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Digital Transformation and Disruption – A Conversation with Sriram Sabesan

By The Open Group

The term “disruption” has been the de rigueur description for what’s been going on in the technology industry for a number of years now. But with the pressures of a digital economy facing all industries now, each is being disrupted in numerous ways.

Although disruption is leading to new and better ways of doing things, it can also be devastating for businesses and industries if they choose to ignore the advances that digitalization is bringing. Companies that don’t want to be left behind have to adapt more quickly than ever—or learn to disrupt themselves.

Sriram Sabesan, a partner with Conexiam, believes that a certain amount of disruption, or mitigations to disruptions, can indeed by architected by an enterprise—if they have the foresight to do so. We spoke with him in advance of his session at The Open Group San Francisco 2017 event to learn more about how enterprises can architect their own disruptions.

We’ve been hearing a lot about disruption over the past few years. How do you define disruption and what is the disruption curve?

Disruption normally happens when you don’t anticipate something and the change suddenly occurs on you.  In fact, the changes have been happening, but no one has taken the time to connect the dots. To give an example, let us consider an individual holding a mutual fund, which has significant stakes in property and casualty (P&C) insurance businesses.  The impact of a shared economy (Uber, Lyft, Airbnb) is that the number of ‘owners’ is likely to stay flat or see marginal increase.  This cascades into a smaller number of insured people, hence diminished revenue for the insurance provider.  This impacts the stock valuation of the P&C companies, finally, impacting the individual owning the mutual fund with interest in P&C sector.  And that’s a foresight people might not have. This is not about crying ‘wolf,’ but about mitigating potential risk to an asset—at every step of the chain.

Let us take another example. Most manufacturing businesses hold reasonable stock of spare parts to their machinery.  Even at home, we hold metallic clips, nails, etc.  With 3D printing, one may be able to reuse the raw materials—sheet metal or plastic or whatever they’re trying to manufacture for the main product to create the spare-parts.  At home, we don’t have to stock clips, pins or nails—but raw material.  3D printing impacts the businesses that are producing these products todays.  Some positively (example e-Nable – http://enablingthefuture.org/) and some in unknown ways.

It is about walking the chain.  The company adopting a new technology or approach may not be the one getting impacted.  It may not be about the industry vertical that is adopting a new model.  It’s mostly likely the cascading effect of people taking part in the diluted chain that are impacted. It’s a system of systems game.

The Disruption Curve is based on product maturity ‘S-curve.’  Familiarity breeds contempt and raises expectations.  As people get used to do something in a certain way, some start to notice the little annoyances, and others want to do things differently or better.  For businesses, it is the necessity to create a new revenue model.  The next S-curve is born when the old S-curve approaches its top end.  The best definition is given by Prof. Clayton Christensen from Harvard Business School. However, the simplest interpretation could be ‘an unexpected change to the way one does things or when someone is unseated.’  For this topic, I think everyone is trying to improve their personal productivity, including better disposable income, a dose of vacation or a personal moment for themselves.  Any and all of these will cause a disruption.

In your opinion, what have been the biggest industry disruptions to occur in the past 10 years?

Most of the changes happened in isolation in the past.  There was no significant combinatorial effect that could transcend multiple industry verticals like today.

Google disrupted search; Amazon disrupted in-store purchase models; Netflix  the DVD rental market.  They all leveraged the internet. Google was able to capture and connect contents of websites, scanned copies of books, triggering the birth of  ‘big data’.  And Amazon on the other side, when they started having too many products, they couldn’t have an ecosystem that could support the enterprise across the globe and they came up with the AWS system. What they made internally, they also made a commercial, external facing product. Skype changed telephony; Paypal changed money exchange. 

Growth in metallurgy and medical sciences evolved from the foundations laid in the later half of last century.  Growing human body parts in lab, implantable devices, etc. The last decade made remote, continuous monitoring of human behavior and health possible.

But the biggest change is that all these companies discovered that they actually depend on each other.  Netflix on AWS, AWS on fiber optic cable owners, both of them on the last mile internet service providers, etc.  That realization, and the resultant collaboration via open standards is the biggest of all.

All of them changed some of the fundamentals of human-to-human interaction and human-to-machine interaction.  The new model made any individual able to provide a solution rather than waiting for large enterprises to initiate changes.

Who have been the most influential disruptors—is it just the usual suspects like Uber or Airbnb or are there others disruptors that are having a greater influence on industries that people are less aware of?

It depends on the vertical. As I said before, the past decade has been limited to a single vertical.

If you think about tax filing, Intuit has been the most influential in that area with Turbo Tax. They made a lot of things easier. Now you can take a picture of your W2 and 80% of your filing work is completed. Using another product, Mint.com, they became a personal finance advisor in a non-intrusive way—working with your banks, investment accounts and credit card accounts.  PayPal and Square are disruptors in the ecommerce and money movement sectors.

Each vertical had its own set of disruptors, not everyone came together. But now more and more people are coming together because the services are so interdependent. Apple with its iTunes changed the whole music industry. Amazon Kindle for books.  IBM with its Watson is changing multiple verticals.

Medical devices are also undergoing a lot of change in terms of things that could be planted in human beings and monitored wirelessly so it can give real-time information to doctors. The most common human behavior is to visit doctors when we are not healthy. Doctors don’t have data points on the transition from a healthy state to an unhealthy state, what happened, why it happened. Now they can monitor a person and behavior continuously. I recently read about an emergency room operation that used the data from a FitBit to figure out what happened to a patient and treat the patient very quickly. They saw the transition and the data points stored in the device and were able to diagnose the patient because the patient wasn’t conscious.

So, I guess, there are more unusual suspects and players.  To name a few: Khan Academy and Open Courseware in education, e-Nable for exoskeletal structures, derivatives of military’s ‘ready-to-eat-meals’.  There are also new products like ‘Ok Google,’ ‘Alexa’ and ‘x.ai’ which combines several aspects.

Your talk at The Open Group San Francisco advocates for an “architected approach” to disruption. Can disruption be architected or is there a certain amount of happenstance involved in having that kind of impact on an industry?

There is some element of happenstance.  However, most of the disruptions are architected.

An enterprise invariably architects for disruption or reacts rapidly to mitigate disruptive threats to sustain a business.  There are some good examples that go unnoticed or written off as the natural evolution of an industry.

I believe Qantas airlines was the first to realize that replacing seat mounted inflight entertainment (IFE) units with iPads saved at least 15 pounds per seat.  Even after adding 40% more seats, eliminating these devices reduced the overall weight of a Boeing 777 by 7%.  Simply by observing inflight human behavior and running test flights without IFEs, airlines architected this change.  The moment the savings was realized, almost every airline followed.  This is an example of architected change.  As regulators started accepting use of wifi devices at any altitude, compliance work done at the gate, by the pilot and maintenance crew also switched to hand-held devices.  Less paper and faster turnaround times.  Savings in weight resulted in lower overall operating cost per flight, contributing to either lower prices or more cargo revenue for the airline.

Every enterprise can anticipate changes in human behavior or nudge a new behavior, build a new business model around such behaviors.  Apple’s introduction of touch devices and natural interfaces is another example of well-architected and executed change.

There are parts of a business that need significant effort to change due to cascading impacts, say an ERP system or CRM or SCM system.  Even shifting them from on-premise to cloud would appear daunting.  However, the industry has started to chip away the periphery of these solutions that can be moved to cloud.  The issue is not technical feasibility or availability of new solutions.  It is more about recognizing what to change and when to change.  The economics of the current way of doing things balanced against cost of change and post change operations will simplify decision making.  The architect has to look outside the enterprise for inspiration, identify the points of friction within the enterprise, and simply perform a techno-economic analysis to architect a solution.

Sometimes a group of architects or industries realize a need for a change.  They collectively guide the change.  For example, consider The Open Group’s new Open Process Automation Forum.  What would normally appear to be disconnected verticals – Oil and Gas, Food Processing, Pharmaceuticals, Fabric and Cable manufacturers have come together to solve process management problems.  Current equipment suppliers to such companies are also part of the forum.  The way the forum works will lead to incremental changes. The results will appear to be natural evolution of the industry but the fact that these folks have come together can be called a disruption to an otherwise normal way of operations.  With this, there is the possibility of collaboration and mutual learning between operations technology and information technology.

I know of car companies, insurance companies and highway management companies who started silent collaboration to explore solar panels embedded on the road and live charging of automobiles.  An extended ‘what if’ scenario is the use of GPS to identify the availability of solar panel embedded roads matched with driving behavior of the car owner to make a decision whether the charge on the car’s battery can be used as source of power to reduce the burden on the electric grid.  Last month I read an article that the first solar panel road is a reality.  For metering and charging of power consumption, this may not be much of a disruption.  But other adjoining areas like regulations, parking privileges, toll charges will be impacted.  It is a question of how soon the players are going to react to make the transition gradual or suddenly wake up to call them disruptions.

Is it possible for established enterprises to be the arbiters of disruption or is that really something that has to come out of a start-up environment? Can an architected approach to disruption help established companies keep their edge?

Yes and no. The way most companies have grown is to protect what they’ve already established. A good number of organizations operate under the philosophy that failure is not an option, which implies that taking risks has to be reduced which in turn stifles innovation. They will innovate within the boundaries and allowances for failures. Start-ups have a mindset that failure is an option because they have nothing else to lose. They are looking for the right fit.

To be an arbiter, start-up or established enterprise, take a page from the research on Design Thinking and Service Blueprinting by Stanford University.  It provides a framework for innovation and possibly disruptions by any organization – not just the start-ups.  Progressive’s telemetry device is just the beginning.  Once the customers understand the limits of privacy management, all insurance companies will change the way they rate premiums.  Just learn from the rapid changes the TSA made for full-body scanners.  Scanned images rapidly changed from close to real body shape to a template outline.  Customer outrage forced that change.

Some big enterprises are actually working with start-ups to figure out what changes the start-ups want to do, what kind of pain points they’re offsetting. There are companies who work with an agenda to change the operating model of the whole industry. 

In the U.S., one can look at CaptialOne, Amazon (the retail business, not AWS), MegaBus, and Old Navy for creating new business models, if not a complete disruption.  Expedia created GlassDoor, and Zillow; Expedia was founded on making search, comparison of competitive offers and decision-making simple. The bottom line is whether the philosophy with which an enterprise was created has become its DNA, resulting in new verticals and value creation in the eyes of the investors.

It is possible to have an architected disruption approach moving forward but it comes from a place where the company defines the level of risk and change they’re willing to bring. At the end of the day, public companies are under constant pressure for quarterly results so big changes may not be possible; but they may be doing small incremental things that morph into something else that we cannot easily see.

Is architected disruption a potential new direction that Enterprise Architects can take as either a career path or as a way to show their continued relevance within the enterprise?

Yes. Let me qualify that. As things stand today, there are three kinds of architects.

Architects who guide and oversee implementation—people who have to make sure that what has been planned goes according to plan. These architects are not chartered to create or mitigate disruptions.  It is the task that is given to them that distances them from effecting big changes.

The second kind of architects focus on integrating things across businesses or departments and execute with the strategy leaders of the company.  These architects are probably on the periphery of enabling disruption or mitigating impacts of a disruption using an architected approach. These architects often react to disruptions or changes.

The third set of architects are trying to provide the strategy for the company’s success—creating roadmaps, operating at the edges of corporate charter or philosophy, thinking about every moving part within and outside the enterprise. They are on the watch out for what’s happening in human behavior, what’s happening in machine behavior and what’s happening in automation and trying to modify the portfolio quarter by quarter, if not sooner.  It is tricky for these architects to keep track of everything happening around them, so it is normal to get lost in the noise.

With the right attitude and opportunity, an architect can create a career path to move from the first kind to the third kind.  Having said that, let me be clear, all three kinds of architects are relevant and required for an enterprise to function.

Is there a role for standards in architected disruption?  

Yes.  The standards provide a buffer zone to limit the impact of disruption.  It also provides a transition path to adopt a new way of doing things.

The standards help in a couple ways—The Open Group sets standards for Boundaryless Information Flow™.  At the end of the day, no business is an island. So when a payment or financial e-commerce transaction changes from a bank to a PayPal account to a mobile wallet or a phone number, you need to have certain communications protocols, certain exchange standards to be defined. What kind of failure mitigation one needs to have in place needs to be defined—that’s one.

Second is supporting management decision makers—CEOs, COOs. We have to provide them the information that says ‘if you do this within this confine, the possibilities of failures go down.’ It’s about making it easier for them to decide and take on a change effort.

The standards provide a framework for adopting the change as well as a framework for helping management decisions mitigate risk and for making an ecosystem work well together.

Are there any other ways that disruption can be planned for?

One way is to look at the business patterns, the economic indicators that come along with these patterns.

Would Uber have survived in the mid-to-late 1990s? Probably not, because of the growing and more affluent economy. The economic pressure of the late 2000s diminished total disposal income so people were open to certain changes in their habits. Not only were they open in their thinking about socializing, they were open to penny-pinching as well.

There are parts of businesses that are hard to change, like the logistics management and ERP systems of an airline; clearing house operations of banking systems; cross-border, high-value sales.  There are parts of the business that can change with minimal impact.  Gartner calls this concept Pace-Layering.  We have to look for such layered patterns and make it easier to solve.  And the growth part will be complemented by what’s going on outside the enterprise.

There are a lot of examples of products that were way ahead of their time and for users to imagine / accept the change, and hence failed.  Uber or Ford, despite following different approach to deliver their product to the market, focused on the problem of mobility, the economic and social climate, and were willing to innovate and iterate. Oxo products, for example, though they cannot be technically classified as disruptors, changed the way we look at kitchen tools.  Oxo focused on user research and product fit.

So the winning formula is to focus on market and customer needs.  Start with accepting failure, test like there is no tomorrow. And at the hint of a tipping point, scale.

@theopengroup #ogSFO
by-the-open-groupSriram Sabesan leads the Digital Transformation practice at Conexiam.  He is responsible for developing best practice and standards in the areas of Social, Mobile, Analytics, Cloud and IoT (SMACIT), Customer Experience Management and governance.

Over the past 20 years, Sriram has led teams specializing in system engineering, process engineering and architecture development across federal, technology, manufacturing, telecommunication, and financial services verticals. Managing and leading large geographically distributed teams, Sriram has enabled clients develop and execute strategies in response to shifts technology or economic conditions.

Sriram has been an active member of The Open Group since 2010 and is on The Open Group Governing Board.  He has contributed to the development of Open Group standards, snapshots and white papers. He is an Open Group Certified Distinguished Architect and is certified in TOGAF® v8, Scrum Practice and Project Management.

Sriram holds a Bachelor of Science degree Mechanical Engineering and Master of Science (Tech) in Power and Energy.  Sriram also received his Diplomas in Financial and Operations Management in 1998.

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Customer Experience and Transformation in Financial Services – Part 2

By Stuart Macgregor, CEO, Real IRM and The Open Group South Africa

This is Part 2 of a two part series.  Part 1 can be found here.

The financial services industry is undergoing massive change. For financial services companies to achieve transformation and digitisation, addressing the architectural foundations is the starting point.

Chapter 4 – Customer Engagement Model (Part 2)

So, this is not simply about technological advancement. The harsh reality is that financial companies have fallen out of touch with customer needs. These disruptors have arrived to serve an unmet need.

In the era of the modern-day customer, more demanding and empowered than that of decades ago, should banks still be rolling out vanilla services like cheque accounts, credit cards, and rewards programmes?

Should banks still be classifying customers into vast segments based primarily on monthly income? Should they still be quantifying affordability and risk in the same way? Should they still seek to derive their non-interest income from monthly fees and transaction fees?

The entrance of new disruptors proves that most of these practices, embedded into the anatomy of a bank, often prevent the bank from meeting the modern customers’ expectations.

For another perspective on the needs and expectations of digital customers, we can look at The Open Group ‘ROADS principles’. These can be summarised as follows:

  • Real Time: The customer can commence or progress a journey at any time, with responses and updates tailored in real-time to meet the customer’s evolving needs.
  • On Demand:The service provider has the flexibility to adapt and adjust the services delivered to the customer on demand.
  • All-Online: The customer is able to accomplish all activities and transactions associated with the journey online. An offline channel need only be used if absolutely required to handle a physical product or service.
  • Do-It-Yourself: The customer is provided with the capability, and has the choice, to complete the activities and transactions associated with the journey alone. Interaction with a service provider representative is not required.
  • Social: The journey is tightly integrated with digital social media, so at any stage of the journey the customer is able to access social media for advice, recommendations and feedback.

Financial companies’ general inability to respond  to these demands can often be linked back to fundamental architectures and tools.

These are the outdated architectures that are unable to conduct impact assessments, not able to fully leverage resources and technical capabilities, and not able to find meaning in the masses of customer data and documentation stored inside their four walls.

We can define this as the concept of Big Data: teasing out the learnings from the masses of structured and unstructured customer data streamed from various sources and systems – with the goal of creating customer-specific engagement tactics.

Chapter 5 – Customer Engagement Model (Part 3)

To survive the onslaught from advancing attackers to the financial services industry, we advocate ‘outside-in thinking’ – working backwards from the customer frontline (designing the experiences that customers will love) – and then plotting the internal processes that support the customer experience vision.

This systems-thinking approach uncovers the optimal roles and relationships within the organisation, the metrics on which to evaluate success, and maps the reinforcing loops that will accelerate change and enhance value delivery. Keeping EA at the centre of the reengineering process ensures a sharp focus on the information that’s required to make these new processes successful.

Organisations can now understand where underlying data is housed, how it can be best integrated between systems and across functions, and how information should be delivered to  those team members that are tasked with supporting customers. This is brought to bear in business capability maps, causal loop diagrams, process models, value-chain diagramming, and the like.

The leading financial services firms of tomorrow will use these these insights, to invest in architectures and systems that creates superior customer experiences. Ultimately, this is the only approach that can help financial companies stay relevant in the face of new and disruptive threats.

It goes without saying that customer experience is felt at the various digital and traditional touchpoints with which customers engage. But ‘touchpoints’ in the truest sense of the word incorporate any engagement that the consumer has with the financial services brand, products, services, or staff.

A number of models seek to define these customer touchpoints. The Open Group’s Customer Experience Reference Model, for example, notes that any organisation needs to look beyond itself, and take a wider view of the broader ecosystem when understanding the customer journey.

To measure progress, the Customer Experience Reference Model suggests defining a set of key performance indicators. Depending on the organisation and its strategy, these could take a multitude of forms – including Net Promoter Scores, click-through rates, churn rates, average revenue per customer, cart abandonment rates, valency indexes, conversion rates, and much more.

Scenario: customer journey in the Insurance sector

Insurance policies traditionally involve reams of paper, reliance on customers to enter information accurately, and high back-office administration costs. They are typically updated on an annual basis, and do not reflect an accurate assessment of risk.

As a result of the inefficiencies in the system, insurance tends to be a very expensive item in household budgets.

But in the next few years, insurers will start consolidating feeds from connected devices within cars, geolocation data from smartphones, smart keys, as well as wearables (like smartwatches) and even ‘digestibles’.

Known in technology circles as the Internet of Things, this example shows how an insurer can far more accurately assess and mitigate risk – by tracking everything from driving behaviour, to cardiovascular activity, smoking habits, or whether or not a person has locked their house.

By developing customer insights at this level of detailed granularity, insurers are able to package accurate, personalised insurance premiums (rather than segmenting customers into broad risk groups, as they do today). Of course, customers who want to benefit from preferential, personalised rates, will sacrifice some level of personal privacy.

This leads us to the ethics of tracking intimate customer details for use in designing such personalised and fluid insurance policies – which dynamically adjust based on customer behaviour (for example, a trip overseas to a country with high crime statistics many cause a temporary increase in one’s premium).

Chapter 6 – Development Agenda

When considering the financial services enterprise of the future, it’s not enough to simply aim for excellent customer service. Unless this generates higher levels of profitability, better customer retention or improved customer acquisition, any customer service effort is going to be in vain.

These three questions above – relating to a financial services company’s business goals – should be guiding forces for the architecture team, as they create the optimal design for the future.

In essence, the firm’s architecture needs to enable the flow of information and investment of resources to the markets, segments, demographics and regions that offer the most profitable opportunities at any given time.

As financial companies come under increasing threat from new competitors, narrowing the focus to certain services, or markets, is a way of maintaining profitable leadership positions in certain areas – while exiting over-traded, hyper-competitive or unprofitable markets.

However, this is no longer a static, consistent landscape. To succeed, financial services firms should be “striving for continuous improvement and renewal”, as a recent Backbase/Efma Report describes.

From an EA perspective, this means one’s technology and application architecture must support the rapid and continuous delivery of new services and features to customers.

“The innovation planning cycle is far too slow for today’s high-speed digital banking environment,” notes the report, adding: “Today’s big digital players in other industries test and learn as part of an iterative process. They’re agile and experiment in real-time with their own customer base. The decision-making process is much faster and the rollout is fast … very fast!”

Across the breadth of architecture realms – from business, information, data, applications and technology – one’s EA frameworks should be designed with rapid prototyping and delivery in mind. By doing so, financial companies are able to capture new windows of profitable opportunity, react faster to changing customer demands, and produce new services in a cost-effective manner.

This could come in the form of instant home loan approvals, new services for wearable technology, or a concerted focus on a niche insurance segment. The specific opportunities depend on the company in question and where they are at a given point in time.

In short, having the architecture to unleash digital transformation, opens up new value streams for the bank and increasing satisfaction and loyalty for the customer.

Chapter 7 – Capabilities and Insights

The final McKinsey “timeless tests” looks at how to anchor customer centricity within the organisation, and align governance approaches and staff incentives to fit with the new customer service ethos.

From an Enterprise Architecture perspective, this is reflected in the maturity from ‘EA execution’ to ‘EA leadership’. The concluding article in our series on change management in EA highlights the hallmarks of a mature-state EA practice – the state of EA leadership.

EA helps to create the structures that will thrust customer-centricity to the forefront of all business decision-making. Specifically, it can support the organisation’s customer experience vision in the areas of:

  • Mandate and governance
  • Strategy
  • Performance management
  • Organisational transformation

But the reality is that so few firms ultimately realise the value of EA in their customer experience and digital transformation ambitions. Another of our series – on what catastrophes often cause the EA practice to implode – addresses the common reasons for this.

Because so few organisations fully leverage the power of EA, those financial services firms that do get it right, have a tremendous competitive advantage over their peers – who continue struggle away in disjointed silos, bondaged in unnecessary red tape.

Addressing these final two McKinsey tests requires a relentless focus on customer insights; and then ensuring the voice of the customer be heard when structuring, integrating or re-designing all business processes.

Without EA at the core of these endeavours, the organisation’s leadership cannot take full advantage of these rich sources of insights. More specifically, they wouldn’t have the architectural work products to improve resource allocation, reduce decision-making biases, assess strategic alternatives, manage change and complexity, or chart the innovation journey.

In this way, EA provides deeper insights into the unintended consequences of certain potential decisions – like company restructuring or deciding to enter a new market.

To conclude, the McKinsey tests represent the important questions that financial services organisations need to ask themselves as they seek to put the customer at the heart of their digital transformation initiatives.

And, as we’ve teased out in this series, having the fundamental architecture to support these goals, and prepare for an uncertain and volatile future, is an absolute prerequisite for success.

by-stuart-macgregor-ceo-real-irmStuart Macgregor is the CEO, Real IRM Solutions and  The Open Group South Africa. Through his personal achievements, he has gained the reputation of an Enterprise Architecture and IT Governance specialist, both in South Africa and internationally.

Macgregor participated in the development of the Microsoft Enterprise Computing Roadmap in Seattle. He was then invited by John Zachman to Scottsdale, Arizona to present a paper on using the Zachman framework to implement ERP systems. In addition, Macgregor was selected as a member of both the SAP AG Global Customer Council for Knowledge Management, and of the panel that developed COBIT 3rd Edition Management Guidelines. He has also assisted a global Life Sciences manufacturer to define their IT Governance framework, a major financial institution to define their global, regional and local IT organizational designs and strategy. He was also selected as a core member of the team that developed the South African Breweries (SABMiller) plc global IT strategy.

Stuart, as the lead researcher, assisted the IT Governance Institute map CobiT 4.0 to TOGAF®, an Open Group standard. This mapping document was published by ISACA and The Open Group. He participated in the COBIT 5 development workshop held in London in 2010.

 

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The Open Group Paris Event to Take Place in October 2016

The Open Group, the vendor-neutral IT consortium, is hosting its next global event in Paris, France, between October 24-27, 2016. The event, taking place at the Hyatt Regency Paris Étoile, will focus on e-Government, as well as how to address the dimensions of e-Society, e-Technology and e-Management.

Industry experts will look at issues surrounding business transformation, business analysis, information sharing, e-Health, privacy and cybersecurity. Sessions will examine the strategic execution and the application of emerging technologies and management techniques to e-Government. Presentations will also include the latest on the European Interoperability Reference Architecture (EIRA) and the Regulatory Impact of the General Data Protection Regulation (GDPR) on Personal Data Architecture.

The event features key industry speakers including:

  • Rob Akershoek, ‎Solution Architect (IT4IT), Shell
  • Robert Weisman, University of Ottawa
  • Roland Genson, Director, General Secretariat of the Council of the European Union
  • Olivier Flous, Vice President of Engineering, Thales Group

Full details on the agenda and speakers can be found here.

The focus of Monday’s keynote sessions will be Standardized Boundaryless Information Flow™ and how Enterprise Architecture can be used in e-Government. There will also be a significant emphasis on business transformation, with the Tuesday plenary and tracks looking at successful case studies, standards as enablers, and architecting the digital business.

Further topics to be covered at the event include:

  • IT4IT™ – managing the businesses of IT, vendor adoption of IT4IT™ and a CIO-level view of the standard
  • Open Platform 3.0™ – the customer experience and digital business, architecting Smart Cities and how to use IoT technologies
  • ArchiMate® – new features of ArchiMate® 3.0 and a look at open standards in practice
  • Open Business Architecture – examining the new Open Business Architecture standard and how to address enterprise transformation

Member meetings will take place throughout the course of the three-day event for ArchiMate®, Architecture, Healthcare, IT4IT™, Open Platform 3.0™, Open Trusted Technology and Security Forum members.

Registration for The Open Group Paris event is open now, is available to members and non-members, and can be found here.

@theopengroup #ogPARIS

 

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Digital Disruption for Enterprise Architecture

By Myles F. Suer, Chief Platform Evangelist, Informatica

Recently, I got to sit at the font of wisdom which is Jeanne Ross, and get her view into digital disruption and the role of Enterprise Architecture in enabling firms to respond. I am going to summarize her main points here which I hope will be as useful to you as it was for me.

Jeanne, Research Director and Principal Research Scientist, MIT Sloan School of Management, started her talk by saying that she has a passion for Enterprise Architecture. And she said for me and for you, as the digital economy has arrived, I have felt this was our moment. We were going to have integrated channels, seamless end-to-end transactions, real understanding of customer data, and real tight security. “And this of course means architecture”. And she in jest says that she was hoping that the whole world had come to this very same conclusion. Clearly, she said, it hasn’t happened yet but Jeanne importantly believes with the march to becoming digital, it will happen soon.

Success in the digital economy is not guaranteed

Jeanne says one thing is becoming increasingly clear–enterprises will not be successful if they are not architected to execute their firm’s business strategies. At the very same time, she has found with the companies (existing successful enterprises) that she talks to believe their success is not guaranteed in the digital economy. Given this, Jeanne decided to research what incumbent enterprises actually look like that have taken concrete steps to respond to the digital economy’s mandates. The 27 companies :

  • The challenges they are facing
  • The disruptions that they had identified
  • The strategies they were moving forward with
  • The changes that they had already put in place

She found that digital strategies were inspired by the capabilities of powerful readily available technologies including things like social, mobile, analytics, cloud, and internet of things. Digital strategies were forcing companies around a rallying point but surprisingly there was not much distinction behind the rallying point more than, “I want to be the Amazon or Uber of my industry”. But Jeanne claims this is okay because competitive advantage is not going to be about strategy but instead about execution. And being the best at execution is going to eventually take you in a different direction than other market participants.

Competitive advantage today requires executing on integrated capabilities

At this point, Jeanne stressed that there is no competitive advantage in a single capability. This is why Uber has so much competition. But for established companies, advantage will come from an integrated established set of capabilities. “Competitive advantage will come from taking capabilities that others may or may not have and integrating them in ways that make something extraordinarily powerful”. This in Jeanne’s mind is how established companies can best startups because as we know, startups “can only do one thing well”. Integrating business capabilities provides a whole value proposition that is hard for others to copy.

Jeanne says that there is one more thing that existing companies need to get good at. They need to become responsive. Startups are constantly monitoring and learning what to do next. Think about Christopher Columbus and what an established company and a startup would do. The startup would pivot and learn how to do something different. Established companies need to learn how to do this too.

Now as we move into the digital economy, there are two strategies possible. And established companies must choose one to lead with. They are customer engagement or digitized solutions. Customer engagement means that every day, you wake up trying to figure out what you can do next to make customers love you. The great example that Jeanne gave is Nordstrom. She said that Nordstrom a few years ago was clearly being disrupted. And Nordstrom responded by creating a personalized shopping experience. This was enabled by combining capabilities around a transparent shopping experience and transparent supply chain. This of course is layered on top with predictive analytics. This allows them to predict what a customer needs and to know how to get it to them regardless of channel.

The second strategy is digitized solutions. Here you figure out what customers need that they don’t know they need. GE is doing this today as an industrial company. They are moving the value from the physical asset to asset performance management.

Her parting remarks

If your company has not embraced either of these then it doesn’t get the digital economy. You need to pick one to execute now. Enterprise Architects have a major role to play here. In the past, architecture was largely a divide-and-conquer approach. Today it is about integration. Today architecture is about empowering and partnering. We need to architect for agility. This means flatter organizations. Today, we need to be able to use data for decisions. The jobs of architects are incredibly important. You see the change that is necessary and you are in a unique position to help get your company there.

By Myles F. Suer, Chief Platform Evangelist, Informatica

Myles Suer acts as a Chief Platform Evangelist at Informatica Corporation. In this role, Mr. Suer is focused upon solutions for key audiences including CIOs and Chief Enterprise Architects and the application of Informatica’s Platform to verticals like manufacturing. Much of Mr. Suer’s experience is as a BI practitioner. At HP and Peregrine, Mr. Suer led the product management team applying analytics and big data technology to the company’s IT management.

Mr. Suer has also been a thought leader for numerous industry standards including ITIL and COBIT. As part of this, Mr. Suer was a reviewer for the ITIL Version 3 standard. For COBIT, Mr. Suer has written extensive. Most recently, he published in COBIT Focus, “Using COBIT 5 to Deliver Information and Data Governance”. Prior to HP, Mr. Suer led new product initiatives at start-ups and large companies. This included doing a restart of a Complex Event Processing Company. Mr. Suer has also been a software industry analyst. Mr. Suer holds a Master of Science degree from UC Irvine and a 2nd Masters in Business Administration in Strategic Planning from the University of Southern California.

Twitter: @MylesSuer

Further Reading

Jeanne Ross of MIT/CISR talks on Digital Disruption

Should the CDO drive corporate Digital Disruption?

The Importance of data in Digital Disruption Via @ComputerWorld

What is the role of government in Digital Disruption?

Are you acting like a software company? Your business may depend upon it

Using data and IT to gain Competitive Advantage

Leadership in an age of  digital disruption

Business model change: how does digital disruption drive the need for it?

@theopengroup

 

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The Digital Ecosystem Paradox – Learning to Move to Better Digital Design Outcomes

By Mark Skilton, Professor of Practice, Information Systems Management, Warwick Business School

Does digital technologies raise quality and improve efficiencies but at the same time drive higher costs of service as more advanced solutions and capabilities become available demanding higher entry investment and maintenance costs?

Many new digital technologies introduce step change in performance that would have been cost prohibitive in the previous technology generations. But in some industries the technology cost per outcome have be steadily rising in some industries.

In the healthcare market the cost per treatment of health care technology was highlighted in a MIT Technology Review article (1). In areas such as new drugs for treating depression, left-ventricular assistance devices, or implantable defibrillators may be raising the overall cost of health, yet how do we value this if patient quality of life is improving and life extending. While lower cost drugs and vaccines may be enabling better overall patient outcomes

In the smart city a similar story is unfolding where governments and organizations are seeking paths to use digitization to drive improvements in jobs productivity, better lifestyles and support of environmental sustainability. While there are several opportunities to reduce energy bills, improve transport and office spaces exist with savings of 40% to 60% consumption and efficiencies complexity costs of connecting different residential, corporate offices, transport and other living spaces requires digital initiatives that are coordinated and managed. (U-city experience in South Korea (2)).

These digital paradoxes represent the digital ecosystem challenge to maximise what these new digital technologies can do to augment every objects, services, places and spaces while taking account of the size and addressable market that all these solutions can serve.

Skilton1

What we see is that technology can be both a driver of the physical and digital economy through lowering of price per function in computer storage, compute, access and application technology and creating new value; conversely the issues around driving new value is having different degrees of success in industries.

Creating value in the digital economy

The digital economy is at a tipping point, a growing 30% of business is shifting online to search and engage with consumers, markets and transactions taking account of retail , mobile and impact on supply channels (3);  80% of transport, real estate and hotelier activity is processed through websites (4); over 70% of companies and consumers are experiencing cyber-privacy challenges (5), (6) yet the digital media in social, networks, mobile devices, sensors and the explosion of big data and cloud computing networks is interconnecting potentially everything everywhere – amounting to a new digital “ecosystem.

Disruptive business models across industries and new consumer innovation are increasingly built around new digital technologies such as social media, mobility, big data, cloud computing and the emerging internet of things sensors, networks and machine intelligence. (MISQ Digital Strategy Special Issue (7)).

These trends have significantly enhanced the relevance and significance of IT in its role and impact on business and market value at local, regional and global scale.

With IT budgets increasing shifting more towards the marketing functions and business users of these digital services from traditional IT, there is a growing role for technology to be able to work together in new connected ways.

Driving better digital design outcomes

The age of new digital technologies are combining in new ways to drive new value for individuals, enterprise, communities and societies. The key is in understanding the value that each of these technologies can bring individually and in the mechanisms to creating additive value when used appropriately and cost effectively to drive brand, manage cyber risk, and build consumer engagement and economic growth.

Skilton2

Value-in-use, value in contextualization

Each digital technology has the potential to enable better contextualization of the consumer experience and the value added by providers.   Each industry market has emerging combinations of technologies that can be developed to enable focused value.

Examples of these include.

  • Social media networks

o   Creating enhanced co-presence

  • Big data

o   Providing uniqueness profiling , targeting advice and preferences in context

  • Mobility

o   Creating location context services and awareness

  • Cloud

o   Enabling access to resources and services

  • Sensors

o   Creating real time feedback responsiveness

  • Machine intelligence

o   Enabling insight and higher decision quality

Together these digital technologies can build generative effects that when in context can enable higher value outcomes in digital workspaces.

Skilton3

Value in Contextualization

The value is not in whether these technologies, objects, consumers or provider inside or outside the enterprise or market. These distinctions are out-of-context from relating them to the situation and the consumer needs and wants. The issue is how to apply and put into context the user experience and enterprise and social environment to best use and maximise the outcomes in a specific setting context rom the role perspective.

With the medical roles of patient and clinician, the aim in digitization is how mobile devices, wearable monitoring can be used most efficiently and effectively to raise patient outcome quality and manage health service costs. Especially in the developing countries and remote areas where infrastructure and investment costs, how can technologies reach and improve the quality of health and at an effective cost price point.

This phenomena is wide spread and growing across all industry sectors such as: the connected automobile with in-car entertainment, route planning services; to tele-health that offers remote patient care monitoring and personalized responses; to smart buildings and smart cities that are optimizing energy consumption and work environments; to smart retail where interactive product tags for instant customer mobile information feedback and in-store promotions and automated supply chains. The convergence of these technologies requires a response from all businesses.

These issues are not going to go away, the statistics from analysts describe a new era of a digital industrial economy (8). What is common is the prediction in the next twenty to fifty years suggest double or triple growth in demand for new digital technologies and their adoption.

Skilton4

Platforming and designing better digital outcomes

Developing efective digital workspaces will be fundamental to the value and use of these technologies. There will be not absolute winners and losers as a result of the digital paradox. What is at state is in how the cost and inovation of these technologies can be leveraged to fit specific outcomes.

Understanding the architecting practices will be essentuial in realizing the digitel enterprise. Central to this is how to develop ways to contextualize digital technologies to enable this value for consumers and customers (Value and Worth – creating new markets in the digital economy (9)).Skilton5Platforming will be a central IT strategy that we see already emerging in early generations of digital marketplaces, mobile app ecosystems and emerging cross connecting services in health, automotive, retail and others seeking to create joined up value.

Digital technologies will enable new forms of digital workspaces to support new outcomes. By driving contextualized offers that meet and stimulate consumer behaviors and demand , a richer and more effective value experience and growth potential is possible.

Skilton6The challenge ahead

The evolution of digital technologies will enable many new types of architect and platforms. How these are constructed into meaningful solutions is both the opportunity and the task ahead.

The challenge for both business and IT practitioners is how to understand the practical use and advantages as well as the pitfalls and challenges from these digital technologies

  • What can be done using digital technologies to enhance customer experience, employee productivity and sell more products and services
  • Where to position in a digital market, create generative reinforcing positive behavior and feedback for better market branding
  • Who are the beneficiaries of the digital economy and the impact on the roles and jobs of business and IT professionals
  • Why do enterprises and industry marketplaces need to understand the disruptive effects of these digital technologies and how to leverage these for competitive advantage.
  • How to architect and design robust digital solutions that support the enterprise, its supply chain and extended consumers, customers and providers

References

  1. http://www.technologyreview.com/news/518876/the-costly-paradox-of-health-care-technology/.
  2. http://www.kyoto-smartcity.com/result_pdf/ksce2014_hwang.pdf.
  3. http://www.smartinsights.com/digital-marketing-strategy/online-retail-sales-growth/
  4. http://www.statisticbrain.com/internet-travel-hotel-booking-statistics/
  5. http://www.fastcompany.com/3019097/fast-feed/63-of-americans-70-of-milennials-are-cybercrime-victims
  6. https://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/cyber-crime.pdf
  7. http://www.misq.org/contents-37-2
  8. http://www.gartner.com/newsroom/id/2602817
  9. http://www2.warwick.ac.uk/fac/sci/wmg/mediacentre/wmgnews/?newsItem=094d43a23d3fbe05013d835d6d5d05c6

 

Skilton7Digital Health

As the cost of health care, the increasing aging population and the rise of medical advances enable people to live longer and improved quality of life; the health sector together with governments and private industry are increasingly using digital technologies to manage the rising costs of health care while improve patient survival and quality outcomes.

Digital Health Technologies

mHealth, TeleHealth and Translation-to-Bench Health services are just some of the innovative medical technology practices creating new Connected Health Digital Ecosystems.

These systems connect Mobile phones, wearable health monitoring devices, remote emergency alerts to clinician respond and back to big data research for new generation health care.

The case for digital change

UN Department of Economic and Social Affairs

“World population projected to reach 8.92 billion for 2050 and 9.22 Million in 2075. Life expectance is expected to range from 66 to 97 years by 2100.”

OECD Organization for Economic Cooperation and Development

The cost of Health care in developing countries is 8 to 17% of GDP in developed countries. But overall Health car e spending is falling while population growth and life expectancy and aging is increasing.

 

Skilton8Smart cities

The desire to improve buildings, reduce pollution and crime, improve transport, create employment, better education and ways to launch new business start-ups through the use of digital technologies are at the core of important outcomes to drive city growth from “Smart Cities” digital Ecosystem.

Smart city digital technologies

Embedded sensors in building energy management, smart ID badges, and mobile apps for location based advice and services supporting social media communities, enabling improved traffic planning and citizen service response are just some of the ways digital technologies are changing the physical city in the new digital metropolis hubs of tomorrow.

The case for digital change

WHO World Health Organization

“By the middle of the 21st century, the urban population will almost double globally, By 2030, 6 out of every 10 people will live in a city, and by 2050, this proportion will increase to 7 out of 10 people.”

UN Inter-governmental Panel on Climate Change IPCC

“In 2010, the building sector accounted for around 32% final energy use with energy demand projected to approximately double and CO2 emissions to increase by 50–150% by mid-century”

IATA International Air Transport Association

“Airline Industry Forecast 2013-2017 show that airlines expect to see a 31% increase in passenger numbers between 2012 and 2017. By 2017 total passenger numbers are expected to rise to 3.91 billion—an increase of 930 million passengers over the 2.98 billion carried in 2012.”

Mark Skilton 2 Oct 2013Professor Mark Skilton,  Professor of Practice in Information Systems Management , Warwick Business School has over twenty years’ experience in Information Technology and Business consulting to many of the top fortune 1000 companies across many industry sectors and working in over 25 countries at C level board level to transform their operations and IT value.  Mark’s career has included CIO, CTO  Director roles for several FMCG, Telecoms Media and Engineering organizations and recently working in Global Strategic Office roles in the big 5 consulting organizations focusing on digital strategy and new multi-sourcing innovation models for public and private sectors. He is currently a part-time Professor of practice at Warwick Business School, UK where he teaches outsourcing and the intervention of new digital business models and CIO Excellence practices with leading Industry practitioners.

Mark’s current research and industry leadership engagement interests are in Digital Ecosystems and the convergence of social media networks, big data, mobility, cloud computing and M2M Internet of things to enable digital workspaces. This has focused on define new value models digitizing products, workplaces, transport and consumer and provider contextual services. He has spoken and published internationally on these subjects and is currently writing a book on the Digital Economy Series.

Since 2010 Mark has held International standards body roles in The Open Group co-chair of Cloud Computing and leading Open Platform 3.0™ initiatives and standards publications. Mark is active in the ISO JC38 distributed architecture standards and in the Hubs-of-all-things HAT a multi-disciplinary project funded by the Research Council’s UK Digital Economy Programme. Mark is also active in Cyber security forums at Warwick University, Ovum Security Summits and INFOSEC. He has spoken at the EU Commission on Digital Ecosystems Agenda and is currently an EU Commission Competition Judge on Smart Outsourcing Innovation.

 

 

 

 

 

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