From Value Chain to Value Network: Reinventing the Enterprise in the Light of Technology Forces

Abstract

Cloud, mobile, social, and analytics technologies are changing the environment in which today’s industries operate. It takes only few employees to start a globally scalable business. It may be that such startups are currently still in their infant phase. But what will happen if these new enterprises achieve massive cost reduction and flexibility advantages over the coming years due to new technology application? It is clear that current enterprises have to adapt to the revolution initialized by the new technologies. How can existing enterprises respond to the new entrants who use the latest technology to their advantage? Should they just copy technology? Or should they take a knowledge-based approach and ask the question “what special know-how do they have that new entrants do not have?” What would be the “new” competitive advantage of today’s enterprises? To answer these questions, this chapter analyzes four general business architecture views (value chain, process view, information view, and structural view) of an example financial service company. In particular, it discusses the impact of technology-driven changes on these four views. Based on this analysis, it proposes a scenario that could help financial service companies to respond to technology-driven changes. This scenario is based on process management techniques and the application of domain-specific industry standards. The combination of process management with elements of information architecture can act as a catalyst in transforming value chain oriented enterprises over to value network-oriented enterprises, which focus on orchestration of value creation activities in the value network. Rather than fighting new entrants in their strength areas (technology), existing enterprises can use their business process know-how for reconfiguring their business to adapt to changed external circumstances.