Academic journal article ABA Banking Journal

The Business Ecosystem View of the Extended Enterprise

Academic journal article ABA Banking Journal

The Business Ecosystem View of the Extended Enterprise

Article excerpt

In the mortgage industry, management faces the challenge of maintaining profits while addressing rising interest rates and increased regulatory compliance due to the Sarbanes-Oxley Act, the Graham-Leach-Bliley Act, the Patriot Act, and others. Continued industry mergers and acquisitions further compound these challenges.

An organization's best course to overcome these challenges is to redefine its view of the extended enterprise and to see it as a "business ecosystem." The Harvard Business Review describes business ecosystems as "loose networks--of suppliers, distributors, outsourcing firms, makers of related products or services, technology providers, and a host of other organizations" and that they "affect, and are affected by, the creation and delivery of a company's own offerings." In the mortgage industry, these networks may consist of realtors, builders, service providers, correspondents, brokers, and others.

Organizations like FedEx have transitioned to this viewpoint by applying technology to support data sharing and process integration across all participants in its business ecosystem, gaining a competitive advantage as a result. At minimum, this type of data integration is important to the mortgage industry because it allows the industry to estimate the lifetime value of a customer. The value of maintaining customer loyalty, as it relates to the potential sale of services, can be estimated only by implementing data and process integration across the business ecosystem, allowing companies to measure the value of this loyalty. Additionally, data sharing and process integration enables these measurements to be implemented as a practiced strategy. Achieving this and other advantages afforded by a business ecosystem viewpoint requires innovation by management and technological support.

Although it involves technology, achieving data sharing and process integration across the business ecosystem is not a technology-driven initiative. The key to successfully moving toward the business ecosystem is having management align business and information technology (IT) groups, which yields a correct balance of innovation and useful technology to support this transition. This alignment is important to implement data sharing and process integration across the business ecosystem, which cannot be achieved through a simple "rip and replace" strategy. …

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