3 reasons why enterprises should embrace the shared economy

I wrote in a previous post about the shared economy and how telecommunications and media organisations could embrace its principles to generate new revenue opportunities – but it could also be time for enterprises to start adopting the likes of Uber and Airbnb as operational enablers. Whilst consumers have started to use these services very few enterprises, particularly in Australia, have adopted sourcing policies which set these companies as preferred suppliers or operational enablers. This despite the fact that Uber is now the world’s largest taxi company (valued at $41bn) and Airbnb the largest accommodation company (valued at $20bn) though neither own a taxi fleet or real estate.

Below are three reasons why adopting these companies as preferred suppliers or operational enablers could be beneficial tactically and strategically for enterprise:

1) The shared economy is cheaper for your enterprise

Travel is typically a large line item on most enterprise P&Ls and taxis/accommodation make up a good portion of that cost. Uber’s, Uber 4 Business offers ~30% discount to regular taxi fares, which added to the ability to ride share as well as reducing time taken waiting for taxis could add up to about a 40% (my estimate) discount on taxi travel. Airbnb is similar – the average accommodation cost at a hotel in Sydney with a corporate rate is about $200 per night whilst the average room per night in Sydney on Airbnb is $120 (a 40% discount). If you assume the annual travel bill for a large enterprise (5000 employees) is $25m and at lease half is hotel and taxi related then at ~40% saving could net a benefit of ~$5m per year. Not an insignificant number.

Sure – there are concerns for the quality, safety and legality (particularly UberX) of these platforms which need to be mitigated. However, enterprise could open up ways to mitigate these risks through enterprise specific ratings of cars/property or individual insurance propositions.

2) Shared economy APIs allow enterprises to better understand employee behaviors

Where, why and how employees travel is often not well understood by many large organisations. There are benefits to understanding and analysing this information. They range from the tactical such as understanding and reducing expense leakage (ensuring requested and expensed travel is compliant) to more strategic applications. For example, a field force or sales force that uses shared travel sites – gaining access to travel data can help to plan future sales and service visits, field force size, perhaps even office location planning or market expansion. As Uber/Airbnb open up APIs to developers, enterprises could take advantage of shared economy data using it to benchmark spend against organisations and industries, measuring environmental footprint or optimizing other operational elements.

3) Embracing the shared economy in operations may lead enterprise to develop new business models

Whilst the major benefits of adopting shared economy services in operations may be in productivity and cost reduction it could also have trickle-on effects into new business models. It is not inconceivable that enterprises in 10 years will have business models that use, participate and monetise all assets in a shared, highly utilised and on-demand way. As enterprise adopt shared asset models they may also be able to identify asset classes to share with either consumers or other enterprises. An example could be a fleet heavy organisation (e.g. Building materials, mining, transport) which often have high utilisation targets. Like Uber or Airbnb who aim to improve the overall utilisation of transport and real estate, so could these fleet operations. The same could be said for commercial property and skills based businesses.

Consumer use of the shared economy is only half the story. As enterprise and B2B interactions become highly personalised, employees will expect enterprise to promote the use of these services as well. And there are major benefits to adopting shared economy businesses as preferred suppliers or operational enablers – tactically (cost reduction, productivity, sustainability) and strategically (new business models, participation in the shared economy and business planning). The concerns with opening these services up to wholesale enterprise use need to be worked through by enterprises not to mention the effect enterprise may have on Uber and Airbnb in terms of demand and service growth.

One thing is certain, these companies and others like them will play an increasingly important role in the future business particularly as driverless cars are introduced and accommodation prices rise… The question then remains – when will your enterprise embrace the shared economy?

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