We predicted that the then current consolidation of major industries was the ‘last gasp’ of an aging business model. It will be like the final contraction before the ‘Big Bang’ of the new business world economy. This Bang will not be cataclysmic, but from the perspective of history, we believe it will be viewed as explosive. This explosion will represent the coming of age of Global Business, represented by the growth of electronic business to business transaction exchange.
Now we see the beginning of the end of the old business model. "The age of the conglomerate is over." said Viacom CEO Sumner Redstone1 as he announced the split of Viacom from CBS. Thousands of automotive workers will loose their jobs as the industry contracts from it's bulging state. United Airlines has ceased funding its retirement plans; others are reviewing this obligation. The age of Global Business is upon us!
Just what is Global Business? Quite simply put, it is the mechanism by which two or more business enterprises form enhanced trading partner relationships for the purpose of increasing revenue and reducing costs while in the business of producing a saleable product. The enhanced trading partner relationship is represented by the ability to exchange information electronically, without the need for hard copy or oftentimes, human intervention. It is further represented by the ability to communicate business intelligence directly to the supply distribution and manufacturing kernel business to enable quick reaction and efficient response to the changing business cycles of supply and demand.
Communication has long been the primary driving force and success factor of any business: communication to employees, peers, management, customers, and suppliers. Business lives or dies by how effectively its communications infrastructure works. If a business fails to properly communicate with employees and management, the business ceases to function effectively. If a business fails to communicate to its customers and suppliers, it either looses sales or does not have anything to sell.
The best minds in Information Technology believe they can already see the next great expansion in electronic Global Business. It's called Real-Time Enterprise Computing or RTEC. It's only a buzz now, but they expect it should be a full roar in about four years. RTEC is the culmination of the march that began with management information systems (MIS) and database management systems 20 years ago, and it will be made possible by the next generations of the Internet, servers, and personal information devices.
Put simply, RTEC links together all of the information in a company, as well as its partners up and down the supply/distribution channel, and makes them accessible in real time. Sales, marketing, manufacturing, inventory, HR, accounting, financials--everything is polled continuously and made available right now. American industry is growing desperate for RTEC, even if it doesn't yet know the name.
Back to the consolidation issues. With these consolidations, businesses believed that they could enhance communications by controlling the communicators and devices. We believe all they have accomplished was to create a massive conglomeration of business activities that will become so enormous that the shear weight of the bureaucracy necessary to manage the organization will eventually cause it to crumble.
We believe that the future of business (small, medium and global) will be a return to smaller business enterprise structures. [To accomplish this, companies will either ‘spin off’ enterprise operations or give more autonomous control to various divisions of the organization.] This does not necessarily mean cottage industry or small economic share, but small in the sense of kernel core competency. These kernel businesses will be linked by high-speed communications infrastructures consisting of intelligent computer controlled mechanisms with direct linkages to other ‘linked’ trading partner business enterprises. While small in structure, and more adaptive by nature, these business partnerships will provide the functionality much like the current behemoth organizations we see today; yet with the flexibility to rapidly implement change in the ever faster paced business and world economy.
What we see with the latest television advertisements of e-Business and Internet retail organizations, coupled with the traditional electronic data interchange (EDI) systems that have been in existence for many years, is a shift in this direction. The direction of Electronic Business Flow Management (EBFM) is the embodiment of traditional business practices coupled with leading edge technology to enhance the communications efficiency of trading partner business enterprise relationships.
These relationships will demonstrate an ability to meet the dynamic demand of suppliers and customers (also trading partners) exhibited in today’s fast paced economic model. The consumer demand for new and enhanced products has increased exponentially over the past years. The public has realized and now expects products to pass through the marketplace and be made obsolete by new offerings at an ever-faster pace.
What is the answer if we believe that the current business organization model is doomed? Enhanced e-Business models will enable the move to EBFM or Electronic Business Flow Management. Enhanced EDI tools driven by new technologies such as XML-EDI and the evolving Internet retail spaces will support these new business models. These models will appear like an octopus with tentacles linking to a kernel business competency or product matrix. Traditional products will be produced from the kernel business that will be delivered by enhanced distribution systems, also supported by enhanced EDI tools.
What does this mean to you? It means that companies that do not embrace the fast paced of electronic business models will be left in the proverbial dust! With the ability of smaller kernel businesses that are linked through the e-Business communications model to deal with shifting demand and supply, larger organizations will be struggling to communicate through bureaucratic channels.
If you do not know what EDI means to your organization, find out. If e-Business exists within your organization, learn to understand and work with this new model; if it doesn’t, implement one. The world is changing at an ever-increasing pace. The new Millennium will be one keynoted by Global . The new kernel Global Business model will prosper while the old archaic infrastructures modeled by huge bureaucratic organizations grind to a halt. Work to enable the move to EBFM or Electronic Business Flow Management. This will improve efficiencies within the organization while reducing inefficient manual and paper system interfaces to the kernel business competencies.
We at Management Systems Consulting, Inc. are prepared to assist your organization to meet the challenges presented by the evolving Global e-Business model. Contact us to learn how to implement traditional EDI trading partner relationships or to grow existing relationships towards EBFM and the Global e-Business model.
1. Quote from Viacom CEO Sumner Redstone published in the Orlando Sentinel June 15th 2005.