Using Business Architecture To Enable Customer Experience and Digital Strategy

Using Business Architecture to enable customer experience and digital
strategy
1. 1. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND

VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 41 PRESENTEDBY: Craig
Martin ChiefArchitect,Enterprise Architects An overview of the affect of digital disruption upon
business and where business architecture can provide value USING BUSINESS
ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 42 Digital disruption is shifting
business model design from a focus on product profitability to a stronger focus on customer
experience and value. This webinar will look at environmental pressures and identify how to
use business architecture and business design to address these changes. It covers business
architecture for digital strategy, customer- driven value chains, re-writing of the 4Ps of the
marketing mix, and the nine laws of disruption and how they affect business model design.
Craig also investigates the changes afoot with strategic business planning and Enterprise
Architecture, which are experiencing their own form of disruption. Will Enterprise Architecture
as we know it become a commodity too? Join us for this informative and enlightening look
into the future of the Enterprise Architecture discipline.
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 43 Craig Martin, Chief Architect
twitter @eatraining email craig.martin@enterprisearchitects.com
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 44 Our topics today A shake-up
is occurring The result of disruption Architecting for disruption Where to from here?
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 45 ABOUT ENTERPRISE
ARCHITECTS Enterprise Architects (EA) is an international professional services firm
specialising in business design and enterprise architecture. Established in Melbourne in
2002, our mission is to “design and renew great organisations”. Our History Enterprise
Architects (EA) was founded in Melbourne, Australia in 2002 by Hugh Evans, our CEO. With
his background in traditional architecture, Hugh was motivated to bring the benefits of
Architecture Thinking to business strategy and transformation. EA soon became a magnet
for enterprise architecture talent, providing the ideal environment for architects to access
strategic projects with some of the world’s most ambitious and forward thinking
organisations. A decade on, EA stands as one of the world’s premier employers in enterprise
architecture and remains a pioneer in the growing practice of business design. We’re
delivering a new kind of enterprise architecture capability, one that drives richer business
engagement, strategic coherence and fast-paced change. Our Philosophy Being a services
firm we are centred on the needs and experiences of the people we impact. We believe good
strategy requires participants to discuss opportunities and issues on common ground –
comparing apples to apples. Through our advanced business architecture-oriented methods
we bring together all parties and build consensus and real belief for the strategic roadmap.
Our Approach Our strength is more than just world- class practice in business design,
capability-based planning and strategic enterprise architecture. It’s about how we engage
with clients, offering a seamless extension to their existing capability, however mature, and
defining the roadmaps that will bring ground-breaking competitive strategies to life. Our
Experience Many of the world’s leading brands trust EA to extend their business design and
strategic architecture capabilities. We are experienced across most major industry sectors
including, Banking & Finance, Insurance, Tech, Energy, Oil & Gas, Telco, Health, Retail,
Transport & Logistics, Professional Services, and Higher Education, as well as a broad
range of government departments and agencies at local, state and federal levels. Over the
last 11 years we've developed architectures and supported capability for organisations
across 5 continents.
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 46 OUR SERVICES Servicing
the Strategy and Architecture needs of major corporates. › SPECIALISING IN
ARCHITECTURE CAPABILITY AND DELIVERY › ACTIVE TRACKING OF INDUSTRY
WIDE ARCHITECTURE TALENT › PROVEN TOGAF® METHODS › EXTENSIVE
INDUSTRY REFERENCE MODELS AND BUSINESS VIEW POINTS › FOCUS ON SKILLS
AND KNOWLEDGE TRANSFER › VENDOR AND TOOL NEUTRAL › EXTENSIVE
INDUSTRY RELATIONS AND PARTNERSHIPS › COMPLETE INDEPENDENCE IN
CLIENT OUTCOMES AND RECOMMENDATIONS Strategy & Architecture Delivery ›
Business Architecture › Capability-based Planning › Information Management Strategy ›
Digital Investment Roadmaps › I.T Strategy and CIO Baseline › Application Strategy and
Roadmaps › Infrastructure Strategy and Roadmaps › Information Security Strategy
Architecture Capability Improvement › Maturity assessment › Service model definition ›
Architecture operating model › Staff capability assessment › Team training and mentoring ›
TOGAF® Kick-start and mentoring › Resourcing and talent management services
Architecture Accelerator Frameworks › Enterprise business architecture framework ›
Enterprise security architecture framework › Enterprise cloud framework › TOGAF
Accelerator › Enterprise architecture foundation pack Managed Services › Blueprint and
roadmap maintenance › Transformation blueprint management › Managed architects and
architecture teams › Repository and tooling as a service › Diagramming as a service
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 47 A SHAKE-UP IS
OCCURRING …AND IT’S QUITE DISRUPTIVE
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 48 WHAT IS DISRUPTION? ›
Innovation that creates a new market › Innovation that creates a new value network ›
Eventually disrupts an existing market and value network › Displaces an earlier offering or
technology
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 49 … DISRUPTION Rips
through an existing market… DIFFERENTIATION on its own does not cause disruption… …
combining DIFFERENTIATION + LOW COST
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 410 BLUE OCEAN  Create
uncontested markets  Make competition irrelevant  Create & Capture new demand  Break
value / cost trade-off  Align with differentiation AND low cost RED OCEAN  Compete in
existing markets  Beat the competition  Explore existing demand  Make the value/cost
trade-off  Align with differentiation OR low cost WHY DOES DISRUPTION OCCUR?
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 411 WHEN DOES
DISRUPTION OCCUR? › First stage of disruption, an innovator makes a product much more
affordable and simpler to use (for the user) than what currently exists. › The second stage of
disruption is when additional technological change is added which makes it simpler and less
expensive to build and maintain the products. › The new change eventually displaces the
existing market and value network, resulting in a radical improvement in performance
Disruptive technologies take a while to change the market Christensen, Clayton M. (2010-09-
06). Disrupting Class, Expanded Edition: How Disruptive Innovation Will Change the Way the
World Learns PERFORMANCE TIME Market for old technology Market for new technology
New replaces old technology
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 412 What have these brands
got to do with disruption? DISRUPTION AND DIGITAL DISRUPTION
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 413 DISRUPTION AND
DIGITAL DISRUPTION Larry Downes - Three laws direct the revolutionary changes wrought
by computer technology. Digital technologies are the disruptive innovation creating a
sweeping revolution The digital and material economies function differently. The laws of
supply and demand are different for digital disruption than what they are for physical
disruption Most material products are “rivalrous goods.” If one person uses them, another
cannot - two people can’t build a house on the same site. Digital goods are “nonrivalrous”:
Multiple people can use them simultaneously. Copying a song doesn’t use it up, destroy it or
keep anyone else from using it
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 414 DIGITAL ECONOMY
General Principles of the Digital Economy. These are the principles of Digital Strategy
Enablement “RENEWABILITY” You can renew data, but not exhaust it. Once created it can
be used over and over again. It is a renewable resource “UNIVERSALITY” Everyone can
access the same data simultaneously, and use it for a completely different reason
“MAGNETISM” Information grows in value as more people absorb it, which, in turn, creates a
network effect, drawing more people who want to learn. Metcalfe's law “LACK OF
FRICTION” The more smoothly information flows, the more valuable it is. “VULNERABILITY”
Criminals can harm or misuse information. They can destroy it, ruin it or steal it (as in identity
theft). In this one sense, data is like physical goods Larry Downes - Three laws direct the
revolutionary changes wrought by computer technology.
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 415 “THE LAW OF
DISRUPTION” The dissemination of change is “uneven.” Various elements of society
struggle to keep up with rapid technological change. Technology changes exponentially, but
social, economic and legal systems change incrementally” and struggle to keep up. Larry
Downes - Three laws direct the revolutionary changes wrought by computer technology.
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 416 “METCALFE’S LAW”
“Networking pioneer” Robert Metcalfe said that networks become more valuable the more
people use them. Every time someone joins Twitter, Facebook or, by implication, the
Internet, that network becomes markedly more constructive. Larry Downes - Three laws
direct the revolutionary changes wrought by computer technology.
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 417 “MOORE’S LAW” In 1965,
Intel’s founder, Gordon Moore, predicted that computer chip “processing power” would
double every 12-18 months without a rise in users’ costs. This has held true since. While
inflation harms other goods, deflation rules computer technology. Because software is
manufactured and distributed electronically, it has “zero marginal cost,” unlike the carrying
costs of older consumer goods - time is right. Larry Downes - Three laws direct the
revolutionary changes wrought by computer technology.
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 418 WHAT HAS BEEN THE
RESULT OF THIS DISRUPTION?
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 419 DISRUPTION ALTERS
ENTIRE VALUE NETWORKS Example: Disruption will alter the entire value chain and place
the student at the centre Faculty & Staff CONTENT CLASSES SOCIAL INTERACTION
LECTURERS STUDENTS Students & Social Interaction CONTENT CLASSES FACULTY
STAFF FACILITATORS Teach at SCHOOL and do Homework at HOME Teach at HOME
and do Homework at SCHOOL
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 420 DIGITAL DISRUPTION IS
REDUCING THE DELAY Action Reaction Immediate Feedback Delayed Feedback B R “Life
is indeed speeding up, but mans ability to deal with it, is slowing down”
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 421 THIS ACCELERATION IS
PUTTING PRESSURE ON CURRENT BUSINESS MODELS Technology commoditising
from below Business roles taking on more architecture accountabilities
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 422 ANALYTICAL THINKING
INTUITIVE THINKING * From Roger Martin (2009) The Design of Business GOAL:
Exploitation; Reliability Produce consistent, predictable outcomes GOAL: Exploration;
Validity Produce outcomes that meet an objective THE RESULTS OF DISRUPTION A
stronger focus on the exploration and intuitive aspects of business are producing a strong
drive for innovation within the business and in corresponding business models Unresolved
Business Challenges Heuristics Rules of thumb Robust, repeatable and replicable processes
A reliable system will produce the same test results every time A valid system will produce a
result that is shown, through the passage of time, to be correct
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 423 THE KNOWLEDGE
FUNNEL Non-core but complex - Outsource Innovation, chaos & unresolved mysteries HIGH
HIGH LOW LOW Must be done but adds little value to product or services Very important to
success, high value added to products and services STRATEGIC IMPORTANCE & VALUE
COMPLEXITYANDDYNAMICS Complex negotiation, design, or decision process Many
business rules; expertise involved Some business rules Procedure or simple algorithm Non -
Core Competencies Core Differentiating Competencies Everyday, highly repeatable and
automated Make repeatable and reliable to gain efficiency Core Competitive Competencies
THE RESULTS OF DISRUPTION THE SPEED THROUGH THE KNOWLEDGE FUNNEL IS
ALSO INCREASING Source: Adapted from “Business Process Change” by Paul Harmon
GOAL: Reliably produce consistent, predictable outcomes GOAL: Validity- Produce
outcomes that meet desired objectives
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 424 THE RESULTS OF
DISRUPTION THE COMMODITY SPACE IS GROWING, MAKING THE DIFFERENTIATION
SPACE MORE COMPETITIVE Non-core but complex - Outsource Innovation, chaos &
unresolved mysteries HIGH HIGH LOW LOW Must be done but adds little value to product
or services Very important to success, high value added to products and services
STRATEGIC IMPORTANCE & VALUE COMPLEXITYANDDYNAMICS Complex negotiation,
design, or decision process Many business rules; expertise involved Some business rules
Procedure or simple algorithm Non -Core Competencies Core Differentiating Competencies
Everyday, highly repeatable and automated Make repeatable and reliable to gain efficiency
Core Competitive Competencies Non-core but complex - Outsource Innovation, chaos &
unresolved mysteries HIGH HIGH LOW LOW Must be done but adds little value to product
or services Very important to success, high value added to products and services
STRATEGIC IMPORTANCE & VALUE COMPLEXITYANDDYNAMICS Complex negotiation,
design, or decision process Many business rules; expertise involved Some business rules
Procedure or simple algorithm Non -Core Competencies Core Differentiating Competencies
Everyday, highly repeatable and automated Make repeatable and reliable to gain efficiency
Core Competitive Competencies Opportunity or Threat?
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 425 DISRUPTION IS
SHIFTING THE FOCUS TO CUSTOMER LIFETIME VALUE This shift is the essence of
what drives the emergence of the chief digital officer (CDO). It also forces a stronger focus
on the chief marketing officer (CMO) SELLER DRIVEN ENTERPRISE CUSTOMER
CENTRIC ENTERPRISE CUSTOMER DRIVEN ENTERPRISE “Maximize product
profitability” Push Selectively Target Pull (collaboration) DATA ANALYSIS SERVICE
Interactive & Proactive UNDERSTANDING Segmented Individualized CUSTOMER OFFERS
Intra-enterprise bundles Inter-enterprise bundles ORGANISATION Integrated Function
Customer Outcome CHANNELS Segment Driven Integrated and Seamless “Maximize
market share” “Maximize customer lifetime value” MARKETING Passive & Reactive
Interactive & Reactive Insight as Art Factual insight Predictive insight Broad Product Driven
Singular Functional Silo Digital Strategy Focus
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 426 THE CUSTOMER DRIVEN
SHIFT Production Products Selling and Promotion Profit Through sales volume Target
individual Customer Intention Outcome Marketing Profit through customer lifetime
satisfaction The Selling Concept Product Driven The Value Concept Customer Driven The
Marketing Concept Customer Centric Target Market Segment Segment Needs Integrated
Marketing Profit through Increased Market Share The digital strategy focus
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 427 4P’S ARE OUT 4E’S ARE
IN From Product to Experience From Place to Everyplace From Price to Exchange From
Promotion to Evangelism › EXPERIENCE - Discover and map out the full Customer Journey
on your own brand – in your own country. › EVERYPLACE - Develop your knowledge of new
media and channels the way a chef masters new ingredients. Try new things – do something
that doesn’t start with TV or print. › EXCHANGE - Appreciate the value of things, not just the
cost. Start by calculating the value of your customers – and what their attention, engagement
and permission are worth to you. › EVANGELISM - Find the passion and emotion in your
brand. Inspire your customers and employees with your passion. The Change is disrupting
some age old marketing fundamentals Source: Brian Fetherstonhaugh – Ogilvy & Mather:
http://www.Ogilvy.com
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 428 WHAT IS DIGITAL? Digital
is a participatory layer of all media that allows users to self select their own experiences and
affords marketers the ability to bridge media, gain feedback, iterate their messages, and
collect relationships. BUD CADDELL Enterprise Architects, March 2011 Slide 28
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 429 … Consumers expect
personalised product experiences Digitization shifts POWER to the consumer … and access
ANYWHERE, ANYTIME
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 430 THE SHIFT TO
CUSTOMER DRIVEN IS SHIFTING THE FOCUS TO CUSTOMER VALUE BASED
INTENTION › Increased mobility of population › Growing elderly population (Baby Boomers)
› Decreasing job security and increasing educational requirements › Increasing tendency to
multiple careers › High divorce rates › More small businesses and outsourcing › Increasing
diversity › Increasing travel and cross-border activity › Broadening understanding of effects of
nutrition, exercise and vacations › Increase in single parent families and a growing number of
dual-career families A consumer intention is a fundamental life need or objective that
requires extensive planning, decisions and coordination across several dimensions, such as
finances, health, career, family, social and other concerns. › Moving to a New Community ›
Managing for Productive Elder Years › Upgrading Professional Career › Changing Career ›
Rebuilding Lifestyle › Building Personal Independence › Integrating into Culture › Gaining
Cross-Cultural Experience › Remaining Healthy Throughout Life › Starting a Family
Environmental Influencers Value Based Intention
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 431 VALUE BASED
INTENTION - EXPAND BEYOND THE CORE BY CREATING INNOVATIVE VALUE
PROPOSITIONS AROUND A CONSUMER INTENTION Current New -MARKETS- -
PRODUCTS/SERVICES - CurrentNew - GROWING - Existing Business “CORE”
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 432 TRANSMEDIA EXAMPLE
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 433
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 434 THE LAWS OF
DISRUPTION › Law One: Convergence – When Worlds Collide” - When the physical world
and the digital world clash, society has to negotiate the chaos › Law Two: Personal
Information – From Privacy to Propriety - Personal information issues are shifting from
matters of privacy to issues of propriety › Law Three: Human Rights – Social Contracts in
Digital Life - Technological disruption has radically changed human rights. › Law Four:
Infrastructure – Rules of the Road on the Information Highway – AT&T Use Case - The
digital world will change the existing infrastructure and its use. › Law Five: Business – All
Regulation Is Local” - Governments should fund research and provide safety nets, but should
not apply outdated, moralistic or – in the modern marketplace Innovative and disruptive
solutions cannot be contained by social, legal and economic systems that cannot keep up.
Disruption is causing a rethink on a number of these issues Larry Downes - Three laws direct
the revolutionary changes wrought by computer technology.
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 435 THE LAWS OF
DISRUPTION › Law Six: Crime – Public Wrongs, Private Remedies - In the digital world,
“crime is just another kind of information use. › Law Seven: Copyright – Reset the Balance -
Existing copyright law is partly “archaic” and partly useless in a digital world, where copying
files is so easy. › Law Eight: Patent – Virtual Machines Need Virtual Lubricants - Current law
tries to treat software like a patented product. This doesn’t work because of the speed with
which software is developed and becomes obsolete. › Law Nine: Software – Open Always
Wins…Eventually - Copyright and patent laws now protect software, but the way these laws
are drafted fundamentally misunderstands the nature of software and the digital economy.
Innovative and disruptive solutions cannot be contained by social, legal and economic
systems that cannot keep up. Disruption is causing a rethink on a number of these issues
Larry Downes - Three laws direct the revolutionary changes wrought by computer
technology.
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 436 THE RESULTS OF
DISRUPTION & DIGITAL THE BALANCE IS SHIFTING AS ACCOUNTABILITIES CHANGE
CIO CMO CDO COO ROI TCO
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 437 THE CMO AGENDA
FOCUS ON THE HERE AND NOW… Exploration & Validity Produce outcomes that meet an
objective For a CMO or LOB executive focused on making his or her numbers, getting to a
solution and starting to earn margin more quickly is more important than getting the lowest
possible cost for something. Source: CIO Magazine:
http://www.cio.co.nz/article/466738/big_shift_when_cmos_grab_it_budget_from_cios/
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 438 This CMO focus will lead
to…. GARTNER PREDICTION Gartner made a big splash late last year with its prediction
that… by 2017 the CMO will spend more on IT than the CIO Likewise, IDC predicts that what
it terms "line of business executives" will control 40 percent of IT spending by 2016
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 439 EVERYONE NEEDS TO
RETHINK THEIR ASSUMPTIONS ABOUT IT BUDGETS when considering how they're
spent by CIOs and CMOs. CIOs across Asia Pacific now directly control less than 60 per
cent of enterprise IT spending and “time is running out for CIOs to partner with the business”,
according to Forrester Research’s Dane Anderson. IT groups across the region accounted
for 58 per cent of IT purchases in 2012, down from 2010 when they bought 74 per cent of
their organisation’s IT. Source: CIO Magazine:
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 440 LESS BUDGET
VISIBILITY MEANS SPENDING UNPREDICTABILITY Source: CIO Magazine:
http://www.cio.co.nz/article/466738/big_shift_when_cmos_grab_it_budget_from_cios/ In the
new, CMO-controlled world, much of the spending will be focused on public cloud computing,
where no capital investment is required, but where all costs will fall into an OpEx category.
The fact that this spending does not require CapEx means that less visibility into budgets will
be possible on Jan. 1 of a given year. In short, the new world moves from predictable CapEx
to unpredictable OpEx. You can expect many more midyear budget recalculations as cloud-
based application costs move all over the map.=
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 441 THE CMO AGENDA WILL
FOCUS MORE ON EXPLORATION & VALIDITY Budgets will further be exacerbated by the
fact that CMO-oriented applications, by their very nature, have much higher variability of load
and user base Consider the costs of cloud hosting for a viral event Source: CIO Magazine:
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 442 DISRUPTION OF THE
PLANNING CYCLE CMOs frequently are presented with new business opportunities that
don't fall neatly into "beginning of the year" launch timeframes. If it's a good opportunity, you
want to pursue it right away, not wait for the next budget cycle. Budget cycles are affected by
the “un-reliable” nature of the CMO agenda Source: CIO Magazine:
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 443 Source: Building Bridges to
the Promised Land, The CMO Club, 2014 THE CMO’S DILEMMA
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 444 HOW DO WE ARCHITECT
FOR DISRUPTION?
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 445 ‘Enterprise Lifecycle's 2014
© Enterprise Architects PTY LTD PERORMANCE TIME ENTERPRISE BRAND PLATFORM
BUSINESS MODEL BUSINESS CAPABILITIES PRODUCT CONSTANT CHANGE IS
MOVING UPWARDS FASTER ORGANIZATIONS…AND ARCHITECTS NEED TO BE
ABLE TO PROVIDE THE MEANS TO ENABLE THIS CHANGE
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 446 Improve project
performance Improve enterprise wide investment performance Improve Business
Performance Improve Market Performance A B VALUE MANDATE C E Improve Product and
& Service Performance D THE CMO DILEMMA IS BEST DEALT WITH BY
ARCHITECTURE….BUT WHERE IS THE MANDATE Business Architecture is seen as a
positive progression away from IT Maximize Product Profitability Maximise Market Share
Maximise Customer Lifetime Value …but in fact business architecture spans this entire
curve. Therefore the higher the mandate, the higher the value *Adapted from Ruth Malan,
Dana Bredemeyer
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 447 THE IMPERATIVE TO
ACT SOME INDUSTRIES ARE ABLE TO REALIZE THE VALUE SOONER Improve
Business Model Portfolio Performance Ahead of the curve Behind the curve
ARCHITECTURE MANDATE TIME A B C E D F RETAIL MEDIA& ENTERTAIN’T ICT
ACCOM. FINANCE SERVICES EDUCATION Industry distribution
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 448 THE EA DIGITAL
STAKEHOLDER MAP™ A digital strategy requires coherency between the CMO and CIO as
they seek to deliver the customer driven outcomes ‘The Digital Stakeholder Map 2014 ©
Enterprise Architects PTY LTD
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 449 THE EA DIGITAL
STRATEGY APPROACH™ A business architecture is central to the development of a digital
strategy ‘The Digital Strategy Approach 2014 © Enterprise Architects PTY LTD
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 450 THE DISCIPLINE OF
BUSINESS ARCHITECTURE THE ROLE OF THE BUSINESS ARCHITECTURE
FUNCTION IS TO FACILITATE A MORE EFFECTIVE AND EFFICIENT MOVEMENT
THORUGH THE KNOWLEDGE FUNNEL Unresolved Business Challenges Rules of thumb
Robust, repeatable and replicable formulas & processes Ultimately all innovative algorithms
will become utility. * From Roger Martin (2009) The Design of Business
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 451 THE EA APPROACH TO
ARCHITECTING FOR DIGITAL An end-to-end view is required to enable the CMO agenda
using “Architecture Thinking” EXPERIENCES
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 452 Improve project
performance Improve enterprise wide investment performance Improve Business
Performance Improve Market Performance A B VALUE MANDATE C E Improve Product and
& Service Performance D ARCHITECTING FOR DIGITAL DISRUPTION Business
Architecture is seen as a positive progression away from IT Maximize Product Profitability
Maximise Market Share Maximise Customer Lifetime Value *Adapted from Ruth Malan,
Dana Bredemeyer Value System Engineering the use of tools like the canvas tend to occur
at a higher mandate, but the value of business architecture at this level is much higher
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 453
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 454 BUSINESS MODEL
INNOVATION IS REQUIRED Disruptive Business Models can be found when you mix it up
at the value system level EDUCATION POLICY & LAWMAKERS ENFORCEMENT
JUDICIAL PENAL COMMERCIAL
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 455 Business Motivation
Strategic Business Models Value Discipline Orientation Operating Business Models
Capabilities and Resources DISRUPTION NORMALLY OCCURS WITHIN THE VALUE
SYSTEM. IT’S THE STRATEGIC BUSINESS MODELS THAT CAN DETERMINE WHERE
VALUE LIES O P C O P C O P C MISSION STRATEGIES TACTICS VISION GOALS
OBJECTIVES Pe Pr T Pe Pr T Pe Pr T LEVERS DRIVERSI N F O R M A T I O N
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 456 WHAT IS A BUSINESS
MODEL? Some Definitions “A Business Model describes the rationale of how an
organisation creates, delivers, and captures value” Alex Osterwalder – Business Model
Generation THE ENVIRONMENT BUSINESS MODEL Markets Industries Customers Market
Segment Channels Customer Relationships Value Proposition Offering: Services/Products
Processes/ Value Chains Capabilities Business Service Functions Data Applications
Technology MARKET MODEL OPERATING MODEL SERVICE MODEL
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 457 THE STRATEGIC
BUSINESS MODEL The canvas is a tool that is used to prototype a variety of strategic
business models
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 458 THE STRATEGIC
BUSINESS MODEL Each strategic scenario can be evaluated in line with the value
disciplines of the organisation DRIVER TREES AND VALUE MAPS & GOALS These value
disciplines will help decisions around the strategic balance between efficiency and
effectiveness There is often fragmentation around value disciplines which results in
“competitive” forces and flawed decision making Semi Integrated Universal Bank Product
Specialist Customer Owner Infrastructure Provider
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 459 *Adapted from Geoffrey
Moore’s: Dealing with Darwin Each industry moves along a life cycle, with different
opportunities for competitive advantage at each stage THE STRATEGIC BUSINESS
MODEL Its also great for start-ups at the early stage of the lifecycle Introduction Growth
Maturity Decline TOTAL INDUSTRY REVENUE TIME DISRUPTOR ENTERS MARKET
SHARE, REVENUE & COST BECOME KEY PRODUCT INNOVATION REDUCES
PROCESS INNOVATION BEGINS PRODUCT LEADERSHIP CUSTOMER INTIMACY
OPERATIONAL EXCELLENCE VALUE DISCIPLINE ORIENTATION THROUGH THE
INDUSTRY LIFECYCLE
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 460 STRATEGIC BUSINESS
MODEL MATURITY Measuring the Maturity of a full business model is a complex task. The
Key is to look for certain heuristics to use as a litmus test. *Rita Gunther McGrath
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 461 BUSINESS MODEL
MATURITY 1. Switching costs – how easy or difficult will it be for your customers to “switch
to or from” your business? 2. Recurring revenues – how much recurring revenue does the
business model bring in? 3. Earn before spend – does the business model allow for the
organisation to earn money before it is spent? 4. Game Changing cost structures – are there
cost structures in place that create a new market 5. Shifting the burden – does the business
model get others to do the work for you, or pay your bills for you 6. Scalability – can the
business scale to include massive volumes as well as support different markets 7.
Competition – how well does the business model protect the organisation from competition A
Strategic Business Model health can be evaluated based upon 7 criteria
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 462 WHERE TO FROM
HERE?
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 463 MOVING STRATEGIC
BUSINESS MODELS INTO THE DETAIL STRATEGIC BUSINESS MODELS CAN ONLY
GO SO FAR. THE NEXT LEVEL OF DETAILS IS REQUIRED
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 464 WHAT WE HAVE FOUND
IN LARGE ACCOUNTS Cohesion Mandate Undefined - Enterprise Planning Ownership An
ownership gap for business architecture exists - Lines of responsibility around coherency
and business architecture, are often unclear EnterprisePerformance Capabilities X-
FunctionalCapabilities FunctionalCapabilities CONTEXT Markets Industries Customers
Market Segment Channels Customer Relationships Value Proposition Offering:
Services/Products Processes/ Value Chains Capabilities Business Service Functions Data
Applications Technology MARKET MODEL OPERATING MODEL SERVICE MODEL
Strategic Architecture Mandate – Business Ownership IT Architecture Mandate – IT
Ownership Business Architecture Mandate Undefined
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 465 THERE IS OFTEN A
CHASM BETWEEN THE CUSTOMER EXPERIENCE VISION, PRODUCT DEVELOPMENT
AND OPERATIONAL REALITY › Value Chain Analysis › Cross Functional Models ›
Capability/Business Anchor Models › Process Models › Application Models › Data and
information Models › Technology Models › Value Maps › Product and Offering Maps › Design
Models › Customer Storyboards & personas › Journey Maps & Lifecycles › Learning Maps ›
Motivation Models › Business Model Innovation GAP GAP THE ENVIRONMENT BUSINESS
MODEL Markets Industries Customers Market Segment Channels Customer Relationships
Value Proposition Offering: Services/Products Processes/ Value Chains Capabilities
Business Service Functions Data Applications Technology MARKET MODEL OPERATING
MODEL SERVICE MODEL
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 466 FOR THE DIGITAL
STRATEGY TO BE REALISED, YOU NEED TO LOOK FOR THE MOST EFFECTIVE WAY
TO ALIGN THE BUILDING BLOCKS OF YOUR BUSINESS MODEL › Value Chain Analysis
› Cross Functional Models › Capability/Business Anchor Models › Process Models ›
Application Models › Data and information Models › Technology Models › Value Maps ›
Product and Offering Maps › Design Models › Customer Storyboards & personas › Journey
Maps & Lifecycles › Learning Maps › Motivation Models › Business Model Innovation THE
ENVIRONMENT BUSINESS MODEL Markets Industries Customers Market Segment
Channels Customer Relationships Value Proposition Offering: Services/Products Processes/
Value Chains Capabilities Business Service Functions Data Applications Technology
MARKET MODEL OPERATING MODEL SERVICE MODEL
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 467 Customer Outcome
Customer Expectations Customer interaction map : Customer Segment ABC Establishing my
account is quick and simple… Integration is quick and easy, with the right help available
Efficient, with choices that make it convenient I know when the goods will arrive I can find out
whether my goods were delivered; I get a meaningful resolution to my problem “I want to set-
up my account” “I want to get ready to send goods” “I want to send a shipment” “I need to
know when my goods will arrive” “I want confirmation that my goods have arrived”
“Something has gone wrong with my goods delivery…” KPIs % of accounts set-up in <X
hours % of accounts that utilise more than X % of orders with no manual intervention % of
articles with at least 4 scans Service Delivery Performance Metric # of complaints per million
Set-up Integrate Order Track and Trace Receive QueryB C D E F G FOCUSSING ON THE
CUSTOMER JOURNEY AS A CROSS FUNCTIONAL CAPABILITY PRODUCES QUICK
WINS FOR THE CMO, THE BUSINESS AND THE CIO Map the Customer personas into a
customer interaction map to come up with the journey through the customer value chain &
look for issues
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 468 Customer Outcome
Customer Expectations Customer interaction map : Customer Segment ABC Establishing my
account is quick and simple… Integration is quick and easy, with the right help available
Efficient, with choices that make it convenient I know when the goods will arrive I can find out
whether my goods were delivered; I get a meaningful resolution to my problem “I want to set-
up my account” “I want to get ready to send goods” “I want to send a shipment” “I need to
know when my goods will arrive” “I want confirmation that my goods have arrived”
“Something has gone wrong with my goods delivery…” KPIs % of accounts set-up in <X
hours % of accounts that utilise more than X % of orders with no manual intervention % of
articles with at least 4 scans Service Delivery Performance Metric # of complaints per million
Set-up Integrate Order Track and Trace Receive QueryB C D E F G CUSTOMER
BEHAVIOUR: THE CUSTOMER VALUE CHAIN & EMOTIONAL DRIVERS In light of the
touchpoints understand the customer value chain and their emotional drivers across the
value chain
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 469 CUSTOMER BEHAVIOUR:
UNDERSTAND THE EMOTIONAL ROLLER COASTER OF YOUR CUSTOMERS
Incremental, significant or transformation changes required to improve the experience
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 470 THE ENVIRONMENT
BUSINESS MODEL Markets Industries Customers Market Segment Channels Customer
Relationships Value Proposition Offering: Services/Products Processes/ Value Chains
Capabilities Business Service Functions Data Applications Technology MARKET MODEL
OPERATING MODEL SERVICE MODEL THE CUSTOMER JOURNEY OVERLAID ONTO
THE CROSS FUNCTIONAL CAPABILITY MODEL WILL HELP FOCUS THE EFFORTS OF
THE BUSINESS ON VERY SPECIFIC DIGITAL STRATEGIES Its at this point that business
begins to see the true value of using capabilities Standard functional capabilities can be
aligned to a value chain Cross functional capabilities assemble and mix functional
capabilities to achieve outcomes in the value map or driver tree Cross functional capabilities
each drive out different outcomes. Underlying functional capabilities will have varying
perspectives of capability maturity and capability uplift You can also use cross functional
models as scenarios to test the capability anchor model validity
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 471 CROSS FUNCTIONAL
MODELS PROVIDE THE GLUE TO LINK THE VALUE TOGETHER FOR THE
CUSTOMERS The Process Layer Plays a Strong Role in assembling capabilities for different
outcomes PROCESS Sign Up & Integrate CAPABILITY 20. Information Services
Management CAPABILITY 15. Sales Execution PROCESS A1. Explore and compare
potential providers and services PROCESS B2. Sign up and activate account PROCESS C3.
Integrate my store with Australia Post’s API’s precedes precedes precedes precedes
BUSINESS SERVICE Customer Sales Management BUSINESS SERVICE Partner
Collaboration PROCESS C1. Receive information on how the systems and processes will
work PROCESS C2. Install the necessary hardware / software on my systems is realized by
LOGICAL APPLICATION COMP. Customer Sales Management LOGICAL APPLICATION
COMP. Enterprise Resource Planning LOGICAL APPLICATION COMP. Partner
Collaboration Management LOGICAL APPLICATION COMP. Security Management
communicates with communicates with communicates with implements is realized by
implements ACTOR Post Staff DATA ENTITY Sales Order ACTOR Post Staff participates in
participates in is processed by consumes SAP - CRM SAP - ERP auspost.com.a u IAM -
OIM is processed by ACTOR Fiona participates in Customer CAPABILITY People Process
Tools Connecting these to projects provides valuable insight into coherency o the capex
investment across the enterprise Within each process flow, there are typically four to five
capabilities that make up the process. These typically correspond to functional silos that
complete each step. Within each capability, the model identifies systems or applications that
are used to execute the capability. This is where the model forms the alignment between
business and IT. Archimate Notation
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 472 THE CAPABILITY
ANCHOR MODEL PROVIDES THE UTILITY BUILDING BLOCKS REQUIRED The
capability anchor model represents the "map" of the organisation THE ENVIRONMENT
BUSINESS MODEL Markets Industries Customers Market Segment Channels Customer
Relationships Value Proposition Offering: Services/Products Processes/ Value Chains
Capabilities Business Service Functions Data Applications Technology MARKET MODEL
OPERATING MODEL SERVICE MODEL
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 473 THE BUSINESS ANCHOR
MODEL The Business Anchor Model Anchors the organization on the set of blocks they can
use to drive out the digital outcomes CUSTOMER EXPERIENCES VALUE DRIVING
CAPABILITIES SUPPORTING CAPABILITIES SUPPLIERS&PARTNERS CUSTOMER
TOUCHPOINTS PRODUCTS AND SERVICES VALUE CHAIN VALUE CHAINVALUE
CHAIN CUSTOMERS,STAKEHOLDERS CROSS FUNCTIONAL VALUE STREAMS VALUE
BASED INTENTIONS THE EA APPLIED BUSINESS ARCHITECTURE COURSE
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 475 Questions?
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 476 1. In the old, IT-controlled
world, yearly budgets were more or less set in stone by Jan 1. Beyond the obvious fact that
headcount costs were more or less fixed and could be forecasted by that date, most other
spending was fixed as well. Because non-maintenance, non-headcount spend was primarily
capital expenditure for long-lived assets, it had to go through long planning and budgeting
exercises before the year it would be spent, often two or more years in advance. It's common
for IT organizations to be researching something in one year, putting it into the budget
planning the next year and spending the following year. In the new, CMO-controlled world,
much of the spending will be focused on public cloud computing, where no capital
investment is required, but where all costs will fall into an OpEx category. The fact that this
spending does not require CapEx means that less visibility into budgets will be possible on
Jan. 1 of a given year. LESS VISIBILITY MEANS SPENDING UNPREDICTABILITY Source:
CIO Magazine:
http://www.cio.co.nz/article/466738/big_shift_when_cmos_grab_it_budget_from_cios/ This
new CMO cloud world will cause IT spending within a company to be far less predictable for
the following reasons: 2. This unpredictability will be exacerbated by the fact that these
CMO-oriented applications, by their very nature, have much higher variability of load and
user base. If your application is tied to a movie's release, and the star of the movie
experiences a personal scandal that drives enormous interest in the movie, your app may
experience 10 times the traffic you expected-and 10 times the cost for your cloud computing.
3. A third factor increasing the unpredictability of IT spending lies at the intersection of the
decision-maker profile and cloud computing itself. CMOs frequently are presented with new
business opportunities that don't fall neatly into "beginning of the year" launch timeframes. If
it's a good opportunity, you want to pursue it right away, not wait for the next budget cycle. In
the past, when you had to budget capital to pursue an opportunity, the process meant the
increased spending was quite predictable, as it had to be planned for and slotted into the
yearly budget. Today, when cloud computing makes resources available in minutes, there's
little to prevent you from starting right away. Even if there's a budget forecast at the
beginning of the year, you can expect significant variation as CMOs choose to pursue
promising new business opportunities.
VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 477 DISRUPTIVE BUSINESS
MODELS Predictions…

Using Business Architecture To Enable Customer Experience and Digital Strategy

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