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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Creating Business Agility: How Convergence of Cloud, Social, Mobile, Video, and Big Data Enables Competitive Advantage provides a game plan for integrating technology to build a smarter, more customer-centric business. Using a series of case studies as examples throughout, the book describes the agility that comes from collaborative commerce, and provides key decision makers the implementation roadmap they need to build a successful business ecosystem. The focus is on Business Agility Readiness in terms of the five major changes affecting the information technology landscape, and how data-driven delivery platforms and decision-making processes are being reinvented using digital relationships with a social business model as the consumer world of technology drives innovation and collaboration. Cloud computing, social media, next-gen mobility, streaming video, and big data with predictive analytics are major forces now for a competitive advantage, and Creating Business Agility provides leaders with a roadmap for readiness. Business leaders tasked with innovation and strategy will find that Creating Business Agility provides important insight from an informed perspective.
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Veröffentlichungsjahr: 2014
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CONTENTS
Cover
Title Page
Copyright
Dedication
Foreword: How to Survive in the Jungle
Preface
Chapter 1: Bridging the Digital Divide
Business Agility Concepts
Digital Business Organization
Business Ecosystem Strategic Concepts
Stages of Business Ecosystem Coevolution
Digital Business Stakeholders
Ecosystem Hub Concepts
Ecosystem Hub Implementation Concepts
Ecosystem Hub Roadmap for Business Agility Readiness
Balanced Scorecard Delivering Business Value
Change Management Imperatives
Customer-Centric Business Strategy
Business Agility Alignment Issues
Business Agility Readiness Roadmap
Sonoma County Tourism Sneakaway Marketing Campaign Leverages Hybrid Cloud Deployment as Platform for Ecosystem Hub
References
Chapter 2: Disruptive Innovation and Evolving Business Model
Disruptive Innovation Creates Business Dilemma
Disruptive Innovation Introduces New Paradigm
Service-Oriented Architecture and Business Process Management Drive Systems of Engagement
CIO-CMO Alignment via Business Process Management and Balanced Scorecard
Business Agility Readiness Transformation
Business Agility Circle of Influence
What Is Multidimensional Scoring (MDS)?
Measuring Relationship in Systems of Engagement
Listening to Own Conscience: Fourth Dimension in Driving Agility
Video: New Disruptive Technology for Digital Content
Travel Industry Disruption by Force 5 Tornado
References
Chapter 3: Hyperconnectivity Drives Innovation
Paradigm Shifts: Mainframes to Client-Server to Cloud Computing
Next Evolution: Large Data Center—Grid Computing—Cluster Computing
Defining Cloud Computing
What Is Cloud Computing?
Key Business Drivers for Cloud Services
Business Value Propositions for Cloud Computing
President Obama Election Campaign Leverages Cloud to Win
Concerns and Risk Assessment of Cloud Computing
Understanding Cloud Architecture
Cloud-Based Solutions to Meet the IT Needs of Multiregional Branch Offices
Advantages of Cloud Computing-Based Solution
Design and Deployment Strategy for Cloud Services
Five Steps in Cloud Apps Deployment
Obstacles and Opportunities for Cloud Computing
Driving Growth More Efficiently
Database Services on a Private Cloud
Security Considerations in Private and Public Clouds
Virtual Machine Introspection
Service-Level Agreement
Intellectual Property Rights
References
Chapter 4: Breaking the Barrier of Physical Infrastructure
Effective Use of Technologies
Reduce Cost to Your Advantage
Amazon and eBay Business Models: Breaking the Barrier of Physical Infrastructure
Education: Going beyond Physical Boundaries
Massive Open Online Courses: Breaking Physical Boundaries in Education
Khan Academy: Making a Great Impact in Education
Health Care Services Leveraging Outsourced Services
Assembly: Outsourced by Apple in China
Manufacturing Outsourcing: Levi Strauss & Co.
Travel and Hospitality Sectors: Breaking Physical Boundaries
Software Development Leverages Global Resources
AEC Industry Removes Barriers
Converging Technology: Inside the Force 5 Tornado for the Perfect Storm
Transformation, Synergy, and Innovation through the Cloud1
References
Chapter 5: Power of Collaborative Management
Collaborate for Better Execution and Effective Decision Making
Use of Wiki in Enterprise-Wide Team Collaboration
Central Desktop: Powerful Tool for Effective Team Collaboration
Mindjet (Spigit): Great Tool for Collaborative Ideation
Oracle WebCenter: Enterprise-Wide User Experience Tool
Oracle Social Network: Cloud-Based Enterprise-Class Collaborative System
CIO-CMO Collaborative Alignment
References
Chapter 6: Mobility Drives Agility
Convergence of Consumer Electronics into Smart Devices
Mobility Strengthens Ecosystemism
Location-Based Targeted Customer Outreach
Mobile Development Framework
Next Generation of Applications Leverages Mobility Platform
Enterprise Mobility Platform
Mobile Deployment Framework
Smart Devices Protection Is Important
Mobotory: Business Agility Strategy in Action
Chapter 7: Listening to the Voices
Social Media: A New Disruptive Revolution
Mobility: Enable Agile Relationships
Customer Engagement: Key Business Challenge
Personalization: A Key Tenet of User Engagement in Business
Sentiment Analytics: A Better Way to Drive Business Focus and Agility
Change Management and Business Agility for Social Media
Oilstop: Using Big Data to Drive More Intimate Customer Relationships, and Social Media to Enhance Community
Chapter 8: Role of Collective Intelligence
Why Should You Care about Big Data?
What Do Key Characteristics Signal about Big Data?
Does Size of Data Really Matter?
How Complex Is Big Data?
How Does Big Data Coexist with Existing Traditional Data?
How Big Is the Big Data Market?
How Would You Manage Big Data on Technology Platforms?
Chapter 9: Cultivating Knowledge Ecosystems
Knowledge Management Disciplines and Technologies
Force 5 Tornado Convergence Creates Business Agility
How Team Oracle Wins AC34 with Big Data Analytics for Adaptive Decision Making
Chapter 10: 2020 Foresight
Ecosystemism
Consumerization of Information Technology
The Internet of Things
Industrial Internet
Internet of Everything: Cisco
Saving Costs in Home Utilities
Bionics: Wearable Contact Lenses
What to Expect with a Customer-Centric Business in 2020
Epilogue: Selling Sonoma County Wine Country
About the Authors
Acknowledgments
Index
End User License Agreement
List of Illustrations
Figure 1.1
Figure 1.2
Figure 1.3
Figure 2.1
Figure 2.2
Figure 2.3
Figure 2.4
Figure 2.5
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Figure 7.1
Figure 7.2
Figure 7.3
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Figure 7.8
Figure 9.1
Figure 9.2
Guide
Cover
Table of Contents
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Creating Business Agility
How Convergence of Cloud, Social, Mobile, Video, and Big Data Enables Competitive Advantage
Rodney Heisterberg
Alakh Verma
Cover Design: C. Wallace
Cover Photograph: Sparkling Network Connection
© iStockphoto/Jamie Farrant
Copyright © 2014 by Rodney Heisterberg and Alakh Verma. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
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Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.
Library of Congress Cataloging-in-Publication Data
Heisterberg, Rodney J.
Creating business agility : how convergence of cloud, social, mobile, video, and big data enables competitive advantage / Rodney Heisterberg, Alakh Verma.
1 online resource.
Includes index.
Description based on print version record and CIP data provided by publisher; resource not viewed.
ISBN 978-1-118-72456-9 (hardback); ISBN 978-1-118-86931-4 (ebk); ISBN 978-1-118-86945-1 (ebk)
1. Technological innovations–Management. 2. Information technology–Management. 3. Organizational effectiveness. 4. Strategic planning. I. Verma, Alakh, 1963- II. Title.
HD45
004.68–dc23
2014018188
Dedication
I humbly dedicate this book to my parents, without their blessings I could not have reached this stage; to my lovely wife, Kavita, who constantly motivated and supported me; and to my children, Akshay and Akshita, who always encouraged me in all my endeavors.
In addition, I also dedicate this book to my academic mentors and colleagues at Oracle who have helped and nurtured throughout its lifecycle of ideas to completion.
—Alakh Verma
To Claire: my partner, my best friend, and my love of all the years. Your patience and passion makes the world fun!
—Rodney Heisterberg
Foreword: How to Survive in the Jungle
During the dot-com era, analysts and executives worried constantly about being “Amazoned”: the swift and effective way incumbents were being eliminated by Amazon.com's massive inventory, low pricing, and great service every time the e-commerce pioneer entered a new market.
Fifteen years later: No industry is safe. Every sector has comfortable market leaders that have been attacked by a new tech-driven competitor. Witness Tesla in the auto space, Salesforce.com in the software world, and even Amazon's own Redshift in data storage.
Indeed, today's business world is a jungle. Incumbents must adapt to survive in this ecosystem. Only the smartest, most nimble players will stay alive.
We are entering yet another new paradigm for business computing. The challenge is to embrace and leverage the massive technological convergence that is taking place right now. Consider the combined impact of these developments:
Cloud computing:
In November 2013, more than 100,000 people attended
Salesforce.com's
Dreamforce conference. That's equivalent to the attendance of enterprise software's two established shows: Oracle's Open World and SAP's Sapphire. Beyond being a testament to Salesforce's
current
popularity, Dreamforce attendance points to where businesses want to be in the
future
—and that's in the cloud.
Mobile:
Be it a smart phone, tablet, or laptop, corporate citizens must be able to access all company information wherever they are, from whichever device they chose. This mobile power presents productivity opportunities—and security threats.
Social media:
There's no doubt savvy companies know the power of Facebook, Twitter, Pinterest, and the countless other social media platforms on which customers and competitors are active—but do they know what to do about it? The integration of social media into corporate computing is critical to reach consumers in the next era.
Video:
The preference of video content has expanded far beyond the boundaries of YouTube. Where social media is responsible for the proliferation of video communication, businesses are now leveraging video in all types of corporate applications making it an increasingly important part of the enterprise IT landscape.
Big data:
Enterprises now capture terabytes-worth of data about customers, prospects, products, vendors, and competitors. But today, most of this intelligence sits unused in silos. Very soon, all of the data from internal and external systems will combine to form a business intelligence engine that will deliver a competitive advantage to the companies who use it best.
These five technological developments are converging to change the engines of modern business. Consider the “Internet of Things” (IoT) taking shape now. Gartner predicts the IoT will connect 26 billion everyday objects by 2020. While manufacturing and healthcare are leading the way, all industries are working rapidly to deploy ways to communicate with their products in order to understand and optimize their usage.
To stay alive, companies must fundamentally change how they operate. It is critical that executives manage in a way that takes advantage of these amazing technological advances by changing business processes, offering new products and solutions—in essence, operating in a completely different way than ever before.
The bottom line? Surviving in today's business jungle takes agility.
In this book, Creating Business Agility, Rodney Heisterberg and Alakh Verma provide real-world cases that illustrate how today's companies can avoid getting Amazoned by incorporating next-generation technology in their strategic plans—and learn to thrive in the jungle.
—M.R. Rangaswami
Founder, Sand Hill Group
Publisher SandHill.com
Preface
Problem: The key problem is that our business environment is changing—changing at an ever-faster pace. Now the only thing constant is change; with a higher frequency since the Internet as disruptive innovation became a fundamental of the business world. Yet human behavioral changes always happen more slowly than the technological changes that spawn them.
In order to see ahead, it's useful to look back 20 years across five stages of the first generation of revolutionary business practices:
E-commerce along the information superhighway
E-business in the dot-com era
Collaborative commerce by virtual enterprises at the turn of the twenty-first century
Social business evolution of Web 2.0 over the past decade
Business ecosystems as a twenty-first-century business model of a digital business
A digital business consists of a set of digital stakeholder relationships. They empower employees and engage trading partners to form a virtual enterprise. The digital businesses operate separately along with social business practices and processes. Today, a customer-focused digital business model leverages stakeholder relationships using digital collaboration channels in their virtual enterprise to deliver a great customer experience that will produce a market leader. Yet the only way to sustain their competitive advantage is for digital businesses to sense changes in their business ecosystem, and then adapt their plans based on predictions of how these insights will produce customer delight and advocacy. A discussion of these agile business practices in Chapter 1 provides a context for this new way of doing business—digitally.
Even as these stages have progressed rapidly over the past 20 years, the enabling technologies have changed more quickly. Information technology (IT) evolution is now measured in terms of “Internet time” as fourth-generation hardware, software, and network system technologies are deployed. Ubiquitous access to information at any time, in any place, and in any way is expected as a routine practice that provides a state of presence that drives personal experience delivery as the new normal of customer service.
The basis of business competition evolved from product-centered financial assets to customer-centered information assets. This business model paradigm shift has moved away from “past is prelude” thinking characterized by business-as-usual planning. With this traditional practice, extrapolation of strategy plans is based on assumptions that the future will continue like the past, with historical time-series sales forecasting and static regression analysis models. Now best practices lead to outside-the-box thinking. This is reflected by scenario-based planning that anticipates change via adaptive sense-and-respond business intelligence processes, real-time customer-facing decision support, and dynamic simulation analytic models.
Business agility produces a sustainable competitive advantage and is the goal for next-generation digital businesses. We define business agility as innovation via collaboration to be able to anticipate challenges and opportunities before they occur. This definition is made actionable as a business practice by incorporating a holistic performance management system using a balanced scorecard for the business ecosystem as a whole. This is enhancing the balance sheet with the balanced scorecard. In Chapter 1 we elaborate on this approach in terms of how the concept of a business ecosystem provides a model for sustainable competitive advantage. This ecosystem approach works by leveraging collaborative commerce synergy with “coopetition.”
Such actionable use cases and scenarios, when combined with proven conceptual frameworks and including insightful research, create a forum to understand the ways of putting these ideas into practice. This research draws from both our own primary sources as well as secondary sources via key thought leaders. From our IT outpost here in Silicon Valley, we'll bring you what's happening with the “next big thing”—utilizing the convergence of a decade's worth of technological advancement in low-cost, efficient computing power to extract actionable information from large data sets.
Challenges and Opportunities: The challenges and opportunities resulting from these evolving digital business models have generated a “perfect storm” for creating business agility. The convergence of cloud, social, mobile, and big data is synergistic—where the power of the whole is greater than the sum of the parts. The transformative nature of a digital environment has not only caused the nature of business competition to change, but it has also changed the fundamental business value-creation processes and measures of performance. We explore this convergence in more detail in Chapter 2 and add video as a fifth force of the perfect storm that is powerfully transforming the way businesses relate to and engage their customers via technology.
Throughout this book we take a use-case approach via a technology–industry–applications framework reflected in this three-dimensioned collection of practical examples.
1. Technology—how the Force 5 Tornado spawned by a perfect storm creates a rainbow that leads to a pot of gold.
The convergence of cloud, social, mobile, video, and big data provides synergy for determining what the vision, mission, and strategy of the next generation of digital businesses is using in collaboration internally to align functional resources and externally to leverage trading partner capabilities with compatible core competencies. In this manner we can use the digital business value chain to develop a market-leading ecosystem where the power of the whole is greater than the sum of the parts.
2. Industry—travel and sports scenario planning examples.
People are familiar with the global travel industry and international sports events from their personal experience, so these examples provide an entertaining way to tell compelling stories about creating business agility. Travel generated over one billion tourist experiences last year, according to Elizabeth Becker, author of Overbooked (Simon & Schuster, 2013). It is the number one economic development engine of the biggest business sector in the world economy. The nature of sports as a universal human activity provides the team metaphor for collaboration enabling agility for competitive advantage.
The story of how the Kauai Marriott Resort and Beach Club formed a business ecosystem to enable the success of its new hospitality venture provides an insider's look at building a virtual enterprise. Such insights demonstrate how digital business teams may leverage their understanding of these converging technologies to share their intellectual capital in order to fulfill the expectations of their trading partner community.
With the “Selling Sonoma County Wine Country” use case scenario, we feature an integrated case study of Sonoma County Tourism's Sneakaway marketing campaign to illustrate key concepts of business agility readiness described in each chapter. These insights focus on how CXO teams (the chiefs of business functions and units) may leverage their understanding of these converging technologies to create business agility in terms of innovation via a collaborative culture that mitigates risk by celebrating failures as lessons learned in order to drive future success.
Use cases from the world of sports are led by the latest competition for the oldest trophy in international sports. The story of how ORACLE TEAM USA harnessed the perfect storm of this Force 5 Tornado to propel the greatest comeback in sports history illustrates the business value of IT in creating the agility to produce a sustainable competitive advantage.
3. Applications—CIO and CMO business value using big data.
Featured along the applications dimension is the marketing function in general, with a specific focus of the framework on the relationship between the chief marketing officer (CMO) and the chief information officer (CIO) in delivering the business value of IT. The best practices for both the CIO and the CMO in terms of digital business management are viewed through the lens of business agility readiness.
Use cases presented are in conjunction with the “CMO-CIO Partnership for Collaborative Marketing Agility” scenario. This business value theme is developed using a strategy of innovation for CMO-CIO alignment around big data analytics based on collaborative marketing best practices. A Business Agility Readiness Roadmap is presented using a balanced scorecard to describe and measure the alignment gap. Such a tool may be used to assess how to best vet the internal/external collaboration activities associated with management of big data for driving predictive analytics. This is a critical success factor in managing the digital business for competitive advantage of the business ecosystem as a whole.
Solution: The solution to build a next-gen digital business is business ecosystem integration. Our approach was created by utilizing the two fundamental elements of virtual enterprise information systems engineering:
Ecosystem Hub architecture that employs the Force 5 Tornado technologies using collaborative commerce concepts
Ecosystem implementation roadmap that is a model for digital business evolution using business agility readiness gap analysis concepts
The collaborative commerce architecture is described throughout the book with use case scenarios from the ubiquitous global multitrillion-dollar travel industry to provide clear examples to demonstrate the “what-why-how” story. Such familiar scenarios use a virtual enterprise integration methodology that is illustrated by a virtual Visitor Information Center platform as an ecosystem hub that is developed using an iterative incremental implementation roadmap.
Lessons Learned: What are the lessons learned from this accelerating pace of information technology disruption that has created a climate of innovation further multiplied by the convergence of those same technologies? The global consumerization of IT and the resulting “bring your own device” (BYOD) phenomenon in the business world are driving the winds of change—generating the perfect storm of technology convergence with cloud, social, mobile, video, and big data acting like a Force 5 Tornado disrupting the business playing field.
In the context of the disruptive technology metaphor, enterprises that are forward-looking can harness this disruptive power to their advantage via big data with predictive analytics in order to:
Produce early warnings to strengthen infrastructure via the cloud.
Collaborate for real-time problem solving in their communities via social networks.
Communicate vital decision-making information to the right people, places, and times via mobility solutions.
Provide interactive messages for alerts and instructional information via videos.
By developing readiness for creating business agility and harnessing the five technological forces that have converged in our present business environment, market leaders will transform the Force 5 Tornado spawned by this perfect storm into a coherent pattern of light, creating a rainbow that leads to a pot of gold—achieving success.
Innovators will change the way they do business as they develop customer-centric business models to compete as a collaborative ecosystem. Such digital businesses will use this technological tornado to reengineer their decision-making processes with embedded predictive big data analytics to create valuable customer insights that deliver compelling customer experiences. This strategy will enable a new generation of market share leaders to produce a sustainable competitive advantage.
In the spirit of putting the data back into data processing, we have created a business agility data model that describes how this convergence enables building next-generation digital businesses. In doing so we have extended the conventional cloud, social, mobile technology conversation to reflect predictive big data analytics and include video as shared content for internal/external collaboration with customer co-creation. This data model provides the context for the content in the following chapters in order to describe an actionable Business Agility Readiness Roadmap in terms of people, processes, and technology that is integrated by data.
Next Steps: Taking the next steps on the journey to create business agility requires the understanding of how sense-and-respond information management strategies facilitate executing adaptive business strategies, as well as the courage to lead the change management initiatives necessary to transform internal processes and external relationships. Fundamental to this transformation is to reengineer the decision-making processes in order to make better resource allocation decisions. This requires the capability to sense business ecosystem signals that are key performance indicators, and respond with customer insights using predictive analytics. This creates business agility and when paired with a culture of customer experience management produces a sustainable competitive advantage.
The purpose of this book is to facilitate the translation of technical issues to business people and business issues to technical people so that they can collaborate to improve the competitive advantage of their business ecosystems, as well as contribute to the quality of life in our global marketplace. The target audience is the CXO team and their direct reports and staff in general, with special focus on establishing and strengthening the CMO-CIO partnership as an example of game-changing collaboration.
The strategic themes of the book focus on how the convergence of cloud, social, mobile, and video technologies with predictive big data analytics can produce sustainable business value. Chapters are organized to curate a compelling story about how this perfect storm of technology is creating business agility for market leaders. They are developing a competitive advantage via enabling the next generation of digital businesses to build sustainable ecosystems around the cultivation and harvesting of big data as a “whole product” solution. These themes explain how this convergence works in terms of the classic input-process-output model of a data processing system expressed as data-driven discovery processes feeding predictive analytics engines to produce insightful fact-based decisions while being mindful of garbage in, garbage out traps.
In writing this book, we take a business ecosystem point of view for developing digital business architecture. And we frame the twenty-first-century business value of IT in terms of business agility while relying on other sources as references for the construction details in the hands-on processes of doing the building itself. Many books have already been written about the cloud, business analytics, and social, mobile, and video technologies as separate topics in great detail. This book is written to satisfy the market need to integrate key concepts for digital business as a 360-degree transformation in terms of customer-centric strategy, customer-focused processes, and customer-facing apps.
This architectural view of a business ecosystem is reflected by the following list of the book's contents, which provides a preview of the technology convergence impact as highlights of a roadmap for business agility readiness:
Chapter 1
Bridging the Digital Divide
Chapter 2
Disruptive and Evolving Business Model
Chapter 3
Hyperconnectivity Drives Innovation
Chapter 4
Breaking the Barrier of Physical Infrastructure
Chapter 5
Power of Collaborative Management
Chapter 6
Mobility Drives Agility
Chapter 7
Listening to the Voices
Chapter 8
Role of Collective Intelligence
Chapter 9
Cultivating Knowledge Ecosystems
Chapter 10
2020 Foresight
Epilogue
Selling Sonoma County Wine Country
Each chapter is structured to first feature a deep discussion of the key concepts and is illustrated by use cases to provide a broad view of their general applicability. The collection of use cases in each chapter features examples of best practices from industries such as travel, health care, education, and financial services, as well as expert insights in context with the technology–industry–applications framework.
At the end of the book, the Epilogue describes a use scenario about Selling Sonoma County Wine Country. It features an illustrative example of how a digital business can employ these concepts to create business agility. This travel destination and event industry scenario of a collaborative marketing campaign provides the context for an Ecosystem Hub implementation story that shows how to make it all work at the virtual enterprise level within the business ecosystem. This Business Agility Readiness roadmap is expressed in terms of people, processes, and technology that are integrated by data. The roadmap is keyed to the respective business, applications, and technology levels of the Ecosystem Hub architecture.
We intend to evolve this book with a clear, concise, and compelling story of “ecosystemism” as the driver of business agility for a game-changing strategy. We hope that your reading experience provides the understanding to be able to ask the right questions, as well as to provide some important answers.
Chapter 1Bridging the Digital Divide
The world of business is changing more broadly, deeply, and rapidly than ever before. As the global marketplace has been flattened by the Internet, the leading industrialized nations are being challenged by the developing economies led by the BRIC countries of Brazil, Russia, India, and China. Today there is no company that is big enough, strong enough, rich enough, or smart enough to lead any market without partners.
As a result of this tectonic shift in their competitive space, market leaders have digitized their business relationships with trading partners to keep up with their ever-changing world in the increasing pace of Internet time. In this manner, these customer-centric digital businesses, which vary in size and scale, product type, as well as market reach, have created digital value chains as virtual enterprises with compatible core competencies in order to compete in their business ecosystems. The foundation of these thoughts has been long established. Marshall McLuhan observed when writing his 1967 classic The Medium Is the Message that “Any technology gradually creates a totally new human environment.”
Business Agility Concepts
Business agility is defined here as innovation via collaboration to be able to anticipate challenges and opportunities before they occur. Accordingly, a gap analysis methodology can be used to evaluate the business agility readiness (BAR) needed to implement successfully an information management system of customer engagement for creating the business agility that produces the culture needed to enable a sustainable competitive advantage.
The recognition of the business value of business agility is not new. It was articulated several decades ago as “management productivity”—timelier decisions with greater insight and impact on business performance. This was as a result of implementing corporate management information systems with an integrated database enabling real-time decision support systems (Heisterberg 1985). Such a computer data-driven “silicon crystal ball” capability creates a culture of adaptive decision-making processes. With the advent of commercial Internet technology, this internal agility evolved as a competitive advantage with ubiquitous corporate intranet deployments.
In order to see the future of business agility that lies ahead, it's useful to look back 20 years across the previous generation of revolutionary business practices, in which innovation has resulted in continuous decision process reengineering (Heisterberg 2001):
Electronic commerce (e-commerce) along the “information superhighway”
E-business in the dot-com era
Collaborative commerce (c-commerce) by virtual enterprises as value chains at the turn of the twenty-first century
Social business evolution of Web 2.0 over the past decade
Business ecosystems as the twenty-first-century business model for competition within and between industry markets
Even as these stages have progressed for more than two decades, the enabling technologies have changed more quickly. Information technology (IT) evolution has been measured in terms of Internet time as a set of next-generation hardware, software, and network system technologies that are continually deployed in faster enterprise implementation cycles.
This technology evolution has produced the ability to monetize innovative ideas. During the same period strategic business management theories, principles, and practices have evolved with the development of “customer value” as a framework for organizing resource allocation decision making. The associated abstract concept of Intellectual Capital for measuring the creation and delivery of customer value expressed as intangible assets has become a core element of today's customer-centric business models. As illustrated in Figure 1.1, this new rule of competitive advantage has become the driver for digital business in a knowledge-based marketspace.
Figure 1.1 Intellectual Capital Business Model of Innovation Monetization
Digital Business Organization
Ubiquitous Internet connectivity has created a data-rich business environment. Access to information at any time, in any place, and in any way is now expected as a routine practice that provides a digital “state of presence” that drives personal experience delivery as the new normal of customer relationships. As their customers become increasingly connected to their suppliers and distributors via the Internet, businesses need to develop strategies and organizational structures that reflect this dependency on their digital ecosystems of trading partners. Such a new digital business has both physical and virtual relationships that must be managed for successful execution of that strategy.
Businesses today are now reliant on these trading partners to be able to deliver a whole product with an experience that matches their customer expectations. This expression of the customer-centric value proposition in terms of the bundle of tangible goods and intangible services as a whole product provides insights into the necessary structure of a market-leading organization. A winning digital business strategy requires collaboration with trading partners that have compatible core competencies for developing and delivering a whole product. The organizational structure that is formed by a set of digital businesses around a whole product value chain is called a virtual enterprise. Likewise, coevolution of the collection of virtual enterprises collaborating to grow a rich business environment for their mutual benefit while competing to lead their market space is known as a business ecosystem. For example, Apple and Google as digital businesses with their respective virtual enterprises of iOS and Android whole products compete to lead their tablet business ecosystem while collaborating in order to build it more strongly as a vibrant competitor against the personal computer business ecosystem.
The basis of business competition has also evolved from product-centered financial assets to customer-centered information assets. This business model paradigm shift has moved away from “past is prelude” thinking characterized by business-as-usual planning. With this traditional practice, extrapolation of strategy plans was based on assumptions that the future will continue like the past using historical time-series sales forecasting and static regression analysis models. Now best practices lead to outside-the-box thinking. This is reflected by scenario-based planning that anticipates change via adaptive sense-and-respond business intelligence processes, real-time customer-facing decision support, and dynamic prescriptive analytic models. The growing criticality of digital customer relationship channels that augment conventional physical customer relationships and the inexorable progression of digital relationship management as a core competency are now fundamental enablers of agility for digital business success.
Business Ecosystem Strategic Concepts
This approach builds on the work of James F. Moore in The Death of Competition: Leadership and Strategy in the Age of Business Ecosystems by identifying and defining the business ecosystem as a strategic interenterprise organizational paradigm (Moore 1996). He describes the linking of synergistic core competencies in terms of four stages of strategic business coevolution. This process dynamically strengthens the ecosystem as a whole through an iterative cycle of collaboration and competition. These concepts of coevolution will be explored and elaborated throughout this book.
Collaborative commerce strategic concepts provide the foundation for digital business practices that enable business ecosystem trading partners to create, manage, and use data in a shared environment to design, build, and support their whole product throughout its life cycle, working separately to leverage their core competencies together in a value chain that forms a virtual enterprise (Heisterberg 2003). Sustainable competitive advantage has been realized by creating a culture for adoption of digital business strategies and customer-centric business models. This definition of digital business is made actionable by blending the elements of operations management, performance management, and information management in order to realize virtual enterprise integration within business ecosystems. It is important to understand that a precondition for success of this integration is creating an ecosystem culture that rewards innovation as a strategic customer value proposition based on mutual trust. (See Figure 1.2.)
Figure 1.2 Business Ecosystem
These concepts for business ecosystem success are predicated on collaboration, as the Internet “killer app” and cloud technologies enable the IT agility that drives the sense-and-respond processes that create business agility. Taking a systems approach to business ecosystems, referred to as “ecosystemism,” fosters business agility thinking with twenty-first-century strategic goals: grow revenue, reduce cost, and manage risk. This provides the organizing principles for development of customer-centric business models. As such an approach to articulating a contemporary vision of creating business value, ecosystemism is based on systems theory in general, and specifically the fundamental first two laws.
The first law is known as “synergy” or commonly referred to as “the whole is greater than the sum of its parts.” It has been adopted as the mainstream business practice of collaboration and often implemented using “crowdsourcing” processes. The second law is known as “suboptimization.” This concept may be understood as simply “a chain is as strong as its weakest link.” It is best reflected by the business practice of innovation utilizing core competencies.
An ecosystemism digital divide is defined by the ecosystems that are characterized by their associated enterprise system scale:
Digital business intranet → Developing a partnership between the chief marketing officer (CMO) and the chief information officer (CIO) that leverages the business value of IT
Virtual enterprise extranet → Enabling competitive parity of small and medium-sized enterprises (SMEs) versus big enterprises by executing c-commerce strategies
Business ecosystem Internet → Creating global market spaces in a flat world driven by social business models
As a matter of fact, just as e-business concepts have been subsumed into twenty-first-century standard practice for the management of business, c-commerce concepts are now simply expressed in the context of collaboration. Clearly, the business world has recognized they are all strong at something, yet not everything, and have concluded that two or more heads are better than one. This is evidenced by how ubiquitous the term collaborate is in everyday business conversation, as well as its widespread use in the trade press and in advertising copy of all media.
The expression of digital business management in terms of c-commerce principles and practices is both broad and deep. A complete treatment of this subject is worthy of several books covering strategies, tactics, and operations across the full spectrum of business value chain functions. Furthermore, coverage needs to include virtual enterprise integration issues such as the formation and management of virtual organizations at various levels from the enterprise to the project team. Then there is also the articulation of the critical success factors associated with a collaborative culture, as well as the critical role of trust in building an effective business ecosystem. Obviously, such a treatment is beyond the scope of this book. In order to make the definition of digital business actionable, we will focus on introducing experienced business managers to ecosystem-level strategic concepts of business agility.
Stages of Business Ecosystem Coevolution
In today's business management climate, the four stages of strategic business coevolution of business ecosystems may be viewed as intense innovation leadership challenges that can be enabled by the strategic business value of IT. The role of innovation as a critical success factor has been growing rapidly because of the climate change due to technology advancement, globalization of markets, and the diffusion of knowledge expressed in terms of intellectual capital as well as financial capital. Innovation as cultural imperative is a hallmark of leading digital businesses. They work collaboratively and competitively with the trading partners in their virtual enterprise to develop new core and whole products, satisfy customer demands, and integrate the next cycle of innovation.
Moore (1996) describes this climate of innovation in terms of the “opportunity environment.” This is the “space of business characterized by unmet customer needs, unharnessed technologies, potential regulatory openings, prominent investors, and many other untapped resources…shaping cohesive strategy in the new order starts by defining the opportunity environment…strategy making revolves around devising novel ways to seize opportunities and create viable networks with other business ecosystems.”
According to Moore, business ecosystems develop over four stages of strategic business coevolution:
Stage I: Pioneering an ecosystem
. Link capabilities to create core offers on which to build; create value that is much superior to the status quo.
Stage II: Expansion of an ecosystem
. Start with a core set of synergistic relationships and invest in increasing their scale and scope to establish critical mass within whatever market boundaries you wish to respect and exploit.
Stage III: Authority in an established ecosystem
. Concentrate on embedding your contributions within the heart of the ecological community to maintain your authority within the business ecosystem.
Stage IV: Renewal or death
. Find ways to insert new ideas into the order; stay competitive with other alternatives.
The following example describes how business ecosystems develop over these four stages of ecosystem maturity, viability, and growth. This coevolution is analyzed using the story found in the following Marriott Kauai ecosystem case study published by The Center for Corporate Citizenship at Boston College in 2002. It deals with the problem of creating and sustaining food and beverage customer experience management as a core competency. These business ecosystem insights are amplified by Brad Snyder, General Manager, Kauai Marriott Resort and Beach Club. His experiences provide a context for how virtual enterprises may leverage their understanding of these converging technologies to share their intellectual capital in order to fulfill the expectations of their trading partner community. The resort management used a balanced scorecard approach to building their business ecosystem strategy based on a customer-centric business model.
Stage I: Pioneering an Ecosystem
Fine cuisine plays a prominent role at the Kauai Marriott Resort and Beach Club, which has five restaurants and lounges. Its chefs favor locally grown produce for its freshness and its appeal to guests, who are eager to sample the island's offerings. When Marriott International opened its resort on Kauai, it hoped to differentiate itself and attract guests by featuring on its menu native cuisine prepared with locally grown produce. But Hawaii's northernmost island lacked a strong, diversified farming infrastructure, and this was matched with a struggling local economy. Without a reliable source of quality fruits and vegetables, the Kauai Marriott Resort and Beach Club was forced to turn to offshore sources. Ironically, the chefs found themselves preparing native cuisine with food shipped from the continental United States (IN PRACTICE, 2002).
This required establishing a system of synergistic relationships that resulted in a differentiated value to the customer. The new value proposition was developed in collaboration with key suppliers and customers. The resort management also worked to create a business model for delivering offerings in a way that was significantly superior to previously available food and beverage customer services, while protecting proprietary intellectual property.
Stage II: Expansion of an Ecosystem
The resort found a solution to its produce needs when it partnered with the Kauai Food Bank to support a broad-based community development program through which local residents were taught to grow high-quality produce on a small farm owned by the Food Bank. Over a two-year period, this program evolved into the Hui Meai'ai, training local independent growers in producing high-quality fruits and vegetables on their own land. The Hui Meai'ai then began functioning as a wholesale purchaser, buying the growers' produce for resale to local grocers, hotels, resorts, and restaurants. The words Hui Meai'ai translate from Hawaiian into “the club of things to eat” (IN PRACTICE, 2002).
This required establishing a critical mass of ecosystem trading partners, including suppliers, distributors, as well as customers in order to be able to coevolve the Kauai food and beverage ecosystem. The new food production capabilities expanded the supply to support a viable hospitality market. The resulting business model became a procurement best practice and the basis of the standard adopted by the leading suppliers and their key customers for delivering food services.
Stage III: Authority in an Established Ecosystem
The resort's ultimate goal in partnering with the Kauai Food Bank was to form strong working relationships with local growers. Such relationships generate competitive advantage by allowing the resort's chefs a reliable low-cost, high-quality source of local produce that would support the development of attractive, seasonal menus that offer guests fresh, native-grown fruits and vegetables. The partnership has benefited both Marriott and the Kauai Food Bank (IN PRACTICE, 2002).
This provided the Kauai Marriott Resort and Beach Club with the opportunity to lead the innovation that drives the coevolution of the Kauai food and beverage ecosystem. The strategy reflected in the balanced scorecard has created the hospitality “spirit of aloha” that is embraced by stakeholders throughout the island.
Stage IV: Renewal or Death
The Kauai Marriott Resort and Beach Club continues to purchase a significant supply of its produce from the Hui Meai'ai. The Hui now has over 50 growers and supplies over 25 island customers, providing a self-sustaining local agricultural economy. The for-profit business model of the Kauai Food Bank with its continuous performance improvement practices has enabled the nonprofit Hui Meai'ai to realize its goal of becoming an economically viable virtual enterprise.
Digital Business Stakeholders
A digital business consists of a set of digital stakeholder relationships. They empower employees and engage trading partners to form a virtual enterprise. The digital businesses operate separately with social business principles, practices, and processes. Today, a customer-focused digital business model leverages stakeholder relationships using digital collaboration channels in their virtual enterprise to deliver a great customer experience that will produce a market leader. Yet the only way to sustain their competitive advantage is for digital businesses to sense changes in their business ecosystem, and then adapt their plans based on predictions of how these insights will produce customer delight and advocacy. A discussion of these agile business practices here provides a context for this new way of doing business—digitally.
Today, forward-looking enterprises are seeking to achieve the benefits of c-commerce by leveraging the Internet as an enabling technology in order to transform their core business management decision-making practices. These real-time enterprise value propositions for decision making are based on managing information rather than inventory. The business case for digital businesses is predicated on IT investments to facilitate collaborative business practices with shared demand/supply data and virtual enterprise visibility information in real time that will reduce uncertainty to improve decision effectiveness. Here is where digital businesses develop and execute a customer experience management strategy enabled by social business technology to drive a customer-centric value chain as a virtual enterprise.
The collaborative commerce architecture is described throughout the book with use case scenarios from the ubiquitous global multitrillion-dollar travel, tourism, and hospitality industry to provide clear examples to demonstrate the “what-why-how” story. Such familiar scenarios utilize a virtual enterprise integration methodology that is illustrated by a virtual Visitor Information Center (vVIC) platform as an Ecosystem Hub that is developed using an iterative incremental implementation road map (Heisterberg 2009).
The key for building next-generation digital businesses is integrating the business ecosystem with customer engagement solutions. Our approach was created by utilizing the two fundamental elements of enterprise information systems engineering. These methodologies have evolved over the past 25+ years of virtual enterprise integration research and development:
Ecosystem Hub architecture that employs the
Force 5 Tornado
technologies using collaborative commerce principles
Ecosystem Hub implementation road map that is an extensible, robust, scalable model for digital business transformation in accordance with business agility readiness gap analysis concepts.
Both of these subjects are introduced in this chapter in order to provide an overview of our strategic framework for creating business agility. Ecosystem Hub architecture concepts will be further elaborated in the next chapter, while the Ecosystem Hub implementation roadmap will be illustrated by use case scenarios throughout the remainder of the book.
Ecosystem Hub Concepts
What are the lessons learned from this accelerating pace of information technology disruption that has created a climate of innovation further multiplied by the convergence of those same technologies? The global consumerization of IT and the resulting “bring your own devices” (BYOD) phenomenon in the business world are driving the winds of change—generating the “perfect storm” of technology convergence with cloud, social, mobile, video, and big data acting like a “Force 5 Tornado” disrupting the business playing field.
Note that we have created this metaphor as a “conceptual shorthand.” The use of the term “Force 5” refers to both the five technology trends as well as the highest strength level of the winds in such a storm. The “Tornado” terminology is based on Geoffrey Moore's technology adoption model associated with disruptive innovations described in Crossing the Chasm, and in Inside the Tornado where he refers to technologies evolving from niche markets into the business mainstream.
In the context of the disruptive technology metaphor, enterprises that are forward-looking can harness this disruptive power to their advantage via big data with prescriptive analytics in order to:
Produce early warnings to strengthen infrastructure via the cloud
Collaborate for real-time problem solving in their communities via social networks
Communicate vital decision-making information to the right people, place, and time via mobility solutions
Provide interactive messages for alerts and instructional information via videos
By developing readiness for creating business agility, and harnessing the five technological forces that have converged in our present business environment, market leaders will transform the Force 5 Tornado spawned by this perfect storm into a coherent pattern of light, creating a rainbow that leads to a pot of gold—achieving success.
This book describes the Ecosystem Hub architecture as an enterprise information management system (EIMS) in terms of three integrated layers consisting of business, applications, and technology. We leverage the top five information technology trends in the context of building collaborative commerce business architectures and putting the “data” back into “data processing” by incorporating master data management principles and practices into a big data strategy for building a digital business. It is a strategy for the next stage of digital business evolution. Collaborative commerce business practices enable trading partners to create, manage, and use data-driven processes in a shared environment to design, build, and support products throughout their life cycles, working separately to leverage their core competencies together in a value chain that forms a virtual enterprise.
Traditionally, technology has been utilized within the four walls of the enterprise to facilitate improvements in business processes. With the advent of the Internet, enterprises have extended their use of information technologies to include external transactions based on digital touch points with trading partners termed electronic commerce (e-commerce). The emerging digital business models provide the enterprise with a collaboration capability across suppliers and customers that facilitates ease of information sharing and improved decision making. This in turn requires the development of virtual enterprise management principles with new business practices for the formation and operation of alliances with collaborative partners having a mutual interest in their shared value. This is a proven approach and has been accomplished in accordance with the evolution of business information management best practices over the past 20 years. An Ecosystem Hub is a standards-based, secure, shared data platform:
Developed as the proprietary Integration Hub for Lockheed during the 1990s to create, manage, and use shared program/project/product data in the aerospace industry in accordance with a standard for providing contractor integrated technical information management software as a service via the Internet.
Evolved as commercially sourced independent enterprise information portal (EIP) software packaged products.
Now available as an integrated turnkey EIP software suite via the cloud as software-as-a-service (SaaS) packages.
As previously stated, Business Ecosystem Hubs provide the environment that facilitates digital business web services for applications such as inventory visibility, business process management, and performance metrics displayed in real-time dashboards. Application software developed using a service-oriented architecture (SOA) and deployed as web services has provided the technology base for the concept of the next-generation Internet—Web 2.0.
The customer relationship management (CRM) application software product that led the demand chain integration movement was Salesforce.com, a sales force automation package that was delivered as an online service for an affordable monthly subscription fee. This spawned establishment of a new sector of the software industry now referred to as the cloud and software as a service (SaaS) applications. The widespread adoption of SaaS products that support collaboration within and between small, medium-sized, and large corporations around the world has enabled Enterprise 2.0.
Social network SaaS applications are enabling Enterprise 2.0–driven business cases in terms of virtual enterprise collaboration. Note that the cloud and SaaS sector has its early roots in the computer time-share industry with the deployment of corporate accounting and payroll services, and then later with the aerospace industry delivery of contractor integrated technical information services (CITIS) on U.S. Department of Defense (DoD) programs via an extranet using EIP technologies. The Digital Business Ecosystem (DBE) Initiative launched by the European Union introduced the concept of “extended dynamic clusters” for deployment of c-commerce solutions via SaaS applications targeted for small and medium-sized enterprises (SMEs) to enable their participation in global value chains (Nachira, Nicolai, Dini, Leon, and Le Louarn 2007).
The DBE project provided an opportunity for innovative software application development by software producer SMEs and for the achievement of greater information and communication technology adoption by SMEs in general. SaaS changes the way SMEs navigate their ecosystems by dynamically linking internal and external resources and associated value networks for allocation according to their business goals in order to achieve virtual enterprise integration (Dini and Nicolai 2003).
Thought leaders such as McKinsey, Gartner, Forrester Research, Harvard Business Review, and the MIT Center for Digital Business agree that companies that adopt digital information asset-based policies and processes generate significantly higher growth, market share, and profits. Industry leaders are building new data-driven customer-centric businesses leveraging information-based assets with agility derived from big data analytics (BDA) to create innovative revenue streams. This is now becoming a mainstream business model across many industries, with big data technology challenging conventional information infrastructures using innovation to provide opportunities for collaborative customer-facing applications enabled by predictive customer insights. Information management is becoming a critical success factor for business leaders around the globe.
This concept was articulated by Regis McKenna at the dawn of the Internet era in his seminal book Real Time: Preparing for the Age of the Never Satisfied Customer (McKenna 1997). He observed that for Silicon Valley companies, “Growth forecasts, such as five- and ten-year projections for product sales, are routinely ignored because they are seen as mere extrapolations from history. Instead, people are in constant touch with the technological and competitive environment of the moment. Change is treated as an opportunity that, if spotted ahead of competitors and acted on as fast as possible, can transform the ranking of companies in an industry virtually overnight.”
These “perfect storm” technologies have emerged separately over the past decade and been widely written about in much detail. Several thought leaders have come forward recently to address the symbiotic character of this set of technologies that are trending together, such as Geoffrey Moore in terms of the “chasm” decision making for enterprise information technology adoption, Malcolm Frank of Cognizant with the “SMAC Stack” concept (social, mobile, analytics, and cloud), as well as the Gartner “Nexus of Forces” (social, mobile, cloud, and information). We will take a “whole product” approach to digital business strategy for virtual enterprise formation and operation with digitization of customer-focused business practices, processes, and protocols. We will explore this convergence in more detail in Chapter 2 and add video as a fifth force of the perfect storm, which has strong implications for transforming the way businesses relate to and engage their customers via technology.
Ecosystem Hub Implementation Concepts
The Ecosystem Hub implementation roadmap that is a model for digital business transformation has also been developed in accordance with the corresponding business performance management best practices over the past 25+ years:
Developed as proprietary advanced manufacturing technology system integration methodology by the Computer Aided Manufacturing–International research consortium and deployed for consortium members, such as General Motors and General Electric, to provide interoperability for factory management planning, execution, and shop floor control systems.
Augmented with the Department of Defense contractor-integrated technical information service business case methodology project in accordance with Military-Standard 974 for CITIS.
Deployed integrally to Gartner IT balanced scorecard projects, as well as numerous c-commerce IT management consulting engagements worldwide.
Collaborative business practices require the sharing of business and technical data that are often proprietary or at least competition-sensitive information. It is important to emphasize that relationship management is a fundamental core competency for digital businesses and trust is the associated critical success factor. A relationship portfolio approach provides a framework to facilitate intelligent partnering. Trust as the foundation of the business ecosystem culture is realized by means of:
Developing a capability-based strategy
Building a portfolio of relationships
Managing the relationship portfolio
Trust is the key to relationship management by increasing the velocity of the value chain. In the real-time virtual enterprise, trust is an economic driver and not trusting is a bigger risk (Covey 2008).
