cancel
Showing results for 
Search instead for 
Did you mean: 

"Over the top"

Over the Top Business Model
8730
0

This is a very normal evolution: whenever a company is founded, it starts thinking about future clients and what they want, but then later, its focus changes from customer-centric to product-centric, and the main idea shifts from serving a market to making the product better and cheaper.

Take the example of opening the market for electrical power in Germany: that opening encouraged new providers on the market to offer price comparisons between the different electricity providers. In the latest versions of their web-based price comparison tools, you only have to enter 2 pieces of information: location and family size. Compared to the original versions, this is much more efficient and much more convenient for customers, including myself. However, consider what will be possible with the Internet of Things and connected devices like NEST? We can imagine that in the future, specific devices in the homes of families will be able to order electricity at the best price themselves without user interaction - and that will be even more convenient for end users. Ipv6, integrated sensors and cloud are the technical means and, just like Uber has disrupted the taxi business, once it is possible, someone will do it. Is comparing electricity prices a secured business model then?

Customer experience will be the differentiator for many companies.

Even though companies often have a good understanding of their current customers, they have difficulties anticipate customers’ future needs and behaviors. Companies rely less on the loyalty of their customers since competitive products are just one click away, and therefore companies have to find other ways to keep current customers and attract new ones. One possible route is to multiply the number of touchpoints with customers, while ensuring customer satisfaction is maximized on each of the touchpoints.

Now - what can you do?

Most IT roadmaps are currently based on typical business functions: sales, marketing and accounting. This results in the typical matrix views that have often been used in Enterprise Architecture for years: In Germany we use marketing application A, in France Application B. However, we need only one application, so we will try to consolidate. But this strategy leads to egalitarianism and thus primarily serves the efficiency paradigm, not the differentiation paradigm.

So you need a new IT framework: Primarily starting from the customer, and only after that, focus on business functions and other features, as explained in this article. By doing so, one can assess the IT landscape against customer journey requirements, and, per the example above, not just benchmarking your marketing application. That way you ensure differentiation rather than standardization. This is phase 1 (differentiation).

In Phase 2 (agility), you structure with a focus on business functions in order to define the performance framework for applications. Of course, you can’t be agile if you have too many applications in the portfolio: for example, 16 different time-recording systems. But that doesn’t mean you should only have one application that supports all business functions. It would be impossible to improve the marketing function of an application without impacting the sales function of the same application.

Business functions are therefore only the secondary breakdown characteristic. This serves the aim of agility: If the application is too large and supports many business functions, then a modification (new version, whatever), does not only impact one, but two or more business functions. Ideally, an application should not be so large as to impede changeability.

And finally, in Phase 3 (cost saving), the cost of production and time to market are relevant because this new and stronger form of customer orientation will be very costly itself. You have to save costs: All processes (and their supporting IT systems) that do not directly serve the customers are subject to this review. A great way to do so is to link customer touchpoints to those processes, which will result in an end-to-end customer journey. You will be able to understand exactly where you are in direct contact with your customer, and you will be able to understand steps and activities which do not provide value and can be streamlined.

OTT business models force established vendors into either a Bimodal IT or Multimodal IT. This does not only describe an IT landscape of 2 or more modes (e.g. safety and agility), but allows you to build an IT landscape structure with differentiating evaluation criteria. Processing speed can be one, but also technology, cost tolerance, functional fit to customer expectation, technical fit to mass production and more.

It is important that you are able to evaluate the different areas of your IT landscape against different evaluation criteria, each specific to one of the three phases.

8730
0
Comment

This is a very normal evolution: whenever a company is founded, it starts thinking about future clients and what they want, but then later, its focus changes from customer-centric to product-centric, and the main idea shifts from serving a market to making the product better and cheaper.

Take the example of opening the market for electrical power in Germany: that opening encouraged new providers on the market to offer price comparisons between the different electricity providers. In the latest versions of their web-based price comparison tools, you only have to enter 2 pieces of information: location and family size. Compared to the original versions, this is much more efficient and much more convenient for customers, including myself. However, consider what will be possible with the Internet of Things and connected devices like NEST? We can imagine that in the future, specific devices in the homes of families will be able to order electricity at the best price themselves without user interaction - and that will be even more convenient for end users. Ipv6, integrated sensors and cloud are the technical means and, just like Uber has disrupted the taxi business, once it is possible, someone will do it. Is comparing electricity prices a secured business model then?

Customer experience will be the differentiator for many companies.

Even though companies often have a good understanding of their current customers, they have difficulties anticipate customers’ future needs and behaviors. Companies rely less on the loyalty of their customers since competitive products are just one click away, and therefore companies have to find other ways to keep current customers and attract new ones. One possible route is to multiply the number of touchpoints with customers, while ensuring customer satisfaction is maximized on each of the touchpoints.

Now - what can you do?

Most IT roadmaps are currently based on typical business functions: sales, marketing and accounting. This results in the typical matrix views that have often been used in Enterprise Architecture for years: In Germany we use marketing application A, in France Application B. However, we need only one application, so we will try to consolidate. But this strategy leads to egalitarianism and thus primarily serves the efficiency paradigm, not the differentiation paradigm.

So you need a new IT framework: Primarily starting from the customer, and only after that, focus on business functions and other features, as explained in this article. By doing so, one can assess the IT landscape against customer journey requirements, and, per the example above, not just benchmarking your marketing application. That way you ensure differentiation rather than standardization. This is phase 1 (differentiation).

In Phase 2 (agility), you structure with a focus on business functions in order to define the performance framework for applications. Of course, you can’t be agile if you have too many applications in the portfolio: for example, 16 different time-recording systems. But that doesn’t mean you should only have one application that supports all business functions. It would be impossible to improve the marketing function of an application without impacting the sales function of the same application.

Business functions are therefore only the secondary breakdown characteristic. This serves the aim of agility: If the application is too large and supports many business functions, then a modification (new version, whatever), does not only impact one, but two or more business functions. Ideally, an application should not be so large as to impede changeability.

And finally, in Phase 3 (cost saving), the cost of production and time to market are relevant because this new and stronger form of customer orientation will be very costly itself. You have to save costs: All processes (and their supporting IT systems) that do not directly serve the customers are subject to this review. A great way to do so is to link customer touchpoints to those processes, which will result in an end-to-end customer journey. You will be able to understand exactly where you are in direct contact with your customer, and you will be able to understand steps and activities which do not provide value and can be streamlined.

OTT business models force established vendors into either a Bimodal IT or Multimodal IT. This does not only describe an IT landscape of 2 or more modes (e.g. safety and agility), but allows you to build an IT landscape structure with differentiating evaluation criteria. Processing speed can be one, but also technology, cost tolerance, functional fit to customer expectation, technical fit to mass production and more.

It is important that you are able to evaluate the different areas of your IT landscape against different evaluation criteria, each specific to one of the three phases.