In the current business environment in which companies are under increasing pressure not only to increase revenue but also to respond quickly to changing market conditions, companies will be successful only if they transform themselves and become on demand businesses. In this paper we describe the changes needed to effect this transformation, and in particular, we describe the important role played by componentization and by service orientation. We discuss the way componentization enables a business to operate in a value net, a network of partnerships with customers and suppliers supported by real-time information flows and information technology systems. We also describe the need for service orientation to achieve seamless integration of business components. We illustrate these ideas with a case study from the rental car business. Finally, we describe IBM activities in this area and the resulting methods and tools that help businesses deal with these challenges.
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