Digital Disruption and Business Architecture To G V

USING BUSINESS ARCHITECTURE
TO ENABLE CUSTOMER EXPERIENCE

AND VALUE STRATEGIES
An overview of the affect of digital
disruption upon business and where
business architecture can provide value
PRESENTED BY:
Craig Martin
Chief Architect, Enterprise Architects
1 | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS © 201 4
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.
Craig Martin, Chief Architect
twitter @eatraining
email craig.martin@enterprisearchitects.com
Our topics today
A shake-up is occurring
The result of disruption
Architecting for disruption
Where to from here?
ABOUT ENTERPRISE ARCHITECTS
Enterprise Architects (EA) is an international Our History
Enterprise Architects (EA) was founded in
Our Philosophy
Being a services firm we are centred on
Our Experience
Many of the world’s leading brands trust
professional services firm specialising in business Melbourne, Australia in 2002 by Hugh the needs and experiences of the people EA to extend their business design and
strategic architecture capabilities.
design and enterprise architecture. Evans, our CEO. With his background in
traditional architecture, Hugh was
we impact. We believe good strategy
requires participants to discuss
We are experienced across most major
motivated to bring the benefits of opportunities and issues on common
industry sectors including, Banking &
Architecture Thinking to business ground – comparing apples to apples.
Finance, Insurance, Tech, Energy, Oil &
strategy and transformation. Through our advanced business
Established in Melbourne in 2002, our mission is architecture-oriented methods we bring
Gas, Telco, Health, Retail, Transport &
Logistics, Professional Services, and
to “design and renew great organisations”. EA soon became a magnet for enterprise together all parties and build consensus Higher Education, as well as a broad
architecture talent, providing the ideal and real belief for the strategic roadmap. range of government departments and
environment for architects to access agencies at local, state and federal levels.
strategic projects with some of the Our Approach
world’s most ambitious and forward Our strength is more than just world- Over the last 11 years we've developed
class practice in business design, architectures and supported capability
thinking organisations.
for organisations across 5 continents.
capability-based planning and strategic
A decade on, EA stands as one of the enterprise architecture.
world’s premier employers in enterprise
architecture and remains a pioneer in the It’s about how we engage with clients,
growing practice of business design. offering a seamless extension to their
We’re delivering a new kind of enterprise existing capability, however mature, and
architecture capability, one that drives defining the roadmaps that will bring
richer business engagement, strategic ground-breaking competitive strategies
coherence and fast-paced change. to life.
OUR SERVICES
Servicing the Strategy and Architecture needs of Strategy & Architecture Delivery Architecture Capability Improvement
› Maturity assessment
› Business Architecture
major corporates. › Capability-based Planning
› Service model definition
› Architecture operating model
› Information Management Strategy › Staff capability assessment
› Digital Investment Roadmaps › Team training and mentoring
› SPECIALISING IN ARCHITECTURE CAPABILITY AND DELIVERY › I.T Strategy and CIO Baseline › TOGAF® Kick-start and mentoring
› Application Strategy and Roadmaps › Resourcing and talent management
› ACTIVE TRACKING OF INDUSTRY WIDE ARCHITECTURE TALENT › Infrastructure Strategy and
services
› PROVEN TOGAF® METHODS Roadmaps

› Information Security Strategy
› EXTENSIVE INDUSTRY REFERENCE MODELS AND BUSINESS VIEW POINTS
› FOCUS ON SKILLS AND KNOWLEDGE TRANSFER
› VENDOR AND TOOL NEUTRAL Architecture Accelerator Frameworks Managed Services
› Enterprise business architecture › Blueprint and roadmap maintenance
› EXTENSIVE INDUSTRY RELATIONS AND PARTNERSHIPS framework › Transformation blueprint
› Enterprise security architecture management
› COMPLETE INDEPENDENCE IN CLIENT OUTCOMES AND RECOMMENDATIONS framework › Managed architects and architecture
› Enterprise cloud framework
teams
› TOGAF Accelerator
› Repository and tooling as a service
› Enterprise architecture foundation
pack › Diagramming as a service
A SHAKE-UP IS
OCCURRING
…AND IT’S QUITE

DISRUPTIVE
WHAT IS DISRUPTION?
› Innovation that creates a new › Eventually disrupts an existing
market market and value network
› Innovation that creates a new › Displaces an earlier offering or
value network technology
DIFFERENTIATION
on its own does not cause disruption…
… DISRUPTION Rips
through an existing market…
… combining DIFFERENTIATION
+ LOW COST
RED OCEAN BLUE OCEAN
 Compete in existing  Create uncontested markets
markets
 Make competition irrelevant
 Beat the competition
 Create & Capture new
 Explore existing demand demand
 Make the value/cost  Break value / cost
trade-off trade-off
 Align with differentiation  Align with differentiation
OR low cost AND low cost
WHY DOES DISRUPTION OCCUR?

WHEN DOES DISRUPTION OCCUR?
Disruptive technologies take a while to change the market
PERFORMANCE
› 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

New replaces additional technological change is
old technology added which makes it simpler and less
Market for old
technology
expensive to build and maintain the
products.
Market for new

› The new change eventually displaces
technology
the existing market and value network,
resulting in a radical improvement in
TIME
performance
Christensen, Clayton M. (2010-09-06).

Disrupting Class, Expanded Edition: How Disruptive Innovation Will Change the Way the World Learns
What have these brands got to do with disruption?
DISRUPTION AND DIGITAL

DISRUPTION
DISRUPTION AND DIGITAL DISRUPTION
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
Larry Downes - Three laws direct the revolutionary changes wrought by computer technology.
DIGITAL ECONOMY
General Principles of the Digital Economy. These are the principles of Digital Strategy
Enablement
“RENEWABILITY” “UNIVERSALITY”
You can renew data, but not exhaust it. Once created it can be Everyone can access the same data simultaneously, and use it
used over and over again. It is a renewable resource for a completely different reason
“MAGNETISM” “LACK OF FRICTION”

Information grows in value as more people absorb it, which, in The more smoothly information flows, the more valuable it is.
turn, creates a network effect, drawing more people who want
to learn. Metcalfe's law
“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
“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.
“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.
“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.
WHAT HAS BEEN
THE RESULT OF THIS
DISRUPTION?
DISRUPTION ALTERS ENTIRE VALUE
NETWORKS
Example: Disruption will alter the entire value chain and place the student at the
centre
CONTENT CONTENT
STUDENTS
Faculty
CLASSES STAFF
Students CLASSES
& Social
& Staff Interaction
SOCIAL
LECTURERS FACULTY FACILITATORS
INTERACTION
Teach at SCHOOL and do Homework at HOME Teach at HOME and do Homework at SCHOOL
DIGITAL
DISRUPTION
IS REDUCING B
THE DELAY Action Reaction
“Life is indeed speeding up,

but mans ability to deal with
it, is slowing down”
Immediate
Feedback
R
Delayed
Feedback
Business roles taking on
more architecture
accountabilities
THIS
ACCELERATION
IS PUTTING
PRESSURE ON
CURRENT
BUSINESS
MODELS
Technology
commoditising
from below
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
GOAL: Exploitation;
Reliability GOAL: Exploration; Validity
Produce consistent, Produce outcomes that
predictable outcomes meet an objective
ANALYTICAL INTUITIVE
THINKING THINKING
Robust, repeatable Heuristics Unresolved
and replicable Rules of Business
processes thumb Challenges
A reliable system will A valid system will

produce the same test produce a result that is
results every time shown, through the
* From Roger Martin (2009) The Design of Business
passage of time, to be
correct
THE SPEED THROUGH THE KNOWLEDGE FUNNEL IS ALSO INCREASING
HIGH
Complex negotiation,
design, or decision process
GOAL: Validity- Produce

Non-core but complex Innovation, chaos & outcomes
- Outsource unresolved mysteries that meet desired
Many business rules;
expertise involved objectives
COMPLEXITY AND DYNAMICS
Core Differentiating
Competencies
Non -Core THE KNOWLEDGE

Competencies FUNNEL
Some business rules
GOAL: Reliably produce

Everyday, highly Make repeatable and
repeatable and reliable to gain
consistent, predictable
automated efficiency outcomes
Procedure or simple
algorithm Core Competitive
LOW
Competencies
LOW STRATEGIC IMPORTANCE & VALUE HIGH
Source: Adapted from “Business Process Must be done but adds little value to Very important to success, high value added
Change” by Paul Harmon product or services to products and services
THE COMMODITY SPACE IS GROWING, MAKING THE DIFFERENTIATION SPACE MOR E
COMPETITIVE
Opportunity
or Threat?
HIGH
HIGH
Complex negotiation, design, Complex negotiation, design,
or decision process or decision process
Innovation, chaos
Non-core but complex Innovation, chaos & Non-core but complex - & unresolved
- Outsource unresolved mysteries Outsource
Many business rules; expertise Many business rules; expertise mysteries
involved involved

Core Differentiating Core Differentiating

Competencies Competencies
Non -Core
Non -Core Competencies
Competencies
Some business rules Some business rules
Everyday, highly Make repeatable and Make repeatable

Everyday, highly repeatable and
repeatable and reliable to gain and reliable to
automated
automated efficiency gain efficiency
Procedure or simple algorithm Procedure or simple algorithm

Core Competitive Core Competitive
LOW
LOW
Competencies Competencies
LOW STRATEGIC IMPORTANCE & VALUE HIGH LOW STRATEGIC IMPORTANCE & VALUE HIGH
Must be done but adds little value to Very important to success, high value added to Must be done but adds little value to Very important to success, high value added to
product or services products and services product or services products and services
DISRUPTION IS SHIFTING THE FOCUS TO
CUSTOMER LIFETIME VALUE Digital
This shift is the essence of what drives the emergence of the chief digital officer (CDO). It also forces a Strategy
Focus
stronger focus on the chief marketing officer (CMO)
SELLER DRIVEN ENTERPRISE CUSTOMER CENTRIC ENTERPRISE CUSTOMER DRIVEN ENTERPRISE
“Maximize product “Maximize market “Maximize customer

profitability” share” lifetime value”
MARKETING Push Selectively Target Pull (collaboration)
DATA ANALYSIS Insight as Art Factual insight Predictive insight
SERVICE Passive & Reactive Interactive & Reactive Interactive & Proactive
UNDERSTANDING Broad Segmented Individualized
CUSTOMER OFFERS Singular Intra-enterprise bundles Inter-enterprise bundles
CHANNELS Product Driven Segment Driven Integrated and Seamless
ORGANISATION Functional Silo Integrated Function Customer Outcome
THE CUSTOMER DRIVEN SHIFT
The Selling Concept
Product Driven
Profit
Selling and
Production Products Through sales
Promotion
volume
The Marketing Concept Customer Centric
The digital
strategy Target Market Segment Integrated
Profit through
Increased
Segment Needs Marketing
focus Market Share
The Value Concept Customer Driven
Profit through
Customer Outcome
Target individual customer lifetime
Intention Marketing
satisfaction
4P’S ARE OUT 4E’S ARE IN
The Change is disrupting some age old marketing fundamentals
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.
Source: Brian Fetherstonhaugh – Ogilvy & Mather:

http://www.Ogilvy.com
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
WHAT IS DIGITAL?
Enterprise Architects, March 2011 Slide 28

Digitization shifts POWER to the consumer
… Consumers expect personalised product experiences
… and access ANYWHERE, ANYTIME
THE SHIFT TO CUSTOMER DRIVEN IS SHIFTING THE
FOCUS TO CUSTOMER VALUE BASED INTENTION
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.
› Increased mobility of population › Moving to a New Community

› Growing elderly population (Baby Boomers) › Managing for Productive Elder Years
› Decreasing job security and increasing › Upgrading Professional Career
educational requirements › Changing Career
› Increasing tendency to multiple careers
› Rebuilding Lifestyle
› High divorce rates › Building Personal Independence
› More small businesses and outsourcing › Integrating into Culture
› Increasing diversity › Gaining Cross-Cultural Experience
› Increasing travel and cross-border activity › Remaining Healthy Throughout Life
› Broadening understanding of effects of › Starting a Family
nutrition, exercise and vacations
› Increase in single parent families and a
growing number of dual-career families
Environmental Influencers Value Based Intention
VALUE BASED INTENTION - EXPAND BEYOND THE CORE BY
CREATING INNOVATIVE VALUE PROPOSITIONS AROUND A
CONSUMER INTENTION
- GROWING -
New
- MARKETS -
Existing
Business
“CORE”
Current
Current New
- PRODUCTS/SERVICES -
TRANSMEDIA EXAMPLE
THE LAWS OF DISRUPTION
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
› 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
THE LAWS OF DISRUPTION
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
› 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.
CIO
COO
CMO
CDO TCO
ROI
THE RESULTS OF DISRUPTION & DIGITAL

THE BALANCE IS SHIFTING AS ACCOUNTABILITIES CHANGE
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/
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
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.

LESS BUDGET VISIBILITY MEANS SPENDING
UNPREDICTABILITY
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.

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

DISRUPTION OF THE PLANNING CYCLE
Budget cycles are affected by the “un-reliable” nature of the CMO agenda
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.

THE CMO’S DILEMMA
Source: Building Bridges to the Promised

Land, The CMO Club, 2014
HOW DO WE ARCHITECT
FOR DISRUPTION?
CONSTANT CHANGE IS MOVING UPWARDS
FASTER
ORGANIZATIONS…AND ARCHITECTS NEED TO BE ABLE TO PROVIDE THE MEAN S TO
ENABLE THIS CHANGE
ENTERPRISE
PERORMANCE
BRAND PLATFORM
BUSINESS MODEL
BUSINESS CAPABILITIES
PRODUCT
TIME
‘Enterprise Lifecycle's
2014 © Enterprise Architects PTY LTD
THE CMO DILEMMA IS BEST DEALT WITH BY
ARCHITECTURE….BUT WHERE IS THE MANDATE
Improve Market Performance

…but in fact business
E
architecture spans
this entire curve.
Maximize Product Profitability
Maximise Market Share Therefore the higher
Maximise Customer Lifetime Value
the mandate, the
higher the value
Improve Product and & Service
Performance D
VALUE
Business Architecture is
seen as a positive
progression away from IT
C Improve Business Performance
B Improve enterprise wide

A investment performance
Improve project
performance
MANDATE
*Adapted from Ruth Malan, Dana Bredemeyer
THE IMPERATIVE TO ACT
SOME INDUSTRIES ARE ABLE TO REALIZE THE VALUE SOONER
ARCHITECTURE
MANDATE
Improve Business
Model Portfolio F
Performance
D
Ahead of the curve
Behind the curve
C
B
Industry distribution
A
TIME
RETAIL
ICT
ENTERTAIN’T
SERVICES
FINANCE
MEDIA &
EDUCATION
ACCOM.
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

THE EA DIGITAL STRATEGY APPROACH™
A business architecture is central to the development of a digital strategy
‘The Digital Strategy Approach

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
Ultimately all innovative and replicable
formulas & processes
algorithms will become utility.
* From Roger Martin (2009) The Design of Business
THE EA APPROACH TO ARCHITECTING FOR
DIGITAL
An end-to-end view is required to enable the CMO agenda using “Architecture
Thinking”
EXPERIENCES
ARCHITECTING FOR DIGITAL DISRUPTION
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
Improve Market Performance

E
Maximize Product Profitability

Maximise Market Share
Maximise Customer Lifetime Value
Improve Product and & Service

Performance D
VALUE
Business Architecture is
seen as a positive
progression away from IT
C Improve Business Performance
B Improve enterprise wide

A investment performance
Improve project
performance
MANDATE
*Adapted from Ruth Malan, Dana Bredemeyer
BUSINESS MODEL INNOVATION IS REQUIRED
Disruptive Business Models can be found when you mix it up at the value system level
POLICY &
EDUCATION ENFORCEMENT JUDICIAL PENAL COMMERCIAL
LAWMAKERS
DISRUPTION
NORMALLY
OCCURS WITHIN MISSION VISION
THE VALUE
SYSTEM.
DRIVERS
LEVERS
STRATEGIES GOALS Business Motivation
IT’S THE
STRATEGIC
BUSINESS MODELS TACTICS OBJECTIVES
THAT CAN
DETERMINE
WHERE VALUE LIES
Strategic Business Models
O P C O P C O P C Value Discipline Orientation
Operating Business Models
Capabilities and Resources

Pe Pr T Pe Pr T Pe Pr T
INFORMATION
WHAT IS A BUSINESS MODEL?
Some Definitions
BUSINESS MODEL
Markets
Industries
MARKET Customers
MODEL Market Segment
Channels
“A Business Model describes the
SERVICE
Customer Relationships
Value Proposition
rationale of how an organisation
MODEL Offering:
Services/Products creates, delivers, and captures
Processes/ Value Chains
value” Alex Osterwalder – Business
Capabilities
Business Service
Model Generation
OPERATING Functions
MODEL Data
Applications
Technology
THE ENVIRONMENT
THE STRATEGIC BUSINESS MODEL
The canvas is a tool that is used to prototype a variety of strategic business models
THE STRATEGIC BUSINESS MODEL
Each strategic scenario can be evaluated in line with the value disciplines of the organisation
There is often fragmentation around value disciplines which results

in “competitive” forces and flawed decision making
Semi
Integrated
DRIVER TREES AND VALUE

Universal Bank
MAPS & GOALS

Product
Specialist
Customer
Owner
Infrastructure
Provider
These value disciplines will help decisions around the strategic

balance between efficiency and effectiveness
THE STRATEGIC PROCESS INNOVATION
BEGINS
MARKET SHARE, REVENUE
& COST BECOME KEY
BUSINESS MODEL
TOTAL PRODUCT
INDUSTRY INNOVATION
REVENUE REDUCES
Its also great for start-ups at the

early stage of the lifecycle
VALUE DISCIPLINE
ORIENTATION
THROUGH THE
INDUSTRY LIFECYCLE
Each industry moves along a life
cycle, with different opportunities for DISRUPTOR
competitive advantage at each stage ENTERS
TIME
Introduction Growth Maturity Decline
PRODUCT LEADERSHIP CUSTOMER INTIMACY
OPERATIONAL EXCELLENCE
*Adapted from Geoffrey Moore’s:

Dealing with Darwin
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
BUSINESS MODEL MATURITY
A Strategic Business Model health can be evaluated based upon 7 criteria
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
WHERE TO
FROM HERE?
MOVING STRATEGIC BUSINESS MODELS INTO
THE DETAIL
STRATEGIC BUSINESS MODELS CAN ONLY GO SO FAR. THE NEXT LEVEL OF
DETAILS IS REQUIRED
WHAT WE HAVE FOUND IN LARGE ACCOUNTS
An ownership gap for business architecture exists - Lines of responsibility around coherency
and business architecture, are often unclear
CONTEXT
Markets
Strategic Industries
Architecture MARKET
Enterprise Performance
Mandate – Customers
Business MODEL
Capabilities
Market Segment
Ownership
Channels
X-Functional Capabilities
SERVICE Value Proposition
Business MODEL Offering:

Services/Products
Architecture
Mandate Processes/ Value Chains
Undefined
Functional Capabilities
Capabilities
Business Service
OPERATING
IT Architecture Functions
Mandate – MODEL Data

IT Ownership
Applications
Technology
Cohesion Mandate
Undefined - Enterprise Planning Ownership
THERE IS OFTEN A CHASM BETWEEN THE CUSTOMER EXPERIENCE
VISION, PRODUCT DEVELOPMENT AND OPERATIONAL REALITY
BUSINESS MODEL › Business Model Innovation

Markets
Industries
› Customer Storyboards & personas
MARKET Customers
› Journey Maps & Lifecycles
› Learning Maps
› Motivation Models
Channels
Customer
GAP
SERVICE
Relationships
› Value Maps
MODEL
Value Proposition
› Product and Offering Maps
Offering:
Services/Products
› Design Models
Processes/ Value
GAP
Chains
› Value Chain Analysis
Capabilities
› Cross Functional Models
OPERATING Business Service
› Capability/Business Anchor Models
MODEL Functions › Process Models
Data › Application Models
Applications › Data and information Models
Technology › Technology Models
THE ENVIRONMENT
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
BUSINESS MODEL › Business Model Innovation

Markets
Industries
› Customer Storyboards & personas
MARKET Customers
› Journey Maps & Lifecycles
› Learning Maps
› Motivation Models
Channels
Customer
SERVICE
Relationships
› Value Maps
MODEL
Value Proposition
› Product and Offering Maps
Offering:
Services/Products
› Design Models
Processes/ Value
Chains
› Value Chain Analysis
Capabilities
› Cross Functional Models
OPERATING Business Service
› Capability/Business Anchor Models
MODEL Functions › Process Models
Data › Application Models
Applications › Data and information Models
Technology › Technology Models
THE ENVIRONMENT
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
Customer interaction map : Customer Segment ABC

Customer Outcome
“I need to know when my goods will “I want confirmation that my goods “Something has gone wrong with my
“I want to set-up my account” “I want to get ready to send goods” “I want to send a shipment”
arrive” have arrived” goods delivery…”
B C D Track E F G
Set-up Integrate Order Receive Query
and Trace
Customer Expectations
Establishing my Integration is quick and Efficient, with choices I know when the I can find out whether I get a meaningful
account is quick and easy, with the right that make it goods will arrive my goods were resolution to my
simple… help available convenient delivered; problem
KPIs
% of accounts set-up in % of accounts that % of orders with no % of articles with at Service Delivery # of complaints per
<X hours utilise more than X manual intervention least 4 scans Performance Metric million
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
Customer interaction map : Customer Segment ABC

Customer Outcome
“I need to know when my goods will “I want confirmation that my goods have “Something has gone wrong with my
“I want to set-up my account” “I want to get ready to send goods” “I want to send a shipment”
arrive” arrived” goods delivery…”
B C D Track E F G
Set-up Integrate Order Receive Query
and Trace
Customer Expectations
Establishing my account Integration is quick and Efficient, with choices I know when the goods I can find out whether I get a meaningful
is quick and simple… easy, with the right help that make it convenient will arrive my goods were resolution to my
available delivered; problem
KPIs
% of accounts set-up in % of accounts that utilise % of orders with no % of articles with at least Service Delivery # of complaints per
<X hours more than X manual intervention 4 scans Performance Metric million
CUSTOMER BEHAVIOUR: UNDERSTAND THE EMOTIONAL
ROLLER COASTER OF YOUR CUSTOMERS
Incremental, significant or transformation changes required to improve the experience
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
BUSINESS MODEL
Markets
Industries
MARKET Customers
Channels
SERVICE
Cross functional capabilities each drive out
Value Proposition
MODEL
different outcomes. Underlying functional
Offering:
Services/Products
capabilities will have varying perspectives of
capability maturity and capability uplift
Capabilities
Business Service
OPERATING Functions
MODEL
You can also use cross functional Data
models as scenarios to
Applications
test the capability anchor model validity
Technology
THE ENVIRONMENT
Cross functional capabilities assemble and mix functional capabilities to
achieve outcomes in the value map or driver tree
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
Within each process flow, there are
typically four to five capabilities that make
Archimate
up the process. These typically correspond Notation
to functional silos that complete each step.
ACTOR CAPABILITY CAPABILITY
Customer
Fiona 15. Sales Execution 20. Information Services Management
ACTOR ACTOR
CAPABILITY
Post Staff Post Staff
participates in
PROCESS
participates in participates in
Sign Up & Integrate
PROCESS PROCESS PROCESS PROCESS PROCESS

People
A1. Explore and compare B2. Sign up and activate C1. Receive information on C2. Install the necessary C3. Integrate my store
consumes
potential providers and account precedes how the systems and hardware / software on with Australia Post’s API’s
precedes precedes precedes
services processes will work my systems
is realized by is realized by
is processed by
BUSINESS SERVICE
Customer Sales
BUSINESS SERVICE
Partner Collaboration
Process
Management
implements implements
DATA ENTITY
LOGICAL
APPLICATION COMP.
LOGICAL
APPLICATION COMP.
LOGICAL
APPLICATION COMP.
Tools
Sales Order Customer Sales Enterprise Resource Partner Collaboration
Management Planning Management
is processed by communicates with communicates with
SAP - CRM SAP - ERP auspost.com.a
u
communicates with
LOGICAL
APPLICATION COMP.
Within each capability, the model
Security Management identifies systems or applications that
IAM - OIM are used to execute the capability. This
Connecting these to projects provides valuable is where the model forms the alignment
insight into coherency o the capex investment between business and IT.
across the enterprise
THE CAPABILITY ANCHOR MODEL PROVIDES THE UTILITY
BUILDING BLOCKS REQUIRED
The capability anchor model represents the "map" of the organisation
BUSINESS MODEL
Markets
Industries
MARKET Customers
Channels
SERVICE Value Proposition
MODEL Offering:
Services/Products
Capabilities
Business Service
OPERATING Functions
MODEL Data
Applications
Technology
THE ENVIRONMENT
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
THE EA APPLIED BUSINESS ARCHITECTURE COURSE
VALUE BASED INTENTIONS
CUSTOMER EXPERIENCES
CUSTOMERS, STAKEHOLDERS
SUPPLIERS & PARTNERS
CUSTOMER TOUCHPOINTS
PRODUCTS AND SERVICES
VALUE CHAIN VALUE CHAIN VALUE CHAIN
CROSS FUNCTIONAL VALUE STREAMS
VALUE DRIVING CAPABILITIES
SUPPORTING CAPABILITIES
Questions?
LESS VISIBILITY MEANS SPENDING
UNPREDICTABILITY
This new CMO cloud world will cause IT spending within a company to be far less predictable for the following reasons:
1. In the old, IT-controlled world, yearly 2. This unpredictability will be exacerbated by 3. A third factor increasing the unpredictability
budgets were more or less set in stone by Jan 1. the fact that these CMO-oriented applications, of IT spending lies at the intersection of the
Beyond the obvious fact that headcount costs by their very nature, have much higher decision-maker profile and cloud computing
were more or less fixed and could be forecasted variability of load and user base. If your itself. CMOs frequently are presented with new
by that date, most other spending was fixed as application is tied to a movie's release, and the business opportunities that don't fall neatly into
well. Because non-maintenance, non-headcount star of the movie experiences a personal "beginning of the year" launch timeframes. If it's
spend was primarily capital expenditure for scandal that drives enormous interest in the a good opportunity, you want to pursue it right
long-lived assets, it had to go through long movie, your app may experience 10 times the away, not wait for the next budget cycle.
planning and budgeting exercises before the traffic you expected-and 10 times the cost for
In the past, when you had to budget capital to
year it would be spent, often two or more years your cloud computing.
pursue an opportunity, the process meant the
in advance. It's common for IT organizations to
increased spending was quite predictable, as it
be researching something in one year, putting it
had to be planned for and slotted into the
into the budget planning the next year and
yearly budget. Today, when cloud computing
spending the following year.
makes resources available in minutes, there's
In the new, CMO-controlled world, much of the little to prevent you from starting right away.
spending will be focused on public cloud Even if there's a budget forecast at the
computing, where no capital investment is beginning of the year, you can expect
required, but where all costs will fall into an significant variation as CMOs choose to pursue
OpEx category. The fact that this spending does promising new business opportunities.
not require CapEx means that less visibility into
budgets will be possible on Jan. 1 of a given
year.

Predictions…
DISRUPTIVE BUSINESS MODELS

Digital Disruption and Business Architecture To G V

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USING BUSINESS ARCHITECTURE

TO ENABLE CUSTOMER EXPERIENCE

This webinar will look at environmental pressures and identify how to

Craig also investigates the changes afoot with strategic business

› PROVEN TOGAF® METHODS Roadmaps

…AND IT’S QUITE

WHY DOES DISRUPTION OCCUR?

› First stage of disruption, an innovator

› The second stage of disruption is when

Market for new

Christensen, Clayton M. (2010-09-06).

DISRUPTION AND DIGITAL

The digital and material economies function differently.

“MAGNETISM” “LACK OF FRICTION”

The dissemination of change is “uneven.” Various elements of society

“Networking pioneer” Robert Metcalfe said that networks become

“Life is indeed speeding up,

A reliable system will A valid system will

GOAL: Validity- Produce

Non -Core THE KNOWLEDGE

Some business rules

GOAL: Reliably produce

LOW STRATEGIC IMPORTANCE & VALUE HIGH

COMPLEXITY AND DYNAMICS

Core Differentiating Core Differentiating

Some business rules Some business rules

Everyday, highly Make repeatable and Make repeatable

Procedure or simple algorithm Procedure or simple algorithm

SELLER DRIVEN ENTERPRISE CUSTOMER CENTRIC ENTERPRISE CUSTOMER DRIVEN ENTERPRISE

“Maximize product “Maximize market “Maximize customer

MARKETING Push Selectively Target Pull (collaboration)

DATA ANALYSIS Insight as Art Factual insight Predictive insight

UNDERSTANDING Broad Segmented Individualized

CUSTOMER OFFERS Singular Intra-enterprise bundles Inter-enterprise bundles

CHANNELS Product Driven Segment Driven Integrated and Seamless

ORGANISATION Functional Silo Integrated Function Customer Outcome

The Marketing Concept Customer Centric

The Value Concept Customer Driven

From Product to Experience

Source: Brian Fetherstonhaugh – Ogilvy & Mather:

Enterprise Architects, March 2011 Slide 28

… Consumers expect personalised product experiences

… and access ANYWHERE, ANYTIME

› Increased mobility of population › Moving to a New Community

Environmental Influencers Value Based Intention

THE RESULTS OF DISRUPTION & DIGITAL

Exploration & Validity

For a CMO or LOB executive focused on making his or her numbers,

Source: CIO Magazine:

Likewise, IDC predicts that what it terms "line of business executives"

IT groups across the region accounted for 58 per cent of IT

Source: CIO Magazine:

In the new, CMO-controlled world, much of the spending will be

Source: CIO Magazine:

Budgets will further be exacerbated by the fact that

Consider the costs of cloud hosting for a viral event

Source: CIO Magazine:

CMOs frequently are presented with new business

Source: CIO Magazine:

Source: Building Bridges to the Promised

Improve Market Performance

B Improve enterprise wide

‘The Digital Stakeholder Map