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Project Success Stories - Virtual business enters the real world

Work by EU-funded researchers will help make Europe a world leader in virtual organisations, the new, emerging business reality. It is a reality that will change how work gets done.

Digital Economy icon Digital Economy

Take Mark Kwan's company in Frankfurt. It designs the logical functionality of video software and needs help from Soo Chen's company in Milan for audiovisual interfaces. They both need Jemish Patel's platform company in London. They put together software and hardware interfaces so a new type of video camera can work with editing software. They are in a hurry. They do not do anything so 20th century as a meeting. For this project the three firms become one joint venture, working as a fully integrated virtual organisation (VO). They will collaborate virtually. But this VO is much more than video-conferencing. Using a 'contract wizard' they are able to rapidly establish the legally binding terms of their cooperation. Their human resources systems link seamlessly, so the right people are assigned to the right job. The three SMEs work as a single company for the purposes of this one-time project. They can co-opt other SMEs or larger companies on the fly, if they need more expertise. At the end they can dissolve the VO, start on a new project, or another VO. This is a world where SMEs can self-organise into ad-hoc virtual corporations to tackle projects, take on markets and exploit opportunities that no single SME could do on its own. It is a big, big vision and it is a lot closer because of the work by 'European collaborative networked organisations leadership' (Ecolead) initiative, a major European effort to lead the world in networked collaboration. 'In ten years, in response to fast-changing market conditions, most enterprises and especially SMEs, will be part of some sustainable collaborative networks that will act as breeding environments for the formation of dynamic virtual organisations,' says Martin Ollus, coordinator of Ecolead and a researcher at Finland's VTT institute. 'Collaborative networks of organisations provide a basis for competitiveness, world-excellence, and agility in turbulent market conditions,' he adds. 'They can support SMEs to identify and exploit new business potential, boost innovation, and increase their knowledge. Networking of SMEs with large-scale enterprises also contributes to the success of the big companies in the global market.' Far-ranging Ecolead project was far-reaching and consisted of many direct and indirect impacts. It had a large work programme involving 27 partners and a budget of EUR 15.22 million, with EUR 9.75 million provided by the EU. Using these resources the project developed dozens of important tools and many pieces of key infrastructure. In the process the partners helped to create a whole new market sector for Europe's ICT industry, a sector focused on collaborative networking, VOs and the even more complex community of networked organisations (CNOs). More importantly, software development for the European SME market is now a viable proposition. Few enterprise solutions target SMEs because it is a fragmented market of relatively small installations. But by creating a focus on the collaborative networking tools SMEs need, Ecolead helped to overcome this barrier. Ecolead's work had direct application too. Five key strands created the framework for a VO-enabled world. First, there was an important, broad and very influential study of networking and collaboration theory. Second, Ecolead developed appropriate infrastructure and tools. Next the project developed three strategic processes to enable a sustainable VO ecosystem: VO breeding environments (VBE), dynamic VOs and professional virtual communities. VBEs are the key element to prepare SMEs, typically consisting of companies that could potentially form VOs. 'There are many groups and associations that have some of the characteristics of a VBE, but they are not particularly acting in this capacity. Industry associations and chambers of commerce offer a potential springboard for the development of VBEs. These potential VBEs have in their DNA the mission to support the overall well-being of their associated SMEs,' explains Mr Ollus. Here, software is the key enabler and Ecolead developed a series of tools and services that can be used together or separately. The assistance tool, for example, supports rapid creation of a virtual organisation which accommodates issues of trust, competency, and other factors to set it up. For performance, the project developed a measurement tool to record the efforts of each member. Over time this data becomes invaluable for matching SMEs in a VO. A contract negotiation wizard allows member to quickly establish the terms of cooperation. Meanwhile an application service provider (ASP) model offers management tools to run the VO, without clogging up the IT infrastructure of member companies with ad-hoc software. There is collaborative problem solving support for trouble-shooting when something goes wrong, and there is an advanced collaboration tool that can match individual competencies across the VO to specific tasks. Ecolead developed all this essential software infrastructure after an extensive theoretical study of the requirements. The work has become so influential that Springer has published two books about it. These results are real enabling factors for the adoption of ICT solutions in SMEs; VBEs and ICT-vendor companies will be able to provide Ecolead-compatible solutions. 'The global market is pushing SMEs into cooperation with other SMEs and also with big companies in the collaborative network paradigm. But collaboration frequently requires a preparedness that usually is missing in actual SMEs,' stresses Mr Ollus. But however many tools, services and supports Ecolead develops, SMEs will always require help at some point. For this reason Ecolead developed models of professional virtual communities. These consist of consultancy companies relevant to VBEs and VOs. These consultants provide the key services that are not available within SMEs. It was an enormous work programme, and Ecolead achieved its overall aim to create strong foundations and mechanisms needed to establish the most advanced collaborative and network-based industrial society in Europe. The project's work continues, moreover; the 'Collaboration and interoperability' (COIN) project carries on this work, further underlining Europe's commitment to be number one in this field. In the future business will be networked, it will be collaborative, it will be agile. Thanks to the work of the Ecolead project, that future is a lot closer than we thought, and Europe is leading the way. The Ecolead project received funding from the 'Networked business and governments' initiative of the EU's Sixth Framework Programme for research.