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The Open Group Madrid 2015 – Day One Highlights

By The Open Group

On Monday, April 20, Allen Brown, President & CEO of The Open Group, welcomed 150 attendees to the Enabling Boundaryless Information Flow™ summit held at the Madrid Eurobuilding Hotel.  Following are highlights from the plenary:

The Digital Transformation of the Public Administration of Spain – Domingo Javier Molina Moscoso

Domingo Molina, the first Spanish national CIO, said that governments must transform digitally to meet public expectations, stay nationally competitive, and control costs – the common theme in transformation of doing more with less. Their CORA commission studied what commercial businesses did, and saw the need for an ICT platform as part of the reform, along with coordination and centralization of ICT decision making across agencies.

Three Projects:

  • Telecom consolidation – €125M savings, reduction in infrastructure and vendors
  • Reduction in number of data centers
  • Standardizing and strengething security platform for central administration – only possible because of consolidation of telecom.

The Future: Increasing use of mobile, social networks, online commercial services such as banking – these are the expectations of young people. The administration must therefore be in the forefront of providing digital services to citizens. They have set a transformation target of having citizens being able to interact digitally with all government services by 2020.

Q&A:

  • Any use of formal methods for transformation such as EA? Looked at other countries – seen models such as outsourcing. They are taking a combined approach of reusing their experts and externalizing.
  • How difficult has it been to achieve savings in Europe given labor laws? Model is to re-assign people to higher-value tasks.
  • How do you measure progress: Each unit has own ERP for IT governance – no unified reporting. CIO requests and consolidates data. Working on common IT tool to do this.

An Enterprise Transformation Approach for Today’s Digital Business – Fernando García Velasco

Computing has moved from tabulating systems to the internet and moving into an era of “third platform” of Cloud, Analytics, Mobile and Social (CAMS) and cognitive computing. The creates a “perfect storm” for disruption of enterprise IT delivery.

  • 58% say SMAC will reduce barriers to entry
  • 69% say it will increase competition
  • 41% expect this competition to come from outside traditional market players

These trends are being collected and consolidated in The Open Group Open Platform 3.0™ standard.

He sees the transformation happening in three ways:

  1. Top-down – a transformation view
  2. Meet in the middle: Achieving innovation through EA
  3. Bottom-up: the normal drive for incremental improvement

Gartner: EA is the discipline for leading enterprise response to disruptive forces. IDC: EA is mandatory for managing transformation to third platform.

EA Challenges & Evolution – a Younger Perspective

Steve Nunn, COO of The Open Group and CEO of the Association of Enterprise Architects (AEA), noted the AEA is leading the development of EA as a profession, and is holding the session to recognize the younger voices joining the EA profession. He introduced the panelists: Juan Abal, Itziar Leguinazabal, Mario Gómez Velasco, Daniel Aguado Pérez, Ignacio Macias Jareño.

The panelists talked about their journey as EAs, noting that their training focused on development with little exposure to EA or Computer Science concepts. Schools aren’t currently very interested in teaching EA, so it is hard to get a start. Steve Nunn noted the question of how to enter EA as a profession is a worldwide concern. The panelists said they started looking at EA as a way of gaining a wider perspective of the development or administrative projects they were working on. Mentoring is important, and there is a challenge in learning about the business side when coming from a technical world. Juan Abal said such guidance and mentoring by senior architects is one of the benefits the AEA chapter offers.

Q: What advice would you give to someone entering into the EA career? A: If you are starting from a CS or engineering perspective, you need to start learning about the business. Gain a deep knowledge of your industry. Expect a lot of hard work, but it will have the reward of having more impact on decisions. Q: EA is really about business and strategy. Does the AEA have a strategy for making the market aware of this? A: The Spanish AEA chapter focuses on communicating that EA is a mix, and that EAs need to develop business skills. It is a concern that young architects are focused on IT aspects of EA, and how they can be shown the path to understand the business side.

Q: Should EA be part of the IT program or the CS program in schools? A: We have seen around the world a history of architects coming from IT and that only a few universities have specific IT programs. Some offer it at the postgraduate level. The EA is trying globally to raise awareness of the need for EA education. continuing education as part of a career development path is a good way to manage the breadth of skills a good EA needs; organizations should also be aware of the levels of The Open Group Open CA certifications.

Q: If EA is connected to business, should EAs be specialized to the vertical sector, or should EA be business agnostic? A: Core EA skills are industry-agnostic, and these need to be supplemented by industry-specific reference models. Methodology, Industry knowledge and interpersonal skills are all critical, and these are developed over time.

Q: Do you use EA tools in your job? A: Not really – the experience to use complex tools comes over time.

Q: Are telecom companies adopting EA? A: Telecom companies are adopting standard reference architectures. This sector has not made much progress in EA, though it is critical for transformation in the current market. Time pressure in a changing market is also a barrier.

Q: Is EA being grown in-house or outsourced? A: We are seeing increased uptake among end-user companies in using EA to achieve transformation – this is happening across sectors and is a big opportunity in Spain right now.

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Filed under Boundaryless Information Flow™, Enterprise Architecture, Internet of Things, Open Platform 3.0, Professional Development, Standards, Uncategorized

Risk, Security and the Internet of Things: Madrid 2015 Preview

By Jim Hietala, Vice President, Business Development & Security, The Open Group

The Internet of Things (IoT) is a fast evolving phenomenon. From smartphones and tablets to connected cars and industrial control systems, the number of IoT devices is continuing to explode. In fact, according to a report by Cisco, the number of connected devices is set to reach 30 billion in 2020, creating a $19 trillion opportunity for businesses around the world.

However as this technology grows, it’s important to consider the potential risks that IoT could introduce to the enterprise and even to society. To put it simply, not much is being done at the moment in terms of IoT security.

The risks brought about by IoT aren’t just restricted to industries handling highly-sensitive personal data, such as Healthcare. Look at industries like energy, transport, manufacturing and mining, which are all starting to report the benefits of IoT ranging from faster time to market, better equipment efficiency and improved productivity. In any industrial setting, if high-value IoT data that gives an organization a competitive advantage was to leave the company, it could have serious consequences.

Arguably there are many vendors producing IoT enabled devices which are not taking risk or basic security mechanisms into account. Vendors are putting Internet Protocols (IPs) onto devices without any consideration about how to properly secure them. It’s fair to say, there are currently more problems than solutions.

This is happening, and it’s happening fast. As IoT technology continues to race way ahead, security standards are trying to catch up. Currently, there isn’t a consensus around the right way to secure the vast number of connected devices.

It’s important that we as an industry get to grips with IoT Security and start to apply a common sense strategy as soon as possible. That’s why we want people to start thinking about the risks and where best practices are lacking, a key issue we’ll be discussing at The Open Group Madrid 2015.

We’ll be exploring the implications of IoT from the standpoint of Security and Risk, looking at the areas where work will need to be done and where The Open Group Security Forum can help. What are the burning issues in each vertical industry – from retail to Healthcare – and what is the best way to identify the key IoT-enabled assets that need securing?

As organizations start to permit IoT-enabled equipment, whether it’s connected cars or factory equipment, IT departments need to consider the Security requirements of those networks. From a Security Architecture point of view, it’s vital that organizations do everything in their power to ensure they meet customers’ needs.

Registration for The Open Group Madrid 2015 is open now and available to members and non-members.  Please visit here.

By Jim Hietala, The Open GroupJim Hietala, Open FAIR, CISSP, GSEC, is Vice President, Business Development and Security for The Open Group, where he manages the business team, as well as Security and Risk Management programs and standards activities,  He has participated in the development of several industry standards including O-ISM3, O-ESA, O-RT (Risk Taxonomy Standard), O-RA (Risk Analysis Standard), and O-ACEML. He also led the development of compliance and audit guidance for the Cloud Security Alliance v2 publication.

Jim is a frequent speaker at industry conferences. He has participated in the SANS Analyst/Expert program, having written several research white papers and participated in several webcasts for SANS. He has also published numerous articles on information security, risk management, and compliance topics in publications including CSO, The ISSA Journal, Bank Accounting & Finance, Risk Factor, SC Magazine, and others.

An IT security industry veteran, he has held leadership roles at several IT security vendors.

Jim holds a B.S. in Marketing from Southern Illinois University.

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Filed under Information security, Internet of Things, RISK Management, Security, Security Architecture, Uncategorized

Enabling the Boundaryless Organization the Goal of The Open Group Madrid Summit 2015

The Open Group, the global vendor-neutral IT consortium, is hosting its latest event in Madrid April 20 – 23 2015. The event is set to build on the success of previous events and focus on the challenge of building a Boundaryless Organization in the face of a range of new IT trends. As organizations look to take advantage of trends such as the Internet of Things and Open Platform 3.0™, the Madrid event will be an opportunity for peers to present and discuss and how the Boundaryless Organization can be achieved and what methods are best to do so.

Objectives of this year’s conference include:

  • Understanding what role Enterprise Architecture as currently practiced plays in Enterprise Transformation, especially transformations driven by merging and disruptive technologies.
  • Showing the need for Boundaryless Information Flow™, which would result in more interoperable, real-time business processes that span throughout all business ecosystems.
  • Understanding how to develop better interoperability and communication across organizational boundaries and pursue global standards for Enterprise Architecture that are highly relevant to all industries.
  • Showing how organizations can achieve their business objectives by adopting new technologies and processes as part of the Enterprise Transformation management principles – making the whole process more a matter of design than of chance.
  • Examining how the growth of “The Internet of Things” with online currencies and mobile enabled transactions has changed the face of financial services, and poses new threats and opportunities.

Key plenary and track speakers at the event include:

  • Allen Brown, President & CEO, The Open Group
  • Ron Tolido, SVP, Group CTO Office, , Global Insights and Data practice, Capgemini
  • Mariano Arnaiz, CIO, Grupo CESCE
  • Domingo Molina, Director of Information Technology and Communication Management, CNIS

Full details on the event agenda can be found here.

Registration for The Open Group Madrid is open now and available to members and non-members.  Please visit here.

Join the conversation! @theopengroup #ogMAD

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Filed under big data, Boundaryless Information Flow™, Enterprise Architecture, Internet of Things, Interoperability, Open Platform 3.0, OTTF, Professional Development, RISK Management, Standards, Strategy, TOGAF

The Open Group San Diego 2015 – Day Two Highlights

By Loren K. Baynes, Director, Global Marketing Communications, The Open Group

Day two, February 3, kicked off with a presentation by Allen Brown, President and CEO of The Open Group, “What I Don’t Need from Business Architecture… and What I Do”.

Allen began with a brief history of The Open Group vision of Boundaryless Information Flow™, which enables the break down of barriers to cross-functional organization when information is held in siloed parts. Allen and team used the word “boundaryless” that was started by Jack Welch in 2002 with the phrase “Boundaryless Organization”. This approach focused on thinking and acting, not technical. “Boundaryless” does not mean there are no boundaries, it means that boundaries are permeable to enable business.

Allen also discussed brand actualization, and that organizations wishing to achieve brand recognition such as Nike and Apple must be aware of the customer journey. The journey entails awareness, evaluation, joining, participation, renewal and advocacy. The organization needs to learn more about the people so as not to segment, since people are not “one size fits all”. Business Architecture helps with understanding the customer journey.

By Loren K. Baynes

Business Architecture is part of Enterprise Architecture, he continued. A greater focus on the “what”, including strategic themes, capabilities and interdependencies, can add a lot of value. It is applicable to the business of government as well as to the business of “businesses” and non-profit organizations.

John Zachman, Founder & Chairman, Zachman International and Executive Director of FEAC Institute, presented “The Zachman Framework and How It Complements TOGAF® and Other Frameworks”. John stated the biggest problem is change. The two reasons to do architecture are complexity and change. A person or organization needs to understand and describe the problem before solving it.

“All I did was, I saw the pattern of the structure of the descriptive representations for airplanes, buildings, locomotives and computers, and I put enterprise names on the same patterns,” he said. “Now you have the Zachman Framework, which basically is Architecture for Enterprises. It is Architecture for every other object known to human kind.” Thus the Zachman Framework was born.

According to John, what his Framework is ultimately intended for is describing a complex object, an Enterprise. In that sense, the Zachman Framework is the ontology for Enterprise Architecture, he stated. What it doesn’t do is tell you how to do Enterprise Architecture.

“My framework is just the definition and structure of the descriptive representation for enterprises,” he said. That’s where methodologies, such as TOGAF®, an Open Group standard, or other methodological frameworks come in. It’s not Zachman OR TOGAF®, it’s TOGAF® AND Zachman.

By Loren K. BaynesJohn Zachman

Allen and John then participated in a Q&A session. Both are very passionate about professionalizing the architecture profession. Allen and John agreed there should be a sense of urgency for architecture to keep up with the rapid evolution of technology.

The plenary continued with Chris Forde, GM APAC Region and VP, Enterprise Architecture, The Open Group on “The Value of TOGAF® Architecture Development Method (ADM) and Open Systems Architecture”. Chris was presenting on behalf of Terry Blevins, Fellow of The Open Group, who could not attend.

Chris said, “Enterprise Architecture is a constant journey.” The degree of complexity of organizations or objects (such as airplanes) is enormous. Architecture is a means to an end. ADM is the core of TOGAF.

Enterprise Architecture (EA) is nothing but a paperweight if there are no plans in place to use it to make decisions. Supporting decision-making is the key reason to produce an Enterprise Architecture. Chris noted sound decisions sometimes need to be made without all of the information required. EA is a management tool, not a technology tool.

Allen Brown chaired a panel, “Synergy of EA Frameworks”, with panelists Chris Forde, John Zachman, Dr. Beryl Bellman, Academic Director, FEAC Institute, and Iver Band, Enterprise Architect, Cambia Health Solutions.

Iver began the panel session by discussing ArchiMate®, an Open Group standard, which is a language for building understanding and communicating and managing change.

One of the questions the panel addressed was how does EA take advantage of emerging technologies such as mobile, big data and cloud? The “as designed” logic can be implemented in any technology. Consideration should also be given to synergy among the different architectures. EA as a management discipline helps people to ask the right questions about activities and technologies to mitigate risk, take advantage of the situation and/or decide whether or not to deploy the strategies and tactics. The idea is not to understand everything and every framework, but to get the right set of tools for interaction and navigation.

In the afternoon, tracks consisted of Risk, Dependability and Trusted Technology, Open Platform 3.0™, Architecture Frameworks and EA and Business Transformation. Presenters were from a wide range of organizations including HP, Tata Consulting Services (India), Wipro, IBM, Symantic and Arca Success Group.

A networking reception was held at the Birch Aquarium, Scripps Institution of Oceanography. Attendees enjoyed a scrumptious dinner and experienced the wonders of ocean and marine life.

A very special thank you goes to our San Diego 2015 sponsors and exhibitors: BiZZdesign, Corso, FEAC Institute, AEA, Good E-learning, SimpliLearn and Van Haren Publishing.

Most of our plenary proceedings are available at Livestream.com/opengroup

Please join the conversation – @theopengroup #ogSAN

By Loren K. BaynesLoren K. Baynes, Director, Global Marketing Communications, joined The Open Group in 2013 and spearheads corporate marketing initiatives, primarily the website, blog and media relations. Loren has over 20 years experience in brand marketing and public relations and, prior to The Open Group, was with The Walt Disney Company for over 10 years. Loren holds a Bachelor of Business Administration from Texas A&M University. She is based in the US.

 

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Filed under Enterprise Architecture, TOGAF®, Standards, Business Architecture, Enterprise Transformation, Conference, Professional Development, Open Platform 3.0, Interoperability, Internet of Things, Value Chain

Q&A with Marshall Van Alstyne, Professor, Boston University School of Management and Research Scientist MIT Center for Digital Business

By The Open Group

The word “platform” has become a nearly ubiquitous term in the tech and business worlds these days. From “Platform as a Service” (PaaS) to IDC’s Third Platform to The Open Group Open Platform 3.0™ Forum, the concept of platforms and building technology frames and applications on top of them has become the next “big thing.”

Although the technology industry tends to conceive of “platforms” as the vehicle that is driving trends such as mobile, social networking, the Cloud and Big Data, Marshall Van Alstyne, Professor at Boston University’s School of Management and a Research Scientist at the MIT Center for Digital Business, believes that the radical shifts that platforms bring are not just technological.

We spoke with Van Alstyne prior to The Open Group Boston 2014, where he presented a keynote, about platforms, how they have shifted traditional business models and how they are impacting industries everywhere.

The title of your session at the Boston conference was “Platform Shift – How New Open Business Models are Changing the Shape of Industry.” How would you define both “platform” and “open business model”?

I think of “platform” as a combination of two things. One, a set of standards or components that folks can take up and use for production of goods and services. The second thing is the rules of play, or the governance model – who has the ability to participate, how do you resolve conflict, and how do you divide up the royalty streams, or who gets what? You can think of it as the two components of the platform—the open standard together with the governance model. The technologists usually get the technology portion of it, and the economists usually get the governance and legal portions of it, but you really need both of them to understand what a ‘platform’ is.

What is the platform allowing then and how is that different from a regular business model?

The platform allows third parties to conduct business using system resources so they can actually meet and exchange goods across the platform. Wonderful examples of that include AirBnB where you can rent rooms or you can post rooms, or eBay, where you can sell goods or exchange goods, or iTunes where you can go find music, videos, apps and games provided by others, or Amazon where third parties are even allowed to set up shop on top of Amazon. They have moved to a business model where they can take control of the books in addition to allowing third parties to sell their own books and music and products and services through the Amazon platform. So by opening it up to allow third parties to participate, you facilitate exchange and grow a market by helping that exchange.

How does this relate to the concept of the technology industry is defining the “third platform”?

I think of it slightly differently. The tech industry uses mobile and social and cloud and data to characterize it. In some sense this view offers those as the attributes that characterize platforms or the knowledge base that enable platforms. But we would add to that the economic forces that actually shape platforms. What we want to do is give you some of the strategic tools, the incentives, the rules that will actually help you control their trajectory by helping you improve who participates and then measure and improve the value they contribute to the platform. So a full ecosystem view is not just the technology and the data, it also measures the value and how you divide that value. The rules of play really become important.

I think the “third platform” offers marvelous concepts and attributes but you also need to add the economics to it: Why do you participate, who gets what portions of the value, and who ultimately owns control.

Who does control the platform then?

A platform has multiple parts. Determining who controls what part is the art and design of the governance model. You have to set up control in the right way to motivate people to participate. But before we get to that, let’s go back and complete the idea of what’s an ‘open platform.’

To define an open platform, consider both the right of access and the right to manipulate platform resources, then consider granting those rights to four different parties. One is the user—can they access one another, can they access data, can they access system resources? Another group is developers—can they manipulate system resources, can they add new features to it, can they sell through the platform? The third group is the platform providers. You often think of them as those folks that facilitate access across the platform. To give you an example, iTunes is a single monolithic store, so the provider is simply Apple, but Android, in contrast, allows multiple providers, so there’s a Samsung Android store, an LTC Android store, a Google Android store, there’s even an Amazon version that uses a different version of Android. So that platform has multiple providers each with rights to access users. The fourth group is the party that controls the underlying property rights, who owns the IP. The ability modify the underlying standard and also the rights of access for other parties is the bottom-most layer.

So to answer the question of what is ‘open,’ you have to consider the rights of access of all four groups—the users, developers, the providers and IP rights holders, or sponsors, underneath.

Popping back up a level, we’re trying to motivate different parties to participate in the ecosystem. So what do you give the users? Usually it’s some kind of value. What do you give developers? Usually it’s some set of SDKs and APIs, but also some level of royalties. It’s fascinating. If you look back historically, Amazon initially tried a publishing royalty where they took 70% and gave a minority 30% back to developers. They found that didn’t fly very well and they had to fall back to the app store or software-style royalty, where they’re taking a lower percentage. I think Apple, for example, takes 30 percent, and Amazon is now close to that. You see ranges of royalties going anywhere from a few percent—an example is credit cards—all the way up to iStock photo where they take roughly 70 percent. That’s an extremely high rate, and one that I don’t recommend. We were just contracting for designs at 99Designs and they take a 20 percent cut. That’s probably more realistic, but lower might perhaps even be better—you can create stronger network effect if that’s the case.

Again, the real question of control is how you motivate third parties to participate and add value? If you are allowing them to use resources to create value and keep a lot of that value, then they’re more motivated to participate, to invest, to bring their resources to your platform. If you take most of the value they create, they won’t participate. They won’t add value. One of the biggest challenges for open platforms—what you might call the ‘Field of Dreams’ approach—is that most folks open their platform and assume ‘if you build it, they will come,’ but you really need to reward them to do so. Why would they want to come build with you? There are numerous instances of platforms that opened but no developer chooses to add value—the ecosystem is too small. You have to solve the chicken and egg problem where if you don’t have users, developers don’t want to build for you, but if you don’t have developer apps, then why do users participate? So you’ve got a huge feedback problem. And those are where the economics become critical, you must solve the chicken and egg problem to build and roll out platforms.

It’s not just a technology question; it’s also an economics and rewards question.

Then who is controlling the platform?

The answer depends on the type of platform. Giving different groups a different set of rights creates different types of platform. Consider the four different parties: users, developers, providers, and sponsors. At one extreme, the Apple Mac platform of the 1980s reserved most rights for development, for producing hardware (the provider layer), and for modifying the IP (the sponsor layer) all to Apple. Apple controlled the platform and it remained closed. In contrast, Microsoft relaxed platform control in specific ways. It licensed to multiple providers, enabling Dell, HP, Compaq and others to sell the platform. It gave developers rights of access to SDKs and APIs, enabling them to extend the platform. These control choices gave Microsoft more than six times the number of developers and more than twenty times the market share of Apple at the high point of Microsoft’s dominance of desktop operating systems. Microsoft gave up some control in order to create a more inclusive platform and a much bigger market.

Control is not a single concept. There are many different control rights you can grant to different parties. For example, you often want to give users an ability to control their own data. You often want to give developers intellectual property rights for the apps that they create and often over the data that their users create. You may want to give them some protections against platform misappropriation. Developers resent it if you take their ideas. So if the platform sees a really clever app that’s been built on top of its platform, what’s the guarantee that the platform simply doesn’t take it or build a competing app? You need to protect your developers in that case. Same thing’s true of the platform provider—what guarantees do they provide users for the quality of content provided on their ecosystem? For example, the Android ecosystem is much more open than the iPhone ecosystem, which means you have more folks offering stores. Simultaneously, that means that there are more viruses and more malware in Android, so what rights and guarantees do you require of the platform providers to protect the users in order that they want to participate? And then at the bottom, what rights do other participants have to control the direction of the platform growth? In the Visa model, for example, there are multiple member banks that help to influence the general direction of that credit card standard. Usually the most successful platforms have a single IP rights holder, but there are several examples of that have multiple IP rights holders.

So, in the end control defines the platform as much as the platform defines control.

What is the “secret” of the Internet-driven marketplace? Is that indeed the platform?

The secret is that, in effect, the goal of the platform is to increase transaction volume and value. If you can do that—and we can give you techniques for doing it—then you can create massive scale. Increasing the transaction value and transactions volume across your platform means that the owner of the platform doesn’t have to be the sole source of content and new ideas provided on the platform. If the platform owner is the only source of value then the owner is also the bottleneck. The goal is to consummate matches between producers and consumers of value. You want to help users find the content, find the resources, find the other people that they want to meet across your platform. In Apple’s case, you’re helping them find the music, the video, the games, and the apps that they want. In AirBnB’s case, you’re helping them find the rooms that they want, or Uber, you’re helping them find a driver. On Amazon, the book recommendations help you find the content that you want. In all the truly successful platforms, the owner of the platform is not providing all of that value. They’re enabling third parties to add that value, and that’s one reasy why The Open Group’s ideas are so important—you need open systems for this to happen.

What’s wrong with current linear business models? Why is a network-driven approach superior?

The fundamental reason why the linear business model no longer works is that it does not manage network effects. Network effects allow you to build platforms where users attract other users and you get feedback that grows your system. As more users join your platform, more developers join your platform, which attracts more users, which attracts more developers. You can see it on any of the major platforms. This is also true of Google. As advertisers use Google Search, the algorithms get better, people find the content that they want, so more advertisers use it. As more drivers join Uber, more people are happier passengers, which attracts more drivers. The more merchants accept Visa, the more consumers are willing to carry it, which attracts more merchants, which attracts more consumers. You get positive feedback.

The consequence of that is that you tend to get market concentration—you get winner take all markets. That’s where platforms dominate. So you have a few large firms within a given category, whether this is rides or books or hotels or auctions. Further, once you get network effects changing your business model, the linear insights into pricing, into inventory management, into innovation, into strategy breakdown.

When you have these multi-sided markets, pricing breaks down because you often price differently to one side than another because one side attracts the other. Inventory management practices breakdown because you’re selling inventory that you don’t even own. Your R&D strategies breakdown because now you’re motivating innovation and research outside the boundaries of the firm, as opposed to inside the internal R&D group. And your strategies breakdown because you’re not just looking for cost leadership or product differentiation, now you’re looking to shape the network effects as you create barriers to entry.

One of the things that I really want to argue strenuously is that in markets where platforms will emerge, platforms beat product every time. So the platform business model will inevitably beat the linear, product-based business model. Because you’re harnessing new forces in order to develop a different kind of business model.

Think of it the following way–imagine that value is growing as users consume your product. Think of any of the major platforms, as more folks use Google, search gets better, the more recommendations improve on Amazon, and the easier it is to find a ride on Uber, so more folks want to be on there. It is easier to scale network effects outside your business than inside your business. There’s simply more people outside than inside. The moment that happens, the locus control, the locus of innovation, moves from inside the firm to outside the firm. So the rules change. Pricing changes, your innovation strategies change, your inventory policies change, your R&D changes. You’re now managing resources outside the firm, rather than inside, in order to capture scale. This is different than the traditional industrial supply economies of scale.

Old systems are giving away to new systems. It’s not that the whole system breaks down, it’s simply that you’re looking to manage network effects and manage new business models. Another way to see this is that previously you were managing capital. In the industrial era, you were managing steel, you were managing large amounts of finance in banking, you were managing auto parts—huge supply economies of scale. In telecommunications, you were managing infrastructure. Now, you’re managing communities and these are managed outside the firm. The value that’s been created at Facebook or WhatsApp or Instagram or any of the new acquisitions, it’s not the capital that’s critical, it’s the communities that are critical, and these are built outside the firm.

There is a lot of talk in the industry about the Nexus of Forces as Gartner calls it, or Third Platform (IDC). The Open Group calls it Open Platform 3.0. Your concept goes well beyond technology—how does Open Platform 3.0 enable new business models?

Those are the enablers—they’re shall we say necessary, but they’re not sufficient. You really must harness the economic forces in addition to those enablers—mobile, social, Cloud, data. You must manage communities outside the firm, that’s the mobile and the social element of it. But this also involves designing governance and setting incentives. How are you capturing users outside the organization, how are they contributing, how are they being motivated to participate, why are they spreading your products to their peers? The Cloud allows it to scale—so Instagram and What’s App and others scale. Data allows you to “consummate the match.” You use that data to help people find what they need, to add value, so all of those things are the enablers. Then you have to harness the economics of the enablers to encourage people to do the right thing. You can see the correct intuition if you simply ask what happens if all you offer is a Cloud service and nothing more. Why will anyone use it? What’s the value to that system? If you open APIs to it, again, if you don’t have a user base, why are developers going to contribute? Developers want to reach users. Users want valuable functionality.

You must manage the motives and the value-add on the platform. New business models come from orchestrating not just the technology but also the third party sources of value. One of the biggest challenges is to grow these businesses from scratch—you’ve got the cold start chicken and egg problem. You don’t have network effects if you don’t have a user base, if you don’t have users, you don’t have network effects.

Do companies need to transform themselves into a “business platform” to succeed in this new marketplace? Are there industries immune to this shift?

There is a continuum of companies that are going to be affected. It starts at one end with companies that are highly information intense—anything that’s an information intensive business will be dramatically affected, anything that’s community or fashion-based business will be dramatically affected. Those include companies involved in media and news, songs, music, video; all of those are going to be the canaries in the coalmine that see this first. Moving farther along will be those industries that require some sort of certification—those include law and medicine and education—those, too, will also be platformized, so the services industries will become platforms. Farther down that are the ones that are heavily, heavily capital intensive where control of physical capital is paramount, those include trains and oil rigs and telecommunications infrastructure—eventually those will be affected by platform business models to the extent that data helps them gain efficiencies or add value, but they will in some sense be the last to be affected by platform business models. Look for the businesses where the cost side is shrinking in proportion to the delivery of value and where the network effects are rising as a proportional increase in value. Those forces will help you predict which industries will be transformed.

How can Enterprise Architecture be a part of this and how do open standards play a role?

The second part of that question is actually much easier. How do open standards play a role? The open standards make it much easier for third parties to attach and incorporate technology and features such that they can in turn add value. Open standards are essential to that happening. You do need to ask the question as to who controls those standards—is it completely open or is it a proprietary standard, a published standard but it’s not manipulable by a third party.

There will be at least two or three different things that Enterprise Architects need to do. One of these is to design modular components that are swappable, so as better systems become available, the better systems can be swapped in. The second element will be to watch for components of value that should be absorbed into the platform itself. As an example, in operating systems, web browsing has effectively been absorbed into the platform, streaming has been absorbed into the platform so that they become aware of how that actually works. A third thing they need to do is talk to the legal team to see where it is that the third parties property rights can be protected so that they invest. One of the biggest mistakes that firms make is to simply assume that because they own the platform, because they have the rights of control, that they can do what they please. If they do that, they risk alienating their ecosystems. So they should talk to their potential developers to incorporate developer concerns. One of my favorite examples is the Intel Architecture Lab which has done a beautiful job of articulating the voices of developers in their own architectural plans. A fourth thing that can be done is an idea borrowed from SAP, that builds Enterprise Architecture—they articulate an 18-24 month roadmap where they say these are the features that are coming, so you can anticipate and build on those. Also it gives you an idea of what features will be safe to build on so you won’t lose the value you’ve created.

What can companies do to begin opening their business models and more easily architect that?

What they should do is to consider four groups articulated earlier— those are the users, the providers, the developers and the sponsors—each serve a different role. Firms need to understand what their own role will be in order that they can open and architect the other roles within their ecosystem. They’ll also need to choose what levels of exclusivity they need to give their ecosystem partners in a different slice of the business. They should also figure out which of those components they prefer to offer themselves as unique competencies and where they need to seek third party assistance, either in new ideas or new resources or even new marketplaces. Those factors will help guide businesses toward different kinds of partnerships, and they’ll have to be open to those kinds of partners. In particular, they should think about where are they most likely to be missing ideas or missing opportunities. Those technical and business areas should open in order that third parties can take advantage of those opportunities and add value.

 

vanalstynemarshallProfessor Van Alstyne is one of the leading experts in network business models. He conducts research on information economics, covering such topics as communications markets, the economics of networks, intellectual property, social effects of technology, and productivity effects of information. As co-developer of the concept of “two sided networks” he has been a major contributor to the theory of network effects, a set of ideas now taught in more than 50 business schools worldwide.

Awards include two patents, National Science Foundation IOC, SGER, SBIR, iCorp and Career Awards, and six best paper awards. Articles or commentary have appeared in Science, Nature, Management Science, Harvard Business Review, Strategic Management Journal, The New York Times, and The Wall Street Journal.

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Discussing Enterprise Decision-Making with Penelope Everall Gordon

By The Open Group

Most enterprises today are in the process of jumping onto the Big Data bandwagon. The promise of Big Data, as we’re told, is that if every company collects as much data as they can—about everything from their customers to sales transactions to their social media feeds—executives will have “the data they need” to make important decisions that can make or break the company. Not collecting and using your data, as the conventional wisdom has it, can have deadly consequences for any business.

As is often the case with industry trends, the hype around Big Data contains both a fair amount of truth and a fair amount of fuzz. The problem is that within most organizations, that conventional wisdom about the power of data for decision-making is usually just the tip of the iceberg when it comes to how and why organizational decisions are made.

According to Penelope Gordon, a consultant for 1Plug Corporation who was recently a Cloud Strategist at Verizon and was formerly a Service Product Strategist at IBM, that’s why big “D” (Data) needs to be put back into the context of enterprise decision-making. Gordon, who spoke at The Open Group Boston 2014, in the session titled “Putting the D Back in Decision” with Jean-Francois Barsoum of IBM, argues that a focus on collecting a lot of data has the potential to get in the way of making quality decisions. This is, in part, due to the overabundance of data that’s being collected under the assumption that you never know where there’s gold to be mined in your data, so if you don’t have all of it at hand, you may just miss something.

Gordon says that assuming the data will make decisions obvious also ignores the fact that ultimately decisions are made by people—and people usually make decisions based on their own biases. According to Gordon, there are three types of natural decision making styles—heart, head and gut styles—corresponding to different personality types, she said; the greater the amount of data the more likely that it will not balance the natural decision-making style.

Head types, Gordon says, naturally make decisions based on quantitative evidence. But what often happens is that head types often put off making a decision until more data can be collected, wanting more and more data so that they can make the best decision based on the facts. She cites former President Bill Clinton as a classic example of this type. During his presidency, he was famous for putting off decision-making in favor of gathering more and more data before making the decision, she says. Relying solely on quantitative data also can mean you may miss out on other important factors in making optimal decisions based on either heart (qualitative) or instinct. Conversely, a gut-type presented with too much data will likely just end up ignoring data and acting on instinct, much like former President George W. Bush, Gordon says.

Gordon believes part of the reason that data and decisions are more disconnected than one might think is because IT and Marketing departments have become overly enamored with what technology can offer. These data providers need to step back and first examine the decision objectives as well as the governance behind those decisions. Without understanding the organization’s decision-making processes and the dynamics of the decision-makers, it can be difficult to make optimal and effective strategic recommendations, she says, because you don’t have the full picture of what the stakeholders will or will not accept in terms of a recommendation, data or no data.

Ideally, Gordon says, you want to get to a point where you can get to the best decision outcome possible by first figuring out the personal and organizational dynamics driving decisions within the organization, shifting the focus from the data to the decision for which the data is an input.

“…what you’re trying to do is get the optimal outcome, so your focus needs to be on the outcome, so when you’re collecting the data and assessing the data, you also need to be thinking about ‘how am I going to present this data in a way that it is going to be impactful in improving the decision outcomes?’ And that’s where the governance comes into play,” she said.

Governance is of particular importance now, Gordon says, because decisions are increasingly being made by individual departments, such as when departments buy their own cloud-enabled services, such as sales force automation. In that case, an organization needs to have a roadmap in place with compensation to incent decision-makers to adhere to that roadmap and decision criteria for buying decisions, she said.

Gordon recommends that companies put in place 3-5 top criteria for each decision that needs to be made so that you can ensure that the decision objectives are met. This distillation of the metrics gives decision-makers a more comprehensible picture of their data so that their decisions don’t become either too subjective or disconnected from the data. Lower levels of metrics can be used underneath each of those top-level criteria to facilitate a more nuanced valuation. For example, if an organization needing to find good partner candidates scored and ranked (preferably in tiers) potential partners using decision criteria based on the characteristics of the most attractive partner, rather than just assuming that companies with the best reputation or biggest brands will be the best, then they will expeditiously identify the optimal partner candidates.

One of the reasons that companies have gotten so concerned with collecting and storing data rather than just making better decisions, Gordon believes, is that business decisions have become inherently more risky. The required size of investment is increasing in tandem with an increase in the time to return; time to return is a key determinant of risk. Data helps people feel like they are making competent decisions but in reality does little to reduce risk.

“If you’ve got lots of data, then the thinking is, ‘well, I did the best that I could because I got all of this data.’ People are worried that they might miss something,“ she said. “But that’s where I’m trying to come around and say, ‘yeah, but going and collecting more data, if you’ve got somebody like President Clinton, you’re just feeding into their tendency to put off making decisions. If you’ve got somebody like President Bush and you’re feeding into their tendency to ignore it, then there may be some really good information, good recommendations they’re ignoring.”

Gordon also says that having all the data possible to work with isn’t usually necessary—generally a representative sample will do. For example, she says the U.S Census Bureau takes the approach where it tries to count every citizen; consequently certain populations are chronically undercounted and inaccuracies pass undetected. The Canadian census, on the other hand, uses representative samples and thus tends to be much more accurate—and much less expensive to conduct. Organizations should also think about how they can find representative or “proxy” data in cases where collecting data that directly addresses a top-level decision criteria isn’t really practical.

To begin shifting the focus from collecting data inputs to improving decision outcomes, Gordon recommends clearly stating the decision objectives for each major decision and then identifying and defining the 3-5 criteria that are most important for achieving the decision objectives. She also recommends ensuring that there is sufficient governance and a process in place for making decisions including mechanisms for measuring the performance of the decision-making process and the outcomes resulting from the execution of that process. In addition, companies need to consider whether their decisions are made in a centralized or decentralized manner and then adapt decision governance accordingly.

One way that Enterprise Architects can help to encourage better decision-making within the organizations in which they work is to help in developing that governance rather than just providing data or data architectures, Gordon says. They should help stakeholders identify and define the important decision criteria, determine when full population rather than representative sampling is justified, recognize better methods for data analysis, and form decision recommendations based on that analysis. By gauging the appropriate blend of quantitative and qualitative data for a particular decision maker, an Architect can moderate gut types’ reliance on instinct and stimulate head and heart types’ intuition – thereby producing an optimally balanced decision. Architects should help lead and facilitate execution of the decision process, as well as help determine how data is presented within organizations in order to support the recommendations with the highest potential for meeting the decision objectives.

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penelopegordonPenelope Gordon recently led the expansion of the channel and service packaging strategies for Verizon’s cloud network products. Previously she was an IBM Strategist and Product Manager bringing emerging technologies such as predictive analytics to market. She helped to develop one of the world’s first public clouds.

 

 

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The Open Group Boston 2014 – Day One Highlights

By Loren K. Baynes, Director, Global Marketing Communications

The Open Group kicked off Enabling Boundaryless Information Flow™  July 21 at the spectacular setting of the Hyatt Boston Harbor. Allen Brown, CEO and President of The Open Group, welcomed over 150 people from 20 countries, including as far away as Australia, Japan, Saudi Arabia and India.

The first keynote speaker was Marshall Van Alstyne, Professor at Boston University School of Management & Researcher at MIT Center for Digital Business, known as a leading expert in business models. His presentation entitled Platform Shift – How New Open Business Models are Changing the Shape of Industry posed the questions “What does ‘openness’ mean? Why do platforms beat products every time?”.

Van AlstyneMarshall Van Alstyne

According to “InterBrand: 2014 Best Global Brands”, 13 of the top 31 companies are “platform companies”. To be a ‘platform’, a company needs embeddable functions or service and allow 3rd party access. Alystyne noted, “products have features, platforms have communities”. Great standalone products are not sufficient. Positive changes experienced by a platform company include pricing/profitability, supply chains, internal organization, innovation, decreased industry bottlenecks and strategy.

Platforms benefit from broad contributions, as long as there is control of the top several complements. Alstyne commented, “If you believe in the power of community, you need to embrace the platform.”

The next presentation was Open Platform 3.0™ – An Integrated Approach to the Convergence of Technology Platforms, by Dr. Chris Harding, Director for Interoperability, The Open Group. Dr. Harding discussed how society has developed a digital society.

1970 was considered the dawn of an epoch which saw the First RAM chip, IBM introduction of System/370 and a new operating system – UNIX®. Examples of digital progress since that era include driverless cars and Smart Cities (management of traffic, energy, water, communication).

Digital society enablers are digital structural change and corporate social media. The benefits are open innovation, open access, open culture, open government and delivering more business value.

Dr. Harding also noted, standards are essential to innovation and enable markets based on integration. The Open Group Open Platform 3.0™ is using ArchiMate®, an Open Group standard, to analyze the 30+ business use cases produced by the Forum. The development cycle is understanding, analysis, specification, iteration.

Dr. Harding emphasized the importance of Boundaryless Information Flow™, as an enabler of business objectives and efficiency through IT standards in the era of digital technology, and designed for today’s agile enterprise with direct involvement of business users.

Both sessions concluded with an interactive audience Q&A hosted by Allen Brown.

The last session of the morning’s plenary was a panel: The Internet of Things and Interoperability. Dana Gardner, Principal Analyst at Interarbor Solutions, moderated the panel. Participating in the panel were Said Tabet, CTO for Governance, Risk and Compliance Strategy, EMC; Penelope Gordon, Emerging Technology Strategist, 1Plug Corporation; Jean-Francois Barsoum, Senior Managing Consultant, Smarter Cities, Water & Transportation, IBM; and Dave Lounsbury, CTO, The Open Group.

IoT PanelIoT Panel – Gardner, Barsoum, Tabet, Lounsbury, Gordon

The panel explored the practical limits and opportunities of Internet of Things (IoT). The different areas discussed include obstacles to decision-making as big data becomes more prolific, openness, governance and connectivity of things, data and people which pertain to many industries such as smart cities, manufacturing and healthcare.

How do industries, organizations and individuals deal with IoT? This is not necessarily a new problem, but an accelerated one. There are new areas of interoperability but where does the data go and who owns the data? Openness is important and governance is essential.

What needs to change most to see the benefits of the IoT? The panel agreed there needs to be a push for innovation, increased education, move beyond models of humans managing the interface (i.e. machine-to-machine) and determine what data is most important, not always collecting all the data.

A podcast and transcript of the Internet of Things and Interoperability panel will be posted soon.

The afternoon was divided into several tracks: Boundaryless Information Flow™, Open Platform 3.0™ and Enterprise Architecture (EA) & Enterprise Transformation. Best Practices for Enabling Boundaryless Information Flow across the Government was presented by Syed Husain, Consultant Enterprise Architecture, Saudi Arabia E-government Authority. Robert K. Pucci, CTO, Communications Practice, Cognizant Technology Solutions discussed Business Transformation Justification Leveraging Business and Enterprise Architecture.

The evening concluded with a lively networking reception at the hotel.

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Loren K. BaynesLoren K. Baynes, Director, Global Marketing Communications, joined The Open Group in 2013 and spearheads corporate marketing initiatives, primarily the website, blog and media relations. Loren has over 20 years experience in brand marketing and public relations and, prior to The Open Group, was with The Walt Disney Company for over 10 years. Loren holds a Bachelor of Business Administration from Texas A&M University. She is based in the US.

 

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