Senior Executives at Small and Midsize Enterprises Join Large Enterprises in Embrace of Business Networks as Pathways to New Markets and Business Growth, According to BusinessWeek Research Services Survey and Report
NEWTOWN SQUARE, Pa. — A new survey finds that C-level executives are increasingly turning to collaboration with their business networks as a way in which to win new markets and address quickly evolving customer needs. According to the survey conducted by BusinessWeek Research Services (BWRS) and commissioned by SAP AG (NYSE: SAP), these executives also plan to expand their collaboration efforts even further over the next three years. Additionally, nearly twice as many small businesses and midsize companies expect to rely heavily on collaboration within the next three years. The C-level executives surveyed emphasized the importance of information technology (IT) and its role in facilitating integration to support their companies’ business goals of increased levels of collaboration with customers, partners and suppliers.
Titled “Getting Serious About Collaboration: How Companies are Transforming Their Business Networks,” the research report about the survey finds that large and midsize businesses plan to expand their reliance on their business network of partners by more than a third over the next three years. Approximately one out of three respondents identified access to new markets and customers as one of the top benefits to collaboration today. Roughly half of the respondents said they are currently counting on partners for R&D, manufacturing, marketing, logistics, distribution, customer service, human resources or other corporate functions – and two-thirds expect to be reliant on third parties for these functions to some extent by 2011. Large and midsize businesses also plan to outsource 18 percent of their operations by 2011. They already outsource 13.4 percent of their operations to date.
In the survey findings, a Procter & Gamble executive addresses the reasons for seeking out third parties for collaboration:
“The reason we had to do it was that the world had changed,” says Jeff Weedman, vice president for external business development at manufacturer Procter & Gamble Co. “Only about one-third of the products we brought to market were successes. The fast-followers were getting faster, and the retailers were increasingly our competitors…Over time, we’ve been able to understand networks and the value of them, so we’ve added places to look for ideas and technologies.”
Small Businesses and Midsize Companies Embrace Collaboration
The survey findings show that collaboration is skyrocketing for small and midsize enterprises (SMEs, 100-1,000 employees). These companies now recognize co-innovation with partners as a pathway to growth. Nearly twice as many SMEs are expecting to rely more heavily on collaboration in the next three years. The survey findings show that the percentage of business operations supported by external partners of SMEs will triple by 2011 and are approaching the level of partnering currently used by large companies. In addition to gaining access to new markets and obtaining cost benefits, SMEs emphasize improved quality as one of the most important benefits for collaboration.
The Rising Importance of IT to Enable Collaboration
As the role of collaboration changes, the need for a robust IT infrastructure becomes even more important to drive success across partnerships. Only half of the C-level executives responding to the survey are confident that their IT infrastructures will be able to support their collaboration strategies during the next three years. This result underscores the crucial role IT plays in facilitating collaboration and enabling business transformation. While CEOs are embracing the concept of developing customer-centric business models by optimizing the company’s network of employees, suppliers, customers, partners and distributors, IT needs to play a strategic role to make it all work.
As mentioned in the survey findings, The Dow Chemical Company’s heavy investment in IT in the mid-1990s set it apart from other companies in the low-margin chemical industry. It ditched fragmented legacy systems and created common work processes. Its smooth-running technology became the gold standard among large companies in its industry. Dow’s IT infrastructure is the crucial foundation platform that enabled a successful overhaul of its strategy and business model.
“The findings of this survey confirm that collaboration is being increasingly recognized as a pathway to growth, innovation and competitive differentiation,” said Zia Yusuf, executive vice president, Global Ecosystem and Partner Group, SAP. “In an early acknowledgment of this trend, SAP itself is a practitioner of business network transformation through collaboration. Through our ecosystem of partner and customers, we are helping to accelerate innovation and improve return on investment for our customers. The SAP ecosystem brings together diverse relationships, resources, and communities to help create the next generation of technology solutions in concert with our own development efforts.”
In addition to the survey, SAP also has engaged business leaders worldwide on the subject of collaborative business networks. To view SAP TV videos where CEOs from companies including Cisco Systems, Inc., the LEGO Group and Mahindra and Mahindra discuss their thoughts on collaboration, please visit http://www.sap-tv.com/special_0801_00.htm.
Please visit, “Getting Serious About Collaboration: How Companies are Transforming Their Business Networks,” to view the research report.
BusinessWeek Research Survey Methodology
BusinessWeek Research Services (BWRS) launched a survey and research program in early 2008 to discover and analyze the views of C-level executives and line-of-business executives on collaboration with third parties. BWRS received responses from 353 C-level executives of companies with at least 100 employees in January 2008 via an online questionnaire. Respondents were from a wide variety of industries including manufacturing, financial services, healthcare/pharmaceuticals/life sciences, transportation/utilities and wholesale/retail. The quantitative survey was complemented with qualitative research. BWRS conducted in-depth telephone interviews with senior executives from a cross-selection of industries. BWRS also conducted interviews with leading independent consultants, industry analysts and academics to provide context and additional insights.
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