WILL YOU SURVIVE THE NEXT COMPETITIVE BARRIER?

Last week, I met with the executives at one of the world's top global companies. They had embarked on a strategy that sounded all-too-familiar. They were focusing all of their energies on internal operational efficiencies and on product innovations. Their logic was that, when the global recession ended, they would be well-positioned with a leaner, more efficient company and a set of hot new products. Sound good? It wasn't. And these execs had begun to realize it. As one of them said, "While we spend the next two years belly button gazing and getting all of our internal systems and business processes streamlined, our competitors will be embracing their customers' business processes. By the time we get our own internal house in order, we'll be shut out of the game!"

He was correct. There's a real danger in perfecting your internal operations. First, they'll never be perfect. Second, you're going to need to change them tomorrow, or the next day. Third, if you try to get your own house in order before you expose yourself to your customers, business partners, and suppliers, you're going to fall irrevocably behind.

ARE YOU GOOD AT EXTENDING YOUR ENTERPRISE?

While it's tempting to focus on streamlining internal operations and business processes before you invite customers, partners, suppliers, and others to link up to your enterprise systems, people, and processes, it's dangerous.

We believe that the only way to thrive in the networked world in which we all now compete is to aggressively expose your internal operations, business processes, systems, and information to your customers, business partners, and other key stakeholders. And you need to be aggressive in building collaborative commerce applications that enable customers, partners, and suppliers to co-design products and processes, to manage projects and relationships, and to quickly react and respond to changes in context and conditions.

Don't limit your thinking to the use of the Web to extend your enterprise. Remember that we live in a multi-touchpoint environment. You'll need to be able to provide consistent information in context as well as transaction support and collaborative problem-solving tools by phone, e-mail, Web, mobile wireless, and whatever the next interaction touchpoint may be. Your customers, partners, suppliers, and employees need integrated, multi-touchpoint, extended enterprise solutions in order to interact productively.

DESIGN YOUR EXTENDED ENTERPRISE FROM THE OUTSIDE IN

INTEL'S OUTSIDE IN APPROACH. One company that understands how to start from the outside in is Intel. Back in 1997, Intel's executives in its Asia Pacific region realized that, in order to be competitive, Intel needed to link its customers' and distributors' business processes seamlessly into its own. The issues were complex. Each customer or distributor had its own internal workflows, signature authorities, and quality-control processes. Intel's team met with each one and co-designed business processes that would work. Intel even worked with the Taiwanese government to improve the country's Internet infrastructure to be able to handle the security and encryption requirements for these collaborative applications. As they went live with this first customer and partner extranet solution in Taiwan, Intel still hadn't connected its back-end systems into the process. They used manual steps to bridge the gaps. Why? They needed to see how information and processes would flow before they glued everything into place.

That first Taiwanese initiative was extremely successful and has become the model for how Intel now thinks about extending its enterprise out to customers and partners. Start first with the customers' own internal business processes and requirements, streamline those along with the new combined capabilities, and don't worry about hardwiring your systems together until you have developed a flexible, adaptable set of key services that support your collaborative commerce applications.

DESIGN THE KEY SCENARIOS FROM THE CUSTOMERS' POINTS OF VIEW

How do you develop a core competency in quickly designing and enabling extended enterprise business processes? Begin by capturing the key customer scenarios: the tasks, processes, and outcomes that matter the most to each of the key groups of customers and partners with whom you interact (or would like to). As you uncover these scenarios and co-design them with your customers and partners, make sure that you're thinking a bit out of the box and that you correctly capture the interaction touchpoints that each constituency is most likely to need and to use at each step in his or her scenario. Here's an example of the kinds of extended enterprise applications that a pharmaceutical company might need in preparation for the introduction of a revolutionary new treatment.

PREPARING FOR LAUNCH. A hypothetical pharmaceutical company is preparing for the roll-out of a new drug that is about to be approved by the FDA. This company realizes that, in order to insure the successful uptake of its compound by prescribing physicians, it needs to surround the roll-out with a variety of business processes that meet the various stakeholders' needs. These might include:

* Having a hotline that connects physicians quickly with a colleague who participated in the drug trials, so they can get expert advice.

* Giving patients and doctors collaborative tools to manage patients' dosages and compliance with the treatment regimes, using the Internet and mobile, wireless phones.

* Managing the end-to-end delivery and inventory of this complicated treatment, some of which needs to be refrigerated, and another part of which is radioactive and needs to be dispensed by radio labs.

* Helping doctors with the rapid reimbursement of claims and replenishment of inventory.

Notice that these all are inter-enterprise applications. They need to be secure, robust, and confidential. Ideally, these kinds of applications should be able to be built and deployed quickly, modified quickly, and supplanted or abandoned quickly. For each new drug roll-out, there will be very different kinds of collaborative applications required. Yet many of them should be able to rely on some of the same underlying services that were originally developed for other roll-outs.

EVOLVE RE-USABLE SERVICES FOR YOUR EXTENDED ENTERPRISE APPLICATIONS

Gone are the days when any company can afford to do "one-offs" for any application or requirement. Intel doesn't want to build one-off extranets nor extended-enterprise applications for each set of customers or geographies. Nor does any pharmaceutical company want to develop a unique set of collaborative applications for every new product it launches. Profit margins would erode quickly. Here's the trick: As you use an outside-in/customer-scenario approach to quickly design and deploy extended-enterprise applications, you need to also design for re-use. What does that mean in practice?

* Use a building block or services approach to spec'ing and designing your applications-make sure that the platforms and tools you select are comprised of services (e.g., security, authentication, chat, paging, application interfaces) that you'll be able to re-use in other extended applications.

* Add time at the end of each project to capture best practices and learnings.

* Take the time at the end of each project to catalog each service component and to rewrite and extend it so that it can be re-used in a future project.

* Enforce a culture of re-usability. Reward for re-use. Penalize architects and developers who start from scratch or who choose a new solution each time.

DON'T WAIT: THE EXTENDED ENTEPRISE ERA IS UPON US

We are passionately convinced that, over the next three years, companies will fall into two categories: the group of companies that is destined to thrive and the group that is destined to fail. The key difference between the companies that succeed and those that fail will be the speed with which they become expert at the design and continuous improvement of extended-enterprise applications.