INDUSTRY ANALYSIS

Network Integration and the Pivotal Role of CRM

Lots of us think that the rise of the Internet over the last decade has turned us into a society totally connected with each other and to the world at large.

Although we are definitely on the way, there’s still a lot of work to be done. And as it turns out, the Internet has provided only the plumbing.

In The Rise of the Network Society, sociologist Manuel Castells identified five primary kinds of networks:

  • Supplier networks, in which firms subcontract for inputs ranging from design operations to the manufacturing of component parts.
  • Producer networks, which are composed of companies that pool their production facilities, financial resources and human resources to expand their portfolio of goods and services, broaden geographic markets and reduce up-front risk costs.
  • Customer networks, which link together manufacturers, distributors, marketing channels, value-added resellers and end users.
  • Standard coalitions, which bring together as many firms as possible in a given field with the purpose of binding them to the technical standards established by an industry leader.
  • Technology cooperation networks, which allow firms to share valuable knowledge and expertise in the research and development of product lines.

    The point that stuck with was that enterprise software is already roughly aligned with the five types of networks Castells describes.

    Bringing Networks Together

    Most interestingly, the first three network types — supplier, producer and customer — correspond well with the most prominent kinds of enterprise software: supply chain, ERP and CRM.

    The top three can also be considered “old style” in that their actions are based on transactions, while the last two network types have an aura of Buck Rogers and the twenty-first century about them.

    Large pharmaceutical companies and academic medicine seem to come together in technology cooperation networks to cure disease or discover a new drug. Such networks also increasingly bring together competitors to develop technologies like the new cross-service fighter jet being developed by Lockheed and Boeing.

    Central Role for CRM

    But what really takes your breath away is the potential importance of CRM to the mix.

    In a highly networked world where everyone is a vendor and everyone is a customer, CRM occupies a unique place in bringing the various networks together. That’s why integration has to be at the forefront of any CRM company’s thinking today. And by integration, I mean process integration, not simply integrating data.

    Data integration has been a powerful tool in integrating any single network type, but process integration is required to integrate across networks. While it might be relatively easy to vertically integrate data up and down the processes of a single network type, it is far more difficult to integrate horizontally, across networks.

    For example, while a modern CRM system can capture a complete view of the customer’s needs, it is far more difficult to translate this information into product specifications that participants in either a supplier network or a producer network (or both) can use to design, build and deliver the right product at the right time.

    Challenge of Integration

    Similarly, technology cooperation networks performing high-value research — such as new drug discovery or deep market studies — depend on deep understanding of different aspects of the customer to perform their functions.

    All this and more argues for inter-process integration. Because there are so many disparate processes and systems that manage each of these kinds of networks, it is virtually impossible to consider developing and maintaining traditional point-to-point interfaces between all of them.

    It is also highly doubtful that any single vendor can provide the best applications for all aspects of a trans-network business process.

    All of this leads us to the importance of integration strategies that are just coming to market. In this space I have discussed the virtues of Web Services, XML, SOAP and more ambitious approaches such as Siebel’s Universal Application Network and SAP’s NetWeaver. I’ve also discussed the need for deep support articulated by Shoshana Zuboff in The Support Economy.

    The challenge of building better products that are more useful and less expensive resides in integrating the numerous networks that support the different phases of product analysis, development, delivery and support. This can be done only by continuously improving inter-process integration.


    Denis Pombriant is former vice president and managing director of Aberdeen Group’s CRM practice and founder and managing principal of Beagle Research Group. In 2003, CRM Magazine named Pombriant one of the most influential executives in the CRM industry.


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