Critical Sucess Factors in Collaboration

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Collaboration may be the latest industry buzzword, but people have very different ideas about what it means. My dictionary defines collaboration as teamwork, partnership or group effort. But for an increasing number of medium sized organisations it has a deeper meaning: it is the only way they can stay in business.

For them information is no longer just a competitive weapon to be jealously guarded. It is a means to improve their performance – and sharing it provides a new way of gaining business advantage.

The data they gather from their tills, web sites or from the factory floor can form the basis of collaborative planning and forecasting with trading partners or more ambitious joint ventures to open up new channels to market.

You have only to look at the sportswear company Nike to see how outsourcing every thing you can brings massive rewards. The company is quicker to react to market changes, better placed to innovate and has reduced inventories to boot. Collaboration means Nike is proactive and can beat the competition at every price point.

Managing suppliers
One leading mobile phone handset manufacturer has made collaboration a cornerstone in its business strategy. The company developed a procurement system thatintegrated global requisitioning in the belief that if you are going to get better results, then managing your suppliers is a good place to start.

Add that to improved processes, employees who are more focused and working with better systems, then you can achieve vastly improved cycle times.

In industries with shrinking windows of opportunity to bring new products to market, collaboration in design and manufacturing is the only way to speed up the flow of new products and to share the costs involved.

The roll call of companies that have proved collaboration works for them is a broad one, embracing a well known tinned food company, at one end, to high tech firms at the other. It is clear that the only way small companies will survive in the future is to leverage the size of these bigger companies by working with them.

If you want to be on an equal footing you have to form partnerships, because there is a limit to how far improved efficiency on its own will take you. Leveraging the size of your partners allows you to take advantage of their purchasing power and get greater clout as a result.

Collaboration can take many forms, but it must start with internal teamwork. Unless your own employees are working together there is no prospect of successful collaboration outside the organisation. Here management by example is critical. Senior executives must take the lead if they are to have any hope of banishing the ‘not invented here’ way of thinking.

They need to explain why it makes sense to share nonsensitive data gathered from EPOS systems with suppliers. Those who have already experienced this new world will embrace it, many will need to be persuaded that they don’t have to hoard company information.

Outside the organisation, the ability to create new partnerships is greatly increased by the development of technologies such as supply chain event management software, radio frequency identification (RFID) and online exchanges, which facilitate closer connections between trading partners and more reliable information to make decisions.

Every organisation needs a strong foundation on which to base its relationships and in technology terms this is an enterprise resource planning (ERP) system. ERP systems not only provide a single data source but also a platform on which to build a best of breed application such as an e-procurement hub or a web-based marketing system. These applications need to be part of end-to-end processes that guarantee integrity and accountability.

Mid size companies cannot afford to go it alone, they don’t have the resources. Shared web services that enable a company to develop new channels by working with partners that do not compete with them is one way they can punch above their weight.

However, there are limits to collaboration. For instance, information must be restricted to some degree. You don’t want to hand over data to your partners that you are using to make key strategic or technical decisions – that would be disastrous. The exchange needs to be confined to lower level information.

Not every company can benefit from doing business collaboratively. Players in fast moving businesses such as fashion or grocery are more likely to be involved in collaborative activity than firms in established, slower moving sectors such as engineering.

Often companies are not successful in their endeavours because they have issues with their end-to-end processes. One partner may have unique systems that create problems with data integrity, so that a collaborator can’t be sure that the information they receive is correct, uncorrupted and upto- date.

A secure environment is critical to reassuring partners. There have been big technical advances in this area in recent years. For example, a company that was doing a lot of government work in the UK recently built firewalls that allowed it to pass data to workers in India as screen displays but prevent them from actually downloading it or printing it out.

In many parts of the world there are restrictions about what can be done with personal information. Austria and Germany, for instance, will not allow companies to take names and addresses out of the country. And everywhere governments are introducing regulations that place fresh demands on those responsible for corporate governance.

The old saying ‘no pain: no gain’ applies as much to collaboration between organisations as it does to physical fitness. Of course, collaboration calls for financial investment, but just as importantly it calls for an investment in time. It is not an easy thing to do and those who look to work more closely with the organisations they do businesses with must be prepared to wait for their efforts to bear fruit.

 Patience, determination, belief in what you are doing and trust in your people are the critical success factors. The rewards, however, are worth waiting for. Hitesh Amin is mid market sector leader, IBM Global Business Services. Email:

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