One Small Step for Networks … One Giant Leap for Collaboration

Looking ahead, you'll see that trading portals and communities are steppingstones to a far more open environment for dynamic collaboration and commerce that HP calls Value Collaboration Networks (VCNs).

Business-to-business e-commerce will surpass $1.3 trillion by the year 2003. Enroute to this record, trading communities will be established and portals oriented to vertical, industry-specific processes will continue to accelerate during the next two years.

So, when examining possible progressions from Enterprise Resource Planning (ERP) and Supply Chain Management (SCM), especially those involving more extensive e-commerce and e-services, it’s not all that surprising to hear how relieved corporate IT groups are after they discover how well they are positioned for the future. It may take some time yet before the dust settles on business-to-business e-commerce. But the transformation and improvements beginning in the early ’90s when client-server architectures first revolutionized materials planning and thereafter augmented ERP and extended SCM pales in comparison to what’s next: The Value Collaboration Network (VCN).

A VCN is a Web-based opportunity to become much more customer-centric while operating more easily among a wider circle of partners with vested interests. VCNs will be characterized by more effective use of operating resources and allocations enabling VCN practitioners to serve customers better than competitors. In these loosely-coupled trading communities, trading partners enjoin themselves through a trading portal as needed, respond very quickly, and may even subsequently disband.

Throughout the supply chain, processes that currently rely on delay-prone human interactions (one user requesting data and another user making decisions), can be supplanted with the VCN via the dynamic features of network devices that enable automated communications between them.

The net effect on e-commerce is dramatically streamlined manufacturing and distribution between trading partners. It paves a path for integrating product design and development that is truly customer-centric and allows companies to leverage the intellectual capital across multiple enterprises.


Another critical piece of the puzzle is the need to ensure that a product is designed to maximize the efficiency of the supply chain, or the "design-for-supply-chain" in HP terminology. Increasingly, success depends on the integration and effective coordination of all designers and suppliers across the supply chain. In this respect, a VCN makes this configure-to-order-environment much more cost-effective. This is a key role, missing from ERP and SCM, that VCNs will facilitate.

VCNs will be dependent on e-services (the combination of Web-based processes and transactions wrapped with dynamic agents and intelligent IT assets that equip companies to identify and capitalize on new revenue streams). "Soon, many business-to-business and business-to-consumer activities will be handled by a series of e-services locating one another, negotiating with one another and handling each other’s requests," writes Patricia Seybold in Preparing for the E-services Revolution: Designing your Next-Generation E-Business.

This should have the effect of making enterprises within a VCN exceptionally fast through their sales cycles, product development cycles, distribution channels and so on, far faster than was previously possible.

According to Seybold, "Competitors you know and many you’ve never heard of will be providing surprisingly flexible, low-cost, high-quality products and services by linking up in real-time with a startling number of new players, as well as with familiar players with new capabilities. To this, let’s add that the processes between trading partners that she speaks of, will be highly automated.

The good news, especially for those invested in legacy systems, is that the road to a VCN and an assertive customer-centric e-services orientation leverages legacy enterprise resources and an open systems foundation of client-server architecture.

Well-designed back office processes and a lean supply chain facilitate a company’s progress into the next phase — collaborations among trading partners using an Internet-based infrastructure as the pipeline connecting supply chain partners and customers. Key to a successful VCN is e-services which shape the way in which trading communities are established and function.

Finding The Value In Value-Add

E-services make the VCN less a domain of a select group of partners who’ve invested in integrating applications and sharing specific data and more of a trade-focused pavilion that welcomes new participants on an opportunistic basis. Executives for most corporations recognize that success in the next few years requires them to complement technically superior products with value-added services throughout the supply chain.

To that end, VCNs improve upon existing ERP and supply chain networks by literally revolutionizing communication. And, more importantly, collaboration between trading partners. For example, in successful VCNs, trading partners must operate in an environment of trust. The partners will have to share the data required for e-commerce transactions, criss-crossing many company boundaries. But in more developed and sophisticated VCNs, those same partners will also need to share sensitive product design information leading to superior quality adherence and shorter development cycles.

While industry-specific, application-specific, and company-specific Web portals as well as trading communities collectively represent a giant transformation in the volume and type of information and services shared between trading partners, it’s the incorporation of a product design and development pathway that leverages the full potential of VCNs.


A corporation’s executives might look at their participation and the VCN-based mode of doing business as putting a whole lot of eggs into one basket. But with a VCN, IT managers will see the analogy and respond by providing enterprise servers, databases and disk farms on the network with availability on the order of 99.999%.

What if trading partners didn’t actually have to go to the Web or portal intending to access data or a specific service? What if, instead, they were automatically alerted and prompted for their inputs or informed about relevant requirements?

In the "old days," partners had to "pull" data by making requests. Conversely, the "push" approach saves users’ time and even launches actions that foster continuous processes and operations improvement in the supply chain. Simply put, this is the kind of forward thinking and slate of new opportunities the e-services world can support.

"The most significant paradigm shift within HP’s e-services vision will occur when these intelligent agents — hosted anywhere on the Internet — locate, moderate, negotiate and transact in response to a user request that may have occurred days or weeks ago at some remote location in cyberspace," reports the Aberdeen Group (Boston, Mass.). Dynamic brokering of services turns the Web into an open-services marketplace where e-services are composed, on-the-fly, to work on the user’s request.

Your Next Consultation

It almost goes without saying: underlying the sweeping advances that VCNs represent – there must be a high degree of assurance for IT managers that they’re not recommending a risky new approach with untested technology. With the mission-critical services that VCNs require, the value of consulting services is elevated.

Furthermore, companies may also choose to outsource IT management entirely while contracting for service level assurance thereby effectively re-dedicating IT resources to enhancing the corporation’s core competency.

In the end, the VCNs and e-services will certainly change the way business is done. It currently requires a significant investment of time and effort to blend a solution from a wide spectrum of solution component products and services in order to participate in a supply chain.

But the ante for even the smallest companies to conduct e-commerce in trading communities now, and VCNs a bit later in the new millennium, will become quite small. VCNs will truly herald in a new era of business where the customer is king. And only the agile will survive.

— Ulrich van der Meer is Global Manager, Extended Manufacturing Initiative for HP Consulting, a division of Hewlett-Packard's Customer Service and Support Group.

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