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Company 'Federations' to Share Data


The next step, beyond corporate alliances and employee swapping, may be collaboration on infotech systems

Companies have long formed alliances and joint ventures. Recently, they've come together to swap employees, a practice Google (GOOG) and Procter & Gamble (PG) have experimented with to share expertise.

The next wave could be "federations." In such arrangements, companies can exchange much more than their knowledge, profits, or workers. They share access to parts of their info tech systems. Today the practice is common between such business partners as employers and their 401(k) providers.

But some tech experts believe federations could have a far broader impact when it comes to cross-company collaboration. Frank Modruson, chief information officer at Accenture (ACN), says his company recently gave Microsoft (MSFT) employees access to its collaboration software. That means staff can find, chat with, instant message, or videoconference with any employee at the other company. Modruson says he has received eight requests from clients in the past month to set up a similar structure with Accenture, up from none in January.

Federating the same software between two companies is fairly simple. But opening up systems that involve multiple applications and dozens, if not hundreds, of companies is much more complex. That's not happening yet, but it should, says John Hagel, co-chairman of Deloitte's Center for Edge Innovation. Companies increasingly design products and run supply chains with large groups of specialized partners. "For the companies that can figure this out," says Hagel, "it's a massive opportunity."

And federated IT systems could be the building blocks for ad hoc ventures that pop up for specific projects. Accenture's chief scientist, Kishore Swaminathan, sees federation as a way to handle sudden spikes in demand or share data between agencies in criminal investigations. Ideally, he says, "it could be turned on and off instantly."

Return to the Game-Changing Management Ideas Table of Contents

McGregor is BusinessWeek's management editor.

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