By Andrew K. Reese
Hugo Evans is an unabashed technology enthusiast who talks about Wikis and blogs and RSS feeds with the passion of a true believer. When it comes to leveraging Web 2.0 solutions within the supply chain, Evans and his team have a 360-degree perspective on the possibilities for these emerging tools. "I get excited about the technologies," explains Evans, chief information officer with A.T. Kearney Procurement & Analytic Solutions, "but I always take a step back and ask the most critical question, 'How can this be applied to a business problem?'"
Evans hosted a recent Web seminar on Web 2.0 technology for the Sourcing Interest Group (SIG) with Walter Alvendia, business technology director with A.T. Kearney, to share his enthusiasm. More importantly, he wanted to help procurement and sourcing executives understand the evolving role of Web 2.0 technologies in the enterprise. "With Web 2.0, there's a lot of hype, confusion and acronyms, and the technology is constantly changing," Evans says, adding that the technology really is secondary to the business and change management processes behind it.
A "Perfect Storm" Driving Web 2.0
Evans sees three forces creating a "perfect storm" to drive greater adoption of Web 2.0 technologies within the enterprise: the initial waves of the so-called "Millennial Generation," or Gen Yers, entering the workforce, the increasing maturity of Web 2.0 technologies, and changes in enterprise technologies.
Starting with the Millennials, Evans notes that they have grown up with technology and been immersed in it. "They tend to eschew hierarchies, and they share information much more freely," he says. "This is interesting because one of the primary challenges that organizations face in promoting collaboration is the ‘silo effect.' We don't see that effect with this younger generation." Alvendia suggests that the Millennials may be more eager to seek personal validation by using Web 2.0 tools to demonstrate their knowledge, a useful trait within organizations that might traditionally have seen individuals keep knowledge to themselves in order to maintain their value to the company.
With regard to the technology, Web 2.0 comprises a variety of new tools for enabling collaboration among different individuals and groups. Many of these tools are familiar to any Internet user. They include blogs, wikis, podcasts and social networking sites like Facebook and LinkedIn. Others, like mashups, RSS and social tagging, are still gaining broader recognition. (See sidebar, "8 Flavors of Web 2.0" for a primer on these and other Web 2.0 technologies.)
Underlying these different technologies is the fundamental goal of connecting people to each other and to information across organizational and geographic boundaries. "Web 2.0 is really about empowering users to generate content, connect people with each other, and connect people to content," Evans says. "Web 2.0 is not a new technical standard ‘or a new version of software. It's a broader way of thinking about how users interact with each other and the technology."
Finally, with regard to enterprise technology, Evans sees the emergence and increased adoption of technologies like Microsoft SharePoint and Oracle Collaboration Suite, among others, as laying a technology foundation for greater adoption of Web 2.0 within the enterprise. As technology vendors adapt to the new Web 2.0 paradigm and incorporate browser-based tools for collaborating and managing shared documents, the technology itself will help drive greater adoption in the enterprise.
Web 2.0 in Procurement
Procurement and other supply chain executives are starting to take notice of Web 2.0. A.T. Kearney's 2008 Assessment of Excellence in Procurement (AEP) Study, which surveyed 295 companies worldwide in the procurement space earlier this year, showed that a growing minority of procurement organizations already have adopted Web 2.0-based collaboration solutions. The study found that 22 percent of "market leaders" have adopted some form of collaborative work environment within their practice, while 33 percent of the organizations had plans to do so.
"Procurement leaders reported that they have adopted and are using technology robustly, across all aspects of procurement processes," Alvendia notes. "And they are now beginning to apply collaboration technologies to establish communities of interest around categories, supplier issues and projects, including active outreach to design and engineering departments. Collaborative workspaces are intended to be self-service and user-configurable online areas where users in the sourcing and procurement communities can organize their work, find stakeholders and develop deeper supplier relationships." The benefits could include the ability to support and enable more, better and faster engagement across business units, locations, geographies and functions.
One example of the types of collaboration tools that procurement leaders are adopting is electronic product data management and product lifecycle management (ePDM/ePLM) solutions that enable procurement to actively engage with the engineering and design communities within the enterprise. Within leading procurement organizations identified in A.T. Kearney's AEP Study, 59 percent said that the procurement organization has direct electronic access to engineering and design data or that they will soon, and 36 percent of leaders said that they have specifications data integrated with spend data to enable analytics. "Leaders know the importance of having procurement linked to the manufacturing and product development functions, where the bulk of cost is designed into products from the start," Alvendia says.
From a sourcing perspective, Web 2.0 technologies can help a company's procurement staff collaborate across geographies on the sourcing of a various commodities, leveraging the commodity-specific expertise or procurement practices that staff in one region might bring to the table. Supply management staff is better able to share knowledge of a company's relationships with particular suppliers, as well as the histories of those relationships over time, to craft better negotiating strategies. Yes, that information and institutional knowledge is available without Web 2.0, but the new technologies make it faster and easier to share that information across silos, and make it easier for staff in one function to find colleagues in another department who can provide intelligence or perspective on a particular issue.
Challenges to Broader Adoption
Alvendia acknowledges that while leading organizations have made great strides in implementing technology across a range of processes, very few companies have deployed the full range of Web 2.0 technologies. Even leading organizations are likely to encounter a number of challenges to the broader deployment of these technologies. Recent surveys have shown, for example, that senior IT leaders often are suspicious of Web 2.0 technologies, and only a minority of CIOs have made Web 2.0 a priority. In addition, typically these sorts of significant technology initiatives require senior-level sponsorship. The employees who are most likely to see value in the new tools are those Millennials who are just entering the workforce and are therefore least likely to have any significant voice within the enterprise. This also means that companies accustomed to a top-down flow of information must reorient themselves to take advantage of the bottom-up, or grassroots, nature of content creation in a Web 2.0 collaboration environment.
A.T. Kearney Procurement & Analytic Solutions has established a "collaboration team" to help companies overcome these challenges and move more quickly to incorporate Web 2.0 into their processes. The team has developed a methodology to incorporate collaboration tools for the enterprise space, including the development of customized platforms for companies' program/project management offices (PMOs) and management of their supply chain processes, PLM, knowledge management/enablement and procurement transformation initiatives, among other uses.
"The next frontier for procurement and supply chain leaders is changing how people work. The adoption of Web services and SOA, along with collaboration platforms, is rolling through many organizations and is forming the next wave of change, with the leaders on the bleeding edge," Alvendia concludes.