The Value Of CollaborationThe Value Of Collaboration

For companies that focus so much of their energy on supply-chain-management, value-chain-integration, and customer-relationship-management initiatives, there's really only one constant that is the key to success for any of them: collaboration.

There's a lot more to collaboration than sharing transaction information, logistics data, or business documents. The real value comes when business partners tap into each others' business processes.

Consider General Motors, whose ability to integrate its suppliers into the overall automobile design process can save more than six months in overall design and production time. GM asks manufacturers of components such as seats, dashboards, and fuel-injection components to provide input on automobile designs very early in the conceptual phase, which lets the automaker find ways to reduce manufacturing costs by better accommodating suppliers' products.

But if your company wants to step up its collaboration with outside parties, it pays to take a hard look at what you're getting into. Major challenges include organizational commitment, intellectual property, and competition issues.

Some companies may be challenged with the whole notion of collaboration. Plenty of companies have failed at their own internal collaboration and knowledge-management initiatives because of organizational structures that create silos, the inability to get people to see the value of collaboration, and the inability to present a clear business case to gain full organizational buy-in.

The good news is, the dynamics of a customer relationship or business partnership makes it much easier to create a clear business case for external collaboration. While the benefits of internal collaboration are sometimes fuzzy, the upside of external collaboration makes for easier justification. Lowering development costs, accelerating payments, and potential up-selling opportunities are all good business reasons to invest in external partner collaboration.

When partners collaborate--particularly in product design--the issues of intellectual property rights will inevitably arise. If multiple parties contribute to a single design, where does the ownership really lie?

In the interest of making the most of your business relationships, companies should not try to impede their initiatives with overcautious paranoia. Parties that are not effectively collaborating may not have any designs or property to share--and it's better to own a portion of something than all of nothing. If possible, don't allow excessive caution or legal fears slow down your business interests unnecessarily.

We're not trying to minimize the risk of giving away confidential information or intellectual property. Use common sense in collaborations with external partners. If your business processes are proprietary, there's risk in sharing them with others. If your partners could also compete with you, this risk is heightened. This means you have to pick partners wisely. The better partners for online collaboration include those that are not direct competitors, those that you have an open relationship with, and those that have a clear understanding of their future direction and business strategy.

Collaborative commerce is becoming a way of life, and over the next five years, it will be a key ingredient of the core competencies of many successful companies. But to be able to take advantage of the benefits of collaboration, now is the time to start looking at your current roster of partners and examining your own company's readiness to begin collaborating with these partners online.

James K. Watson, Jr. is president and CEO of Doculabs Inc., an industry analyst and advisory firm that helps companies plan their E-business strategies and select and exploit technologies for their E-business. Watson can be reached at 312-433-7793 or [email protected].