InformationWeek

February 8, 1999

Inside the IT Value Chain

Links Mean Value

Competitive Edge

Customer Service Has Its Costs

Value Chain Benefits Still To Come

Slow Revolution In E-Commerce

Get Creative In Sharing Knowledge

Business Value Of Communications

Tighten Links In Value Chains

Executive Reports:
Tighten Links In The Chain

Infrastructure issues will be key as value chains evolve

By John Soat

hether you use the term "value chain" or "supply chain," the emphasis is usually on the first word, the active word, the results-oriented word, with an almost cavalier disregard for the complexity and strenuousness embodied in the second word. But the interactions represented in either phrase still constitute a chain, albeit a virtual one. And you know what they say about chains.

The current state of the value-chain equation epitomizes that conventional wisdom. The weak links involve all aspects of network-oriented business processes: standards, protocols, communications, and security. Some of the weak links are technological, such as where and when to use virtual private networks vs. the Internet. Some are cultural, such as the need for business process reengineering in connection with implementing enterprise resource plan- ning systems. And some are political, such as the resistance to sharing data, especially among competitors.

But the fits-and-starts process of value-chain implementation is providing some insight into how infrastructures are evolving. Many companies, for example, use electronic data interchange for business-to-business supply-chain interactions, and reserve the Internet for customer interaction. Also, many companies have begun the reengineering necessary to effectively imple- ment enterprise systems. Furthermore, ERP systems are evolving as a viable format for data standardization--in the future. "They may be as important in establishing intraenterprise standards as inter-enterprise," says Ken Harris, CIO of Nike Inc. "With a good communications protocol, the technical standards may be less important than the data standardization."

bar chart

But that's only a start. As the tactical supply chain evolves into the strategic value chain, infrastructure issues will emerge as paramount in establishing the most efficient, effective form of business and knowledge transfer. And for dealing with those weak links.

John Soat is news editor-at-large at InformationWeek.

Illustration by Matsu