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

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 notwithstanding? 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^TM (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.