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The influence of digital transformation on the extended enterprise

How is digital transformation influencing the evolution of the concept of the extended enterprise?

The rise of new technologies has profoundly changed the way companies are organised and the way they interact with their environment, their business partners and their customers. The concept of the extended enterprise, which extends far beyond an organisation’s internal boundaries, is no exception to this trend. In an ultra-connected, ever-changing world, digital transformation has opened up new windows of professional opportunity aimed at boosting growth. In this article, we invite you to discover the impact of digital transformation on the management of an extended enterprise, as well as the prospects for development and the potential challenges to be met.

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Definition of the extended enterprise concept

The extended enterprise refers to a commercial ecosystem based on an alliance between several partners or economic players, including suppliers, distributors, franchisees, subcontractors and customers. In the jargon, this notion is commonly referred to as “horizontal integration”.

From this perspective, the organisational merger between internal collaborators (employees) and external collaborators (service providers) with the aim of forming a single interconnected entity enables an improvement in the company’s overall performance.

The adoption of this hybrid organisational model has been greatly accelerated by the digital revolution, with the birth of information and communication technologies (ICTs) enabling companies to explore new business opportunities.

The COVID-19 global health crisis was also a response to this accelerated transition, prompting organisations to adopt a more agile and flexible approach in order to boost their growth and maintain their competitiveness in a fragile and constantly changing market.

How is digital technology influencing the concept of the extended enterprise?

Digital technology has a considerable impact on the concept, management and evolution of an extended enterprise. In particular, it makes it possible to :

1. Optimise the company’s internal processes (effectively)

Digitalisation and simplified access to digital tools such as Enterprise Resource Planning (ERP) systems, Electronic Data Interchange (EDI) software and Cloud Computing technology enable organisations to better manage all their internal processes.

The use of digital technology has a major influence on several aspects that are essential to the smooth running of an extended enterprise: procurement, stock of goods, sale of products/services, data analysis, etc.

In addition, the rise of artificial intelligence (AI) technologies is also enabling organisations to automate tasks that are considered time-consuming and redundant (invoicing, data entry, expense tracking, etc.), thereby improving the coordination of operations between the internal team and external players.

2. Facilitate outsourcing and subcontracting of company projects

To be fully operational, a company needs to focus on its key area of competence and expertise. The alliance formed with its network of employees, combined with the use of digital technology, makes it easier to outsource the company’s projects.

Collaboration tools such as project management platforms (Asana, Notion, Monday), videoconferencing software (Google Meet, Microsoft Teams, Zoom), instant messaging services (Slack, Discord) or file and document sharing (Google Drive, Dropbox, OneDrive) encourage more efficient and productive collaboration, including from a distance.

Outsourcing and subcontracting projects to external service providers not only provides access to specialist skills, but also frees up the time needed for the lead company to concentrate on higher added-value tasks.

3. Improve communication and facilitate coordination of activities between departments/partners

In an extended enterprise, collaboration between different independent entities can be a complex challenge, sometimes leading to confusion or misunderstanding.

Consequently, the use of digital technology is proving to be an efficient solution for improving communication, streamlining cooperation and facilitating the monitoring of projects between the organisation’s various departments/partners.

Collaborative platforms, for example, give your network of partners instant access to a centralised space containing all the information, processes and tools (planning, assignment of tasks, updating of project data, etc.).

This solution enables all team members to communicate and share a constant flow of project-related information (messages, documents, spreadsheets, etc.) in real time, making it easier to coordinate the team’s activities regardless of geographical constraints.

4. provide access to international markets and recruit highly qualified partners

In 2023, the rise of digital technologies will enable companies to expand their presence on a global scale and open up to international markets to exploit new professional opportunities. The aim? Stimulate their growth, improve their competitiveness and find qualified partners with in-demand skills.

Given that the concept of the extended enterprise is based on collaboration between several independent entities, breaking with the codes of a traditional company, it is essential to select the right partners. These are the same partners who will support, participate in and contribute to the success of the organisation’s projects.

Digital technology, through recruitment platforms, marketing advertising or social networks (LinkedIn), makes it easier to connect with economic players based abroad who have specific skills that are beneficial to the company’s growth.

5. Promoting a culture of innovation to improve the company’s competitiveness

The strength of the extended enterprise comes from combining the knowledge, skills and innovative ideas of each of its employees to add value to its offering, and so stand out from the competition.

Brainstorming tools, for example, offer an interesting alternative for optimising and streamlining the process of creating an extended enterprise project. Thanks to these tools, employees (whether face-to-face or remote) can communicate on the progress of the project, share their opinions on the latest market trends or pool their ideas with the aim of making collective progress towards common objectives.

What’s more, this solution saves companies a considerable amount of time and energy, which they can then reinvest in another area of their business (marketing, sales, etc.), notably by reducing the frequency of team meetings.

6. Improve customer experience and satisfaction

Digital technology also plays an essential role in customer experience and satisfaction. On the one hand, it enables a better understanding of customer needs, so that we can respond more effectively to their requests by proposing appropriate services/offers. This can be achieved, for example, by conducting a survey on social networks or sending out a questionnaire via an e-mail campaign.

On the other hand, it encourages smoother communication and faster interaction with customers. Customers can interact with the company at any time, particularly via a website chatbot or instant messaging on social networks.

For the employees of the extended enterprise, the use of digital technology is revolutionising teamwork. Customer relationship management (CRM) tools, for example, can be used to automate certain processes (full tracking of customer interactions, invoice printing, personalised e-mailing, automatic reminders, data collection and creation of analysis reports, etc.) to boost the productivity of the company’s internal and external teams.

The extended enterprise: future prospects, challenges and opportunities

With the increasing evolution of digital technologies and artificial intelligence (AI), business practices and consumer habits, the concept of the extended enterprise will undoubtedly have to evolve.

Today, this ‘hybrid’ way of working is attracting more and more companies, who see this organisational model as an effective way of forging fruitful alliances, gaining access to valuable resources or exploring new windows of opportunity. The main aim of these strategic alliances is to stimulate growth, encourage innovation and boost the competitiveness of companies in the marketplace.

However, despite the many advantages offered by this model based on the merger of several independent entities, the main challenge remains to maintain a certain balance so as not to fall into a form of dependency on employees or external partners, at the risk of weakening rather than strengthening the company’s organisational structure. In addition, the latter must retain control of the company’s strategic activities and remain in a decision-making position throughout the collaboration.

Extended businesses that manage to adapt to technological, economic and social change, as well as being opportunistic, will have far better prospects for growth and success.

To conclude

Digital technology is reshaping the world of work, providing extended enterprises with valuable resources to optimise their internal processes to create a unified, high-performance business ecosystem that delivers real added value to the market.