Thursday, September 24, 2009

SAP EDI and Linkedin

One year ago SAP's Venture Capital arm made an investment in Linkedin.  Linkedin is described as a  business-oriented social networking site founded in December 2002 and used mainly for professional networking.  About a year ago, SAP AG also announced an investment in another collaboration company in the EDI and B2B industry called Crossgate.  Let’s first talk about Linkedin.

Linkedin enables a person to create an online profile (much like a resume or CV) and then connect to other people’s profiles that are known through personal and/or professional relations. The result is the user ends up with millions of professional connections through relationships that have relationships that have relationships. You connect only once, but then you have access to millions of other professionals that are in Linkedin’s collaborative network. Each user that joins Linkedin brings with them a network of professional contacts and relationships, which are added to and become part of the collaborative network. The ability to easily connect to other users on the network is already built into the system. It is a simple button click to expand one’s collaborative network.

People do not have to program custom html code to add their resume/CV to Linkedin.  There is a standard interface.  You access Linkedin through your browser, fill in the online data fields, upload graphics and documents.  The user does not have to create custom programming code to connect to their professional network.  Linkedin has already created standardized processes and database connections. 

SAP through their recent investment and co-ownership of Crossgate, is now rolling out a similar network-centric infrastructure for companies worldwide that require EDI and B2B connectivity and collaborative neworks.  SAP CEO Leo Apotheker recently stated, “SAP will be focusing future development of its business suite of products and Netweaver integration middleware at meeting business needs to develop and maintain collaborative networks.”

Why would a company choose to self fund a huge investment into building and supporting a large custom internal EDI and B2B system that has no reusability outside of the 4 walls of their IT department?  There are no economies of scale in this traditional model.  This is like everyone building their own point-to-point personal internet rather than participating in the global internet.  The business value comes through the size of your collaboration network.  You can either choose to implement each trading partner's EDI messages one at a time, or you can plug into the vast global network consisting of tens of thousands of pre-connected trading partners. 

Linkedin would never grow if each time you added a professional relationship, it required custom programming.  It expanded so rapidly and efficiently because finding and connecting to other professionals was so very easy.  EDI and B2B, although much more complex, can also benefit from this network-centric approach that reduces the cost for every participant and makes connecting to your trading partners a simple standardized process that can be reused globally.

If you would like to discuss this topic in more detail please contact me.

Author Kevin Benedict
I am a loose canon.  These are my comments, no matter who else I want to blame, they are mine alone.  These comments are not approved by my employer, but if they had the time to read them, I am sure they would come around.

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