This is not just a consumer phenomenon. It’s an enterprise one. More and more businesses are using social and business networks to reach beyond the four walls of their enterprises to connect and collaborate with customers, suppliers and partners in new and innovative ways that enable them to improve their performance and achieve unprecedented levels of productivity.
Networked Enterprises Outpace Peers in Every Category of Business Performance
In 2011, McKinsey & Company reported the initial findings of its examination into how the world’s businesses are beginning to use social media and business networks to enhance collaboration and productivity within the enterprise and across the supply chain.
According to McKinsey, “Fully networked enterprises are not only more likely to be market leaders or to be gaining market share but also use management practices that lead to margins higher than those of companies using the Web in more limited ways. (…) Networked enterprises were 50% more likely than their peers to have increased sales, higher profit margins, gain market share and be a market leader.
With results like that, the question isn’t when your company should leverage business networks, but can it afford not to be networked?
The Networked Enterprise Journey
At SAP we believe the Networked Economy is an exciting journey with many customers looking to us to find the best place to start. Where a customer takes that first step is dependent on your industry or SAP footprint however there are a number of common themes emerging:
1. Start with Finance Automation: Many companies begin the journey with automating Accounts Payable by trading Purchase Orders and Invoices electronically which results in cutting internal processing costs for both yourself and your vendors (and elimination of many errors that cause delayed and erroneous payments). There is minimal change management, integration is easy and SAP manages the outreach to suppliers – many of who will be already be connected and trading. This is a quick win which saves up to 70% of accounts payable operational cost, increases compliance and improves data quality.
2. Unlock Working Capital: The speed of processing electronic transactions enables more working capital that can monetise payables and turn finance into a profit centre. Typical savings are a 2 to 3 million return per billion of addressable spend.
3. Enhance Compliance: Expanding the scope into Procurement by leveraging supplier maintained catalogues for both requisitioning and complex services. This eliminates the over-spending experienced today by taking the price books/contracts sitting in a filing cabinet and put them into the transaction flow.
4. Extend Strategic Sourcing: Free up both capital and people by leveraging technology and the world’s largest trading network that allows focus on preferred suppliers and contracts. The resulting mature sourcing practices enable procurement to have an extended view and become more strategic.
5. Performance Management: Increase performance of vendors through strategic monitoring of the end to end process which is now realised through the above journey. Driving KPI monitoring and publishing regular performance reports ensure an optimal and high performing supply chain. Leverage business networks to gain real-time network based metrics and unlock the wisdom of the crowds.
Wherever you choose to start your journey into the Networked Economy, SAP can provide the most secure, reliable and compliant solution for your needs.
