BY

ERIC VAN HECK AND

PETER VERVEST

SMART BUSINESS
NETWORKS:
HOW THE

NETWORK
WINS

nce merely a dream, digital networks are now a

rapidly maturing reality.
These digital networks
can expose unexpected
behavioral properties of the individual
actors. Combined as a swarm, networked
businesses are able to produce exceptional
or smart results they were not previously
capable of generating. Companies make
different linkages, combine different capabilities from many different parties, are
more agile, and move positions faster.
What are these smart business networks
and why are they important? What should
chief information officers and IT professionals do to help their companies succeed
in a networked world?

Realizing scenarios in
which business is conducted
through a rapidly formed
network with anyone, anywhere,
anytime regardless of different
computer systems and
business processes.

BEING SMART IN THE BUSINESS NETWORK

In less than 10 years, Amazon moved
from electronic book retailing to become
I l l u s t r a t i o n b y KEN ORVIDAS

COMMUNICATIONS OF THE ACM June 2007/Vol. 50, No. 6

29

the worlds leading e-tailer. Without stores and

with limited inventory, Amazon possibly has more
information on retail goods and their buyers and
sellers than many other businesses. Amazon offers
a business platform for the traditional retailer to
make a market [9]. Within the Amazon business
networks, the retailer can:

Consider the example of Kennys Bookshop and

Art Gallery, a family-run small business in Galway,
Ireland (www.kennys.ie). It sources valuable secondhand books and sells them to interested collectors [5]. Established in 1940, Kennys began
focusing on its bookshop customers and then, in
the 1970s, by mailing paper catalogs to libraries
overseas. In 2003, Kennys linked its library manTable
1. Characteristics of
traditional
andto
new
Facilitate search by buyers and
sellers;
agement
system
the Online Computer Library
business
network
approaches.
Discover and help set pricing and other
transacCenter
(OCLC), a not-for-profit organization that
tion conditions;
owns the largest database
Manage and coordiof bibliographic records
Characteristics
Traditional Business
New Business
Network Approach
Network Approach
nate the logistical
in the world. Kennys
Products and
Relative complex, bundled,
Relative simple, unbundled,
processes for transfer
was the first business to
services
and fast delivered products
and slowly delivered
and services
products and services
of the physical or digihave a commercial
tal goods;
arrangement
with
Value creation
Demand networks with
Supply chains with long
quick connect and
term connected
Settle payments and
OCLC,
which
allowed
it
disconnect relationships
relationships
arrange fund transfer;
to provide a full elecCoordination and Hierarchical and central
Network orchestration
and
tronic catalog on virtucontrol
control and decision making with distributed control
and decision making
Authenticate the quality
ally any secondhand
sharing
over
Information
Information
sharing
with
Information
of the goods sold and
book highly efficiently
sharing
and with network partners
direct business partners
verify the credibility of
and faster than anyone
Infrastructure
Network platform with
Actor platforms with
buyers and sellers.
else. Kennys reaped
networked business
information silos and
operating system
systems
instant financial rewards
Thousands of elecsince a cataloged secondTable 1. Characteristics of
tronic retailers join
hand
book
is
usually
valued
four times higher than
traditional and new business
Amazon every month
an uncataloged item. Through Bookrouter.com,
network approaches.
for all or some of these
Kennys published its rapidly growing stock of
functions. At the same time many leave,
or aretable
now-cataloged
secondhand books on multiple
VanHeck
1 (6/07)
rebuked by the Amazon system. Amazon facilitates Internet sites such as Amazon, Alibris, and Bibproduct representation, regulatory compliance, liodirect, using their, or other logistics providers,
risk management, and conflict resolution; it has physical delivery capabilities. In 2006, Kennys
quickly established a reputation for trustworthy bookshop went completely online and their shop
transactions. EBay, with over 222 million regis- in Galway is now just hosting the art gallery.
tered buyers and sellers, has done the same for aucKennys could have remained a traditional booktions. At the end of 2006, Skype had attracted 171 shop with othersAmazon and eBaycapturing
million registered users. In less than four years, their business. They did the reverse. They became
Skype has surpassed anything traditional telephone smart in their business network by capturing a
service providers have ever achieved.
valuable position and leveraging that position
These companies offer platforms on which users across as many links as they could.
can freely move and interact as long as the platform
Capturing and leveraging a position in a busiprovider allows them. These platforms show a strong ness network does not mean one must own, or
network effect: the more users, the more useful the control, the platforms on which those networks
network becomes, the more difficult it becomes to run. For example, TheBigWord company
switch, and the less likely the user will move to (www.thebigword.com) is able to serve the diverse
another network. Albert Lszl Barabsi [1] recog- translation needs of large companies worldwide by
nized this by analyzing Internet traffic. He demon- sharing a translation memory across a network of
strated that the Net is not democratic, and the its clients and thousands of local mother tongue
number of links per node follows a so-called power linguists [7]. It responds almost instantly to translaw distribution. A few nodes have many links while lation needssuch as for publishing on Web sites
many more other nodes have very few links. The in many different languagesby posting the work
node with many links attracts nodes with fewer links to targeted groups of qualified translators, dividing
faster than the lesser-connected nodes. As the big get and allocating the work, and managing the process
bigger, what options do the smaller actors have?
in a way that is fully transparent to the client.
30

June 2007/Vol. 50, No. 6 COMMUNICATIONS OF THE ACM

MULTIASISTENCIA: THE NETWORK ORCHESTRATOR

By Javier Busquets, Juan Rodn, and Jonathan Wareham

perating in Spain, France, the U.K., and Portugal,

threshold, loss adjusters can carry out a desktop audit on the
Grupo Multiasistencia coordinates home insurance
Internet; digital photographs are taken on-site by trade profesclaims and repairs serving approximately
nine million) figure
sionals,
sent toMultiasistencia
the CSR, and reviewed for approval in real
Sidebar (Busquets
caption:
customers. Founded in 1983, it manages small-tradebusiness
profestime.
network
actors.
sionals and has evolved to become a service coordinator for
In 2006, Multiasistencia and a European insurer defined a
over 100 large corporations including insurance companies,
new service to inform end customers about the process whenbanks, department stores, and
ever a claim was preother retail chains. European
sented. The application
end customers and corporate
sends Short Message
clients are handled by its
Services (SMS) messages
1.a Request for a
Corporate Clients
repair service
Madrid-based control center.
through cell phones to
Its 375 Customer Service Reprethe end customers. As
7. Invoicing,
sentatives (CSR) receive
one of the insurers execInformation on
2. Transfer of
8. Survey
requests for home repairs by
utive explains, Informarepairs
a request for a satisfaction
and claims
repair service
phone, email, or the Internet
tion management has
and deploy and control jobs to
been the key to increasa network of 11,000 trade proing loyalty by 20% with
1.b Request
fessionals who complete the
our customer base whenEnd Customers
Multiasistencia
for a repair
service
repairs. The figure here illusever they use the sertrates the main actors in the
vice. Trade professionals
3. Repair
business network.
also benefit. They use
assignment
6. Invoicing
and order
After Multiasistencias sucdigitalized signatures and
cess in managing collectives
electronic invoicing,
and attracting corporate clients,
thereby improving cash
4. provision of the service
Trade
5. Invoicing on behalf of eRepairs
it experienced in 2000 declining
collection and reducing
Professionals
(when repair not included under policy)
quality resulting from the nonadministrative costs by
scalability of operating all their
40%.
communication via the teleBesides the productivMultiasistencia business
phone. In that year the new CEO
ity gains, this smart business network has also standardized
network actors.
and CIO started to reengineer
the highly fragmented and heterogeneous household repairs
using the newest information
sector: applying predefined prices, transparent conditions, serand communication technolovice performancefig.
and quality
guarantees, ensuring timely
VanHeck sidebar (Busquets)
(6/07)
gies [1]. The result has been a Networked Business Operating
response (within 24 hours; three hours for emergencies) and
System (BOS) based on their call center, Internet, Web services,
warranting the work for six months.
and mobile systems.
There are two critical challenges for Multiasistencia to supThe network coordination is highly automated. On a
port the business model and the business relationships. The
repair order no one needs to intervene unless an exception
first challenge is the interfacing of the BOS with human agents.
occurs. The BOS tracks more than 100 variables to assure
The second challenge is negotiating and finding a balance
quality standards and timely execution. With this automated
between standardization and innovative environmental
coordination, productivity increased to 49.6% and the numresponses. c
ber of errors dropped dramatically. The firm has automated
almost all human communication except for incoming calls.
References
Therefore the CSRs do not manage phone calls, they monitor
1. Busquets, J. Multiasistencia on the Internet (A), (B), and (C).
the processes to manage exceptions to ensure quality. With
Teaching Cases, DVD Multimedia and Teaching Note, European
the intense use of ICT, particularly Web services, connected
Case Clearing House, 2006; www.ecch.com.
and disconnected processes have been integrated and stan2. Nohria, N. and Ghoshal, S. The Differentiated Network. Josseydardized.
Bass, 1997.
3. Von Hippel, E. Democratizing Innovation. MIT Press, Cambridge,
Rather than technological, a major challenge in implementMA, 2005.
ing the BOS has been ensuring trust with the agents given the
higher levels of standardized processes and transparent control. The BOS also has the capacity to adapt to environmental
Javier Busquets (xavier.busquets@esade.edu) is head of the
changes by defining behavioral limits as automatic responses
Department of Information Systems at ESADE, University Ramon
or human-driven actions for exception management. The BOS
Llull in Barcelona, Spain.
also accommodates idiosyncratic corporate customer demands
Juan Rodon (joan.rodon@esade.edu) is an assistant professor
as turnkey services. All services are audited through SLAs with
of the Department of Information Systems at ESADE, University
all agents in the network. Multiasistencia has also boosted
Ramon Llull in Barcelona, Spain.
value and innovation by collaborating with its corporate clients
Jonathan Wareham (wareham@acm.org) is an associate
[2, 3]. Approximately 80% of new software development has
professor in the Department of Information Systems at ESADE,
been done in collaboration with its large customers. For examUniversity of Ramon Llull in Barcelona, Spain.
ple, in 2005, it created a new desktop telesurvey adjustment
2007 ACM 0001-0782/07/0600 $5.00
service. When the repair assessment exceeds a financial

COMMUNICATIONS OF THE ACM June 2007/Vol. 50, No. 6

31

TheBigWord rewards the translators by paying by

the number of words they translate and by providing their administration and payment services.
TheBigWord example demonstrates these business
networks can respond with much more agility
together than acting as an individual company. But
what are other characteristics and what are the reasons why these new forms are starting to be developed and implemented now?
A NEW BUSINESS NETWORK APPROACH
Organizations are moving, or must move, from
todays relatively stable and slow-moving business
networks to an open digital platform where business is conducted across a rapidly formed network
with anyone, anywhere, anytime despite different
business processes and computer systems. Table 1
provides an overview of the characteristics of the
traditional and new business network approaches.
The disadvantages and associated costs of the more
traditional approaches are caused by the inability
to provide relatively complex, bundled, and
quickly delivered products and services. The
potential of the new business network approach is
to create these types of products and services with
the help of combining business network insights
with telecommunication capabilities.
The business is no longer a self-contained organization working together with closely coupled
partners: it is a participant in a number of networks where it may lead or act together with others. The network includes additional layers of
meaningfrom the ICT infrastructures to the
interactions between businesses and individuals.
Rather than viewing the business as a sequential
chain of events (a value chain), actors in a smart
business network seek linkages that are novel and
different to create remarkable, better than usual
results. Smart has a connotation with fashionable
and distinguished but can also be somewhat shortlived. What is smart today will be considered common tomorrow. Smart is therefore a relative rather
than an absolute term. Smartness means the network of cooperating businesses can create better
results than other, less smart, business networks or
other forms of business arrangement. To be smart
in business is to be smarter than the competitors
just as an athlete who is considered fast means
faster than the other competitors.
Another way the new business network
approach distinguishes itself is the way the network
is orchestrated. In the sidebar Multiasistencia:
The Network Orchestrator, Busquets, Rodn, and
Wareham introduce the Spanish Grupo Multiasis32

June 2007/Vol. 50, No. 6 COMMUNICATIONS OF THE ACM

tencia. They show how the smart business network

approach with embedded business processes leads
to substantial business advantages, demonstrating
the importance of information sharing in the business network and the design and organizational
dynamics of the infrastructure.
The pivotal question of smart business networks concerns the relationship between the strategy and structure of the business network on one
hand and the underlying infrastructure on the
other. As new technologies, such as RFID, allow
networks of organizations almost complete insight
into where their people, materials, suppliers and
customers are at any point in time, the organizations are able to organize differently. But if all
other players in the network space have that same
insight, the result of the interactions may not be
competitive. Therefore, a first critical step is to
develop a profound understanding about the functioning of the business network.1
UNDERSTANDING THE NETWORK
If two cars drive on the highway with enough distance between them they have no relationship other
than to share the same roadway. If, however, these
same cars get very close, they start behaving differently. If the first car brakes, the second car will
brakebut with a delay. If the first car accelerates,
the second car will also speed up; again, with a
delay. The drivers of these two cars may not notice
much more than the distance between them. But
from a helicopter their behavior will appear as a
wave moving along the flow of traffic. Each participant does not see the behavior of the network but
responds to the local situation with his or her driving logic. The impact of the individual drivers
actions in response to their specific situation and
the road rules they follow creates a collective network behavior not seen nor understood by the individuals. Each driver acts on self-organizing driving
logic according to the driving rules of the network.
The study of networked behavior beyond the
familiar territories of business and ICT networks
those of social interactions, ant colonies, bees, and
other biological systemsreveals attributes and
characteristics that can be applied to the design of
smart business networks. The behavior of the individual drivers, as described in the preceding example, demonstrates swarm intelligence: the
emergence of seemingly intelligent or, perhaps,
smart, behavior from many individuals [2]. Swarm
1

See Decision Making in Very Large Networks, by Peter J. Denning and Rick HayesRoth in the November 2006 issue of Communications for more detailed information.

intelligence studies collective behavior in self-organizing systems populated by simple individuals

interacting locally with one another and with their
environment without centralized control. However,
in many cases, despite being unpredictable, such
swarms are able to exhibit impressive capabilities
for problem solving to, for example, seek food or
respond to an unforeseen problem.
While these studies provide indicators for network dynamicsformation, change, decayand
for the ways in which the individual intelligence of
the network actors is combined, the research in
social network analysis has made a significant contribution to a more profound understanding of
network behavior. Social network researchers take
into account the social relationships and ties of
individuals and therefore the structure of the network. Building on social network analysis using
complex systems theory Dan Braha and Yaneer
Bar-Yam [3] examined the statistical properties of
large-scale product development information networks for vehicle design. They find that such networks have properties (sparseness, small world,
scaling regimes) like those of other biological,
social, and technological networks. They demonstrate that the distribution of incoming communication links always has a cut-offtheir numbers
are restrictedwhile the distribution of outgoing
communication links is considered scale-free,
meaning some nodes act as highly connected hubs.
This would be consistent with Herbert Simons
bounded rationality argument that rational agents
experience limits in formulating and solving complex problems and in processing (receiving, storing,
retrieving, transmitting) information.
Braha and Bar-Yam found it seems easier to transmit information than to process information. Like
individual human beings, a group of peopleor
network of nodesis limited by an inability to
digest an intense input of data. It seems that smartness could be related to the capability to organize the
information flows within the business network as
well as to the topological structure of the network.
Other researchers have shown the attractiveness
and importance of certain positions in the network,
that is, those nodes that are dominant and those
that take subservient roles. For example, in 1992,
Ronald Burt identified bridging positions where
the network participants link through a focal actor
who holds the bridge [4]. This structure brings
information and control benefits (a central player)
but also encourages the dependent actors to find
alternative routes, for example, to disintermediate
the bridger.

As the analysis is applied to larger and more complex networks, more advanced ways are required to
analyze the structure of the network. In the sidebar
Network Horizon and Obtaining a Favorable Network Position, van Liere and Koppius use social
network analysis and simulation techniques to
explore the concept of the network horizon: the
number of nodes an actor can see from a specific
position in the network [12]. With a larger network
horizon a company can take a more advantageous
network position depending on the distribution of
the network horizons across all actors and up to a
certain saturation point. The results indicate the
expansion of the network horizon will soon be a critical success factor for companies.
Most network scientists analyze the structure
and dynamics of business networks independent of
the technologies that enable the networks to perform. Instead, researchers tend to concentrate on
what makes the network effective, the linked relationships between the actors, and how their intelligence is combined to reach the networks goals.
Digital technologies play a fundamental role in
todays networks. They have facilitated improvements and fundamental changes in the ways in
which organizations and individuals interact and
combine as well as revealing unexpected capabilities that create new markets and opportunities.
One need only consider the rapid rise in digital
social networks and massive online computer
games such as Second Life. These are exhibiting
capabilities that seem well beyond those of existing
business networks. The next critical step is to
develop a comprehensive understanding of the
expected smartness of the business network.
WHAT MAKES A SMART BUSINESS NETWORK?
The key characteristics of a smart business network
are that it has the ability to rapidly pick, plug, and
play business processes to configure rapidly to meet
a specific objective, for example, to react to a customer order or an unexpected situation (such as
dealing with emergencies) [11]. One might regard a
smart business network as an expectant web of participants ready to jump into action (pick) and combine rapidly (plug) to meet the requirements of a
specific situation (play). On completion, the participants are dispersed to rest while, perhaps, being
active in other business networks or more traditional
supply chains.
This combination of pick, plug, play, and disperse means the fundamental organizing capabilities
for a smart business network are: the ability to
quickly connect and disconnect with an actor; the
COMMUNICATIONS OF THE ACM June 2007/Vol. 50, No. 6

33

TheBigWord rewards the translators by paying by

the number of words they translate and by providing their administration and payment services.
TheBigWord example demonstrates these business
networks can respond with much more agility
together than acting as an individual company. But
what are other characteristics and what are the reasons why these new forms are starting to be developed and implemented now?
A NEW BUSINESS NETWORK APPROACH
Organizations are moving, or must move, from
todays relatively stable and slow-moving business
networks to an open digital platform where business is conducted across a rapidly formed network
with anyone, anywhere, anytime despite different
business processes and computer systems. Table 1
provides an overview of the characteristics of the
traditional and new business network approaches.
The disadvantages and associated costs of the more
traditional approaches are caused by the inability
to provide relatively complex, bundled, and
quickly delivered products and services. The
potential of the new business network approach is
to create these types of products and services with
the help of combining business network insights
with telecommunication capabilities.
The business is no longer a self-contained organization working together with closely coupled
partners: it is a participant in a number of networks where it may lead or act together with others. The network includes additional layers of
meaningfrom the ICT infrastructures to the
interactions between businesses and individuals.
Rather than viewing the business as a sequential
chain of events (a value chain), actors in a smart
business network seek linkages that are novel and
different to create remarkable, better than usual
results. Smart has a connotation with fashionable
and distinguished but can also be somewhat shortlived. What is smart today will be considered common tomorrow. Smart is therefore a relative rather
than an absolute term. Smartness means the network of cooperating businesses can create better
results than other, less smart, business networks or
other forms of business arrangement. To be smart
in business is to be smarter than the competitors
just as an athlete who is considered fast means
faster than the other competitors.
Another way the new business network
approach distinguishes itself is the way the network
is orchestrated. In the sidebar Multiasistencia:
The Network Orchestrator, Busquets, Rodn, and
Wareham introduce the Spanish Grupo Multiasis32

June 2007/Vol. 50, No. 6 COMMUNICATIONS OF THE ACM

tencia. They show how the smart business network

approach with embedded business processes leads
to substantial business advantages, demonstrating
the importance of information sharing in the business network and the design and organizational
dynamics of the infrastructure.
The pivotal question of smart business networks concerns the relationship between the strategy and structure of the business network on one
hand and the underlying infrastructure on the
other. As new technologies, such as RFID, allow
networks of organizations almost complete insight
into where their people, materials, suppliers and
customers are at any point in time, the organizations are able to organize differently. But if all
other players in the network space have that same
insight, the result of the interactions may not be
competitive. Therefore, a first critical step is to
develop a profound understanding about the functioning of the business network.1
UNDERSTANDING THE NETWORK
If two cars drive on the highway with enough distance between them they have no relationship other
than to share the same roadway. If, however, these
same cars get very close, they start behaving differently. If the first car brakes, the second car will
brakebut with a delay. If the first car accelerates,
the second car will also speed up; again, with a
delay. The drivers of these two cars may not notice
much more than the distance between them. But
from a helicopter their behavior will appear as a
wave moving along the flow of traffic. Each participant does not see the behavior of the network but
responds to the local situation with his or her driving logic. The impact of the individual drivers
actions in response to their specific situation and
the road rules they follow creates a collective network behavior not seen nor understood by the individuals. Each driver acts on self-organizing driving
logic according to the driving rules of the network.
The study of networked behavior beyond the
familiar territories of business and ICT networks
those of social interactions, ant colonies, bees, and
other biological systemsreveals attributes and
characteristics that can be applied to the design of
smart business networks. The behavior of the individual drivers, as described in the preceding example, demonstrates swarm intelligence: the
emergence of seemingly intelligent or, perhaps,
smart, behavior from many individuals [2]. Swarm
1

See Decision Making in Very Large Networks, by Peter J. Denning and Rick HayesRoth in the November 2006 issue of Communications for more detailed information.

intelligence studies collective behavior in self-organizing systems populated by simple individuals

interacting locally with one another and with their
environment without centralized control. However,
in many cases, despite being unpredictable, such
swarms are able to exhibit impressive capabilities
for problem solving to, for example, seek food or
respond to an unforeseen problem.
While these studies provide indicators for network dynamicsformation, change, decayand
for the ways in which the individual intelligence of
the network actors is combined, the research in
social network analysis has made a significant contribution to a more profound understanding of
network behavior. Social network researchers take
into account the social relationships and ties of
individuals and therefore the structure of the network. Building on social network analysis using
complex systems theory Dan Braha and Yaneer
Bar-Yam [3] examined the statistical properties of
large-scale product development information networks for vehicle design. They find that such networks have properties (sparseness, small world,
scaling regimes) like those of other biological,
social, and technological networks. They demonstrate that the distribution of incoming communication links always has a cut-offtheir numbers
are restrictedwhile the distribution of outgoing
communication links is considered scale-free,
meaning some nodes act as highly connected hubs.
This would be consistent with Herbert Simons
bounded rationality argument that rational agents
experience limits in formulating and solving complex problems and in processing (receiving, storing,
retrieving, transmitting) information.
Braha and Bar-Yam found it seems easier to transmit information than to process information. Like
individual human beings, a group of peopleor
network of nodesis limited by an inability to
digest an intense input of data. It seems that smartness could be related to the capability to organize the
information flows within the business network as
well as to the topological structure of the network.
Other researchers have shown the attractiveness
and importance of certain positions in the network,
that is, those nodes that are dominant and those
that take subservient roles. For example, in 1992,
Ronald Burt identified bridging positions where
the network participants link through a focal actor
who holds the bridge [4]. This structure brings
information and control benefits (a central player)
but also encourages the dependent actors to find
alternative routes, for example, to disintermediate
the bridger.

As the analysis is applied to larger and more complex networks, more advanced ways are required to
analyze the structure of the network. In the sidebar
Network Horizon and Obtaining a Favorable Network Position, van Liere and Koppius use social
network analysis and simulation techniques to
explore the concept of the network horizon: the
number of nodes an actor can see from a specific
position in the network [12]. With a larger network
horizon a company can take a more advantageous
network position depending on the distribution of
the network horizons across all actors and up to a
certain saturation point. The results indicate the
expansion of the network horizon will soon be a critical success factor for companies.
Most network scientists analyze the structure
and dynamics of business networks independent of
the technologies that enable the networks to perform. Instead, researchers tend to concentrate on
what makes the network effective, the linked relationships between the actors, and how their intelligence is combined to reach the networks goals.
Digital technologies play a fundamental role in
todays networks. They have facilitated improvements and fundamental changes in the ways in
which organizations and individuals interact and
combine as well as revealing unexpected capabilities that create new markets and opportunities.
One need only consider the rapid rise in digital
social networks and massive online computer
games such as Second Life. These are exhibiting
capabilities that seem well beyond those of existing
business networks. The next critical step is to
develop a comprehensive understanding of the
expected smartness of the business network.
WHAT MAKES A SMART BUSINESS NETWORK?
The key characteristics of a smart business network
are that it has the ability to rapidly pick, plug, and
play business processes to configure rapidly to meet
a specific objective, for example, to react to a customer order or an unexpected situation (such as
dealing with emergencies) [11]. One might regard a
smart business network as an expectant web of participants ready to jump into action (pick) and combine rapidly (plug) to meet the requirements of a
specific situation (play). On completion, the participants are dispersed to rest while, perhaps, being
active in other business networks or more traditional
supply chains.
This combination of pick, plug, play, and disperse means the fundamental organizing capabilities
for a smart business network are: the ability to
quickly connect and disconnect with an actor; the
COMMUNICATIONS OF THE ACM June 2007/Vol. 50, No. 6

33

Table 2. Critical trade-offs and questions with regard to

smart business networks.

selection and execution of business processes across the network; and establishing the
decision rules and the embedded logic within the business
network.

Issues

Network
outcomes

Network
execution

Trade-Offs

Preferred versus expected outcomes

Network versus individual outcomes and

performance
Individual versus network execution
Simple versus complex transactions

Critical Questions

What do customers want in terms of

products and services (quality,
complexity, bundling, delivery time,
price, offline/online)?

June 2007/Vol. 50, No. 6 COMMUNICATIONS OF THE ACM

By Diederik van Liere and Otto Koppius

How to value customer demand?

What can we offer to customers in

terms of products and services (quality,
complexity, bundling, delivery time,
price, offline/online)?

QUICK CONNECT AND DISCONNECT

Global versus local execution
Quick connect requires that, as
What actors will work together to
Integrated versus modular products/
fulfill the customer order? How?
a result of an event the smart
services/processes
business network must seek and
What level of modularity is required?
select those members who, Network
Central governed versus adaptive, self
Who is responsible for the customer order?
together, can fulfill the required governance organizing
How are decision rights delegated?
goal. This means the network
Governance to innovate versus governance
to operate efficiently
How is the relational governance evaluated?
logic acts on a menu of potenNetwork
End-to-end
control
versus
individual
control
How to keep end-to-end control in the
tial fulfillment partners to select design
network?
those who can combine to proNetworked business operating system
versus actor business operating systems
How to design and test the networkked
duce the desired results. Once
business operating system?
Global versus local adaptation
the appropriate participants are
How to deal with the environmental and
found and the connection has
Dynamic versus static business network
internal dynamics of the business network?
been established, the process of Enabling
Open technologies versus closed
What technologies will be disruptive for
the business network?
playperforming the busi- technologies technologies
ness transactioncan begin.
Individual versus network technology
How to speed up technology adoption in
adoption
the business network?
Goldman, Nagel, and Preiss [6]
product design and manufacturing enabling proddescribed this in their discusTable 2. Critical
trade-offs and
uct construction of tailored products from stansion of virtual organizations.
questions regarding
dardized components: the combination of
The capability of quickly consmart business
table 2 (6/07)
networks. VanHeck
Lego-like modules
that are combined in a specific
nected
plug-compatibility
way. Modularity brings the benefits of versatility
enables a superior response
speed and greater component variety particularly (the diverse set of products that an organization
can produce) and agility (the ability to respond
for dealing with new requirements.
While the ability to quickly connect has received quickly to fulfill an unpredictable customer order)
attention, the capability to quickly disconnect while, at the same time, delivering within the
requires more. Members will join the business net- boundaries of allowed value chain total costs and
work and participate on the basis of risk and lead times. Martijn Hoogeweegen et al. developed
reward. While this can be clear while they are a method to design modular business networks and
active, rules should be agreed upon for when the to optimize the allocation of tasks in a business
actors are disconnected (having completed a spe- network based on modularity principles [8]. The
cific customer order or while they will no longer be network nodes will be considered black boxes proa member of the network). Decision rules and logic viding the functionality required by the business
with regard to connection and disconnection will network and are played according to the network
be a crucial component for the success of the busi- rules. However, modular design requires much
more coordination than non-modular: the greater
ness network.
the number of components the higher the organizPLUG AND PLAY: BRINGING THE NETWORK TOGETHER
ing cost. A crucial decision is the degree of moduWhen selected, the network participants must be larity or granularity of a system, or business
able to interoperate. They must be plugged network, and that is determined by the balance
together to enable the required network outcome. between coordination costs and the complexity of
This means they must act with modularity: the the network.
decomposition of a system by grouping elements
into a smaller number of subsystems with rules EMBEDDED BUSINESS LOGIC
governing the architecture for mixing and match- Each business network participant has specific
capabilities captured in its business processes (own
ing these components.
The concept of modularity has a long history in business logic) that it executes according to this
34

NETWORK HORIZON AND OBTAINING A FAVORABLE NETWORK POSITION

n the networked world, decision makers must ensure their

These findings might explain why network orchestrators in
companies understand their position in the business neta wide variety of industries are so successful. Companies such
work. They should see their company as a node in much
as Li & Fung in the apparel industry, Solectron and Flextronics
larger and extensive networks of interdependent firms that are
in semiconductors, and Grupo Multiasistencia in home insurconstantly being reconfigured. This perspective implies that deciance claims and repairs were among the first to see themsion makers must be acutely aware of their companies unique
selves as nodes in a larger business network. In a
position in the network; not onlySidebar
the direct (van
(supplier
or client)
homogenous,
low-horizon
network,
their extensive network
Liere)
figure caption:
Bridging
position
and
contacts but also the contacts contacts, their contacts, and so
horizon enabled them to position themselves as network
network horizon in a network.
forth. The number of nodes that an actor can see from a speorchestrators connecting otherwise disconnected parts of the
cific position in the network is called the network horizon. The
network and become significant companies in their respective
figure here illustrates how the
industries while others
network horizon of Firm A is
struggled to make the tranexpanded using the opportunisition to network thinking.
G
G
ties of the bridging position in
We foresee two chala business network. Our studlenges for organizational
B
B
ies have indicated the network
decision makers seeking
F
F
horizon is an important deterthe networked approach.
E
E
minant of both individual firm
The first challenge is to
A
A
performance and the overall
start to think about a netnetwork dynamics and perforwork strategy, rather than
D
D
C
C
mance.
seeking competitive advanResearch was carried out
tage based upon internal
Suppose firm A has a network horizon
Firm A occupies a bridging position
by developing a management
capabilities. By choosing
that includes firms E, F and G and
because it can broker information and
recognizes the opportunity to
resources between firms B, C and D
exercise called the Business
and maneuvering to the
strengthen its bridging position.
while these are dependent on firm A.
Networking Engine [2] that can
correct network position a
Therefore it establishes a relationship
with firm F.
be used to test the effects of
firm can reap even more
new, networked organizations
benefits from its current
based on the concepts of modcapability-based competiBridging position and tive advantage. The second challenge is to identify which netularity and loosely coupled businetwork horizon. works are relevant for their business and where they can
ness processes. A series of
experiments with executives
expand their network horizon. As business networks continue
from the insurance industry
to grow, the entire network cannot be scanned. Some parts of
showed that firms with a higher network horizon achieved higher
the network are more relevant than other parts. As competitive
VanHeck
sidebar
(Van
Liere) fig. (6/07)
performance. These firms were better able to identify favorable
advantage is increasingly network-based, the expansion of the
network positions where they could act as a bridge between difnetwork horizon will be a crucial success factor in the near
ferent parts of the network: a position rich in structural holes [1].
future. c
Firms with a lower network horizon rarely identified such opportunities and hence had lower performance.
References
As the network adapts to its members responses to
1. Burt, R.S. Structural Holes: The Social Structure of Competition.
changing market conditions and competitor actions, the bridgHarvard University Press, Cambridge, MA, 1992.
2. Hoogeweegen, M.R., van Liere, D.W., Vervest, P.H.M., Hagdorn
ing position advantage may be temporary. So when does a
van der Meijden, L., and de Lepper, I. Strategizing for mass cusnetwork position confer a sustainable competitive advantage?
tomization by playing the business networking game. Decision
Extensive simulation revealed that a key factor is the way the
Support Systems 42, 3 (Mar. 2006), 14021412.
network horizon is distributed across the different firms (in

other words, the network horizon heterogeneity). The results

are striking. In the traditional supply chain where all firms
have a low network horizon (that is, the firms know their
direct upstream and downstream partners but are aware of
little else), a competitive advantage can be sustained for some
time.
However, when the network horizon becomes more
heterogeneous across firms, for instance because some firms
start to think in network terms instead of supply chain terms,
the situation changes significantly. In heterogeneous networks,
a low network horizon confers little advantage but having even
a modest network horizon can sustain a competitive advantage
for some time. However, once all firms have a high network
horizon, the network becomes homogenous again. Any
opportunity can be spotted by many firms and any competitive
advantage is therefore short-lived.

More information about the Business Network Engine is available at:

bne.rsm.nl.

Diederik van Liere (dliere@rsm.nl) is a Ph.D. candidate at

the Department of Decision and Information Sciences of RSM
Erasmus University in Rotterdam, The Netherlands.
Otto Koppius (okoppius@rsm.nl) is an assistant professor at
the Department of Decision and Information Sciences of RSM
Erasmus University in Rotterdam, The Netherlands.

2007 ACM 0001-0782/07/0600 $5.00

COMMUNICATIONS OF THE ACM June 2007/Vol. 50, No. 6

35

Figure 1. The traditional business network approach.

logic.
Traditionally,
ing each participant to
when such participants
execute in its own way
Transaction
combine they create
according to this logic.
Layer
interfaces between capaThis means that, to be a
bilities: translating from
member of the network,
one business logic to
an organization must be
another and executing
able to absorb the
Logistics
accordingly. This can be
shared logic and execute
Layer
seen in the outsourcing
accordingly. This is the
phenomenon: carve out
own business logic of
the total function of a
the network that can be
business
particular business oper- Figure 1. The traditional
enabled
by
a
Networked
Business
Operating Sysnetwork approach.
ation and hand it over to
tem (BOS). Based on the service-oriented architecanother party. As indicated earlier,
traditional
busiture it resolves
VanHeck fig 1 (6/07)-19.5
picasthe problem of information silos by
ness network approaches lack the ability to rapidly loose coupling of underlying systems, which are
pick, plug, and play to configure rapidly to meet a connected together in a business operating layer.
specific objective, for example, to react to a cus- This layer allows process execution and managetomer order or an unexpected event. Figure 1 pre- ment from a distance from the underlying applisents part of a global business network. Its focus is cation systems. The enabling interorganizational
Figure 2. The new business network approach.
on the actors and relationships from manufacturers technology architecture must reflect this loose couvia multi-modal transportation (road, train, sea- pling. Loose coupling is not synonymous with
ship) to retailers. In
decentralized processes.
most current business
It is quite the opposite,
networks, companies Business
where the processes are
Operating Layer
are developing capabilimore tightly coordinated
ties at the logistics layer
because the rigidity of the
and the transaction
IT architecture is no
layer. As discussed in Transaction
longer a constraint [10].
Layer
Table 1, these actors
The business operating
focus on their direct
layer can become rather
partners and are not
complex due to the fact
able to have the end-to- Logistics
that business logic is
Layer
end management of
developed related to such
processes
running
issues as:
across many different
Figure 2. The new business
organizations in many
network approach. Membership Selection: The capabilities to
decide which business entities can act as nodes
different forms. The
of the network;
actor platforms are
dominated by information silos residing either in Linking: The positioning and connecting of
VanHeck
fig 2 (6/07)-19.5
picas
nodes to
the other parts of the network. The
different places within an organization
as islands,
linking processes can include the directories
or in two or more different organizations. Individ(search and select) and routing (path finding)
ual actors are orchestrating processes in their part
through the network as well as typical commuof the supply chain.
nications tasks such as handshake, authenticaFigure 2 presents an example situation illustrating
tion, and trust establishment;
the use of the new business network approach. The
central idea is that linking partners is on the basis of Goal Setting: The coordination mechanisms
that determine goals in the business network
linking processes but allowing individual execution
and the tasks and responsibilities assigned to
according to those processes: they act individually
each member node;
according to the joint rules of the network.
As shown in Figure 2, each of the smart business Risk and Reward Management: The division of
material results (profit and loss in a monetary
network participants becomes a smart insect in a
but also in a fairly loose and generic sense) and
goal-seeking swarm. The network separates process
the perceived value by each of the participating
from execution. It shares the processes required to
business entities of its share;
achieve its goals (the shared business logic) allowAGENT

PRODUCER FORWARDER

BANK

INSURER

RFID
data

END CONSUMER

Scanning

Scanning
data

RFID
data

INLAND SHIPPING

RETAIL

SHIPPING LINE

PRODUCER

ROAD TRANSPORT

SEASHIP

DISTRIBUTION

TERMINAL

Networked Business
Operating System

Standards

EPC
Global

PRODUCER FORWARDER

BANK

PRODUCER

ROAD TRANSPORT

36

June 2007/Vol. 50, No. 6 COMMUNICATIONS OF THE ACM

AGENT

SHIPPING LINE

INSURER

RFID
data

INLAND SHIPPING

DISTRIBUTION

END CONSUMER

Scanning

Scanning
data

RFID
data

TERMINAL

SEASHIP

RETAIL

Continual Improvement: The capabilities and

processes of joining and leaving the network over
time, of network renewal and sustainability.
Fault Tolerance: To malfunction of a node, for
example a business malfunction or bankruptcy.
The concept of a BOS is analogous to that of the
computer operating system. The invention of an
operating system for the PC in the 1970s allowed
application software to be run on different computers as long as they conform to the rules of the
operating system. Implementation of a BOS
enables the portability of business processes and
facilitates the end-to-end management of processes
running across many different organizations in
many different forms. It coordinates the processes
among the networked businesses and its logic is
embedded in the systems used by these businesses.
QUESTIONS FOR THE CIO
For those recognizing the promise, or necessity, of
capturing the capabilities of smart business networks to be proactive and effective in this largely
unmapped territory of being networked the fundamental questions include:

What are the characteristics of smart business

networks and how is the current business network functioning?
What are the key enablers and what is the
expected smartness of the business network?
How to capture the business logic and what are
the potential functionalities of the Networked
BOS and how to create this business operating
layer?
What are the important trade-offs that must be
analyzed and decided upon?
Concerning the last question, we have defined a
set of important trade-offs and related specific
questions that must be answered with regard to the
business network outcomes, execution, governance,
design, and enabling technologies. Table 2 provides
the trade-offs and critical questions.
THE CHALLENGE AHEAD
We may believe that we are familiar with the networked world. However, in recent years our understanding has been disturbed by the rapid
emergence of digital social networksa seeming
swarm of consumers who are interacting in ways
beyond that of most organizations. The pressures
of global competition and the need for effectiveness
and agility demand new ways to organize. Compa-

nies must develop and act smart in rapidly changing and expanding business networks enabled by
todays pervasive communications technologies.
Chief information officers and professionals must
span the boundaries between their own organization and the growing networks in which their organizations operate. They must understand new
vocabularies that are not necessarily technically or
business oriented. Decision making in very large
networks is fundamentally different from what we
are used to. Understanding how federated activities
emerge and operate is not a monolithic discipline
and requires the CIO to adapt and adjust to changing conditions. c
References
1. Barabsi, A.L. LinkedHow Everything Is Connected to Everything
Else and What It Means for Business, Science, and Everyday Life. Penguin Group, New York, 2003.
2. Bonabeau, E. and Meyer, C. Swarm intelligence: A whole new way to
think about business. Harvard Business Review (May 2001), 106114.
3. Braha, D. and Bar-Yam, Y. Information flow structure in large-scale
product development organizational networks. Journal of Information
Technology 19, 4 (Dec. 2004), 244253.
4. Burt, R.S. Structural HolesThe Social Structure of Competition. Harvard University Press, Cambridge, MA, 1992.
5. Golden, W., Hughes, M., and Burke, H. Node to network: Partnerships in the secondhand book trade. In P. Vervest et al., Smart Business Networks, Springer, Heidelberg-New York, 2005.
6. Goldman, S.L., Nagel, R.N., and Preiss, K. Agile Competitors and
Virtual Organizations: Strategies for Enriching the Customer. Van Nostrand Reinhold, New York, 1995.
7. Holland, C., Shaw, D.R., Westwood, J.B., and Harris, I. Marketing
translation services internationally: Exploiting IT to achieve a smart
network. Journal of Information Technology 19, 4 (Dec. 2004),
254260.
8. Hoogeweegen, M., Teunissen, W.J., Vervest, P.H.M., and Wagenaar,
R. Modular network design: Using information and communications
technology to allocate production tasks in a virtual organization.
Decision Sciences 30, 4 (Fall 1999), 10731103.
9. Kambil, A. and van Heck, E. Making Markets: How Firms Can Design
and Profit from Online Auctions and Exchanges. Harvard Business
School Press, Boston, MA, 2002.
10. Konsynski, B. and Tiwani, A. The improvisation-efficiency paradox in
inter-firm electronic networks: Governance and architecture considerations. Journal of Information Technology 19, 4 (Dec. 2004), 234243.
11. van Heck, E., Preiss, K., and Pau, L-F. Smart Business Networks.
Springer, Heidelberg-New York, 2005.
12. van Liere, D.W. Dynamics of Network Positions. RSM Erasmus University, ERIM Ph.D series, May 2007.

Eric van Heck (evanheck@rsm.nl) is professor of information

management and markets at the Department of Decision and
Information Sciences of RSM Erasmus University and director of
doctoral education at Erasmus Research Institute of Management
(ERIM) in Rotterdam.

Peter Vervest (vervest@d-age.com) is professor of business

networking at the Department of Decision and Information Sciences
of RSM Erasmus University and partner at D-Age.
This article is based on our work as discussed in the Smart Business Network Initiative (www.sbniweb.org).

2007 ACM 0001-0782/07/0600 $5.00

COMMUNICATIONS OF THE ACM June 2007/Vol. 50, No. 6

37

Figure 1. The traditional business network approach.

logic.
Traditionally,
ing each participant to
when such participants
execute in its own way
Transaction
combine they create
according to this logic.
Layer
interfaces between capaThis means that, to be a
bilities: translating from
member of the network,
one business logic to
an organization must be
another and executing
able to absorb the
Logistics
accordingly. This can be
shared logic and execute
Layer
seen in the outsourcing
accordingly. This is the
phenomenon: carve out
own business logic of
the total function of a
the network that can be
business
particular business oper- Figure 1. The traditional
enabled
by
a
Networked
Business
Operating Sysnetwork approach.
ation and hand it over to
tem (BOS). Based on the service-oriented architecanother party. As indicated earlier,
traditional
busiture it resolves
VanHeck fig 1 (6/07)-19.5
picasthe problem of information silos by
ness network approaches lack the ability to rapidly loose coupling of underlying systems, which are
pick, plug, and play to configure rapidly to meet a connected together in a business operating layer.
specific objective, for example, to react to a cus- This layer allows process execution and managetomer order or an unexpected event. Figure 1 pre- ment from a distance from the underlying applisents part of a global business network. Its focus is cation systems. The enabling interorganizational
Figure 2. The new business network approach.
on the actors and relationships from manufacturers technology architecture must reflect this loose couvia multi-modal transportation (road, train, sea- pling. Loose coupling is not synonymous with
ship) to retailers. In
decentralized processes.
most current business
It is quite the opposite,
networks, companies Business
where the processes are
Operating Layer
are developing capabilimore tightly coordinated
ties at the logistics layer
because the rigidity of the
and the transaction
IT architecture is no
layer. As discussed in Transaction
longer a constraint [10].
Layer
Table 1, these actors
The business operating
focus on their direct
layer can become rather
partners and are not
complex due to the fact
able to have the end-to- Logistics
that business logic is
Layer
end management of
developed related to such
processes
running
issues as:
across many different
Figure 2. The new business
organizations in many
network approach. Membership Selection: The capabilities to
decide which business entities can act as nodes
different forms. The
of the network;
actor platforms are
dominated by information silos residing either in Linking: The positioning and connecting of
VanHeck
fig 2 (6/07)-19.5
picas
nodes to
the other parts of the network. The
different places within an organization
as islands,
linking processes can include the directories
or in two or more different organizations. Individ(search and select) and routing (path finding)
ual actors are orchestrating processes in their part
through the network as well as typical commuof the supply chain.
nications tasks such as handshake, authenticaFigure 2 presents an example situation illustrating
tion, and trust establishment;
the use of the new business network approach. The
central idea is that linking partners is on the basis of Goal Setting: The coordination mechanisms
that determine goals in the business network
linking processes but allowing individual execution
and the tasks and responsibilities assigned to
according to those processes: they act individually
each member node;
according to the joint rules of the network.
As shown in Figure 2, each of the smart business Risk and Reward Management: The division of
material results (profit and loss in a monetary
network participants becomes a smart insect in a
but also in a fairly loose and generic sense) and
goal-seeking swarm. The network separates process
the perceived value by each of the participating
from execution. It shares the processes required to
business entities of its share;
achieve its goals (the shared business logic) allowAGENT

PRODUCER FORWARDER

BANK

INSURER

RFID
data

END CONSUMER

Scanning

Scanning
data

RFID
data

INLAND SHIPPING

RETAIL

SHIPPING LINE

PRODUCER

ROAD TRANSPORT

SEASHIP

DISTRIBUTION

TERMINAL

Networked Business
Operating System

Standards

EPC
Global

PRODUCER FORWARDER

BANK

PRODUCER

ROAD TRANSPORT

36

June 2007/Vol. 50, No. 6 COMMUNICATIONS OF THE ACM

AGENT

SHIPPING LINE

INSURER

RFID
data

INLAND SHIPPING

DISTRIBUTION

END CONSUMER

Scanning

Scanning
data

RFID
data

TERMINAL

SEASHIP

RETAIL

Continual Improvement: The capabilities and

processes of joining and leaving the network over
time, of network renewal and sustainability.
Fault Tolerance: To malfunction of a node, for
example a business malfunction or bankruptcy.
The concept of a BOS is analogous to that of the
computer operating system. The invention of an
operating system for the PC in the 1970s allowed
application software to be run on different computers as long as they conform to the rules of the
operating system. Implementation of a BOS
enables the portability of business processes and
facilitates the end-to-end management of processes
running across many different organizations in
many different forms. It coordinates the processes
among the networked businesses and its logic is
embedded in the systems used by these businesses.
QUESTIONS FOR THE CIO
For those recognizing the promise, or necessity, of
capturing the capabilities of smart business networks to be proactive and effective in this largely
unmapped territory of being networked the fundamental questions include:

What are the characteristics of smart business

networks and how is the current business network functioning?
What are the key enablers and what is the
expected smartness of the business network?
How to capture the business logic and what are
the potential functionalities of the Networked
BOS and how to create this business operating
layer?
What are the important trade-offs that must be
analyzed and decided upon?
Concerning the last question, we have defined a
set of important trade-offs and related specific
questions that must be answered with regard to the
business network outcomes, execution, governance,
design, and enabling technologies. Table 2 provides
the trade-offs and critical questions.
THE CHALLENGE AHEAD
We may believe that we are familiar with the networked world. However, in recent years our understanding has been disturbed by the rapid
emergence of digital social networksa seeming
swarm of consumers who are interacting in ways
beyond that of most organizations. The pressures
of global competition and the need for effectiveness
and agility demand new ways to organize. Compa-

nies must develop and act smart in rapidly changing and expanding business networks enabled by
todays pervasive communications technologies.
Chief information officers and professionals must
span the boundaries between their own organization and the growing networks in which their organizations operate. They must understand new
vocabularies that are not necessarily technically or
business oriented. Decision making in very large
networks is fundamentally different from what we
are used to. Understanding how federated activities
emerge and operate is not a monolithic discipline
and requires the CIO to adapt and adjust to changing conditions. c
References
1. Barabsi, A.L. LinkedHow Everything Is Connected to Everything
Else and What It Means for Business, Science, and Everyday Life. Penguin Group, New York, 2003.
2. Bonabeau, E. and Meyer, C. Swarm intelligence: A whole new way to
think about business. Harvard Business Review (May 2001), 106114.
3. Braha, D. and Bar-Yam, Y. Information flow structure in large-scale
product development organizational networks. Journal of Information
Technology 19, 4 (Dec. 2004), 244253.
4. Burt, R.S. Structural HolesThe Social Structure of Competition. Harvard University Press, Cambridge, MA, 1992.
5. Golden, W., Hughes, M., and Burke, H. Node to network: Partnerships in the secondhand book trade. In P. Vervest et al., Smart Business Networks, Springer, Heidelberg-New York, 2005.
6. Goldman, S.L., Nagel, R.N., and Preiss, K. Agile Competitors and
Virtual Organizations: Strategies for Enriching the Customer. Van Nostrand Reinhold, New York, 1995.
7. Holland, C., Shaw, D.R., Westwood, J.B., and Harris, I. Marketing
translation services internationally: Exploiting IT to achieve a smart
network. Journal of Information Technology 19, 4 (Dec. 2004),
254260.
8. Hoogeweegen, M., Teunissen, W.J., Vervest, P.H.M., and Wagenaar,
R. Modular network design: Using information and communications
technology to allocate production tasks in a virtual organization.
Decision Sciences 30, 4 (Fall 1999), 10731103.
9. Kambil, A. and van Heck, E. Making Markets: How Firms Can Design
and Profit from Online Auctions and Exchanges. Harvard Business
School Press, Boston, MA, 2002.
10. Konsynski, B. and Tiwani, A. The improvisation-efficiency paradox in
inter-firm electronic networks: Governance and architecture considerations. Journal of Information Technology 19, 4 (Dec. 2004), 234243.
11. van Heck, E., Preiss, K., and Pau, L-F. Smart Business Networks.
Springer, Heidelberg-New York, 2005.
12. van Liere, D.W. Dynamics of Network Positions. RSM Erasmus University, ERIM Ph.D series, May 2007.

Eric van Heck (evanheck@rsm.nl) is professor of information

management and markets at the Department of Decision and
Information Sciences of RSM Erasmus University and director of
doctoral education at Erasmus Research Institute of Management
(ERIM) in Rotterdam.

Peter Vervest (vervest@d-age.com) is professor of business

networking at the Department of Decision and Information Sciences
of RSM Erasmus University and partner at D-Age.
This article is based on our work as discussed in the Smart Business Network Initiative (www.sbniweb.org).

2007 ACM 0001-0782/07/0600 $5.00

COMMUNICATIONS OF THE ACM June 2007/Vol. 50, No. 6

37