how the connected world impacts business and it strategies

© D

iete

r K

. S

inn

-2

01

4

Presented at Fujitsu Forum 2014, Nov 19-20

How the Connected World is Impacting

the Business and the IT Strategies

Dieter K. Sinnsinn-consulting

Knorrstrasse 11, D-80807 MuenchenTel. +49 (0) 89 - 359 0195E-Mail: [email protected]: www.sinn-consulting.de

1

© D

iete

r K

. S

inn

-2

01

4

What this Session is About

This presentation outlines three scenarios of the connected world to illustrate three recent trends which lead to possible new tasks and roles for the corporate IT departments and the IT suppliers.

Search for innovationSearch for customer value

Search for return on investment (ROI)

Develop and market „connected“ services and products, driven by information technology

Business & Enterprises

Corporate IT Departments & IT Suppliers

Identify market opportunities, design new business models, evaluate technologies, develop systems and products ...

Enter a new stage and re-define role as business enabler

Tasks and Role of:

2

© D

iete

r K

. S

inn

-2

01

4

Disclaimer

Selected Scenarios as Examples

There are more scenarios for the connected world than are listed here. The scenarios here are used to illustrate mechanisms and consequences, which the audience may transfer to its corresponding enterprise and industry.

Internet Refrigerator

Not all scenarios that exist for the Internet of Things are appealing to me personally. There will be no mention of the internet fridge that automatically reorders items when stocks run low. Should my fridge ever do such a thing, the next thing I would do is pulling its plug.

Obstacles and Risks

Several aspects, though not included in this presentation, are crucial:• Necessary standards for communication• Security and privacy • Energy consumption of smart objects

STOP

3

© D

iete

r K

. S

inn

-2

01

4

Increase Visibility of IT as Business Driver

Situation

Many IT departments find themselves stuck in their traditional role, fulfilling many highly demanding tasks, but often lacking visibility.

In the Connected World

Goal of this presentation is to show how the IT departments can re-gain visibility as business driver.

Corporate IT

Corporate IT

4

© D

iete

r K

. S

inn

-2

01

4

Elements of the Connected World

Connect Physical World Connect Solutions & Services Connect Customers & Partners

Business processes and transactions are driven by an aggregation of:

• Software, Software as a Service• Content & knowledge• Traditional manual services

IT embedded in physical objects

Communication: Internet of Things (IoT)

Interconnect physical world with digital world

Closer connection to corporate IT-systems

Customer interaction, social networks, collaboration ...

Post-ERP era takes off: IT manages ecosystem beyond the corporate walls

Enterprises

Access: Everyone, anytime, anywhere....

Connect Solutions & Services

Conse-quences for IT

Connect Customers& Partners

Connect PhysicalWorld

5

© D

iete

r K

. S

inn

-2

01

4

Connect Physical World





6

© D

iete

r K

. S

inn

-2

01

4

Scenarios Based on Smart Objects

Smart Objects Computing power, sensors, memory and communication capabilities integrated

Scenarios

Smart Home: Monitoring, remote control, individual adaptation, energy, smart metering ...

eHealth: Monitoring, security, fall detection, assistance ....

City & Environment: Detection, resource allocation, e.g. parking

Machines and Infrastructure: Remote monitoring, predictive maintenance, alerts …

Industry 4.0: Products, machines and back-end systems communicate and interact

Transport and Logistics: Tracking and control of goods across systems and locations

... and many more

Technology Base

Back-End Systems behind the smart objects





7

© D

iete

r K

. S

inn

-2

01

4

Example: Vending Machine

The back-end systems (e.g. process portals) that lie behind the smart objects open up business opportunities. This is illustrated by the following simple example of a soft drink vending machine.

Process Portal:

• Integrates and manages various process members (bottlers, distributors, logistics providers)

• Filling and servicing on-demand, results in cost savings

• Delivers data for stock / product planning, e.g. sales per location, customer preferences ….

Questions – to be discussed later:Who builds and runs such process portals?Who owns and dominates the business?

Smart Object: e.g. vending machine

Transmits data about filling status, error etc.

Telco M2M platform

Data via web service

Service providers





8

© D

iete

r K

. S

inn

-2

01

4

Benefits of Back-End Integration

The connection of smart objects to integrating IT back-end systems creates special benefits. The resulting business and user values can be the basis for new extended business models.

Benefits of Back-End Integration of Smart Objects

• Allows users access to online services and physical world via PC, mobile etc.

• Management of comprehensive business processes and transactions

• Integrates the different parties involved in the business process as well as their corresponding systems

• Enables automation of processes, faster execution, and/or increased cost efficiency

• Integrates online services, traditional manual services as well as the physical world

• Allows real-time monitoring and response

• Provides data for improved planning, better customer services, more efficient utilization of infrastructure

• ...

Process Portal





9

© D

iete

r K

. S

inn

-2

01

4

IT Platforms Shaking up Vertical Markets?

A significant trend: Back-end systems and similar platforms will occupy a predominant position in business. This occurs in numerous vertical markets, especially if these platforms dominate the access to markets.

Example Vending Machine: Who will Build and Run the Back-End Systems ?

• Software vendors? Or telecoms? Or major Internet giants? Or the service providers (bottlers or distributors) in our vending machine example? Or the manufacturer of the vending machine?

• -> Manufacturers of vending machines and the relevant service providers should explore if building such portals is a worthwhile business opportunity for them.

Example Hotel Booking: Broker Portals increasingly Dominate the Access to Markets

• Hotel booking portals hold an increasingly dominant position as opposed to individual hotels. These portals are often run by new entrants. IT startups entering the tourism industry !

• Similar mechanisms will occur in many vertical markets. Established players could lose their market position to newcomers from the IT sector.





10

© D

iete

r K

. S

inn

-2

01

4

Possible Options for IT Departments

Corporate IT departments can play a more active role due to their competency in IT markets and mechanisms. And they can incorporate their skills and expertise in the planning and development of embedded systems.

• What potential competitors exist, what new entrants could enter the game?

• Where are opportunities for building own corporate services and business models? How do these business models look like?

• Or what platforms could be candidates for partnership and closer collaboration?

• How can the company turn its products into smart products?

• Could this create new user values? Are new business models possible?

• Embedding electronics and communication into objects requires IT competency and IT engineering and development resources

Watch the market of process-, services-and broker-portals

Engage in the planning and support of embedded electronics





11

© D

iete

r K

. S

inn

-2

01

4

Connect Solutions and Services





12

© D

iete

r K

. S

inn

-2

01

4

Aggregation of Solutions and Services

An emerging market trend is to support business processes and transactions by a combination and integration of software, digital content and (brokered) manual services. This is an opportunity for IT suppliers and corporate IT departments to create a new type of offers delivering additional business value.

BaaS:

Business as a Service

Combination of software, digital content and physical servicesto support

… specific verticals or business activities and processes

User companiesContent & knowledge

Traditional manual services

Software, local or SaaS ...





13

© D

iete

r K

. S

inn

-2

01

4

Enterprise Stores

Such a combination and integration of software, content and services can be done in cloud integration platforms or so-called enterprise stores. IT departments could adopt a new role by preselecting and technically connecting the individual elements.

Enterprise

Enterprise Store

Integrated support of specific business transactions, activities and processes

IT‘s role is to fill the enterprise store …also from external / third-party sources

Enterprise Store:

• Software self services

• Corporate content, e.g. worksheets, rules …

• Integration of internal Shared Services

• Coordinated integration of external services

Manual services

Content

Software





14

© D

iete

r K

. S

inn

-2

01

4

Use Cases / Selection Criteria / Benefits

The combination of software and services can support specific enterprise divisions or business transactions:

Enterprise Divisions• Development and engineering• Marketing• Sales and customer support• HR department• ...

Business Processes and Transactions• New product development, planning, design …• Expansion, relocation, new subsidiaries … • Finance or legal transactions • Sales and marketing campaigns• HR: recruiting, human resource development • …

Selection Criteria for External Services • Suitable for own company, with regard to

company size, complexity ...• Appropriate quality, e.g. approved by

certifications or user rankings • Good matching of services• Simple integration into platform

Benefits for Users• Consistent support of business transactions• One-stop shopping, single sign-on, consistent

user and rights management • Pre-selection of suitable services• Joint data management, data exchange

across services





15

© D

iete

r K

. S

inn

-2

01

4

New Role for Corporate IT

Role of corporate IT is expanding:

Partner managementand gate keeping

Integrated support and orchestration of business processes by a combination of software with digital content, coupled with internal and external physical services. This also enables the predefining and structuring of processes.

Call to action for Corporate IT• Develop ideas for integrated services• Communicate benefits and goals• Start with a step-by-step approach

Providing software services from external sources / third parties, IT departments acting as brokers for cloud services. IT‘s role may include the definition of internal requirements and the selection and management of appropriate external solutions.

Allowing external services a controlled access to internal corporate platforms. IT departments being responsible for managing e.g. the quality of services, security and service levels.

IT as business enabler

IT as cloud broker





16

© D

iete

r K

. S

inn

-2

01

4

Connect Customers & Partners





17

© D

iete

r K

. S

inn

-2

01

4

Collaboration still Lacks Strong IT Support

Companies‘ business processes are often tightly linked with the processes of their partner companies. IT-based support of this type of communication and interaction is often lagging behind. Collaboration tools are available (often as cloud services), but a close integration of collaboration tools with corporate IT systems is rare.

Past:

Enterprise E-Commerce, web shopCustomer

PartnerE-mail

Enterprise

Customer input Partner fulfillment

Connected World: Interconnection of enterprise processes with partners and customers

Customer interaction

Single-point communication with customers and partners, e.g. via web shop or e-mail





18

© D

iete

r K

. S

inn

-2

01

4

Sales: Siloed Departmental Systems

Marketing and sales are an important success factor for more and more enterprises. Here also integrated IT-support is often lacking. Business departments often select and implement solutions autonomously, which results in a so-called „shadow IT“ with isolated systems and inconsistent data management.

Siloed Systems

CRM• Customer relationships …• Planning, campaign management …

Business Intelligence • Web analytics • Database ...

Communications• Web site • Online marketing• Social, mobile ....

E-Business• Web shop• Connection to ERP / inventory

management …

Marketing and sales as a consistent, integrated IT-based process Connected World

Product planning

Demand creation

Info & offers

Cust. comm.

Salesprocess

Connected to: Social Mobile Search Portals ...





19

© D

iete

r K

. S

inn

-2

01

4

Market Orientation as Core Business Process

Production / Manufacturing as the Core Business Process of the Enterprise

Companies still regard production as the core business process in their value chain. Is this still appropriate to all enterprises? Or is this the result of traditional ERP software which is based on this paradigm?

Planning -> Procurement -> Production -> Inventory Management

FinanceHR

Research Marketing

Demand Delivery

Market Communication -> Planning -> Marketing -> Sales

Post-ERP Era: Market Orientation as the Core Business Process

An alternative approach is to adopt „Market Orientation“ or „Market Communication“ as the core business process. Procurement and production would become sub processes in such a model.

Procurement Production

Finance HRDemand Delivery





Development

DevelopmentPartners & Customers

20

© D

iete

r K

. S

inn

-2

01

4

Sales and Collaboration as Major IT Focus

Marketing and Sales

Sales support is a must for corporate IT

Start now – Sales support is a major duty of corporate IT departments, which is not performed properly in many enterprises.

End-to-end sales solutions are essential

Move from siloed departmental systems to end-to-end solutions. Integrated data management could be a step on this way.

Extend corporate IT to customers

Added value for customers through closer integration of customers with corporate IT systems, e.g. providing customers with analytics, purchasing history, self services, configuration services …

Collaboration and Connection to Customers and Partners

Mind the ERP trapEnterprise Resource Planning solutions are often too much focused on the internal business processes.

From single ERP to multi-platform

Traditional ERP architectures are often not well prepared for supporting business in a connected world. Multi-platform strategies are an alternative.





21

© D

iete

r K

. S

inn

-2

01

4

Consequences for IT Infrastructure & Services

Need for corporate IT departments to develop an up-to-date IT strategy

Opening up the corporate IT systems to the outside world: connection to cloud collaboration platforms, to data exchange platforms, to social platforms …

Open up

Multi-platform

The connected world is not yet well standardized. Different software platforms and data formats are used. A connection to this world requires an open platform strategy.

Fast implementation and delivery of IT solutions are necessary. Rapid prototyping of systems will increase. This requires flexible resources, such as hybrid cloud models for additional infrastructure on demand or Managed Services.

Flexibility

The opening-up of the corporate IT requires the establishment of different, graded security zones. This also includes encapsulation of core IT systems, access control policies, data classification, rights management …

Security

Data A connected world creates large volumes of data from multiple sources. High-volume data management and data quality management are a backbone of connected systems.





23

© D

iete

r K

. S

inn

-2

01

4

Side Note: What does an IT Strategy Include?

Strategic goals

User requirements

Technology trends

Available resources

• Business Goalsand guidelines how to support these goals through IT

• Priorities and Areas for InvestmentAreas where IT is to drive innovation and create competitive advantages. Areas where IT is to provide basic, state-of-the-art support

• IT-Organization and ProceduresHuman resource strategy, roles and responsibilities. How is IT governed, how is the collaboration between business departments and IT organized?

• System StrategyHardware, tools, communications, applications, data ...

• Operation GuidelinesIT management, security, service levels, outsourcing ...

IT Strategy

Implementation and operation





24

© D

iete

r K

. S

inn

-2

01

4

Re-Establish IT Strategy as a Powerful Tool

The changes driven by a connected world provide an opportunity for IT departments to re-establish the IT strategy as a powerful strategic tool.

Changes driven by a connected world

• More need for diversity in terms of systems and operation. The existing longtime enterprise focus on very few standardized systems is not longer sufficient.

• More players, more partnerships, more platform options

• IT will be more industry-specific when integrating physical objects

Benefits of an IT strategy

• Aligning business with IT

• Increased efficiency: rules and policies for IT decisions, delegation of responsibilities …

• Basis for communication of IT with business management

• Strengthens position of IT department





25

© D

iete

r K

. S

inn

-2

01

4

Simply Start off Embracing a Connected World

Claim the topic and live the new role

• Watch the market, keep an eye on players and platforms

• Develop ideas for connected products and services

• Design business models for the connected world

Inspire people• Assign creative, agile, respected people to the new tasks

• Even option on top level, e.g. CDO, Chief Digital Officer

IT has the external and internal expertise about

• Technology

• Customer behavior in the digital world

• Players und mechanisms in the online world

• Internal business processes





26

© D

iete

r K

. S

inn

-2

01

4

Future Solutions in a Connected World

More connected solutions will appear and provide further opportunities for Corporate IT and suppliers.

Technology Drivers

Connected Data • Joining real-time data with stored data …

Hardware• Devices for anytime, anywhere access• IoT, sensors, communication … • Low-power objects





Human Interface Technology• Speech input & output, smart/data glasses• Touch and gesture control, 3D motion tracking• Body-computer interfaces

Human Centric• Augmented reality, virtual reality• Smart advisors• Multimedia „life records“• …

Solutions

...

Automation• Automation of business processes• IT replacing human work• IT generated correspondence• Robots, driverless cars• …

27

© D

iete

r K

. S

inn

-2

01

4

Recommendation of sinn-consulting

Message to Corporate IT:• A focus only on infrastructure and operation means dying a slow death. • Corporate IT acting as a Business Driver is the only viable path to visibility and success.• Our recommendation to Corporate IT follows our general approach:

Cover all three factors, Technology & Business & Market.

Market: mechanisms, trends, players

BusinessTechnology





Corporate IT

28