Editor's Note: For this special issue, we asked our columnists to cover a variety of e-business topics. Their insightful commentary provides a well- rounded outlook as to the benefits and challenges of the e-world. Regular column format will return next month.
There is no argument that the Internet is changing everything. Most companies have embraced, at least intellectually, the tremendous potential for business growth through a connected business model. This inter-enterprise commerce is being implemented via digital marketplaces, also called trading exchanges or communities. Digital marketplaces are already reaching critical mass in many industries such as automotive and oil and gas. Inefficiencies are also being driven out of key areas such as procurement, inventory management, extended logistics and pricing settlement with emerging function-based marketplaces.
These business transactions which cross enterprise boundaries point to the need for companies to develop a new core competency in data and constituent management. Each transaction by each partner must be seen by other members of the trading community to allow real-time responses necessary to keep the marketplace coordinated. For the community to operate effectively over time, it must be self-governing with each member of the digital marketplace monitoring not only current workflow, but also historical performance and future potential. Each trading partner will want to know who is performing and who is not, who has the greatest value potential and who doesn't, and which trading partners tend to work well together and which ones don't. Armed with this insight, leading companies will partner with best-in-breed providers to form virtual, dynamic supply chains to enhance their own value proposition to the market. To accomplish this, enterprises must focus attention on developing a collective management approach for this set of specific extended relationships.
Connected enterprise leadership must have a finger on the pulse of multiple complex relationships that have significant direct or indirect impact on enterprise value. Figure 1 offers a view on the set of relationships that are relevant to enterprise leadership beyond just that with the customer. Other constituents include but are not limited to channel partners, alliance partners, suppliers and employees. In the past, each business constituent was treated separately under separate business rules. The notion of relationship management must now be applied as a single process across numerous relationships using a common set of rules, technology and data. This concept, which I call the extended enterprise exchange web, brings all business entities and all channels into an integrated business construct through a multi- relationship architecture.
Figure 1: The Extended Enterprise Exchange Web
Figure 2 illustrates the multi- relationship architecture of the extended enterprise exchange web, depicting three distinct components. Enterprise value maximization which guides and governs relationship optimization, which then dictates the approach to the constituent-facing experience management. First, the way and with whom an enterprise wants to do business in the marketplace is established as part of enterprise value maximization. Strategy and goals established in this area drive the nature, scope and expected value of relationships that will exist between the enterprise and other constituents. Relationship optimization encompasses the processes which measure, monitor and cultivate each enterprise- constituent relationship. Last, based on expectations for the business as a whole as well as for constituent segments or individuals, a select scope of experience management rules and capabilities are established. Experience management ensures that the interactions between the enterprise and the constituent are developed and delivered in a proscribed, coordinated and consistent fashion.
Figure 2: Multi- Relationship Architecture
An enterprise must always keep its owners' best interests in mind, whether they be shareholders, investors or private capitalists. Enterprise leadership must establish a strategic position in the marketplace which will guide which constituents will become part of the extended enterprise exchange web. As much as possible, an enterprise makes deliberate choices about who will step into the web of relationships and under what circumstances. While we are in a world where customer needs dominate, we cannot forget that at the end of the day, it is the enterprise leadership that decides all rules of engagement, influenced by customer and other constituent demands. On this note, enterprise value maximization includes key processes which set an overall course for the business and then establish, synchronize and align an entire portfolio of relationships to drive enterprise value creation. Key functionality includes strategy development and alignment, business case development, enterprise performance measurement, knowledge and data management, business rule management and cross-functional coordination.
The demands of managing multiple dynamic and virtual relationships among the enterprise and other constituent groups require achieving equilibrium between what a particular constituent is getting and what the enterprise is giving. Relationship optimization is a back-office component calibrating each relationship and is not siloed by channel, relationship or relationship type.
At a process level, the management and measurement practices to optimize a customer relationship are not dissimilar to what is required to optimize a supplier relationship and could also be applied to maintaining stronger employee relationships. This key aspect of the relationship architecture also recognizes that the offers and treatments will vary based upon the relationship type (customer, employee, channel partner, etc.) and the value/strategic nature of the relationship.
Just as not all customers are created equal, neither are other constituents. For instance, your company may wish to make special discounting structures available to suppliers who have achieved a specified level of performance, for a particular customer segment, within a given product line, during a particular time of year, using a defined distribution channel. Or similarly, your company may want to attract a particular type of employee to your company, so you will want to identify those key investments you can make that can influence that particular target audience. The ability to derive and apply robust analytics is central to relationship optimization.
Because communication and service delivery take place at e-speed across multiple channels, or touchpoints, to multiple constituents, the challenge to create a consistent, predictable and designed experience is not trivial. This part of the relationship management paradigm, experience management, is usually referred to as the front office, as it is conceptually where the interaction with the customer or other constituents takes place.
Experience management focuses on two key elements to achieve this consistency: 1) coordination of communication and delivery to and from all constituents across all channels; and 2) effective collection, integration and reuse of channel behavior data. These elements are just as much about delivering an experience as about learning from the experience for future reference. Interaction is truly two-way.
Each member of the marketplace, from customer to supplier, should receive a consistent experience when interacting with the enterprise. For customers, the approaches and benefits to achieve this have been examined at length as part of customer relationship management (CRM) strategies. In a similar way, the experience other trading partners encounter when interacting with your enterprise should be consistent. A supplier, for example, should perceive the same service whether that supplier is parked at your loading dock or communicating to your order department via wireless technology while in transit. Pricing rules for a strategic alliance partner should be the same whether they are being quoted by a member of your sales force or have been imbedded in a joint offer.
To put this discussion back into the context of today's environment, supply chain management brought us closer to partners; customer relationship management brought us closer to customers; and new approaches such as the extended enterprise exchange web have the potential to draw all constituents closer to each other. Establishing an overall relationship management capability and mind-set should not only help you identify efficiencies to be gained as you streamline certain processes, but also should enable your organization to extract greater wealth from your extended enterprise exchange web as you make more targeted investments to impact specific behaviors. Look beyond your customer relationships to other constituents not previously on your radar screen and apply the practice of relationship management. No doubt that more targeted, value-based treatment of all your constituents will have a positive impact on shareholder value your goal at the end of the day.
Special thanks Heidi Wisbach who contributed significantly to this article. Wisbach leads Cap Gemini Ernst & Young's eCRM initiatives.
Register or login for access to this item and much more
All Information Management content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access