SOGETI UK BLOG

An Overview

The 2016 Sogeti IoT Hackathon is a global event of inspiration, imagination and innovation bringing together a passionate community of technologists and practitioners from around the world to design and create novel IoT-based experiences and intelligent systems that have real-world application and market potential.  The IoT Hackathon starts in August and runs through October taking teams through a three-month journey of human-centered design, creative engineering, problem solving, and team building.

IoT Design Thinking Challenges

IoT Hackathon participants will begin by identifying market opportunities in Design Thinking creative spaces to innovate on the following major themes:IOT Hackathon - 1

  • Smart Cities
  • Smart Buildings
  • Smart Energy Grids
  • Connected Health
  • Smart Manufacturing
  • Immersive Retail
  • Connected Transportation

The Hackathon will lead off with a Design Thinking component for ideation toward a build out of prototyping end-to-end IoT solutions.  The objective is for teams to produce full working solutions that can be readily leveraged for sales demos and POCs for prospects and clients.  The IoT hackathon will be conducted on a global basis with US units in different cities participating as well as involvement from colleagues in European markets.

Using Design Thinking challenges, participants will leverage the Internet of Things as a ubiquitous computing ecosystem in which intelligent systems can be designed, developed and deployed using sensor devices to collect, communicate and crunch data in order to perfect and predict some aspects about a future, better world centered on these themes.

IoT Hackathon Platforms

The IoT Hackathon platforms include:

  • Microsoft Xamarin and Azure IoT Suite
  • Covisint IoT on Amazon Web Services (AWS)

These platforms provide a comprehensive set of capabilities to connect IoT devices, communicate device data to IoT event hubs, and deliver real-time as well as predictive analytics to mobile and backoffice visualization user interfaces.

 

A base reference architecture will serve as a foundation for solutions created on the Microsoft Azure and Covisint IoT platforms.  The purpose to include these two platforms is to demonstrate IoT capabilities using Microsoft Azure and Amazon AWS as well as showcase alliance partner IoT offerings.  The base reference architecture will provide readily usable assets that can be modified to suit the IoT ideation and prototyping.  Platform-based assets and IoT devices that can be used in prototyping will be distributed to hackathon teams.

IoT Hackathon Feature

The IoT Hackathon will include coverage of the following IoT reference architecture components:
* IoT Devices such as Azure IoT Starter Kits and Intel Edison Boards

* Mobile Apps and Enterprise Visualization Systems

* IoT Gateways and Event Hubs
* MicroServices and Web API’s
* Streaming Analytics and Machine Learning

* Cloud Services Integration

Maker IoT

The IoT Hackathon will also incorporate a maker aspect to construction by enabling teams to build custom hardware modules into their IoT designs.  Maker components will demonstrate how IoT systems can be enhanced to take on real world interactions in contexts where additional sensor data can deliver new insights and experiences.

This maker experience also goes beyond using IoT simulators and shows capability for integrating real-time embedded software into third-party hardware sensors to open up creative possibilities.

Capture

 

IoT Hackathon Sponsors and Go-To-Market

IoT Hackathon teams will be asked to develop a PowerPoint pitch describing their IoT innovation.  A cross-industry panel of judges will review these pitches to then request a demo.  Prizes will be awarded to the teams with the top five IoT innovations.

The solutions developed via the IoT Hackathon will serve as a basis for innovation lab events for Sogeti clients and prospects.  The innovation labs will present the Design Thinking spaces and the IoT solution architecture to deliver deep insights and practical implementation knowledge to accelerate client time-to-market.

The Sogeti IoT Hackathon is produced by Sogeti USA and SogetiLabs with the help of these sponsors.

IOT-last

Microsoft Azure IoT – Azure IoT Brings the Internet of Your Things to Life

Intel IoT – The Internet of Things Starts with Intel Inside

Covisint – Digitally Transform Your Business with Smart, Connected Products

Other Contributors : Richard Fall, David Yancey

Sergio Compean AUTHOR:
Sergio Compean comes to Sogeti USA with extensive technology consulting and leadership experience in the areas of distributed systems software engineering and enterprise solutions. Sergio has been successful in building culture of innovation and entrepreneurship to develop high performing teams that deliver significant value to clients across market segments and project portfolios. Sergio has a consistent track record for delivering high-touch client services with deep insights to realize positive outcomes from business strategy and technology vision. In addition to participating in go-to-market initiatives and influencing application platform strategy across R+D, sales and execution, Sergio has collaborated with executive management teams and strategic channel partners to achieve significant market development and increased revenue streams. His thought leadership work has been included in Gartner industry analyst presentations and organizational technology readiness initiatives. Sergio’s leading edge work has also been featured by the Microsoft Platform Architecture Group at Microsoft global conferences. He has served on industry standards organizations such as WS-I (now part of OASIS) developing services interoperability specifications. Sergio has produced highly-rated webinars, blog articles, client seminars, and publications covering advanced topics on emerging technologies like Windows Azure. Sergio was the founder of Connected Systems Group, part of the Haiti Rewired initiative, chartered with applying a systems thinking approach to delivering aid to Haiti after a devastating earthquake in 2010. He led the effort for developing ways to deploy mobile technology and cloud services to define a roadmap for economic recovery. Some of his publications related to this work include SWARM – Twitter Messaging Metadata Language for Disaster and Crisis Management, Empowering the New Haiti with Cloud Computing Technology, and Rewiring the Haiti Job Market with Mobile Crowdsourcing. Sergio is an Electrical and Computer Systems Engineering graduate from Rice University. He has also completed advanced courses on machine learning, artificial intelligence and HCI taught by industry thought leaders and professors at Stanford University. Sergio is a voracious reader of business strategy and design books, loves painting in acrylic, and enjoys riding his mountain bike on beautiful sunny days. He is the author of the whitepaper entitled Enterprise Architecture for Business Model Innovation in a Connected Economy.

Posted in: Business Intelligence, Cloud, Collaboration, communication, Data structure, Digital strategy, Innovation, integration tests, Internet of Things, IT strategy, mobile applications, mobile testing, project management, Quality Assurance, Research, Smart, Software Development, Sogeti customers, SogetiLabs      
Comments: 0
Tags: , , , , , , , , ,

 

In part 3 an operating model was selected based on a capability mapping of the business model design.  In this article, a design language for creating an ecosystem to support the operating model will be covered.

Core Diagrams – Ecosystem Visual Modeling

Once the operating model is selected, a Core Diagram is produced that illustrates the platform ecosystem which delivers the capabilities needed to support the enterprise architecture.  The Core Diagram’s main purpose is to graphically represent the systems capabilities and connectivity in a single, comprehensive reference.  The Core Diagram is the blueprint that answers the question:  “What does an enterprise architecture look like?”  The Core Diagram components include the following:

  • Core Business Processes
  • Shared Data Driving Core Business Processes
  • Key Linking and Automation Technologies
    • Middleware
    • Portals
    • Integration Interfaces
      • Employees
      • Customers
      • Partners
      • Suppliers
    • Key Customer Segments
      Core Diagram Design Process4 (©2005 MIT Sloan Center for Information Systems Research and IMD)

      Core Diagram Design Process4 (©2005 MIT Sloan Center for Information Systems Research and IMD)

       

Each type of Core Diagram can be designed using a process that is aligned with the characteristics of the operating model.  In the example diagram above, the major activities in the process are indicated in the sequence in which they are performed.  For instance, in the diagram, key customer segments are first identified so that the business processes that are to be standardized and integrated can be determined.  Once these processes have been selected, the shared data needed to execute them is synthesized to develop into the Core Diagram information architecture.  In the diagram, the technology and platforms enabling the standardized integration are optionally included in the model.

The visual model produced by the process is the Core Diagram that includes all the elements of an enterprise architecture that can be exploited as a robust foundation for execution.  The Core Diagram becomes an essential reference for executive management when developing new business strategies and business model innovation ventures.  The Core Diagram enhances strategic thinking for executive management by facilitating business creativity at a glance.

Coordination Operating Model – Core Diagram

 

Coordination Operating Model Core Diagram4 (©2005 MIT Sloan Center for Information Systems Research and IMD)

The Coordination Operating Model Core Diagram is designed by first considering the key customers shared among the business units in the enterprise.  The business units in this case offer different products and services but all depend upon a set of shared data to deliver value to the customer segments.  Business processes in the Coordination Operating Model are highly integrated since those products and services may involve transactions that span business units.  The key objective is for each customer segment to have a cohesive experience across all the channels and relationships.  The integration technologies and linked processes that enable these business processes are optionally included in the diagram.

To begin to understand the design of the enterprise architecture ecosystem, the table below maps out the enabling technologies and platforms that can be considered for each aspect of the operating model.

Chart3

In this operating model mobile-first responsive design can play a major role in the implementation of the enterprise architecture capabilities.  It is important for the shared customer segments to have a consistent yet context-driven presentation as they engage across the various interfaces of each business unit and channel using either an Apple iOS or Google Android device.

Big Data platforms, such as Windows Azure HDInsight or Apache Hadoop, are also key in this model since the volume, variety and velocity of shared customer-related data that is generated across business units and channels can be very significant.  Developing sophisticated analytical capabilities such as machine learning algorithms can yield data insights over a large number of dimensions that can be capitalized on an enterprise-wide basis.

Being high on the integration scale, the operating model will have to make effective use of platforms that can create system linkages while enabling business process customization.  Each business unit may execute a variant version of a business process that must be supported with agile and flexible integration platforms that can deliver data at high velocity.  Some of the integration platform enablers include Mulesoft Anypoint, Microsoft BizTalk Server and Windows Azure Service Bus.

Chart4

New Venture in Coordination Operating Model

The core diagram facilitates the envisioning process for how the new venture will be able to exploit the enterprise architecture to deliver on the business model innovation.  Executive management can use the core diagram produced by the enterprise architects as a means to build shared vision with the intrapreneurs for how the venture will operate.  The core diagram informs the innovation team how the venture would leverage shared customer data while creating the linkages via ecosystem integration platforms into enterprise resources and services, such as Big Data analytics.

 Unification Operating Model – Core Diagram

Chart5

Unification Operating Model Core Diagram4 (©2005 MIT Sloan Center for Information Systems Research and IMD)

The Unification Operating Model is designed by first identifying the key customer segments or channels that need to be served.  The enterprise architecture team along with executive management work to select the key standardized processes that should be executed on a consistent and scalable basis throughout the business.  The processes may be defined around core competencies by which the enterprise delivers value to the customer segments.  The processes are dependent on a set of common master data that are used across coordinated high-velocity transactions.  This type of operating model is especially well-suited to respond to customer and channel events in real-time to enable the OODA loop to power the collaborative decision-making within the enterprise.  The technology ecosystem to support this operating model consists of a standardized set of integration technologies and platform capabilities that exhibit robust reliability and high scalability.

For customer segments, the key to delivering exceptional experiences across relationships and channels is the architecture’s ability to scale elastically as the core business processes and their associated workflows are performed.  Moreover, the interfaces to these customer segments should be addressed with a mobile-first driven design to facilitate a consistent, context-driven interaction with the core standard processes.  These interfaces enable communication of real-time open world events into the operating core and the response must be presented reliably throughout each process.

The elastic computing necessary to support standardized core processes can be achieved via cloud-based integration platforms such Amazon EC2, Microsoft Azure, or open-source platforms such as OpenStack.  The economic justification for considering these options are based on the fact that capital expenditures related to additional data center capacity need not be incurred to deliver the service level outcomes desired by the enterprise.  During peak periods, cloud computing resources can scale to meet the event-based transaction processing to ensure the customer experience is smooth and seamless as they engage in the various relationships and channels.

To surface the standardized business process, enterprise portals provide the collaborative capabilities to perform them in a consistent and repeatable manner.  Microsoft SharePoint is designed especially well for this enablement since it also includes social networking features built on a Microsoft Azure cloud infrastructure.  The Microsoft SharePoint platform also provides rich support for incorporating shared enterprise information in collaborative workflows.  Slack is also a viable platform for enabling rich collaborative processes with robust integration capabilities to enterprise resources.  These platforms help address the emphasis in the Unification model on creating highly collaborative environments to enable scalable processing as well as group-based decision modeling.

Shared data in this operating model, as in the Coordination model, also introduces an emphasis on Big Data technology and platforms due to the volume, variety and velocity by which the data can be generated and collected throughout the enterprise.  The centralized data aspect to the Unification model prioritizes the need to create a solid foundation for advanced analytics such as classification, regression and prediction to support integrated decision modeling.  Apache Hadoop and Windows Azure HD Insight are two platforms that serve as viable candidates for these capabilities in the operating model to support Big Data.

The table below illustrates the ecosystem technology and platform emphasis mapping for each aspect in the Unification Operating Model.

chart6

A new venture can fully exploit the scalability offered by the Unification Model by incorporating the standardized processes and integration interfaces into its business model.  Enterprise architects use the Core Diagram to illustrate the business agility to intrapreneurs as well as executive management and to create a shared vision of the specialized processes and integration needed to support the innovation at the edge of the enterprise.

chart7

New Venture in Unification Operating Model

Diversification Operating Model – Core Diagram

Chart8

Diversification Operating Model Core Diagram4 (©2005 MIT Sloan Center for Information Systems Research and IMD)

The Diversification Operating Model places the emphasis on the shared technology and platform stack instead of business process standardization and integration.  To begin designing the Core Diagram for a Diversification model, the shared technology architecture services are identified then the corresponding platforms are selected.  The business units in this type of enterprise can then leverage the shared services to execute highly specialized business processes to deliver value to their specific customer segments.  The business units also own the data to serve their customer segments lowering the need for a common master data set.  However, the design of the operating model can allow for a common set of business processes that can be leveraged and then customized by each business unit.

In this type of operating model, the technology and platform stack needs to have a flexible foundation for business process agility so that each business unit can perform their customizations.  Integration platforms, such as Windows Azure Service Bus, Mulesoft Anypoint and Microsoft BizTalk Server, which support business process and workflow design, can serve as the enablers for this capability in the stack.  Enterprise architects can work with business process owners in the business units to deliver the particular integrations and system linkages with customers and partners for execution based on the common integration platforms.  The custom business processes may leverage features such as message-based routing, service brokering and transformation services in these platforms.  It should be noted, however, that business units can make decisions to deploy other platforms based on their specific integration needs.

To surface the set of shared business processes available to the business units, enterprise collaboration portals like Slack and Microsoft SharePoint, can address this aspect of the operating model.  Business units are free to design the information worker experience using these portals to perform the specialized business processing activities.  In fact, using a composite application design approach, common enterprise services may be used to develop flexible and adaptable user interfaces tailored specifically to the information worker needs in a given business unit.   Virtual teaming is another important service provided by these platforms that enable mobilization of individual resources with the required skillsets to execute a specialized process.  The ability to search and discover the information worker resources available with a given skillset profile allows business units to focus on producing and maintaining the data to optimize virtual team formation.

The table below shows the ecosystem emphasis mapping to each aspect in the Diversification Operating Model.  The Core Diagram is designed to illustrate how this mapping is manifested in the enterprise architecture.

chart9In the Diversification operating model, the shared services are exploited by the new venture in business model innovation.  The new venture can be accelerated by developing specialized business processes to deliver value to its specific customer segments using the foundational technology stack.  The new venture can focus on proving out is business model without the need to deploy the pre-requisite technology infrastructure.  In fact, in this operating model, using a common collaboration platform can facilitate the mobilization of information worker resources from established business units into the new venture.  Information workers familiar with the user interface can more readily execute the specific activities involved in the new processes.

Chart10

New Venture in Diversification Operating Model

Replication Operating Model – Core Diagram

Chart11

Replication Operating Model Core Diagram4 (©2005 MIT Sloan Center for Information Systems Research and IMD)

The Replication Operating model emphasis is on business process scalability and accelerated time-to-market for new ventures.  The design of the Core Diagram begins with the identification of standardized business processes that are to be executed by any new ventures in business model innovation.  Business modularity is a key characteristic of this operating model.  The business processes are designed by a centralized team which may include enterprise architects and executive management.  This operating model is advantages where business units need to be deployed rapidly on a global basis but need to maintain consistency with other parts of the enterprise to capitalize on established business model components in new contexts.  The autonomous nature of business units in this operating model is also advantageous in the global environment.  The supporting technologies and platforms used to automate these standardized business processes are then identified and bundled to facilitate planning and deployment when a new venture is formed.

In this operating model, predefined business processes can be enabled using enterprise group collaboration platforms such as Slack and Microsoft SharePoint.  Packaged workflows and group workspaces or sites can be created to be deployed and operated in an independent manner in each business unit.  In essence, these deployments are of turnkey collaboration solutions that can then be customized to meet the specific needs of the business unit in its operating context or region.  These technologies and platforms automate business processes that are known to be efficient and profitable so the top line benefits to the enterprise can be significant from an investment perspective.  The business modules and associated packaged deployment reduces risk and accelerates the time-to-value for the enterprise when a new venture is launched.

In addition to the portal interfaces in these bundled solutions, the underlying integration technologies that facilitate the linkages between internal systems and external services are also included as part of the automation deployment to support the standardized processes.  Platforms in the ecosystem that can serve these purposes are Windows Azure Service Bus, Microsoft BizTalk Server as well as Mulesoft Anypoint.  Components representing the codification and encapsulation of the business modules can be developed in either Mulesoft flows or BizTalk Server applications.  Deployment in a specific business unit will involve following a standard procedure with configuration management reflecting the specific business unit IT environment.  Windows Azure Service Bus can be used to enable linkages between business units, partners and channel service interfaces.  Hybrid solutions could play a major role in these deployments since the business units need to exploit a federated infrastructure for autonomous operation.  Considering Azure Service Bus also enhance ability in the enterprise to perform global class deployments for new ventures.

The table below indicates the ecosystem technology and platform emphasis mapping to the Replication operating model design aspects.  Note that the ecosystem components that are directed at the business unit level are also mapped in the table to illustrate the relationship in the enterprise architecture.

11

New ventures in the Replication Operating Model can be deployed globally in accelerated fashion by exploiting the business process modularity and turnkey solutions used for automation and integration.  In this scenario, enterprise executives are adapting a successful and profitable business model to capitalize on opportunities in new markets using a very similar value proposition, or product-service market fit.  Intrapreneurs in business model innovation can also analyze how these solutions can be adapted to ensure success within the specific context or region the business unit will be operating.  Enterprise architects can then work together with the intrapreneurs to identify linkages across business units that may be necessary to coordinate federated business processes.

chart12jpg

New Venture in Replication Operating Model

In the final Part 5 of this Business Model Innovation Series, a customer-centric methodology for measuring innovation will be presented.  The empirical approach to determining effectiveness of the new design will drive pivot enhancements to guide the evolution of the new venture to increase potential of an optimal trajectory for growth.

References:

  1. The Business Model Innovation Factory: How to Stay Relevant When the World is Changing, Saul Kaplan, Wiley Press, 2012
  2. Alexander Osterwalder (2004). The Business Model Ontology – A Proposition In A Design Science Approach. PhD thesis University of Lausanne.
  3. Business Model Generation, Alexander Osterwalder, Yves Pigneur, Wiley Press, 2010.
  4. Enterprise Architecture as Strategy: Creating a Foundation for Business Execution, J. Ross, P. Weill, D. Robertson, Harvard Business School Press, 2006.
  5. USAF Colonel John Boyd, briefings on military strategy. (http://en.wikipedia.org/wiki/OODA_loop)
  6. Reinventing Your Business Model, Clayton M. Christensen, Mark W. Johnson, Henning Kagermann, Harvard Business Review, December 2008.
  7. Creating Value Through Business Model Innovation, Raphael Amit, Christoph Zott, MIT Sloan Management Review, Spring 2012 Vol. 53 No. 3.
  8. 2012 IBM CEO Study, Leading Through Connections, IBM Corporation.
  9. Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation, Tim Brown (IDEO CEO), HarperBusiness, 2009.
  10. The Storm of Creativity, Kyna Leski, MIT Press, 2015

Sergio Compean AUTHOR:
Sergio Compean comes to Sogeti USA with extensive technology consulting and leadership experience in the areas of distributed systems software engineering and enterprise solutions. Sergio has been successful in building culture of innovation and entrepreneurship to develop high performing teams that deliver significant value to clients across market segments and project portfolios. Sergio has a consistent track record for delivering high-touch client services with deep insights to realize positive outcomes from business strategy and technology vision. In addition to participating in go-to-market initiatives and influencing application platform strategy across R+D, sales and execution, Sergio has collaborated with executive management teams and strategic channel partners to achieve significant market development and increased revenue streams. His thought leadership work has been included in Gartner industry analyst presentations and organizational technology readiness initiatives. Sergio’s leading edge work has also been featured by the Microsoft Platform Architecture Group at Microsoft global conferences. He has served on industry standards organizations such as WS-I (now part of OASIS) developing services interoperability specifications. Sergio has produced highly-rated webinars, blog articles, client seminars, and publications covering advanced topics on emerging technologies like Windows Azure. Sergio was the founder of Connected Systems Group, part of the Haiti Rewired initiative, chartered with applying a systems thinking approach to delivering aid to Haiti after a devastating earthquake in 2010. He led the effort for developing ways to deploy mobile technology and cloud services to define a roadmap for economic recovery. Some of his publications related to this work include SWARM – Twitter Messaging Metadata Language for Disaster and Crisis Management, Empowering the New Haiti with Cloud Computing Technology, and Rewiring the Haiti Job Market with Mobile Crowdsourcing. Sergio is an Electrical and Computer Systems Engineering graduate from Rice University. He has also completed advanced courses on machine learning, artificial intelligence and HCI taught by industry thought leaders and professors at Stanford University. Sergio is a voracious reader of business strategy and design books, loves painting in acrylic, and enjoys riding his mountain bike on beautiful sunny days. He is the author of the whitepaper entitled Enterprise Architecture for Business Model Innovation in a Connected Economy.

Posted in: architecture, Automation Testing, Azure, Big data, Business Intelligence, Cloud, Collaboration, communication, Data structure, Digital strategy, Enterprise Architecture, Infrastructure, Innovation, integration tests, IT strategy, Microsoft, Quality Assurance, Requirements, Research, Social Aspects, Socio-technical systems, Software Development, Technology Outlook, Testing and innovation, Transformation, User Experience      
Comments: 0
Tags: , , , , , , , , , , , ,

 

In Part 3 of the Enterprise Architecture for Business Model Innovation Series, an enterprise operating model will be selected based on the business model design described in Part 2, Using Design Thinking to Design Business Models.

Identifying an Operating Model

An operating model is the first layer in the foundation for execution in an enterprise architecture.  The operating model is the business process standardization and integration necessary to deliver value to Customer Segments.  It is the conceptual component in the organizing logic that defines an enterprise architecture.  In this sense, the operating model is the initial manifestation of the business model when it is deployed as it indicates how value is created, delivered and captured by the business units in the enterprise.  Research conducted by MIT’s Center for Information Systems Research found that enterprises implementing an operating model reported the following:

  • 17% greater strategic effectiveness,
  • 31% higher operational efficiencies,
  • 33% more customer intimacy,
  • 34% higher product leadership, and
  • 29% greater strategic agility than those companies that did not.4

Based on survey and case study research at more than 200 companies in the United States and Europe, MIT’s CISR developed a quadrant based on the two dimensions of business process standardization and integration in which high performing enterprises that had implemented an operating model could be classified.

Operating Model Quadrant (Enterprise Architecture as Strategy, Ross et al, 2006)

Coordination Operating Model

The Coordination Operating Model is characterized by shared customer, product or supplier data but operationally unique business units that can impact each other’s transactions.  These autonomous business units have a high degree of control over business process design to adapt to its specific operations.  Visually a Coordination Operating Model is represented in the following diagram.

Coordination Operating Model

image-1Operating Model Quadrant (Enterprise Architecture as Strategy, Ross et al, 2006)

Unification Operating Model

The Unification Operating Model is based on a globally integrated set of business processes where customers and suppliers are distributed geographically.  Business units have similar operations where process and data are designed centrally so they can be shared.  Centralized management of these processes typically leverages a matrix approach to keep track of the business unit composition.  Although the business units have distinct operations, high-level business process owners work to standardize business processes across the business units.  Essentially, Unification is based on a canonical set of processes and data that can be dynamically configured to execute within each business unit’s operations.

Unification Operating Model

image-2


Diversification Operating Model

Diversification is based on the fact that business units have few, if any, shared customers or suppliers.  These business units also are operationally unique and have transactions that are independent.  There is minimal business process standardization and integration in a Diversification Operating Model.  Most IT decisions and business process design are made at each business unit.  However, these business units do leverage a common set of shared services that can be integrated into their specific environment.

Diversification Operating Model

image-3

Replication Operating Model

The Replication Operating Model also has few, if any, shared customers or suppliers.  The autonomous business units in a Replication Operating Model leverage a federated approach to business process integration and standardization.  Business process design is centrally managed as are IT services.  The information architecture is standardized with canonical data definitions but the actual data is locally owned with some aggregation to the enterprise.  From an operations perspective, the business units are very similar in execution.

Replication Operating Model

image-4

Mapping Business Model to Operating Model

The next step in the process is to identify an operating model that is well-suited for the business model characteristics.  The process is defined by evaluating standardization and integration necessary in certain elements in the business model.  Elements in the business model that play a significant role in determine the operating model include Customer Segments, Key Activities, Key Resources and Key Partners.  The mapping presented here provides insight into the rational for selecting an operating model as well as a structured matrix for organizing the logic in the process.

The mapping activity should be conducted in a session including the intrapreneurs and enterprise architects.  The intrapreneurs can provide data and characteristics from the business model to the mapping matrix.  Enterprise architects can analyze the business processes, system linkages, and data necessary to support that aspect of the business model to lead to a choice for the operating model.  The mapping process and criteria can be adapted to suit the enterprise’s particular business model innovation parameters.


Mapping Matrix

Designing an Ecosystem to Support the Operating Model

 

In order to begin implementing an enterprise architecture to support a foundation for execution, it is important to consider the composition of the types of architectural practices, standardized technologies, and platforms in the ecosystem.  Technology standardization is part of the evolution of the enterprise system landscape toward an optimized, agile ecosystem that provides the responsiveness needed to enable strategic initiatives to be implemented at higher velocities.  Identifying the set of services and platform capabilities in a holistic manner allows a systems thinking approach to support design initiatives for the enterprise architecture.  The cost benefits are also significant as it gives enterprise architects a roadmap to perform technology and platform evaluations that are compliant with the ecosystem governance model to avoid redundant deployments and wasted resources.

Architecture Principles

Enterprise architecture principles that inform program portfolios related to the core operating model and new ventures can serve as valuable guides to building out the ecosystem in a cohesive, consistent manner.  These principles also facilitate increasing organization capability to design, develop, test, and deploy solutions with higher quality and high velocities.  Establishing a set of architectural principles for enterprise architecture development underscores the important consideration that process is just as important as technology for creating world class solutions.  Besides agility, economies of scale and scope can be achieved by leveraging or extending existing architectural components and subsystems to deliver new solutions required to support a new venture.  These architectural principles specifically help address the challenges needed to succeed in the global connected economy.

Architecture Principle Objectives
Responsive Mobile First Design Responsive Mobile First Design is the principle to design interfaces as if they were targeting a mobile audience that may be using various types of devices such as smart phones or tablets.  The objectives of this principle are: 

·        Personalized content, capabilities, context delivery

·        Enhanced customer relationships

·        Support for ambient awareness

·        Optimized omni-channel distribution for demand generation or service delivery

OODA Loop5 The Observe-Orient-Decide-Act Loop principle is a paradigm that informs designing analytical and event-processing capabilities into the operating core as well as new ventures.  The OODA Loop includes components for decision modeling.  Some of the objectives driving this architectural principle include: 

·        Open world decision support for consumers

·        Real-time data insights

·        Complex event processing

·        Distributed enterprise collaboration and decision support

Cloud First Design Cloud First Design is the principle to design all services with business modularity and cloud computing capability to maximize utility of network effects.  The principle helps to achieve these objectives: 

·        Global class integration

·        Partner and supplier plug-n-play

·        Supply chain agility

·        On-demand scale and elasticity

Ecosystem Architecture Principles

image-5

Ecosystem Architecture

Technology and Platform Capabilities

In addition to standardizing the process for designing the ecosystem, the technology infrastructure and platform capabilities also need to be classified to facilitate deployment decisions.  These categories are essentially the toolbox for the enterprise architect to use to create solutions to power new ventures launched from business model innovation initiatives.  The categories have been defined as they help address specific aspects of the types of capabilities needed to succeed in the global connected economy.  It should be noted, however, that the ontology presented in the table below is not exhaustive.  Enterprise architects should develop a more comprehensive catalog of the technology and platform capabilities needed to support the operating model and any extensions for new ventures.

Technology/Platform Objectives/Candidates
Mobile Mobile platforms produce responsive interfaces for consumers using smart phones or tablets.  Platforms should facilitate deploying context-aware, personalized content and capabilities in the various relationships, channels, and revenue streams the consumer is engaged. 

Candidate platforms include:

·        Apple iOS, Google Android

·        Xamarin, Apache Cordova, Appcelerator

·        Bootstrap, Skeleton

Ubiquitous Computing Ubiquitous computing is driven by need to capture more open world contextual data via sensors to develop enhanced situational awareness to empower the decision modeling in the enterprise. 

Candidate platforms include:

·        Arduino, Rasberry Pi, Intel Edison, Intel IoT Gateway

·        RFID, Energy sensors, Manufacturing sensors, Agriculture sensors, Retail beacons

·        Smart products, smart vehicles, smart buildings

·        Ayla Networks, ThingWorx, Amazon IoT, Microsot Azure IoT Suite, IBM Watson IoT

Big Data and Machine Learning Big Data is the collection of large volumes of data from diverse sources at high velocities.  Big Data can enable business context insights to move with high velocities across business units and/or partners in the operating models as well serve as the source for shared data. 

Candidate platforms include:

·        Microsoft Azure HDInsight, Azure Machine Learning

·        IBM Watson

·        Apache Hadoop, Apache Spark

To unlock value from vast amounts of data over large numbers of dimensions, machine learning platforms can provide the numerical analysis to develop insights based on classification, regression, and predictive analytics.  As such, these platforms can also drive personalization for products and services and facilitate open world decision modeling in the consumer customer segments.

 

 

 

Technology/Platform Objectives/Candidates
Cloud Computing Cloud computing provides elastic computing resources for scalability and also relay mechanisms for enabling linkages between business units and enterprises.  This platform capability is especially valuable for business model innovation since these services can be used in an on-demand basis and can be disconnected if the new business model does not perform well.  These connections can be made as part of a new venture or in response to market feedback or competition. 

Candidate platforms include:

·        Microsoft Azure Cloud Services

·        Amazon EC2

·        IBM Bluemix

·        OpenStack

Complex Event Processing Complex event processing is necessary to capture rich context information in real-time.  Events occurring in the consumer’s open world or in the collaborative distributed enterprise contains contextual data that should be incorporated into decision modeling for determining how to respond. 

Candidate technologies include:

·        Microsoft Azure Streaming Analytics

·        Amazon Kinesis

·        TIBCO BusinessEvents & Streambase

Enterprise Service Bus In modern enterprise architectures that have successfully evolved to support composite services and applications, an enterprise service bus is often a key enabler for reaching the data velocities required for business agility.  An enterprise service bus provides key capabilities to support high data velocity at the operating core such as message routing, service brokering, mediation, and message processing including transformation and enrichment, operations management, as well as quality of service. 

Candidate platforms include:

·        Windows Azure Service Bus

·        Mulesoft Anypoint

·        Neudesic ESB

·        Microsoft BizTalk Server

Enterprise Collaboration Portals Enterprise collaboration portals are the interface for group collaboration within and across business units in the enterprise.  These platforms include social network and virtual teaming capabilities to support standardized business processes and accessing shared data. 

Candidate platforms include:

·        Slack

·        Microsoft SharePoint

 

Ecosystem Technology and Platforms

 

With the operating model identified, Part 4 will introduce a design language via the Core Diagram.  A Core Diagram is a visual representation of the organizing logic for the digital ecosystem that enables the enterprise architecture.  Part 4 will present a design process of the Core Diagrams for each class of Operating Model.  The Core Diagram answers the question, “What does the enterprise architecture look like?”

 

Sergio Compean AUTHOR:
Sergio Compean comes to Sogeti USA with extensive technology consulting and leadership experience in the areas of distributed systems software engineering and enterprise solutions. Sergio has been successful in building culture of innovation and entrepreneurship to develop high performing teams that deliver significant value to clients across market segments and project portfolios. Sergio has a consistent track record for delivering high-touch client services with deep insights to realize positive outcomes from business strategy and technology vision. In addition to participating in go-to-market initiatives and influencing application platform strategy across R+D, sales and execution, Sergio has collaborated with executive management teams and strategic channel partners to achieve significant market development and increased revenue streams. His thought leadership work has been included in Gartner industry analyst presentations and organizational technology readiness initiatives. Sergio’s leading edge work has also been featured by the Microsoft Platform Architecture Group at Microsoft global conferences. He has served on industry standards organizations such as WS-I (now part of OASIS) developing services interoperability specifications. Sergio has produced highly-rated webinars, blog articles, client seminars, and publications covering advanced topics on emerging technologies like Windows Azure. Sergio was the founder of Connected Systems Group, part of the Haiti Rewired initiative, chartered with applying a systems thinking approach to delivering aid to Haiti after a devastating earthquake in 2010. He led the effort for developing ways to deploy mobile technology and cloud services to define a roadmap for economic recovery. Some of his publications related to this work include SWARM – Twitter Messaging Metadata Language for Disaster and Crisis Management, Empowering the New Haiti with Cloud Computing Technology, and Rewiring the Haiti Job Market with Mobile Crowdsourcing. Sergio is an Electrical and Computer Systems Engineering graduate from Rice University. He has also completed advanced courses on machine learning, artificial intelligence and HCI taught by industry thought leaders and professors at Stanford University. Sergio is a voracious reader of business strategy and design books, loves painting in acrylic, and enjoys riding his mountain bike on beautiful sunny days. He is the author of the whitepaper entitled Enterprise Architecture for Business Model Innovation in a Connected Economy.

Posted in: architecture, Business Intelligence, Cloud, communication, Data structure, Digital strategy, Enterprise Architecture, Human Interaction Testing, IBM, Infrastructure, Innovation, Internet of Things, IT strategy, mobile applications, mobile testing, Quality Assurance, Rapid Application Development, Research, Smart, Social Aspects, Software Development, Technology Outlook, test framework, Test Methodologies, Transformation, User Experience, User Interface      
Comments: 0
Tags: , , , , , , , , , , , , , , , , , , , , , , , ,

 

In this second article of the Enterprise Architecture for Business Model Innovation Series, a design think-based approach is presented for business model design.  Design thinking is a user-centered design philosophy based on building empathy to guide the search for breakthrough innovation.  The design process involves the innovation team introduced in the first part of the series.

sergio-1

Business Model Design

Business model design sets out to define how an enterprise creates, delivers and captures market value.  The interrelationship between those three facets is key to understanding how a business model can be invented to define a new venture. Intrapreneurs exercise the ideation component to produce novel products or services to potentially create a new market with a compelling value proposition for target customer segments.  The activities and processes that need to be executed together with partners and suppliers to ship the product or service to customers define the value fulfillment mechanism.  Lastly, the enterprise captures value when customers pay for the product or service contributing to the revenue stream.  Implementing this value generation cycle is the essence of business model design.

Business Model Canvas

A valuable tool to use for prototyping a business model is the Business Model Canvas.  The Business Model Canvas is a strategic management asset to describe, design, and invent business models using an ontology developed by Alexander Osterwalder2.  The Business Model Canvas provides a visual representation for the main aspects that define how an enterprise creates, delivers and captures value.

The canvas can be developed using paper prototyping techniques where each of the elements are represented by note cards and modified easily during the design process3. The tactile nature of this technique induces collaboration and intense feedback to establish a shared vision for the innovation in business model design.  Alternatively, the Business Model Toolbox is an iPad application available in the Apple AppStore to develop the aspects of the Business Model Canvas in digital form.

Business Model Toolbox by Strategyzer

Value Propositions

On the Business Model Canvas, Value Propositions are the product or service that will offer value to customers based on novelty, performance, risk reduction, cost efficiencies, customization, or other desired outcomes.  Essentially, these are the reasons customers will pay for an enterprise’s offering that solves a problem or satisfies a particular need and serve as the basis for Revenue Streams.

Customer Segments

Customer Segments identify the target market which realize benefits from Value Propositions that are specifically designed that intended audience.  Each segment will have a corresponding level of profitability so it is important to understand how this impacts the business model design.

Customer Relationships

Customer Relationships define the nature of the ongoing engagement between the enterprise and customers.  They define the frequency of interaction as well as the mechanisms by which customers will derive value from doing business with the enterprise.

Channels

Channels are the distribution modes by which demand for products and services is generated in target Customer Segments as well as how fulfillment is delivered.

Revenue Streams

Revenue Streams capture the options and mechanisms by which Customer Segments pay for products and services.  Options may include flat fees, subscription models or auctions.  Payment mechanisms may involve online portals, mobile applications, or retail locations.

Key Activities

Key Activities are the business processes and operations required to support the business model.  These processes may involve partners, suppliers and alliances to deliver the value to customers.  Operations include platform capabilities required to support the data and interfaces to enable the collaboration between these organizations as well as customer-facing channels.

Key Resources

Key Resources are the physical and digital assets used to provide capability for the various components in the business model.  Resources needed to fulfill demands in Key Activities, Channels, Customer Relationships and Revenue Streams should be considered to ensure value is created, delivered, and captured efficiently.  The resources may involve intellectual property, financial instruments, and human capital.

Key Partners

Key Partners indicate suppliers, service providers, and alliances that support Key Activities and Key Resources to deliver on the Value Proposition to Customer Segments.

Cost Structure

The Cost Structure describes the fixed and variable expenditures required to support Key Activities and Key Resources.  It is important to consider whether the business model is cost or value driven.  A cost-driven business model is more concerned with efficiencies such as automation and price-based value proposition.  A value-driven business model is focused on maximum value creation offered by a premium value proposition.

Design Process

Starting a new venture within the enterprise for business model innovation begins with a mobilization of team consisting of intrapreneurs, enterprise architects and executives from existing business units.  Executives from these business units work together with enterprise architects to identify shared services and data that would support the new ventures.  Intrapreneurs initiate the ideation activities to identify possibilities for new value propositions for Customer Segments.

The team next seeks to understand the viability of the value propositions by conduct market research and identifying how they can take shape with new products and services.  These activities require the team to analyze customer contexts and feedback to gain a deep understanding of the needs and problems that present an opportunity.  This particular part of the design is covered in greater detail in the next section.

In the design phase, the elements of the business model are discussed and defined with the innovation team.  Business model prototyping is the key activity to experiment with various designs on the Business Model Canvas.  The team can use post-it notes on a wall in the design room to rapidly change the elements in the Business Model Canvas.  Different versions of proposed business model prototypes can be evaluated to determine best fit and optimal viability for the target Customer Segments.  Other factors such as Key Resources and Key Activities can be assessed to support Channels, Customer Relationships, and Revenue Streams.  The deliverable from this design phase is a Business Model Canvas that has been selected with the highest evaluation determined by the innovation team.  In fact, it is in the design phase that enterprise architects begin the process of mapping the business model to an operating model.  Enterprise architects collaborate with intrapreneurs to identify the data and processes to enable the elements in the business model.

A plan to deploy the selected Business Model Canvas is then developed to begin delivering the Value Propositions in the market.  The plan should include a roadmap to keep Key Partners synchronized with the deployment timeline and to ensure dependencies will be met.  Enterprise architects work with Key Partners to facilitate the integration of services and data to enable the processes in the new business model design.  Intrapreneurs also begin working with Channels to drive demand for the offerings in the target Customer Segments.

Design Thinking for Business Model Design

Using design thinking to structure the process and philosophy guiding the business model innovation can produce breakthrough results.  Design thinking is composed of several mindful spaces intended to drive generative production of ideas and insights while driving towards a focused value position all based on the initial empathy developed for the users.  The value position is so compelling as to drive massive adoption by users, thereby creating significant market value.

sergio-3

In the Empathise space, the objective is to become immersed in the users’ world.  The intrapreneurs will lead in this space.  Some of the key steps that can be incorporated in this space include the following:

  1. Ask open questions to reflect any negativity on the user’s status quo.
  2. Ask open questions to reflect on any specific bad experiences the user may have gone through.
  3. Ask your user to act out the current experience. Observe any gaps, difficulties, or breakdowns.
  4. From user quotes and defining words, infer thoughts and beliefs.
  5. From user actions and behaviors, infer feelings and emotions.
  6. Fan out and expand the problem space by honing the questions being asked the user.
  7. Look for deeper signals from the market or community of users.sergio-define-2

In the Define space, the objective is to reframe the problem space by identifying latent user needs or discovering novel insights.  The intrapreneur working with designers will define a POV and value statement that contribute to the Value Proposition in the business model design.  One way to think about this step is developing market fit.  In this sense, the Customer Segments and Customer Relationships come into focus.  Some of the key steps that can be incorporated in this space include the following:

  1. Explore what the apparent needs of the market or community of users.
  2. Explore what the latent, deeper needs of the market or community of users.
  3. Develop insights via inferences from the exploration.
  4. Look for emotional cues and signals.
  5. Zoom in and zoom out on the exploration from community to user, user to community.
  6. Change the perspective by reframing the initial problem set.
  7. Draw and sketch thumbnail visions to drive further design.
  8. Design the problem.
  9. Define the problem statement.

sergio-3-1

In the Ideate space, the objective is an intense generative production of possibilities to meet an existing or unrealized market need based on the problem statement.  In this space, intrapreneurs collaborate with enterprise architects to determine what resources are available to deploy for the new product or service.  Technology and partners will be key factors in this ideation as well as enterprise platforms.  Key Activities, Key Resources, Key Partners, and Channels are defined in the ideation.

  1. In ideation, the first thing is to unlearn what you know.
  2. Be attentive and ready for new ideas.
  3. Brainstorm by storming preconceptions using inquiry that questions the status quo.
  4. Connect the dots.
  5. Connect ideas across existing solutions or enterprise services already deployed in the market.
  6. Connect ideas by associative log or analogy.
  7. Connect ideas by using stories, patterns of behavior useful to reach an outcome.
  8. Connect ideas leveraging synchronicity to create meaning for the user.
  9. Create focus and start to synthesize the new business model.
  10. Get feedback from executives and intended market or community of users.

sergio-3-2

In the Prototype space, the objective is to build to think.  The emerging business model can be modeled using paper prototypes.  The product or application delivering the value to the user can also be modeled paper prototyping.  The intrapreneurs and enterprise architects can also build the prototype business model using the Business Model Toolbox application mentioned earlier.  It is important to understand that there is a dual design process involved in creating the new business model based on the product or service that has been defined up to this point.  It is also key to begin to define how the Cost Structure and Revenue Stream components in the business model are factored into the prototyping.

  1. In Prototyping it is key to build to think.
  2. Use role playing to prototype new behaviors.
  3. Use storyboarding to draw out new experiences.
  4. Draw and create paper prototypes of the product or application.
  5. Draw and create lo-fi mockups of new product or application.
  6. Prepare to test these paper cutouts with users to get feedback.
  7. Synthesize a breakthrough.
  8. Seek feedback from enterprise executives on the business model prototype.
  9. Align business model components with the product or service prototyping. Use the Business Model Toolbox application to capture refinements.

sergio-3-3

The Test space objective is to get market or user feedback on the new product or service.  This set of activities also involve validating business model hypothesis based on that feedback.  A critical component is to test out the Value Proposition such that Revenue Streams and Cost Structure factors in the prototype are validated.  This is the crux of business model innovation – will the new product or service delight the user such that adoption will drive growth for the new venture?

  1. Build the prototype. Perhaps use a 3D printed model for testing if a product is involved.
  2. Test the prototype. If necessary, use cutout prototypes in early testing to refine the product.
  3. Gather feedback from the users.
  4. Track what delights the users. Are business model hypothesis being validated by the user?
  5. Track refinements suggested by the users. Be ready for the users to help you innovate!
  6. Collect the data. Analyze and improve the design.
  7. Visit any previous design thinking space as needed to refine the design until the product or service along with the corresponding business model is ready to be deployed as a new venture.

The output of the design thinking process are a new business model and a product or service that will deliver value to the market or community of users via the new venture.  An operating model that is well-suited to the new business model characteristics can now be identified.

In the next part of the series, several classes of operating models will be introduced.  A mapping strategy will be described to assist with the identification of the operating model based on the business model design.

 

References

  1. The Business Model Innovation Factory: How to Stay Relevant When the World is Changing, Saul Kaplan, Wiley Press, 2012
  2. Alexander Osterwalder (2004). The Business Model Ontology – A Proposition In A Design Science Approach. PhD thesis University of Lausanne.
  3. Business Model Generation, Alexander Osterwalder, Yves Pigneur, Wiley Press, 2010.
  4. Enterprise Architecture as Strategy: Creating a Foundation for Business Execution, J. Ross, P. Weill, D. Robertson, Harvard Business School Press, 2006.
  5. USAF Colonel John Boyd, briefings on military strategy. (http://en.wikipedia.org/wiki/OODA_loop)
  6. Reinventing Your Business Model, Clayton M. Christensen, Mark W. Johnson, Henning Kagermann, Harvard Business Review, December 2008.
  7. Creating Value Through Business Model Innovation, Raphael Amit, Christoph Zott, MIT Sloan Management Review, Spring 2012 Vol. 53 No. 3.
  8. 2012 IBM CEO Study, Leading Through Connections, IBM Corporation.
  9. Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation, Tim Brown (IDEO CEO), HarperBusiness, 2009.
  10. The Storm of Creativity, Kyna Leski, MIT Press, 2015

 

Sergio Compean AUTHOR:
Sergio Compean comes to Sogeti USA with extensive technology consulting and leadership experience in the areas of distributed systems software engineering and enterprise solutions. Sergio has been successful in building culture of innovation and entrepreneurship to develop high performing teams that deliver significant value to clients across market segments and project portfolios. Sergio has a consistent track record for delivering high-touch client services with deep insights to realize positive outcomes from business strategy and technology vision. In addition to participating in go-to-market initiatives and influencing application platform strategy across R+D, sales and execution, Sergio has collaborated with executive management teams and strategic channel partners to achieve significant market development and increased revenue streams. His thought leadership work has been included in Gartner industry analyst presentations and organizational technology readiness initiatives. Sergio’s leading edge work has also been featured by the Microsoft Platform Architecture Group at Microsoft global conferences. He has served on industry standards organizations such as WS-I (now part of OASIS) developing services interoperability specifications. Sergio has produced highly-rated webinars, blog articles, client seminars, and publications covering advanced topics on emerging technologies like Windows Azure. Sergio was the founder of Connected Systems Group, part of the Haiti Rewired initiative, chartered with applying a systems thinking approach to delivering aid to Haiti after a devastating earthquake in 2010. He led the effort for developing ways to deploy mobile technology and cloud services to define a roadmap for economic recovery. Some of his publications related to this work include SWARM – Twitter Messaging Metadata Language for Disaster and Crisis Management, Empowering the New Haiti with Cloud Computing Technology, and Rewiring the Haiti Job Market with Mobile Crowdsourcing. Sergio is an Electrical and Computer Systems Engineering graduate from Rice University. He has also completed advanced courses on machine learning, artificial intelligence and HCI taught by industry thought leaders and professors at Stanford University. Sergio is a voracious reader of business strategy and design books, loves painting in acrylic, and enjoys riding his mountain bike on beautiful sunny days. He is the author of the whitepaper entitled Enterprise Architecture for Business Model Innovation in a Connected Economy.

Posted in: 3D printing, Application Lifecycle Management, Automation Testing, Business Intelligence, Digital strategy, Enterprise Architecture, Human Behaviour, Human Interaction Testing, Infrastructure, Innovation, Internet of Things, IT strategy, mobile applications, Quality Assurance, Requirements, Research, Software testing, User Experience, User Interface      
Comments: 0
Tags: , , , , , , , , ,

 

Business Model Canvas (Business Model Generation, Osterwalder et al, 2010)

Overview

The constant tension between profiting from operational excellence and searching for new ways to deliver value need not be an unresolved dissonance for enterprise executives.  Creative harmony between the two types of activities begins with an understanding of how to design a solid foundation for an operating model and knowledge of platform capabilities that serve to support the underlying enterprise architecture.  Using a design thinking approach, it is possible to holistically map out the various facets of a business model into the components of an enterprise architecture which can then be implemented with capabilities offered by ubiquitous and cloud computing, collaboration platforms, as well as intelligent  systems.

This five part series will describe an approach to perform the mapping from the business model to an enterprise architecture which is manifested in a platform ecosystem.

  • This Series Introduction serves to provide an executive overview and imperative for understanding the critical importance of business model innovation. The design process and innovation team composition are introduced.
  • In Part 2, the Business Model Canvas will provide a visual representation of the key components of the business model and serve to anchor the innovation team’s design on how an enterprise creates, delivers and captures value. Design thinking will inform and guide the creative storming to develop breakthrough innovative concepts.
  • Part 3 covers the next step in the process to identify an Operating Model that is well-suited for the business model characteristics. Several types of Operating Models are presented as strategic options in the mapping process.
  • Once the Operating Model is selected, Part 4 describes how a Core Diagram (see below) is produced to illustrate the platform ecosystem which delivers the capabilities needed to support the enterprise architecture. The focus of this part of the series will be to provide a clear vision of how these platform capabilities come together in the ecosystem to implement a particular class of Operating Model.
  • In Part 5, the series will conclude by discussing how the business model performance can be evaluated by verifying the model hypothesis, tracking metrics, implementing feedback loops, and tapping into insights generated by business value analytics. Adapting business model design based on these insights will be covered to illustrate a continuous innovation strategy.

Core Diagram Design Process4 (©2005 MIT Sloan Center for Information Systems Research and IMD)

It is the objective of this innovation series to highlight platform capabilities that enable an unprecedented level of business agility which allows an enterprise to maintain core operations for profitability while experimenting on the edges of its Operating Model to seek out new value streams.  This dynamic nature of the enterprise architecture will then be shown to empower executives with significant degrees of business creativity in adapting the business model in an iterative fashion to respond to market feedback and opportunities to maximize value creation.

Succeeding in the Global Connected Economy

Achieving success in the new global market environment requires modern enterprises to consider powerful trends and dynamics in order to be able to adapt and respond at velocities much more rapid than ever before in history.  These market events and forces are having an effect of tearing apart the traditional enterprise that does not have the architecture to withstand the constant flux of change, competition, and customer demands.  Disruption can happen at any time, in any industry, in any market and can threaten market leaders to such a degree that they can be replaced in a few years’ time.  In his book, The Business Model Innovation Factory:  How to Stay Relevant When the World is Changing, Saul Kaplan uses the disruption Blockbuster experienced due to Netflix’s business model innovation to coin a term to describe the phenomena:  Blockbuster was “netflixed”1.  Kaplan offers other examples of entire industries being netflixed by companies with innovative business models such as Apple, Google, and Amazon.

In this environment, there is increasing pressure for enterprise executives to develop dual strategies to preserve the profitable core business while innovating with new products and services on price, capabilities, and value for customers.  The two types of strategic development require distinct set of lenses with which to identify the set of challenges and opportunities that must be addressed.  One the one hand, robust analytical thinking is essential for optimizing the core but on the other, bold creativity is needed to generate additional market value to facilitate the reinvention and evolution of the next generation enterprise.

Personalization for Mobile, Empowered Consumer

The exponential proliferation of mobile devices and adoption by consumers has led to a phenomenal surge in the levels of interactivity on the Web.  The interactivity enables new forms of value creation and social connectivity but also changes the expectations for how enterprise platforms need to be designed to support these emergent behaviors.  More than ever, consumers gravitate to content and services that are especially suited to their needs in the context they desire.  Preferences and recommendations are common place but consumers’ demands for more social intelligence in service offerings drive the level of analytical sophistication required in enterprise capabilities even higher.  Consumers are expecting service providers to not only understand their individual identity but also their social graph and the open world around them.  In the open world of consumers, time is also of the essence for delivery of those insights and capabilities to help manage uncertainty and maximize outcomes.  Personalized content, capability, and context are all important to deliver if an enterprise seeks to gain competitive advantage in the consumer market.

Long Tail on the Demand Side

The long tail on the demand side illustrates the need for even further personalization in not only the product delivery but also marketing.  Consumer segments must be targeted with specialized messaging to drive demand for niche products and services to capitalize on additional opportunities.  However, the challenge for developing marketing campaigns for these segments is centered on cost.  Enterprises need to build out analytical capabilities to execute these highly tailored marketing initiatives for each consumer segment in an efficient manner.  The days of broadcast advertising to the mass market are history and new marketing models based on participatory engagement and social advocacy must be identified in order to enhance innovation possibilities in the long tail.  Businesses also need to understand how to cultivate niche markets to gain greater traction in segments that are adjacent or lagging to the target.  Transitioning across this chasm is key for enterprises that want to achieve significantly greater market share for their products and services.

Collaborative Real-Time Context for Distributed Enterprise

The massive influence the consumer feedback loop is having on enterprise information technology is evident in the increasing velocities with which data insights need to be delivered.  In the digital supply chain, events processed from the consumers’ open world must be handled collaboratively across departments, business units, and even partners at a speed approaching real-time.  The collaborative group must observe the context and data associated with the event, become oriented to the situation, decide upon a course of action, and then execute the response.  The collaborative entities may consist of knowledge workers, information systems, or a combination of both – and in some scenarios, ubiquitous smart devices.  To enable this type of high-speed collaboration and event processing, enterprises need to consider business process standardization and integration in their operating model.  The degree of standardization and integration depends on the architecture that best aligns with the business model.  The path to this desired state involves an evolutionary process that builds out an ecosystem which satisfies key architectural principles to realize the necessary characteristics and capabilities to enable the collaborative, event-driven, real-time distributed enterprise.

Disruptive Economics on the Supply Side

Another major force that every enterprise must contend with is disruptive innovation within their market segments.  Using open source technologies and platforms, smaller and, often stealth, startups achieve significant efficiencies and time-to-market acceleration to deliver their innovative products and services that are faster, cheaper, or better than those produced by the market leader.  The important economic factor with open innovation is the fact that those technologies can be acquired and integrated at no cost to the startup or enterprise.  These disruptive economics lead to the reality that enterprises must be able to adapt their supply chain to counter threats presented by more agile and fast-moving competitors.  The most immediate capability that can be leveraged to respond to these potential disruptors is cloud computing.  Cloud computing enables the supply chain to integrate external capabilities into the enterprise core to achieve increased agility, velocity, and efficiencies with reduced capital expenditures typically associated with such initiatives.

Sustainability

Sustainability is the corporate responsibility of every modern enterprise to seek ways to minimize the environmental footprint and cost of doing business.  Regulations related to sustainability impact the decision-making enterprise executives must undertake on a global basis and often lead to necessary changes in the business model as well.  Executives may initially consider these changes as overhead but when viewed with opportunistic lenses the business model can be adapted so that overall energy costs are reduced thus contributing to longer-term profitability.  Business model innovation to achieve greater sustainability provides the enterprise with many benefits including enhanced consumer perception, more efficient supply chain, and more valuable products and services.  Consumers are very informed about sustainability when making buying decisions so enterprises’ top line are improved with greener products and services.

Innovation Process and Design Thinking

The process and organization needed to take on a business model innovation initiative must be considered on a holistic, strategic level.  Ad-hoc exercises do not yield the potentially transformative results that are achievable using a design thinking approach.  Design thinking leverages a set of design practices within an informing over-arching framework that considers the linkages and interactions of the various components of the organizational and information technology structures.

Design thinking is especially suited to address the context-driven, user-centric nature of the challenges posed to succeed in the connected global economy.  These skillsets are critical to developing a robust foundational operating enterprise core that can be extended or specialized at the edges to support iterative innovation cycles with accelerated cadences.  Design thinking can also empower creativity at the edges of the operating model as well as provide a mechanism to validate hypothesis to ensure the new business model design is achieving the desired outcomes.

Design Thinking Flow (Stanford d.school)

Execution versus Search Paradigms

Business model innovation should follow a search paradigm that creatively experiments and tests hypothesis in the elements of the new design to determine whether a new product or service is commercially viable.  The search paradigm is inherently riskier and more feedback-oriented compared to the execution mindset necessary when optimizing an established business model.  Modern enterprises need to excel at not only improving existing elements of its current business model but inventing entirely new business models whose exact structure and dynamics are emergent.

The business model innovation initiatives may be organized as a set of ventures that operate outside of existing business units but leverage their resources.  The management of shared resources across the portfolio introduces new requirements in the organizational and information technology architecture.  The successful new business ventures may eventually become integrated into the core operating model so that they can be scaled and optimized to maximize value generation.

Intrapreneurs

Enterprise executives must consider that the management philosophy necessary to run these ventures is considerably different than what is expected for existing business units.  Instead of applying a discipline for optimizing execution of operations, the team running a business model innovation venture is highly entrepreneurial, comfortable with risk, challenges the established modus operandi, and creatively pivots based on findings from market feedback.  These intrapreneurs are essentially leading startups on the edges of the enterprise to find new market opportunities for value creation.  Intrapreneurs apply design thinking to realize innovation for customers.

Enterprise Architects

The team setting out to develop the new enterprise architecture consists of individuals knowledgeable with a systems thinking approach for design.  Enterprise architects apply design thinking to deliver transformational capabilities to executive management.  The team establishes a clear vision that enterprise architecture is the organizing logic for business processes and IT infrastructure reflecting the standardization and integration requirements of the core operating model as well as the new venture entities.  The designers must work closely with both management teams in the established business and new ventures to identify the architecture elements that can be shared and extended to support innovation beyond the operating core.  The enterprise architecture team excels at creating the standardization and integration necessary to exploit resources to provide management with the capabilities for optimally running their business unit or venture while supporting innovation processes.  The design team must also be able to communicate the benefits of enterprise architecture which include:

  • reduced IT costs
  • increased IT responsiveness
  • improved risk management
  • increased management satisfaction, and
  • enhanced strategic outcomes.

In the next part of the series, the business model design process will be described using the innovation team organization covered in this introduction.

References

  1. The Business Model Innovation Factory: How to Stay Relevant When the World is Changing, Saul Kaplan, Wiley Press, 2012
  2. Alexander Osterwalder (2004). The Business Model Ontology – A Proposition In A Design Science Approach. PhD thesis University of Lausanne.
  3. Business Model Generation, Alexander Osterwalder, Yves Pigneur, Wiley Press, 2010.
  4. Enterprise Architecture as Strategy: Creating a Foundation for Business Execution, J. Ross, P. Weill, D. Robertson, Harvard Business School Press, 2006.
  5. USAF Colonel John Boyd, briefings on military strategy. (http://en.wikipedia.org/wiki/OODA_loop)
  6. Reinventing Your Business Model, Clayton M. Christensen, Mark W. Johnson, Henning Kagermann, Harvard Business Review, December 2008.
  7. Creating Value Through Business Model Innovation, Raphael Amit, Christoph Zott, MIT Sloan Management Review, Spring 2012 Vol. 53 No. 3.
  8. 2012 IBM CEO Study, Leading Through Connections, IBM Corporation.
  9. Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation, Tim Brown (IDEO CEO), HarperBusiness, 2009.
  10. The Storm of Creativity, Kyna Leski, MIT Press, 2015

 

 

Sergio Compean AUTHOR:
Sergio Compean comes to Sogeti USA with extensive technology consulting and leadership experience in the areas of distributed systems software engineering and enterprise solutions. Sergio has been successful in building culture of innovation and entrepreneurship to develop high performing teams that deliver significant value to clients across market segments and project portfolios. Sergio has a consistent track record for delivering high-touch client services with deep insights to realize positive outcomes from business strategy and technology vision. In addition to participating in go-to-market initiatives and influencing application platform strategy across R+D, sales and execution, Sergio has collaborated with executive management teams and strategic channel partners to achieve significant market development and increased revenue streams. His thought leadership work has been included in Gartner industry analyst presentations and organizational technology readiness initiatives. Sergio’s leading edge work has also been featured by the Microsoft Platform Architecture Group at Microsoft global conferences. He has served on industry standards organizations such as WS-I (now part of OASIS) developing services interoperability specifications. Sergio has produced highly-rated webinars, blog articles, client seminars, and publications covering advanced topics on emerging technologies like Windows Azure. Sergio was the founder of Connected Systems Group, part of the Haiti Rewired initiative, chartered with applying a systems thinking approach to delivering aid to Haiti after a devastating earthquake in 2010. He led the effort for developing ways to deploy mobile technology and cloud services to define a roadmap for economic recovery. Some of his publications related to this work include SWARM – Twitter Messaging Metadata Language for Disaster and Crisis Management, Empowering the New Haiti with Cloud Computing Technology, and Rewiring the Haiti Job Market with Mobile Crowdsourcing. Sergio is an Electrical and Computer Systems Engineering graduate from Rice University. He has also completed advanced courses on machine learning, artificial intelligence and HCI taught by industry thought leaders and professors at Stanford University. Sergio is a voracious reader of business strategy and design books, loves painting in acrylic, and enjoys riding his mountain bike on beautiful sunny days. He is the author of the whitepaper entitled Enterprise Architecture for Business Model Innovation in a Connected Economy.

Posted in: Business Intelligence, communication, Digital, Digital strategy, Infrastructure, Innovation, Internet of Things, IT strategy, mobile testing, Research, Smart, Social Aspects, Transformation, User Experience      
Comments: 0
Tags: , , , , , , , , , , , ,