Value Creation in a Network: The Role of Pricing and Revenue Optimization and Enterprise Profit Optimization

Sanjeev Kalanidhi

Information Systems Frontiers

December 2001, Volume 3, Issue 4, pp 465-470

Abstract. The Internet has created a virtual upheaval in the structural features of the supply and demand chains for most businesses. New agents and marketplaces have surfaced. The potential to create value and enhance profitable opportunities has attracted both buyers and sellers to the Internet. Yet, the Internet has proven to be more complex than originally thought. With information comes complexity: the more the information in real time, the greater the difficulty in interpretation and absorption. How can the value-creating potential of the Internet still be realized, its complexity not with standing?This paper argues that with the emergence of innovative tools, the expectations of the Internet as a medium for enhanced profit opportunities can still be realized. Creating value on a continuing basis is central to sustaining profitable opportunities. This paper provides an overview of the value creation process in electronic networks, the emergence of the Internet as a viable business communication and collaboration medium, the proclamation by many that the future of the Internet resides in “embedded intelligence”, and the perspectives of pragmatists who point out the other facet of the Internet—its complexity. The paper then reviews some recent new tools that have emerged to address this complexity. In particular, the promise of Pricing and Revenue Optimization (PRO) and Enterprise Profit Optimization (EPO) tools is discussed. The paper suggests that as buyers and sellers adopt EPO, the market will see the emergence of a truly intelligent network—a virtual network—of private and semi-public profitable communities.

Key Words. pricing optimization, revenue optimization and enterprise profit optimization

1. Introduction

Few would disagree with the proposition that the Internet, apart from redefining business relationships, has the potential to enable enterprises to lower costs dramatically across their supply chains and to create additional revenue streams. The Internet improves the utility of information, and more information means more potential to create value. It has become evident, however, that this very capability of improving information in real time does not come without complexity. The initial exuberance about the Internet as a treasure trove of untapped profitable opportunities is gradually being replaced by cautious realism. Given the complexity of the Internet, attention has now shifted to questions of how to realize its value-creating potential in a systematic and sustained fashion. Indeed, teasing out value-creating opportunities from a multitude of possibilities constitutes the very essence of business success in an Internet-based economy. In Section 2 below, the paper begins with a simple explanation of the value creation process within an enterprise, and the contribution of protocols such as EDI in supporting value creation process through the medium of electronic networks. Section 3 reviews how Supply Chain Optimization Tools (SCOT), together with EDI, have led to the improvements in business processes for both buyers and sellers. Section 4 treats the manner in which the Internet has fundamentally changed the nature of electronic networks, and that of the supply chain. The Internet, in conjunction with SCOT, allows collaborative processes—thus enhancing the value creation potential of the network significantly. Section 5 explains why futurists are willing to further extrapolate this value creation potential by proclaiming its “embedded intelligence”. Section 6 addresses another aspect of the Internet revolution—how businesses are dealing with the challenges of the Internetrsquo;s complexities. Section 7 discusses some of the newer approaches to these immediate challenges. Sections 8 and 9 discuss the role of Pricing and Revenue Optimization (PRO) and Enterprise Profit Optimization tools approaches to unscrambling the complexity of the Internet. The paper concludes by providing some thoughts on how adoption of EPO will impact the future of the Internet.

2. Value Creation in a Network

Electronic networks contribute to the value creation process by overcoming some of these cost induced bottlenecks. Protocols such as Electronic Data Interchange (EDI) reduce execution costs and facilitate a broad range of activities, benefiting both the buyer and the seller of outsourced goods and services. From raw materials to final product, EDI links the entire supply chain in a value-creation cycle. A buyer can use EDI to check the availability of a component with a supplier. A supplier can also use EDI to inform the buyer of a stock out. Further, from an execution standpoint, purchase orders and shipment orders and payment acknowledgment can be transmitted through EDI. With each such task, EDI creates value for both buyers and sellers by facilitating network use to effectively address search, coordination, and execution costs.

4. The Internet Juggernaut

The business use of the Internet has resulted in a virtual upheaval in the structure and operation of the supply chain. The structure of the traditional supply chain has been radically changed through the creation of a direct channel and by the emergence of new agents and marketplaces. For instance, the direct Internet channel threatens to disinter mediate distributors and retailers. Conversely, an online retailer relies on the ubiquity of the Internet to reach customers around the world. Further, online exchanges are functioning as new economic agents, bringing buyers and sellers together on the Internet. For example, exchanges like National Transportation Exchange can be used for spot buy

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网络中的价值创造：

定价和收入优化和企业利润优化中的作用

作者：珊吉尔 卡兰尼迪海

文章出处：《信息系统前沿》2001年12月，第3卷，第4期，第465-470

摘要：互联网已经创造了为大多数企业的在供应链和需求链结构特点的虚拟动荡。新的代理商和市场已经浮出水面。创造价值，提升盈利机会的潜力已经吸引买卖双方到互联网。然而，互联网已经被证明是比原先预想的要复杂。随着信息变得复杂：越实时的信息，在解释和吸收难度越大。如何能继续实现互联网的价值创造潜力，它的复杂性不再存在？本文认为，以创新工具的出现，互联网作为增强盈利机会介质的期望还是可以实现的。在连续的基础上创造价值的核心是保持盈利的机会。本文提供了电子网络的价值创造过程的概述，互联网的出现，作为一个可行的商业沟通与协作中，宣布由许多互联网的未来将驻留在“嵌入式智能”，而指出互联网的复杂性的的实用主义者持有其他方面的观点。然后本文回顾已经出现的解决这个复杂最近的一些新的工具。特别是定价和收入优化（PRO）和企业利润优化（EPO）工具的承诺进行了讨论。本文表明，随着买卖双方采用EPO，市场将看到出现一个真正的具有虚拟私人和半公共盈利社区网络的智能网络。

关键词：定价优化，收入优化和企业利润优化

1. 简介

很少人会认为，互联网，除了重新定义的业务关系，有使企业在其供应链显着降低成本，创造更多的收入来源的潜力。互联网提高了信息的效用，并且更多的信息意味着更多潜力创造价值。它已变得明显，然而，这个非常完善的实时信息能力并不是没有复杂性。关于互联网作为尚未开发的盈利机会宝库最初的繁荣正逐渐被现实主义谨慎取代。由于互联网的复杂性，注意力已经转移到如何实现其价值创造潜力的系统性和持久的方式问题。的确，从可能性众多梳理出创造价值的机会，构成了企业成功的以互联网为基础的经济的本质。以下第2节，文章以价值创造过程的企业内一个简单的解释和协议通过电子网络媒介支持价值创造过程的贡献为开头，以及电子数据交换（EPO）。第3节回顾了供应链优化工具（SCOT），与电子数据交换在一起，改进了业务流程买卖双方。第4节解决的方式在于英特网从根本上改变电子网络的性质，以及该供应链。在网上，与供应链优化工具的同时，允许协作流程，从而提高网络价值创造的潜力显著。第5节解释了为什么未来学家愿意通过宣布其“嵌入式智能”，进一步推断这个价值创造潜力。第6节强调另一方面关于互联网革命，企业如何处理互联网的复杂性的挑战。第7节讨论了这些眼前的挑战的最新办法。第8和9讨论定价和收入优化（PRO）和企业利润优化工具的作用的方式去解读了互联网的复杂性。本文总结提供了一些想法关于通过采用电子数据交换(EPO)将如何影响未来互联网。

2.在网络中创造价值

电子网络通过克服一些成本引起的瓶颈，有助于价值创造过程。协议如电子数据交换（EDI）减少执行成本，并促进广泛的活动，有利于买方和外包产品服务的卖方。从原料到最终产品，电子数据交换链接的价值创造周期的整个供应链。买方可以利用EDI与供应商以检查组件的可用性。供方还可以使用EDI来告知缺货的买家。此外，从执行的角度来看，采购订单和发货单和支付确认可以通过EDI传输。随着每一个这样的任务，EDI创造了便利的网络使用，有效地解决搜索，协调和执行成本买卖双方的价值。

4.世界主宰英特网

英特网的商业用途已导致在供应链的结构和运营的虚拟剧变。传统的供应链的结构通过建立直销渠道，并通过新的代理商和市场的出现被彻底改变。举例来说，直接的互联网渠道威胁发掘中介分销商和零售商。相反，网上零售商依赖于互联网的普及给世界各地的客户。此外，网上交易正在运作新的经济主体，在互联网上汇聚全球买家和卖家。例如，像美国国家运输交流的交换，可用于现场购买和运输服务的销售。

7. 互联网的复杂性和价值创造

获得货币的一种观点是，复杂性需要由学习，适应和应对的过程来处理。莫汉比尔萨瓦亨尼和德瓦尔帕瑞克，在最近哈佛商业收入的文章中，认为网络是复杂的;回应最好的办法就是接受它，并学会通过互联网创建的有多智慧。价值来自于一个人对于过程的理解，以及如何理解可以使用得有利益。投资于发展这个更深入的了解企业通常站在从互联网上获得。但这种方法并不奠定了一个路线图;它是类似于语句，如“当海是狂野的，了解海为什么惊涛骇浪去达到海员游泳并且生存的目的。”这是对互联网一个有趣的哲学方法，但也许不是对企业实用的工具。我们提出另一种方法是使用更丰富的优化工具包。在互联网的复杂性可以通过同时评估多个潜在变量更丰富的优化工具包，工具包处理。增加的优化实力，然后会向买方或卖方，以利用互联网以更丰富的资源和盈利方式的能力。事实上，营销和零售和制造业销售商品和服务的一个重要的革命在于以动态的方式改变价格。

10. 结论

不能太早的去推测在不久的将来，将盈利买卖双方的私人和半公共社区将在全球供应链的互动混为一谈。这个社会的基本理念很简单：构建网络成为你的优势。网络的参与者，买家和卖家很相似，影响和塑造它成为优势。强大的优化工具，如电子数据交换（EPO）和定价和收入优化（PRO），显然将帮助参与者辨别盈利竞争的规则。然后我们会看到新的举措为网络奠定真正的智能网络，建立在买卖双方本质上盈利的基础上。

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