Antonio Moreno

<article-ideainbrief class="article-ideainbrief">
 <h4 class="ideainbrief-title">Idea in Brief</h4>
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  <h5>The Advance</h5>
  <p>New information technologies, particularly application programming interfaces, let businesses establish automated, real-time communications with the systems of other companies, significantly reducing collaboration costs and allowing complex activities to be distributed across multiple entities, including customers.</p>
  <h5>Its Impact</h5>
  <p>This digital integration has driven the rise of hyperspecialized services that help companies expand much faster and at a much lower cost and enable small and midsize players to compete with large companies.</p>
  <h5>What It Means for You</h5>
  <p>Companies must rethink their strategies and operations to thrive in this new environment. They need to digitize processes, leverage external services, and prepare for increased competition from businesses that orchestrate external services, which can create new distribution channels and innovative offerings.</p>
 </div>
</article-ideainbrief><p class="mag-icon-operations-and-supply-chain-management-w30">For four decades advances in information technology have allowed companies to increasingly “unbundle” their operations and outsource discrete tasks to specialist firms. Now firms are pursuing that strategy on a much more intense—some might say transformative—level. This development is being driven by technologies—especially application programming interfaces (APIs)—that make it possible to digitally integrate workflows across organizations, allow their systems to interact in real time, dramatically reduce collaboration costs, and permit complex chains of activities to be easily distributed across multiple entities, including customers.</p>

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<p>While companies have been &#8220;unbundling&#8221; their operations and outsourcing tasks for decades, advances in IT are now helping them take that strategy to a whole new level. These technologies make it possible to digitally integrate workflows across organizations, letting firms easily distribute complex chains of activities among multiple entities, including customers. They not only slash collaboration costs but give all players instant access to capabilities that only large firms could once afford. Consider logistics, where thanks to cloud-based services like ShipBob, small brands can fulfill orders just as quickly as retail giants can.</p>
<p>In traditional outsourcing, businesses just handed off tasks, but now they&#8217;re embedding third-party services into their own operations. This development has given rise to a multitude of hyperspecialized services that firms can tap. It has also inspired the emergence of &#8220;orchestrators&#8221; that coordinate all the tasks needed to create and deliver offerings. Hyperspecialists and orchestrators offer firms new opportunities to monetize assets, grow revenues, and create markets. But they&#8217;re also blurring industry boundaries, and some have started competing directly with their clients.</p>

How Digital Integration Is Reconfiguring Value Chains

While companies have been “unbundling” their operations and outsourcing tasks for decades, advances in IT are now helping them take that strategy to a whole new level. These technologies make it possible to digitally integrate workflows across organizations, letting firms easily distribute complex chains of activities among multiple entities, including customers. They not only slash collaboration costs but give all players instant access to capabilities that only large firms could once afford. Consider logistics, where thanks to cloud-based services like ShipBob, small brands can fulfill orders just as quickly as retail giants can. In traditional outsourcing, businesses just handed off tasks, but now they’re embedding third-party services into their own operations. This development has given rise to a multitude of hyperspecialized services that firms can tap. It has also inspired the emergence of “orchestrators” that coordinate all the tasks needed to create and deliver offerings. Hyperspecialists and orchestrators offer firms new opportunities to monetize assets, grow revenues, and create markets. But they’re also blurring industry boundaries, and some have started competing directly with their clients.

How Digital Integration Is Reconfiguring Value Chains

Summary.

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