Business Networks Deliver on the Promise of Digital Revolution

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Investing by companies in technology to increase productivity and growth has been robust over the past decade, rising 54% to $727 billion last year, according to the research firm IDC, as reported in NYT. But, judging by worker productivity and economic growth numbers, the payoff has failed to materialize.

As reported in NYT, according to the U.S. Labor Department, from 2011 through 2015, labor productivity measure shows only 0.4% annual growth in output per hour of work. That’s the lowest for a five-year span since the 1977-to-1982 period, and far below the 2.3% average since the 1950s.

According to the IMF, global economic growth will remain sluggish over the next few years at 3.2% in 2016 and 3.5% in 2017. For the U.S., the IMF expects growth this year to remain flat at 2.4%, with a modest uptick in 2017. According to Commerce Department data, as reported in WSJ, the U.S GDP expanded at an inflation-adjusted annual pace of 2.2% since the recession ended in mid-2009, far below its 3.6% average during the second half of the 20th century.

Too soon to pass judgment on the Digital Revolution

Opinions vary wildly on why all the technical wizardry, grouped collectively in the business world as Digital Transformation, seems to be having so little impact on productivity and the economy. One can find dire pessimists and rosy optimists in equal number, and there is no shortage of either.

But an informed and pragmatic view, guided by a bit of good old-fashion common sense, must take into account several salient factors before passing judgment on the success or failure of the Digital Revolution: 1.) The mind-blowing pace of innovation among digital technologies over the past few years; 2.) The mind-boggling complexity resulting from decades’ of businesses investing in technology; and, 3.) The historically conservative ‘change-resistant’ nature of business.

An industry-by-industry analysis published by the McKinsey Global Institute that examined 22 industries found that investing in digital technology differs greatly. In fact, according to the study, only 18% of the American economy is living up to its “digital potential.” According to James Manyika, Director of the McKinsey Global Institute, “if lagging industries do not catch up, we will not see much of a change in national economic statistics.”

Another keen observation of the report is that, as was the case with past tech-fueled revolutions, “productivity gains are not just the result of inventions, but also of continuous improvements to those inventions which greatly increased output in relation both capital and labor compared to the original inventions.”

Business networks deliver

Today’s Digital Revolution is creating an entirely new world economy. Companies must be equipped to discover, connect and collaborate electronically on everything from sourcing and orders to invoices and payments to supply chain operations, partner and vendor management, and human resources. To put it simply, this is a tall order.

As reported in Forbes, a study conducted by MIT Sloan Management Review and Capgemini Consulting, 90% of CEOs believe that the digital economy will have a major impact on their industry

The challenge remains, given the plethora of digital technologies and near-limitless array of digital solutions, what is the best strategy for jumpstarting or accelerating the digital transformation journey.

For many companies, the answer may be cloud-based business networks. Because of their cost-effectiveness, ease of deployment, masterful use of myriad digital technologies, and market-tested capabilities, business networks are spearheading a new era of enterprise technology centered on connecting businesses to each other and enabling easier and more efficient communication, interaction and commerce.

And according to a survey conducted by Ardent Partners, business leaders across industries are bullish on future of business networks:

  • 55% agree that B2B networks will eventually become the main platform for trading partners to conduct business.
  • 73% believe that B2B networks enhance collaboration between buyers and suppliers.
  • 75% agree that B2B networks are beneficial to buyers and suppliers.
  • 54% agree that B2B networks are an increasing source of new business for suppliers.

Moreover, as reported in Forbes, research from McKinsey & Company shows that networked enterprises that use collaborative technology to connect processes to customers, suppliers, and partners outpace their peers in nearly every category of business performance. And as the networked ecosystem is increasingly supportive and sustainable, each single entity becomes more meaningful.

Enter the SAP Business Network Group

Ariba, Fieldglass, and Concur, known collectively as SAP's Business Network Group, use an open, proven platform to connect internal business processes to ecosystem partners, redefining, respectively, the models for sourcing and procurement, flexible labor management, and travel and expense management.

Even though the Network Revolution has just started, SAP Ariba, SAP Fieldglass and Concur have made tremendous progress in their respective areas:

More than two million companies use SAP Ariba’s business network and comprehensive source-to-pay solutions to connect and collaborate around nearly a trillion in commerce every year.

More than 400 of the top global businesses leverage SAP Fieldglass’ intuitive, cloud-based services solution to gain visibility into its external labor, project-based services including Statements of Work (SOW), independent contractors and additional flexible talent pools.

More than 30,000 companies of all sizes are using Concur to automate travel, expense and invoice processes. And they’re seeing big benefits – like greater productivity, insight and cost savings.

Contact NTT DATA today to learn how we can advance your digital transformation by leveraging the power of business networks.

Post Date: 6/7/2016

Baskar_Radhakrishnan Baskar Radhakrishnan

About the author

Baskar Radhakrishnan is a director of the Global SAP Ariba Practice at NTT DATA, with 18 years of IT experience. He has an extensive experience working with customers globally across various industries in the areas of indirect procurement, MRO, sourcing, spend and supply chain analytics and contract management solutions. He has successfully led several large global procure-to-pay transformation projects, which leverage SAP Ariba on-premises and SAP Ariba cloud technologies.

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