Office culture thwarts collaborative commerce

Companies are just beginning to learn to collaborate over the Internet by automating their operations, but technology isn't the thing that will hold them back.

"These are cultural issues more than technological," said Greg Runyan, an analyst at The Yankee Group, speaking Monday, Feb. 12, in San Francisco to a Yankee Group conference on collaborative e-commerce.

Companies may also move slowly toward collaboration on a range of processes from design to manufacturing, sales and delivery because of unwillingness to give up obsolete computer systems.

While the business-to-business Internet industry first focused on doing transactions over the Internet, the focus has shifted to doing all kinds of other teamwork on the Internet. The Yankee Group estimated that by 2004, there will be $2.78 trillion worth of B2B trades conducted over the Internet - but collaborative commerce has far greater potential.

There are several reasons companies need to work more with their trading partners, analysts and industry officials said. More companies outsource their work. Products are more complex and require more integration between their parts. The supply and distribution chains that companies use to build and sell their products are more complex.

And companies believe they could use collaboration to make more money. A PriceWaterhouseCoopers study estimated that collaborative commerce will ultimately help companies increase revenues by 2 percent to 6 percent, while procurement engines will reduce expenses by 1 percent to 5 percent.

As companies see the need to work more closely with their partners, they will need to integrate their operations with their partners through Internet connections.

"That really defines a new generation of technology, and defines a new generation of solutions," said Jon Corshen, vice president of corporate strategy at Ariba, an e-procurement vendor.

"This next wave will be bigger than ERP [Enterprise Resource Planning] was in the '80s and '90s," he said. ERP software is used as a central software package to run computer operations within a company.

But the coming wave was one reason why Ariba recently paid $2 billion for Agile Software, which makes software that lets companies exchange parts lists for quicker procurement speeds.

While managers may see business value, some people have different ideas. Cultural resistance shows up in several areas. One of them is in supply chain planning, which typically has been planned by the company. Now, collaborative models of working together are emerging that decentralize the decision, giving many stakeholders a say in the planning, starting from the manufacturer in question and branching out to suppliers, delivery companies, customers and distributors.

"What's the incentive you use to get everyone to participate in this?" Runyan asked.

The issue came up again when one participant asked what could be done to get trading partners to share confidential and critical information in collaborative ways, possibly exposing it to competitors.

"I don't have an answer," Runyan said. "It's more a cultural issue than a technological issue."

Employee resistance already blunted the introduction of one company's collaboration effort, said Jon Derome, another Yankee Group analyst.

The unnamed company, a Yankee Group client in the transportation industry, wanted to bring new products to market sooner. After its pilot program cut design time from two years to about seven months and cut manufacturing setup costs from $10 million to $500,000, it took the new collaborative processes companywide. The results were good, but not dramatic. The main reason wasn't technological, but that people didn't want to change how they worked.