RSM Alumni Event Smart Business Networks in the Cloud, February 12, 2009.

1. The Value of
Smart Business Networks:
Experiments and Experiences
Eric van Heck
Rotterdam School of Management
Erasmus University
Email: evanheck@rsm.nl
www.rsm.nl/evanheck
RSM Alumni Event – February 12, 2009
© Eric van Heck, 2009.

2. Smart Business Networks
in the Cloud
2

3. Menu
• Motivation and Introduction
• Business Case:
– Thebigword – Translation Services
• What Smart Business Networks Should Be Able to Do?
• Some Critical Components:
– Network Horizon – example Delta Lloyd
– Network Structure – example PD Tasks Networks
– Business Operating System – example Cordys
– Advocate Agents – example Trading Agent Competition
• Conclusions

4. 4

5. Smart Business Network Participants
www.sbniweb.org
5

6. SBNi 2008: Beijing, China
Tsinghua University
Alibaba
British telecom
Cordys
Elsevier
IBM
Tsinghua Science Park
6

7. SBNi 2004, 2006, and 2008
and Special Issues in JIT (2005) and DSS (2009)

8. Introduction
• Smart Business Networks as New Competitive Business Model
• Smart Business Networks will cooperate and compete to fulfil
customer needs
• What is different?
– Competitive advantage created by the network not the
individual organization
– Acceleration of network’s ability to combine and act
– Intelligence embedded in the smart business network captured
in the business operating system
– Real business opportunity with a thorough understanding of the
science

9. One example:
• TheBigWord: Translations at fast speed

10. Thebigword: Translation Services in the UK
(Chris Holland et al, 2005)

11. Thebigword: Translation Services in the UK
(Holland et al, 2005)
• Global Scale to international customers
• In wide variety of industries including financial services,
technology, manufacturing, travel, and retailing
• Adaptation to local markets (customers’ preferred language)
• Employs approx. 4,500 “mother tongue” linguists
• Innovative use of IT to support every aspect of its operations

12. Web Services in the Translation Market:
Translations available within 48 minutes
(Holland et al, 2005)
Content
Content
Dealing articles Language versions
authored at06:30 available at07:30

13. What is different?
• Network
– TheBigWord links 4,500 “mother tongue” linguists to clients
worldwide
• Acceleration
– Fast translation process – from hours to minutes
• Intelligence embedded
– Standardized linkages and processes
• Business – Science
– Business architecture and web services

14. Definition of a Smart Business Network
...An IT-enabled platform for dynamically
linking different businesses having
different ‘capabilities’ to build a
‘networked business enterprise’ with
innovative business strategies for
competing in the changing markets and
environmental conditions.....
Bhusnan Saxena, MDI Gurgaon, India, 2008
14

15. What are characteristics of the new business
network approach? (Van Heck & Vervest, 2007)

16. What Are Critical Components?
1. Customer Interaction
2. Modularity : Product / Process / Network
3. Information sharing / Network Horizon
4. Network Structure
5. Network Orchestration
6. Infrastructure: Business Operating System

17. 1. Customer Interaction
• Customers are searching online
• Customers are buying offline/online
• Customers are designing products/services
• Customers are forming networks to discuss products and
services

18. 2. Modularisation
• Combine modular products (Customer Interaction) with a
modular organisation (Asset Configuration)...
• ... resulting in the end customer designing not only the
product but the whole (virtual) value chain

19. The end customer designs
the (virtual) organisation and value chain
Product modules Organisationmodules
A1 A2
B1 B2
Customer Core C1 C2
demands Firm
D1 D2
E1 E2

20. 3. Information Sharing / Network Horizon
• Research focuses on:
– Bridging Positions in Business Networks
• Why does a bridging position of the focal firm
strengthen?
– Network Horizon
• What is the impact of network horizon?
– Weakening of positions
• How sustainable are bridging positions?
• PhD Research Project Diederik van Liere
supported by Delta Lloyd

21. The bridging position
• Bridging position in a network
connects actors who are not
directly connected to each
other
• Firms in bridging positions are
more likely to:
– Access diverse information
and opportunities
– Broker the flow of
information and resources
among firms
– Control projects that bring Bridging position
network participants
together

22. Why does a bridging position strengthen?
• A firm must have information
about the business network to
strengthen its a bridging position
• Network horizon: the
completeness of information a
firm has about the business
network
• Network horizon of these Bridging position
companies determines the
intensity of competition for
bridging positions
• Differences in network horizons
between companies we refer to
as network horizon
heterogeneity

23. Results (Van Liere, 2007)
• Network positions change:
– Network horizon
– Network horizon heterogeneity
• Differences between firms in terms of their network
horizon determine the intensity of competition for
bridging positions
– Resource similarity between partner firms
• Firms with similar resources are more likely to shift
their network position because they are taken
advantage
• Overall conclusion:
The most valuable network position is the least
sustainable

24. You can download the PhD dissertation at:
https://ep.eur.nl/handle/1765/1

25. 4. Network Structure:
Product Development Task Networks
(Dan Braha & Bar-Yam, 2005)
.
Network of information flows between tasks of an operating system development
process. This PD task network consists of 1245 directed information flows
between 466 development tasks. Each task is assigned to one or more actors
(“design teams” or “engineers”) who are responsible for it. Nodes with the same
degree are colored the same.

26. Such PD Task Networks consist of:
(Braha & Bar-Yam, 2005)
• Tasks executed by actors (design teams or engineers)
• Information flows
• Design iterations delay the time required for product
development
• Complex networks are scale-free networks e.g. robust to
random failures of nodes, but vulnerable to failure of
highly connected nodes
• Complex networks are dominated by a few highly central
tasks

27. Networks are everywhere
Structural properties
Path length
Clustering coefficient
Degree distribution
In- (out-) degree

28. 5. Network Orchestration
• The one that is interacting with the customer
• The one that is combining the modules
• The one that is designing the products
• The one that is organizing the financial flows
• The one that is organizing the logistical flows

29. 6. Business Operating System
• Quick Connect, and Disconnect
• Embedded Business Logic
• Goal Directed Service Composition
• Use of Advocate Agents
• Business Network Visualization and
Dashboards

30. The Network Business Operating System
Contains the Overall Business Logic
business network actors
invoke performance monitor
customer
the dashboards and
transaction dashboard report
business operating system
process intelligence
management
partners
ERP CRM HR Proc ESM
functions - applications
PeopleSoft
Siebel
SAP
Ariba
w orkflow Tivoli

31. Example : Cordys Platform

32. Research by John Collins, Wolf Ketter, and Maria Gini –
Winners of the SBNi award 2008.

34. Conclusions
• Smart business networks will emerge in high speed markets
• Critical components:
Customer Interaction
Modularity : Product / Process / Network
Information sharing / Network Horizon
Network Structure
Network Orchestration
Infrastructure: Business Operating System
• Working together in a smart way by using product and process
modules, fast connect and disconnect capabilities, advocate
agents, network visualization and dashboards.

35. In: Communications of the ACM,
Vol. 50, Nr. 6, p. 29-37, June 2007