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Digital Business Design Sharpens Organizations’ Competitive Postureby Randy Heffner, December 19, 2013

For: Application Development & Delivery Professionals

Key TaKeaways

Technology-Based Business Building Blocks Improve agilityBusiness agility -- embracing market and operational changes in a routine manner -- requires rapid reconfiguration of the business capabilities and processes locked up within your technology estate. Thus, business agility requires you to restructure your technology estate as technology-based business building blocks using digital business design.

Business Building Blocks Open New Markets and Change Competitive DynamicsWhether it’s ING Vysya Bank competing less on interest rates and more on CIO-to-CIO conversations about business integration or Telefónica O2 Ireland extending its billing competency into payment for toll road charges, business building blocks open new paths to market and new revenue opportunities from existing business capabilities.

Business Design Highlights Key areas where agility Helps The MostFor Dong Energy, business-centered integration opened a wide range of possibilities for business agility; focusing its business design efforts provided a clear understanding of high-value areas to prioritize for agility investment. For a healthcare services firm, its customers’ processes provided the right context for crafting agility priorities.

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For ApplicAtion Development & Delivery proFessionAls

wHy ReaD THIs RepORT

Application integration is a perennial challenge for solution architects and developers, and it’s only getting worse with software-as-a-service (SaaS) adding more point solutions to the mix and mobile adding more integration requirements. Forrester’s integration vision for the next decade — digital business design — charts a path forward through the complexity: Put business design at the center of integration strategy, and thereby achieve coherent business operations in spite of application and technology silos. This report describes how four organizations are applying business-centered design to their integration efforts and, as a result, creating business agility that enables them to open up new markets and change competitive dynamics.

table of contents

Digital Business Design: shift Integration From Technology To Business

ING Vysya Bank shifts Competitive advantage From Rates To apIs

Digital Business Design enables Telco To extend Into New Markets

Dong energy addresses Market Variations with Digital Business Design

Digital Business Design enables Healthcare Firm’s product expansion

recommenDAtions

Lessons Learned: Rethinking Integration Improves Competitive agility

supplemental Material

notes & resources

Forrester interviewed four user companies for this report: Dong energy, inG vysya Bank, telefónica o2 ireland, and a healthcare technology services firm.

related research Documents

Digital Business Design improves your organization’s efficiency And insightDecember 19, 2013

Business Agility Drives Higher performancenovember 12, 2013

Digital Business Design is the new integrationnovember 8, 2012

Digital Business Design sharpens Organizations’ Competitive postureHow Four organizations Are Using Business-centered integration to improve Agility And enter new marketsby randy Heffnerwith christopher mines and sarah Bookstein

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Digital Business Design sharpens organizations’ competitive posture 2

© 2013, Forrester Research, Inc. Reproduction Prohibited December 19, 2013

DIGITaL BusINess DesIGN: sHIFT INTeGRaTION FROM TeCHNOLOGy TO BusINess

Forrester’s vision for digital business design flips the focus of integration strategy from a mindset of “make it easier to live with application silos” to one of “deliver coherent agile business operations despite all the silos.”1 As the case studies in this report illustrate, solutions built using digital business design enable organizations to react more quickly to change — and Forrester’s research shows that agility boosts organizational performance.2 Furthermore, digital business design enables better collaboration among business and technology staff as solutions are designed and built, resulting in better solutions in the first place. In some cases, digital business design enables businesspeople to directly modify solutions and change operations without involving IT.

What is it? We define digital business design as:

A business-centered approach to solution architecture, implementation, and integration that brings business and technology design together by placing design priority on user roles, business transactions, processes, canonical information, events, and other business aspects that embody a complete definition of a business.

Within Forrester’s model for dimensions of business agility, digital business design is a key element of the software innovation dimension. More importantly, it is an enabler for all 10 dimensions of business agility.3

How does it work? Digital business design starts when business and technology staff collaborate to envision what coherent, effective, measured, flexible, competitive business operations would look like — assuming that they could eliminate the ways the business is currently fractured across application and technology silos. Then, it leverages multiple business-centered integration architectures and technologies — such as business process management (BPM), service-oriented architecture (SOA) and application programming interfaces (APIs), data virtualization, business rules, business events, and more — using them to construct business processes and customer/user experiences that are unified across silos. To shed light on how to do this in the real world, this report shows how four organizations are using business-centered integration to improve business agility, enter new markets, and change the basis of competition.

ING Vysya BaNK sHIFTs COMpeTITIVe aDVaNTaGe FROM RaTes TO apIs

At India-based ING Vysya Bank, IT rethought its approach to integration. It created a process of strong collaboration with business executives, which led to a new, more business-centered approach to the market. The result was a strong open API initiative, which is leading some of its commercial customers to choose ING Vysya Bank based more on CIO-to-CIO conversations about business optimization than on the bank’s interest rates. Along the way, the bank used data virtualization to provide business-centered data views and business rules to control automated process flows for international funds exchange. Here’s how the story unfolded:




■ A commercial banking customer had an order processing problem. One of the bank’s customers, a distribution firm, had a problem. It required customers to pay for their online orders before shipping, but few of its customers trusted making online payments. Instead, they would go to the bank and transfer money to the firm. For the firm, it was a nightmare to reconcile which payment was for which order so that it could correctly release orders for shipping.

■ ING Vysya Bank integrated its customer’s payment process all the way to the bank tellers. The bank and the customer firm codified the customer-bank-distributor-payment relationship into a set of business-to-business (B2B) APIs that mirrored the business design: ING Vysya Bank calls the firm’s APIs to retrieve order data and directly record payments for specific orders, which immediately releases orders for shipping. All the firm’s customers need to do is give an order number to a bank teller. Through the business-centered APIs, the teller’s screen provides the precise payment value required, and there’s no confusion about which order the payment applies to. ING Vysya Bank transfers money from customers to the firm and implements an API that facilitates payment confirmation for the firm (see Figure 1).

■ Business design is now the foundation of selling the bank’s commercial services. ING Vysya Bank executives can now focus competitive sales conversations on how to improve a commercial banking prospect’s business rather than on talking only about banking products. Leveraging its expanding arsenal of APIs — and creating customer-specific APIs, if needed — ING Vysya Bank can help its customers redesign their businesses for efficiency and competitive advantage.

■ ING Vysya Bank applies business design to its internal integration efforts, too. ING Vysya Bank’s international transfer agents had to switch between five different siloed applications to perform individual SWIFT, which stands for society for worldwide interbank financial telecommunication transfers. Using the OpenText Cordys platform, it created a single custom user interface (UI) tailored to their user role.4 SOA hides the silos and provides the UI with business services for making transfers. Business process management embodies the business workflow, enabling active control and monitoring, and the solution gives businesspeople direct access to maintain the business policies that control the process.

ING Vysya Bank started with — and still has — a diverse set of best-of-breed applications. Each does one thing well, but the business design focus of its integration strategy is enabling ING Vysya Bank to achieve coherent business operations in spite of its application silos. According to Aniruddha Paul, CIO at ING Vysya Bank, extending these benefits to its customers is opening new markets and creating competitive advantage, while at the same time improving time-to-market by 70% and reducing integration cost by 50% or more.




Figure 1 For ING Vysya Bank, Business-Centered Integration Provided A New Path To Market

Source: Forrester Research, Inc.108421

ING Vysya Bank

Online ordering system Accountingsystem

Bank tellerDistribution�rm’s

customer

Distribution firm (ING Vysya’s customer)

Web app/call center Order API Payment API

Currentaccountssystem

Status API

1. The distribution �rm’s customer places anorder through the �rm’s web app,receiving an order number. The orderenters a suspended state.

2. The customer then goes to an ING VysyaBank location to pay for the order.Through the order API, the bank’s systemlooks up the precise order cost.

3. The customer provides cash or anaccount number. The bank’s systemplaces money into the distributor’saccount and calls a payment API todirectly record the payment in thedistributor’s system. This automaticallyreleases the order to ful�llment.

4. The distributor can later call into a bank-provided API to look up payment historyand status.

2

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1

DIGITaL BusINess DesIGN eNaBLes TeLCO TO exTeND INTO New MaRKeTs

Over the past two years, Telefónica O2 Ireland’s technology teams have been leveraging the telecommunication industry’s enhanced telecom operations map (eTOM) models to create foundational business building blocks as SOA services. These business services mirror business units of work that a businessperson can understand, such as capture order, provision subscriber, and create trouble ticket. To ensure that these really are business services, not technical application services, service designers ask, “Could one of our colleagues tell what back-end system is behind the service?” (The answer should be “no.”) Why is it so important to protect the business design of these services? Because they provide a foundation for building Telefónica O2 Ireland’s business agility and enabling Telefónica O2 Ireland to reach new markets (see Figure 2). For example:

■ Telefónica O2 Ireland extended its billing competency into the toll road market. Through an external bill charge API offered by Telefónica O2 Ireland, a toll road partner can allow travelers to charge tolls to their phone and pay them when they pay their phone bill. The API is merely an external access point to a core SOA service. As a side effect of the fact that its SOA services represent actual business units of work, Telefónica O2 Ireland has realized that any of the services it uses internally can easily be made available to external parties when and if it becomes necessary for some new market opportunity or B2B process enhancement.




■ Policy-based customization controls service delivery to different roles. Telefónica O2 Ireland sets policies on its services, such as rules for product eligibility, bundling, or tariffs, so that different data is provided to different requesters. This enables Telefónica O2 Ireland, for example, to allow its bill charge API to provide multiple billing options for internal consumers while limiting options for toll road partners and other external partners.

■ IT can more quickly deliver changes to product offerings and business transactions. Introducing an existing product to a new channel is now a configuration change that can be done in three days versus a development change that used to require weeks. With business rules and processes as part of its services foundation, Telefónica O2 Ireland could even allow businesspeople to directly make certain changes. In reality, businesspeople are concerned about making errors, so IT continues to make the changes. As it builds out its portfolio of services, some changes require services that haven’t been built yet, but Telefónica O2 Ireland is finding that it does not take longer to build the new capabilities as services than it took to build using old-style technology-centered integration.

Throughout the transformation to business-centered integration, Telefónica O2 Ireland reports that it has benefitted greatly from the governance expertise of Torry Harris Business Solutions (THBS), which has played a key role in the change. In addition to the business design points noted above (i.e., business transactions, business processes, and business rules), Torry Harris Business Solutions has begun modeling business-centered data views as part of its service designs.

Figure 2 Business Services Are The Fulcrum Of Telefónica O2 Ireland’s Business-Centered Integration


Service consumers1. As the center point of Telefónica O2

Ireland’s business-centered integration, business service designs are heavily in�uenced by the telecom industry eTOM model.

2. The same business services may beaccessed by internal solutions or byexternal partners using APIs.

3. Business policies control how servicesfunction for different service consumers.

2

1

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SOA business services(e.g., billing charge, service provisioning)

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Integration technologies/atomic services

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DONG eNeRGy aDDResses MaRKeT VaRIaTIONs wITH DIGITaL BusINess DesIGN

In 2005, five oil, gas, and electricity firms merged to form Dong Energy, which has operations in several European countries. Early on, Dong Energy implemented SAP’s business applications as a successful and central part of its technology estate. To connect SAP with several systems around it, Dong Energy made initial forays into SOA that were technically focused and achieved limited success. This changed when competitive and technical pressures, such as competitors with better billing solutions, mobile apps, and new cloud-based systems, triggered new ways for business and technology staff to collaborate around business design concepts. The result? With its new integration strategy, Dong Energy is now able to implement certain business changes using one-tenth the effort previously required (see Figure 3).

Key elements of its new model include:

■ Market variations handled by business rules. Market rules vary across Dong Energy’s multiple European markets. The implementations of these rules used to be buried in back-end systems. By using its integration strategy to create business-rules flexibility, the rules are now more visible and more easily changed when regulations or competition drives rule changes in specific markets. For now, businesspeople rely on technology staff to make rule changes in the system, but Dong Energy is experimenting with allowing businesspeople to change rules directly.

■ Business processes and human-centric workflows. Along with rules-based processing, Dong Energy employs BPM for process control, including work queues for manual error handling. Processes are designed in Software AG’s Aris using a simple set of about 10 process modeling notations, which makes it easier for business process analysts to involve business managers in the design process.

■ Key business transactions provided through SOA. SAP provides Dong Energy with core SOA business transactions such as meter readings and customer lookup. As Dong Energy adds an increasing number of cloud-based applications and mobile apps, it will build more of its own SOA business services.

■ Business-centric data views based on OData. To provide a unified view of data across siloed applications, Dong Energy defines representational state transfer (REST) data services using OData’s business data model foundation. These data views serve analytic and big data needs as well as transaction processing needs.

Along the way, Dong Energy learned that its more mature departments tend to have an easier time moving toward digital business design. For example, power plant maintenance is heavily process-driven, and its businesspeople have taken up business design well. Its wind power unit, on the other hand, was changing quickly — growing its employee base 10 times over just three years — making it




difficult for its businesspeople to focus on core processes. However, as the wind business matures, processes are becoming more important, and it is becoming easier to focus on digital business design. Another key lesson from Dong Energy: Be selective in how you apply digital business design. Some areas of a given business gain more value from agility than others. Go for the high value areas first.

Figure 3 Dong Energy’s Three Major Layers Of Business-Centered Integration Foster Agility


Business process layer 1. Business process management providesa strong base for process control andoptimization. Simpli�ed process modelsmake it easier to involve businesspeoplein process modeling.

2. To provide agility for meeting localmarket requirements, many businessrules are pulled up from core systemsinto a business rules layer.

3. Business services provide bothtransaction and data access into coreSAP.

1Work queues Error processing

Meter readings

Business data services (OData)

Customer lookup

Process monitoring

Business rules

2Billing

con�gurationLocal market

variations

SOA business services

Billing Customers Products . . .

Core SAP

3

DIGITaL BusINess DesIGN eNaBLes HeaLTHCaRe FIRM’s pRODuCT expaNsION

At a healthcare technology services firm, providing huge integrated data sets has long been the core of the business, but a shift to business design thinking is opening new opportunities. Driven by collaborative discussion and planning across business and technology staff, the stages of its expansion run like this:

■ Core data products continue to rely mostly on technology-centered integration. Traditional batch processing flows are central to the firm’s systems for collecting data from thousands of external data sources and converting them into coherent, well-organized data warehouses for client access and insight. For both client-specific databases and databases accessible to all clients, data flows through a three-tier architecture consisting of data acquisition, data cleansing and loading to warehouses, and business intelligence (BI), through which data is provided to clients via both aggregated extracts and real-time analytics. The firm creates its data views using business- and role-centered designs, but the volume of data conversion and processing favors traditional acquire-transform-load styles of integration.




■ Newer SaaS offerings highlight the limitations of technology-centered integration. Building on its data-provider business, the firm expanded into sales operations solutions delivered via SaaS. Recently, it acquired multiple cloud-based applications, and it became clear that something more than old-style integration was needed to tie these together into a cohesive offering through which the firm’s clients could improve their business processes.

■ Business process design points open new possibilities and agile product offerings. As the firm added a business process design focus to its SaaS offerings, it began to serve its clients in new ways. It could plug into its clients’ processes at specific points where its extensive data collections could help, such as handling territory alignments within the sales operations processes of a pharmaceutical firm. Conversely, if a client has its own territory alignments, but needs help with other aspects of sales operations, the firm’s SaaS applications can operate using the client’s territories. Process-based flexibility enables a wide range of offerings to clients, and it complements the firm’s SOA and big data strategies.

■ Business processes begin to make a break from the firm’s data heritage. The business agility afforded by its process design points led to an important extension of the firm’s business. It can now provide clients with best practice industry processes using the client’s own data. This further expands the possibilities for the firm’s future offerings and strategies.

■ New business event possibilities are emerging. As the firm becomes more intimate with its clients’ processes, it sees new opportunities with different business design points, such as business events. For example, interjecting business events into a process can support real-time fraud alerts and medical alerts.

These types of opportunities have changed the way the firm thinks about its market opportunities. Rather than simply adding more data to its extensive information bases, it must more intimately understand its clients’ businesses and processes. It must plan its products and strategies for seamless integration into its clients’ processes and design them to improve specific client business outcomes.

To ensure that its technology base can keep pace with its increasing need for business agility, the firm is carrying its business-centered product design focus down into its technology implementation designs for process flows, business events, SOA services, data views, and more. Through its use of WSO2’s Carbon platform, it is providing business and data integration capabilities. It is designing SOA data services with specific business rules based on how individual roles work with data. Clients will be able to search for specific business and data services using a shopping portal. By centering its integration efforts in business design, rather than technology design, it is building a foundation for its strategic business future.




R e c o m m e n d at i o n s

LessONs LeaRNeD: ReTHINKING INTeGRaTION IMpROVes COMpeTITIVe aGILITy

The technology staff at each of these four companies viewed integration as intimately connected to company’s market competitiveness. Each of them rose above the “connect across silos” mindset for integration and focused instead on business design concepts that businesspeople can understand, such as payment flows (ING Vysya Bank), billing transactions (Telefónica O2 Ireland), market variations (Dong Energy), and customers’ process flows (healthcare technology services firm). By placing business design at the center of their integration strategies, they create technology-based business building blocks that foster the agility needed to enter new markets and change competitive dynamics.

Key lessons to learn from these case studies include:

■ Set the design scope of integration beyond current products and services. ING Vysya Bank’s CIO included the bank’s customers’ processes within the firm’s integration vision. This created fertile ground for analysis that went beyond the bank’s products to consider why and how its customers use its deposit products and funds transfer services. Had the bank been thinking only about how to make its current products more attractive to commercial customers, it would not have seen that, for key commercial customers, business integration provides more value than better interest rates.

■ Focus on business building blocks to be ready when opportunity knocks. For Telefónica O2 Ireland, strong business-centered design for its SOA services meant that it was ready when a toll road company wanted to simplify billing for its customers. In other words, rather than a reactive mode of scrambling to create one-off integration interfaces for a new business opportunity, the firm proactively prepares for unexpected opportunities by centering its integration strategy on business design.

■ Don’t believe that business agility is always more expensive. Although it may indeed require additional investment to build technology-based business agility, the Telefónica O2 Ireland case demonstrates that this is not always true. Telefónica O2 Ireland was ready for its core SOA initiative to cost more than traditional technology integration but in the end found that it did not.

■ Use market variations and a global presence to justify digital business design. After the merger that formed Dong Energy, executives found that market variations across different countries, when hard-coded into business solutions, become a competitive boat anchor. It was this realization that enabled technology staff to lead the way to business agility through digital business design.




■ Use multiple business design focal points to enable a broad range of paths to market. For the healthcare technology services firm, its competitive future lies in expanding from its traditional data business into models that are based on business processes, events, APIs, and more. Business-centered design and integration of its data products and SaaS offerings allow it to plug into its clients’ businesses at a variety of process points and through a variety of styles of business interaction. The firm can provide data to its clients’ processes, processes for its clients’ data, events to trigger client processes, and more. Its expanding portfolio of business building blocks positions it to take advantage of an ever-changing stream of business opportunity.

suppLeMeNTaL MaTeRIaL

Companies Interviewed For This Report

Dong Energy

ING Vysya Bank

Healthcare technology services firm

Telefónica O2 Ireland

eNDNOTes1 Integration is a perennial challenge. Vintage, monolithic applications are hard to deal with, and point

solutions abound, including point solutions in the cloud. Traditional enterprise application integration (EAI) technology helps, but its primary design focus is on technical connections, not your business. Deliver more business value by refocusing integration strategy on the real goal: building a coherent business that can change quickly to achieve and sustain excellent outcomes. Forrester’s vision for digital business design centers first on sustainable business outcomes and agility, unifying across application silos rather than merely making it easier to live with them. See the November 8, 2012, “Digital Business Design Is The New Integration” report.

2 Survey respondents scored themselves across Forrester’s 10 market, organizational, and process agility dimensions, and revealed that higher scores for business agility means higher performance for the business. Across all industries, enterprises that emphasize channel integration, change management, and digital psychology are significantly better positioned to achieve sustained economic performance. Within specific industries, different agility dimensions help drive performance. Superior awareness and execution in Forrester’s 10 agility dimensions fight digital disruption and improve economic results. See the November 12, 2013, “Business Agility Drives Higher Performance” report.

3 What constitutes agility in the modern era? An agile enterprise embraces change as a matter of routine, whether that change is driven by market trends or is internal and operational; it reacts more quickly to both threats and opportunities. Agile companies enable decisions to be made quickly at lower levels in the organization; leaders concentrate on building this culture over day-to-day decision-making. Forrester







identifies three types of agility that companies must develop — market, organizational, and process agility — and 10 separate dimensions that make them up. See the September 9, 2013, “The 10 Dimensions Of Business Agility” report.

4 OpenText recently acquired Cordys and renamed the product from Cordys Business Operations Platform to OpenText Cordys.



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