InformationWeek

t's a summer morning in Atlanta, the kind where the warm dawn invariably gives way to a hot, still afternoon. A pickup pulls into the lot of a local Home Depot store and out climbs a worker, lunchbox in hand. He enters the store and uses a keypad to log into a mobile cart that will track his hours as he helps shoppers in the store's lumberyard. It's a perfectly ordinary beginning to a perfectly ordinary day--except that this man doesn't work for Home Depot. Rather, he's an employee of Georgia-Pacific Corp.

So why is he punching the clock at Home Depot? In the coming months, the lumber maker and the home-improvement retailer will test whether working together can improve customer service and sales. Under the pilot plan, Home Depot will collect data from the time cards of product representatives, marry it with sales and inventory information, and forward it electronically to Georgia-Pacific. The idea: By providing its top suppliers with more detailed information about how its people perform on the store floor, Home Depot hopes to increase its sales as well as those of its suppliers. "Hopefully we'll both end up managing a better business together," Home Depot CIO Ron Griffin says.

Griffin is in good company. More than ever, according to opinions voiced by IT and business managers in InformationWeek Research's new Information Sharing & Collaboration study, companies need to partner with suppliers and customers to develop the right products, find the right markets, and deliver the goods on time without stockpiling huge inventories. ERP and CRM tools have helped many businesses lay a foundation to make all this happen; now, these companies are looking for the next edge by building close partnerships with suppliers and customers.

There's some urgency. IT managers face intense pressure in a slowing economy to justify new technology with financial returns, and business managers are searching for ways to regain sales momentum and cut costs. The good news: According to the InformationWeek Research survey, more than nine of 10 business and IT executives believe that collaboration--the sharing of business information within and across corporate organizations--will increase sales opportunities, and about half say it will cut costs. Yet this drive for revenue is far different from fanciful dot-com dreams in which Web storefronts capture mountains of cash. Collaboration is about creating a broadly connected world, from suppliers to producers to customers to the customers' customers, that can react more quickly to changes in supply and demand.

Many businesses are already using collaborative tools to better understand their markets and thereby boost sales. Executives at Franciscan Estates in St. Helena, Calif., the winemaking division of Constellation Brands Inc., say they can more effectively tune sales and marketing efforts, since they get access to detailed sales data from distributors. Using a software front end from E.piphany Inc., data mining specialists at the winemaker now can dig more deeply into the raw information that's supplied from distributors via a central information clearing house. Franciscan knows not only which products are selling well through the distributors, it's able to track down sales to the retail level. If a premium product such as Franciscan's Cuvýe Sauvage chardonnay isn't selling well in a well-to-do area of Silicon Valley where it should be a natural, Franciscan's sales staff can target individual stores in those ZIP codes with a sales campaign for that product, without relying on distributors.

"It used to be that we knew what we sold and what the distributor sold, but [none of us knew] where it was being sold," says Elliot Stern, director of sales and marketing operations at Franciscan. "All of a sudden, our universe expands to 600,000 retailers that we can target by ZIP code, address and telephone, name, etc. The distributor network has become so big that it's almost mandatory that we have access around them."

Stern says it's difficult to directly link company sales results with the new data, but he's sure of one thing. "Our goal is to double sales volume in five years," he says. "We couldn't possibly do that without having access to the data and the ability to fine tune it."

Few companies are being as aggressive as Home Depot in sharing information with suppliers to drive sales and cut costs. Beyond the pilot program with Georgia-Pacific, it's sharing real-time point-of-sale information that helps suppliers lower inventory costs. Only 13% of surveyed companies share real-time sales data with suppliers. Home Depot shares that information only when company officials are sure it will pay off. To get the data, suppliers have to show that they can translate a smaller inventory into lower prices and fewer out-of-stock shelves for Home Depot. "Then we'll allow them whatever information they want--sales by store, geography, day of the week, whatever," Griffin says.

Home Depot first began implementing an electronic data interchange network in 1992; today, 85% of all the company's dealings with suppliers--from ordering to invoicing--are conducted electronically. Home Depot is working with suppliers to bring consumers into an electronic network, thereby completing the loop among supplier, retailer, and customer. For instance, the company is linking its E-commerce engine to marketing sites operated by manufacturers. Shoppers browsing small-engine manufacturer Briggs & Stratton Corp.'s Web site, for example, are dropped directly into Home Depot's checkout page if they click the "Find a merchant" button; they can buy from the site if there's a store in their area.

Collaboration may sound like one of those mom-and-apple-pie business ideas that everyone supports, but the reality is that companies such as Home Depot and Franciscan Estates are at the forefront of this wave. Many companies remain wary of opening up too much. Only half of the companies surveyed by InformationWeek Research will share monthly or quarterly sales data with suppliers, and just 39% make collaborating with customers part of early product development.

Yet companies that embrace collaboration find that the more they do it, the better it gets. Eighty percent of companies that share data with more than one partner give the strategy a thumbs up, but only about half of the companies that share data with just one partner feel that way.

Most businesses just aren't built to take full advantage of collaborative networks, says Cap Gemini Ernst & Young consultant Dale Perrott. Collaboration calls for decentralized decision-making structures that let knowledge workers act on the information that IT tools place before them. "This requires a revolution in the thought processes and operating structures of a business," he says.