This paper gives a general overview of why eBusiness is critical to the ongoing success of agricultural businesses, and gives some basic guidance on how to incorporate eBusiness into corporate strategy. It then lays out eBusiness fundamentals, key organizations involved in ag eBusiness, and implementation fundamentals.
The use of eBusiness and eBusiness standards is a strategic and critical success factor for agricultural companies today. In general, using electronic business processes increases business efficiencies, better leverages human resources, decreases errors and improves customer satisfaction (internal and external). Importantly, the use of eBusiness removes some of the risk involved with doing business, because it makes certain key operations less prone to error and uncertainty.
It’s important to recognize that decisions about how fully to adapt eBusiness practices, and how quickly, are not contemplated in a static environment. Agriculture is changing – and rapidly. Traditional operational practices (forecasts, purchase orders, ship notices, invoices, etc.) that don’t leverage eBusiness may be manageable for your business today, but could quickly become cumbersome in the next year, or even the next few months.
Any progressive ag business is well aware of the forces of change in the ag industry, which include the increasing globalization of trade and agriculture businesses, demands on producing more with fewer resources, and increased government regulation of the food and ag sectors – including increased focus on traceability and sustainability. These forces contribute to increasing operational complexity, the need to manage more and more data, and heightened international and domestic market pressures. At the same time, more growers and farmers are increasing their use of new technologies, which requires more exchange of data all along the supply chain. And the technologies themselves do not remain static, but continue to evolve.
All of these forces are competitive concerns, and companies that better leverage eBusiness will, generally speaking, put themselves on stronger competitive footing. Being able to exchange information electronically with your trading partners “greases the skids” throughout the ag supply chain. Those who cannot join in the process will at some point be considered outside the standard business practices of modern agriculture. In addition, standards-based eBusiness makes a business more agile; it enables a company to more quickly ramp up activities critical to its own strategic plan. Primary contributors to business growth – integrating an acquisition, completing a divestiture, entering into joint ventures, and entering into new markets and geographies, are all easier when working with established standards for electronic communication. eBusiness is an enabler, a key to expanding a company’s strategic options.
In Nicholas Carr’s 2003 Harvard Business Review article, “IT Doesn’t Matter”, Carr briefly explains the history of electricity implementation in business from discovery, tactical implementation, strategic implementation, to today. Today, electricity implementations don’t factor in company strategies. It’s a utility. It’s a given. Views on eBusiness are slowly but surely trending in that direction.
Adoption of eBusiness practices is increasing in the agriculture industry each year. One measure of this growth is that membership in AgGateway – the non-profit trade organization committed to promoting, enabling and expanding the use of eBusiness in agriculture – more than doubled between 2010 and 2014 and is at more than 230 companies and growing (as of June 2015). Membership includes key leadership from various ag sectors – from seed and crop protection, to precision agriculture.
When you look at agriculture as a whole, adoption of eBusiness practices continues to evolve. Some companies only address eBusiness issues and opportunities as they arise. These companies often identify business opportunities and then set about to get the IT support they need. They also may be pressured to add eBusiness support to a new or changing process with an important trading partner.
Other companies have an eBusiness strategy that is integral to their company’s strategy. These companies generally have strong executive leaders who had a hand in developing the eBusiness component of their company’s business strategy. While this approach is clearly the goal, it’s important for such companies to also watch for pitfalls. One pitfall is that once a “good” strategy has been developed, it can become stagnant year-to-year in an “if it ain’t broke, don’t fix it” environment. This can be dangerous given that the foundation of eBusiness is a rapidly changing technology landscape.
A worthy goal is for companies to consider the eBusiness aspect of all applicable business strategic, tactical and operational decisions as they are formulated and executed.
eBusiness strategy must be integrated into a company’s overall business strategy to be effective. To do so, for each element of business strategy, consider the following:
The conversation above might be a meeting or series of meetings between key members of the executive staff (e.g., chief executive officer, chief operating officer, chief marketing officer) and the leadership in finance and IT. This team can then prioritize these processes based on the company’s overall business strategy. (That is, asking “Which are the most important processes for us to streamline and improve?”) Prioritization might depend on a specific customer relationship, a competitive field your business is in, or steps you want to take to maximize resources and efficiencies within your company and increase your competitive position.
For those priority processes, companies can then develop a plan for implementation. A key question will be whether there are existing standards and/or guidelines that apply to the process (see below), or if such standards still need to be developed to enable electronic communication.
Key Resources: As you develop implementation plans, take full advantage of the resources that AgGateway and others make available to you. These include but are by no means limited to:
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