Throwback Thursday: Evolution of the Business Network « CPO RISING – THE SITE FOR CHIEF PROCUREMENT OFFICERS & LEADERS IN SUPPLY MANAGEMENT

Publisher’s Note: In 2019, Ardent Partners is celebrating 10 years of delivering “Research with Results” to Chief Procurement Officers (CPOs) and other readers of this site, including published reports, eBooks, presentations, insights, articles and events. To commemorate the occasion, we are going to reflect on the firm’s first decade by presenting this weekly “throwback” series that will include a blend of top articles from our earlier days on this site. Despite procurement’s recent advances, we believe these articles are as topical and relevant as the day they were published. Enjoy!

Business Networks – the first of these networks, which were developed in the mid-to-late nineties, targeted the procurement function and were at the heart of the B2B internet craze. At the time, these “online marketplaces,” as they were referred to then, invested heavily in technology that promised a dramatic shift in how business processes, relationships, and transactions were managed. Although the vision was grand, accessing the first networks was a costly, slow, and complex undertaking. Additionally, the concept of cloud-based technology solutions, which is widely accepted today, had not yet begun to blossom within the enterprise. As a result, most networks failed. Of course, this was fifteen years ago.

In the intervening years, there have been several core, but significant, shifts in the landscape that have created a market that is much better suited to leverage business networks:

The procurement function (and to a lesser degree, the accounts payable function) has experienced a fairly broad transformation in how it operates and is viewed within the enterprise, resulting in a significantly higher level of automation across the function.
Supply management solutions (which automate sourcing, procurement, and accounts payable) have advanced and matured significantly in the areas of functionality, usability, and integration.
The enterprise IT orientation has completely shifted from one dominated by a centrally-managed ERP strategy to one that is focused on supporting the business owners and their processes.
Cloud-technology is now readily accepted by most enterprises for a variety of business uses.
A deliberate focus on collaboration between business functions continues to gain momentum
More and more suppliers are viewed as strategic partners by their customers.
Social networks have been able to redefine personal communication and change the way that many people interact with one another.

Ardent’s recent research around this area revealed that the market has quite a positive view of B2B networks, their role and their potential in the years to come. Business networks providers such as Ariba, Basware and Tradeshift are growing in size each year and are transacting billions of dollars between buyers and suppliers.