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Business Networks Are the New Power Plants of Industry

CottonMill

As any student of Indo-European knows, the word “mill” comes from an ancient word “mylen” which means to grind. So why are the great cotton factories in the North of England called cotton mills when no grinding goes on? Why do we use this old term when describing paper mills, steel mills or sugar mills when none of these processes involve any actual milling?

The reason is that for hundreds of years, the most critical part of a factory was its power plant. And factories were originally powered by water, adopting a technology from flour mills. The name “mill” stuck, even when there wasn’t any flour or any milling or any water.

Factory_IconUntil the invention of widespread electrical generation and transmission in the twentieth century, every factory had its own power plant. First water, then steam powered by coal. The “smokestack” became the iconic signature for a factory, because every factory had to burn coal to drive an engine to turn the machines. Even now, the icon for a factory often includes a smokestack, harking back to the day when every factory had its own power plant.

Imagine how crazy it would be for a web start-up business to have to build their own power plant.

We no longer need water wheels, steam engines because we have electricity. This is a classic example of a network. Rather than have the inefficiencies of building and maintaining engines, transporting coal and producing noxious gases close to population centres, we have transmission by electricity. Imagine how crazy it would be for a web start-up business to have to build their own power plant. What an inefficient use of capital.

Business Networks Are the New Power Plants of Industry

Businesses are now plugging into the New Grid to get their information assets. It has similar benefits to hooking up to the electricity grid instead of running your own power plant.

Allows you to focus on your core business

By plugging into a business network, you can focus on buying and selling. You don’t need to understand the vagaries of Belgian Tax law, Danish Archiving law or the legal format of a Polish invoice.

More effective use of capital

Managing EDI, buying servers, and employing programmers all costs money. But even more serious is the effect that an inefficient invoicing system has on your cash and your trading partner’s cash. Small businesses often have to go out to banks for extra credit to cover late payments from their customers.

Safer

No one wants a power plant blowing up in their factory. Likewise no one wants to be responsible for all the lost business because customers cannot buy from you.

More than one use

When electricity first came into factories, it was just used to power machines. Of course it rapidly became used for heating, cooling, lighting and everything else. This is the same with business networks: you might bring it in first for e-invoicing then discover it can be used to transmit forecasts, receive shipment information and send remittances.

Another  linguistic memory is the name for the professional who maintained the power plant. So important was this skill that the term engineer was subsequently applied to any application of scientific principles to design or develop structures, machines, apparatus, or manufacturing processes.

The literal meaning of words always degrades over time, until the original sense is lost. Even the word “literally“, literally.

This posting was inspired by a presentation given by Andreas Thonig (@AndreasThonig1)
About the author
James Marland
Vice President of Network Strategy - Ariba (Twitter: @JamesMarland)

James is responsible for defining and rolling out strategies for the Network with particular focus on Europe. He joined Ariba at the launch of the Ariba Network in 1998 after previously being a Solution Consultant at SAP America. In addition he ha... Read More >>>

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