading partners to better capitalize on their capabilities and optimize innovation.

2. Business networks help companies become good corporate citizens. Non-profits like Made In A Free World are teaming with networks to help companies detect and eliminate slavery in their supply chains. And companies like Caesars Entertainment are using them to find and qualify suppliers across the globe that meet their diversity requirements.

3. Business networks level the playing field. Smaller selling organizations like JP Promotional Products, M&R Distribution Services, and Armed Forces Construction Group have found business networks to be an effective way to win new business over large competitors and even industry leaders. What makes this possible is the greater visibility networks give small- and medium-sized enterprises (SMEs) for new buying opportunities, at a cost easily within their reach—and the way business network automation helps them scale sales and service capabilities so their size does not inhibit their ability to successfully compete for new business.

4. Business networks stimulate community interaction. While you might think an increase in digital and paperless transactions would reduce community interaction, the opposite often proves true. As journalist Clive Thompson points out, technology works best when it digitizes something people already do naturally—and business networks serve as a powerful enabler for the innate need humans have to connect. The proliferation of online business communities attests to this, with users citing the value they gain from exchanging ideas and information with experts and peers in real time.

5. Business networks provide a window into the digital economy. Because business networks are intelligent—combining cumulative data on commerce and transactions with modern analytics capabilities—they give companies unique insights into myriad areas, including industry trends and purchasing patterns, customer engagement, market research, benchmarking, and trading partner behaviors. What’s the result? Real-time market knowledge that hones their response to changing business environments and gives them a leg up on the competition.

And these uber benefits are just the beginning. The potential of business networks is limited only by the extent of our own creativity and imagination in dreaming up new ways to use them.

So ask yourself: what can you do with business networks to transform your business in the digital economy?

This article is published in collaboration with SAP. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Robert Mihalko writes for SAP.

Image: Businessmen and visitors enjoy the good weather on the stairs under the Arche de la Defense in the financial district of la Defense near Paris April 30, 2009. REUTERS/Charles Platiau