Column by James M. Dorsey

1. By James M. Dorsey
COLUMN
Leveling the
Playing Field
A
marketing director for multinational tion processes. “Success for business nowadays is related to the
Siemens AG, Adrian Honey’s responsi- level of the sophistication of management,” says Luis Maia
bility is to ensure that vendors across the Carneiro, coordinator of Net-Challenge, a European Union
globe understand his company’s core values and and Chinese funded effort to create trans-national standards as
competitive edge. That’s no mean task. Siemens works with well as the software to implement those standards for collabor-
some 2,000 independent vendors selling competing products, ative business networks that would enable small and medium-
including those of Siemens, in 85 countries and a multitude of sized enterprises. Net-Challenge hopes to change the paradigm,
languages. Siemens’ complex product range and multi-layered initially in the textile, footwear and machine tool industry with
vendor network that includes sophisticated large resellers as a horizontal rather than a hub approach built on TIE’s Kinetix
well as less mature small and medium-sized partners doesn’t Platform for business networks. In doing so, Net-Challenge
make things any easier. would create a more level playing field on a peer-to-peer basis,
Mr. Honey’s dilemma is hardly unique. Most multi- particularly in Europe where the vast majority of companies are
nationals operating across continents and covering much of small and medium-sized enterprises
the world’s geography face the same issues. So do government Greater efficiencies and a more level playing field notwith-
officials and company executives seeking to establish com- standing, standardization of business integration may have a
mon standards for business integration less than anticipated effect on the prof-
across borders that demarcate often itability of smaller companies and
vastly different legal and fiscal regimes pricing for consumers. That is where
as well as cultural, linguistic, protocol some experts say governments have a
and infrastructural differences. The role. William Wang, an information
complexity and difficulty of integration management specialist at New Zea-
is evident even in markets that vary far land’s Kelburn Parade Victoria Universi-
less from one another than those in Eu- ty of Wellington, compares cross border
rope and Asia. “Even between Canada business integration to free trade agree-
and the US, issues exist in privacy and ments (FTAs). “While many countries
national security,” says Patrick Hung, nowadays sign FTAs, consumers do
a professor at Canada’s University of not usually feel a reduction in their cost
Ontario Institute of Technology. of living. Put in other words: breaking
For Dennis Gaughan, vice president down boundaries, brings opportunities
of AMR Research Inc., Mr. Honey’s to some and takes away benefits from
successful tackling of the problem others,” Mr. Wang says.
constitutes a notable case study. In research published in That understanding may be the most advanced in Europe,
July, Mr. Gaughan analyses how Mr. Honey worked with The which so far has invested the most in efforts to standardize
Netherlands-based syndicated content provider Tie Holding business integration and facilitate integration of processes
NV, an AMR client, to begin to get a grip on the problem and between companies. Chinese participation in Net-Challenge
to demonstrate the benefits of business integration not only to highlights Europe’s grasp of globalization where production
Siemens but also to its partners in terms of reduced processing of components in low cost economies needs to be tied in to
costs and greater market penetration. the high-tech producer of sophisticated products. Says Mr.
“We’re seeing a shift towards looking from end to end. Carneiro: “You need to communicate with the real world.”
Big companies feel the pain first. They typically have the most
complexity and biggest challenge. Smaller and medium-sized
companies take a more cooperative approach towards tackling James M. Dorsey was a foreign correspon-
the problem,” Mr. Gaughan says. dent for more than 30 years for The Wall
The global market for business-to-business business inte- Street Journal and other publications. Today
gration remains a niche market. Experts estimate the market at Mr. Dorsey is a columnist, media entrepre-
no more than $1 billion. A small group of vendors, including neur and international affairs consultant to
TIE, are benefitting from an inclination on the part of corpora- strategic communications, security and water
tions to outsource the management of their business integra- companies as well as investment funds.
TIE ~ 1/2009 ~ P7