Digital Transformation opportunities and themes 2019/03 - digital consumption

Digital Transformation opportunities and themes from the DTI (2019/03) - Digital consumption

Feb 2022 - this post is permanently moved to https://architectfwd.com, my new site, and can be found here  - https://architectfwd.com/architecture/enterprise-architecture/digital-transformation/dti2019review/platforms/2022/02/01/digital-transformation-opportunities-and-themes-2019-03-digital-consumption/ please go and bookmark that site for all of my future content.

This post follows on from my previous posts on Digital Transformation opportunities and themes, this time focusing on the theme Digital Consumption.

The DTI assessment from May 2018 noted that the following are key themes that have emerged from the analysis of digital transformation across 13 industries (health, retail, professional services amongst others):

• Maximizing return on digital - discussed in a prior post
• Digital Consumption - discussed in this post
• Digital Enterprise - discussed in prior post
• Platform Economy - discussed in prior post
• Societal Implications - future post
• Unlocking Digital Value to Society - future post

Digital Consumption

Digital customers needs and expectations are evolving, and businesses / organisations serving these customers must adapt, primarily through

• Offering experiences rather than products and services. Customer experience is the number 1 priority. I must list the one that comes to mind first: Amazon principle, Customer Obsession: 
• Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.
• Hyper-personalisation. Customers expect services tailored and personalized for them.
  As an example, netflix offers a match percentage when viewing a show, though I sometimes question if it matches anything I want or just matches based on proximity to other shows I may have clicked over. Spotify has the ability to suggest songs or playlists based on other previous playlists and songs a customer has listened to, which helps to promote new songs and playlists ultimately improving the experience of the user.
• Ownership to access, where customers would rather pay for access-based models rather than purchase outright. Think of renting a movie via Apple Movies, or a Spotify subscription where you don't actually own any of the albums you listen to.

I believe the access-based model is becoming more prevalent, especially as platforms drive us to consume content, video and audio for a subscription fee, and more relevant is likely how many customers prefer that to buying a DVD, CD etc and not enjoying the whole album. The choice and flexibility in offering these experiences is highly desirable to older models of purchasing and ownership, just as an example. In my next post I'll discuss one the next themes, Digital Enterprise, with more on disruption and innovation of business models, operating models and how the DTI paper suggests new metrics should be added and tracked to gauge performance outside of typical financial indicators.

Cheers

Quintes

Quintes van Aswegen Togaf 9 Certified Architect, Professional Scrum Master I (PSM I) Certified

Connect with me on LinkedIn or Twitter

Digital Transformation opportunities and themes 2019/03 - platform economy

Digital Transformation opportunities and themes from the DTI (2019/03) - Platform economy

Feb 2022 - this post is permanently moved to https://architectfwd.com, my new site, and can be found here  - https://architectfwd.com/architecture/enterprise-architecture/digital-transformation/dti2019review/platforms/2022/02/01/digital-transformation-opportunities-and-themes-2019-03-platform-economy/ please go and bookmark that site for all of my future content.

This post continues my study of Digital Transformation opportunities and themes as described in the DTI assessment[1] from May 2018, primarily focused on what the DTI report describes as the Platform economy.

Themes

Just to summarise where we're at, the DTI notes the following are key themes that have emerged from the analysis of digital transformation across 13 industries, and I've worked through them as follows:

• Maximizing return on digital - discussed in a prior post
• Digital Consumption - discussed in a prior post
• Digital Enterprise - discussed in prior post
• Platform Economy - discussed in this post
• Societal Implications - future post
• Unlocking Digital Value to Society - future post

Let's dive in and work through what the platform economy holds.

Platforms

As described in the DTI report, value is derived from platforms in these ways..

• to drive transformed business models, through more frequent and complex interactions amongst businesses B2B platforms are requiring businesses to think about innovation and digital business models in new and disruptive ways.
  
• to help ecosystems expand,
  
  interconnected systems and new business models are increasing collaboration between businesses, partners, vendors and the businesses they support to drive highly complex always-on systems capable of supporting local, national and global business. Platforms even create means for other startups or established organisations to leverage those platforms to create services and integrations which could generate new revenue. Atlassian is a good example of that - app market places and plugin ecosystems allow others to leverage the popularity of the platforms to deliver new features or integrations which ultimately become revenue sources to those players.
  
• creating a win-win for industry and society,
  
  The DTI report notes a US$100 trillion value at stake from digital transformation, and it states society can benefit as much as the the industries.. We'll need to unpick that.

DTI further notes changes to Strategies and Operational capabilities, such as
a) changes to pricing models to outcome based objectives, and these may be especially important if considering the move from ownership to access-based models for some services or products.
b) strategies to position an organisation as having a platform mindset, especially for key services or product offerings. Confidence in the customer segment, new or existing, must be high to avoid the 'build it and they will come' platform possibly where there are no customers needing or wanting what has been built.
c) platform-driven innovation, which is especially important to innovate and provide a base for partners and customers to derive and even create further value.

The only thing I think I want to work through here is the win-win for industry and society, just to be clear on what the value to society is envisaged to be. I'll do that in another post.

Cheers

Quintes

Quintes van Aswegen Togaf 9 Certified Architect, Professional Scrum Master I (PSM I) Certified

Connect with me on LinkedIn or Twitter

[1] http://reports.weforum.org/digital-transformation/

Digital Transformation opportunities and themes 2019/03 - digital enterprise

Digital Transformation opportunities and themes from the DTI (2019/03) - Digital Enterprise

Feb 2022 - this post is permanently moved to https://architectfwd.com, my new site, and can be found here  - https://architectfwd.com/architecture/enterprise-architecture/digital-transformation/dti2019review/2022/02/01/digital-transformation-opportunities-and-themes-2019-03-digital-enterprise/ please go and bookmark that site for all of my future content.

Update 06 April 2019, my other post on the theme maximizing return on digital in the DTI report is available.

This post follows on from my previous post on Digital Transformation opportunities and themes, this time focusing on the theme Digital Enterprise and how innovation affects and influences business models, innovation and staff skills needed to succeed in the transformation.

The DTI assessment from May 2018 noted that the following are key themes that have emerged from the analysis of digital transformation across 13 industries (health, retail, professional services amongst others):

• Maximizing return on digital - discussed in a prior post
• Digital Consumption - discussed in a prior post
• Digital Enterprise - discussed in this post
• Platform Economy
• Societal Implications
• Unlocking Digital Value to Society

Digital Enterprise

Innovation and disruption are key to successful transformation into a digital enterprise:

• Business Models.
  Business models must consider distribution channels, customer segments (either existing or new), value proposition and even the Key Assets which could all be driven from new technology enablers. Cost could be impacted through platform, new technology adoption to provide streamlined or new capabilities into value stream stages.. disruption!
  
  The DTI summary notes that Business Models may be able to choose from one of these options to deliver and realise the promise of digital:
  1. Build - If there is time and capability to do so
  2. Buy - when wanting to own the market, open new markets or when internal capability is not mature enough
  3. Partner - thus leveraging the strengths of partners, including any of their key assets, channels or gaining access to their customer segments
  4. Invest - Invest in R&D, in key resources development or even in intrapreneurial initiatives within the organisation
  5. Incubate - invest in and incubate a separate or sub entity and apply startup/lean methods to iterate
• Operating Models.
  Delivering value requires an agile business operating model, in both core and supporting capabilities. Lean, DevOps and Agile methodologies and practices are being adopted in many business units, even those I work with now to reduce waste and increase business agility.
  
  The DTI summary notes the operating models vary amongst 5 key types, likely needing a post on its own. Of these models, the customer-centric operating model focussed on a decentralised organisation focusing on the frontline processes to be customer obsessed is crucial and likely the most obvious depending on the business' target client base. A frugal operating model using less and with constrained resources and funding is also important to deliver more without undue fixed expense or waste. Lastly I like the Open and Liquid operating model, centered around platforms for the 'sharing customer', access based models. The other 2 models noted is (a) Data-powered with a focus on analytics, and (b) skynet with a focus on manufacturing.
• Digital skills. Digital skills of staff and digital leadership are both crucial to delivering in a transformational environment.

DTI also suggests new metrics to monitor as part of key performance indicators. These include number of users, growth in registrations but also monthly active users, conversion rates and abandonment rates. Engagement is also key, with factors such as time on site, time on specific content, contribution metrics and of course customer satisfaction indexes.

These are exciting facets of the Digital Enterprise, and I am excited by this knowledge of innovation, strategy and planning around business models and being able to continue to architect business aligned technology enablement and solutions to improve and enable digital transformation.  

Cheers

Quintes

Quintes van Aswegen Togaf 9 Certified Architect, Professional Scrum Master I (PSM I) Certified

Connect with me on LinkedIn or Twitter

Digital Transformation and Enterprise Architecture - starting at the business model

Digital Transformation and Enterprise Architecture - Starting at the business model

Feb 2022 - this post is permanently moved to https://architectfwd.com, my new site, and can be found here  - https://architectfwd.com/architecture/enterprise-architecture/business-model-canvas/digital-enterprise/strategy/2022/02/01/digital-transformation-and-enterprise-architecture-starting-at-the-business-model/ please go and bookmark that site for all of my future content.

When an organisation begins thinking about digital transformation or when strategy and business objectives require focus on value delivery, new capabilities or new customer segments, then there is a need to model the desired state, as a vision clearly stating how to deliver to and meet these objectives. Where can you start? Bottom up, i.e. from the technology layer up may not realize the value if the business outcomes are not articulated beforehand. Technology for the sake of it will not realize value unless it aligns with a business need.

The Open Group Architecture Framework (Togaf) describes the steps, approach and taxonomy that can be used to elicit requirements and then describe and implement an architecture. But to get there you need a model to drive the requirements for a future state of the business. The Business Model Canvas is an option for high level modelling of the target business model.

The Business Model Canvas was proposed by Alexander Osterwalder and Yves Pigneur in the book 'Business Model Generation' . I initially became familiar with it from Eric Ries' book 'The Lean Startup' and again through some notes from Steve Blanks. A white paper from The Open Group also indicated that the canvas can be used as a means into more robust modelling for EA. It can also be used for customer development, validation and learning in the Lean Startup methodology. I'll get into those in another post.

The Business Model Canvas

The business model canvas describes 9 core entities of a business. The business model describes how the organisation creates, delivers or captures value. In particular it describes the main domains within a business as 9 building blocks, notably the customers, the distribution channels, costs and revenue, the assets and means to create the value proposition. The use of the business model canvas can help to describe the viability of any proposed business model, such as

• is this model going to yield the financial outcomes required to be sustainable
• is the model going to deliver the right product - or service - to the right customer segment
• are the channels to deliver suitable and effective? Are there other channels which would serve the customer better?

The Business Model Canvas building blocks are described best in the book by Osterwalder.

Value Proposition

When thinking of digital transformation the important questions are how does the business or organisation deliver a highly engaging, high value experience to the customer through the use of digitalisation and technology to improve the product or service. This is a key point, the customer satisfaction and the impact to the customer segment must be positive.

The value proposition must include consideration of factors such as efficiency, lowering cost, improving service etc.

I created an example business model canvas to display the core blocks as seen below.

This is a hypothetical music streaming service showing which customers, the channels, value proposition, key resources, activities and partners. It also shows the cost structure and revenue streams core to being a successful business.

It is useful as has become a popular means to describe a business model. I will need to test it out when looking at strategic drivers and objectives in certain projects I'd like to use this modelling tool in, especially to determine if I can use this model when needed as input into other deliverables I typically generate.

Integrating with Enterprise Architecture

The business model defines the as-is or future-state design of a business. Using the Business Model Canvas as a means to look at strategy and innovation is useful in the Enterprise Architecture context.

It helps to ensure enterprise architecture can be aligned with business strategy through developing a business architecture to deliver capabilities, business services and application architectures supporting the business model. In essence supporting support the value streams delivering the product and or service as described in the Value Proposition within the Business Model Canvas. The business architecture views developed through the architecture effort describe either the as-is or target state include operating models, value streams, organisation Maps, organisation model, capability maps etc. as well as other typical Togaf catalogs, matrices and diagrams. The business architecture views developed through the architecture effort drives planning through to implementation of architectures to support the business model.

I'm not suggesting the Business Model Canvas would always be the first model you start with; the business model may be available already and thus any enterprise architecture or solutions architecture can then focus on ensuring that capabilities support the existing business model.

However when modelling to describe who a product or service is aimed at, what channels will be used to communicate with those customers and what value is to be delivered against any costs I aim on utilizing this business model canvas. There are a few projects in my current role in public sector where I already have interest in describing the value proposition through the business model canvas.

Another tool in the belt, use when suitable I suggest!

Cheers

Quintes

Quintes van Aswegen Togaf 9 Certified Architect, Professional Scrum Master I (PSM I) Certified

Connect with me on LinkedIn or Twitter