using business architecture to enable customer experience and digital strategy

1. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 41 PRESENTEDBY: Craig Martin ChiefArchitect,Enterprise Architects An overview of the affect of digital disruption upon business and where business architecture can provide value USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES

2. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 42 Digital disruption is shifting business model design from a focus on product profitability to a stronger focus on customer experience and value. This webinar will look at environmental pressures and identify how to use business architecture and business design to address these changes. It covers business architecture for digital strategy, customer- driven value chains, re-writing of the 4Ps of the marketing mix, and the nine laws of disruption and how they affect business model design. Craig also investigates the changes afoot with strategic business planning and Enterprise Architecture, which are experiencing their own form of disruption. Will Enterprise Architecture as we know it become a commodity too? Join us for this informative and enlightening look into the future of the Enterprise Architecture discipline.

3. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 43 Craig Martin, Chief Architect twitter @eatraining email [email protected]

4. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 44 Our topics today A shake-up is occurring The result of disruption Architecting for disruption Where to from here?

5. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 45 ABOUT ENTERPRISE ARCHITECTS Enterprise Architects (EA) is an international professional services firm specialising in business design and enterprise architecture. Established in Melbourne in 2002, our mission is to design and renew great organisations. Our History Enterprise Architects (EA) was founded in Melbourne, Australia in 2002 by Hugh Evans, our CEO. With his background in traditional architecture, Hugh was motivated to bring the benefits of Architecture Thinking to business strategy and transformation. EA soon became a magnet for enterprise architecture talent, providing the ideal environment for architects to access strategic projects with some of the worlds most ambitious and forward thinking organisations. A decade on, EA stands as one of the worlds premier employers in enterprise architecture and remains a pioneer in the growing practice of business design. Were delivering a new kind of enterprise architecture capability, one that drives richer business engagement, strategic coherence and fast-paced change. Our Philosophy Being a services firm we are centred on the needs and experiences of the people we impact. We believe good strategy requires participants to discuss opportunities and issues on common ground comparing apples to apples. Through our advanced business architecture-oriented methods we bring together all parties and build consensus and real belief for the strategic roadmap. Our Approach Our strength is more than just world- class practice in business design, capability-based planning and strategic enterprise architecture. Its about how we engage with clients, offering a seamless extension to their existing capability, however mature, and defining the roadmaps that will bring ground-breaking competitive strategies to life. Our Experience Many of the worlds leading brands trust EA to extend their business design and strategic architecture capabilities. We are experienced across most major industry sectors including, Banking & Finance, Insurance, Tech, Energy, Oil & Gas, Telco, Health, Retail, Transport & Logistics, Professional Services, and Higher Education, as well as a broad range of government departments and agencies at local, state and federal levels. Over the last 11 years we've developed architectures and supported capability for organisations across 5 continents.

6. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 46 OUR SERVICES Servicing the Strategy and Architecture needs of major corporates. SPECIALISING IN ARCHITECTURE CAPABILITY AND DELIVERY ACTIVE TRACKING OF INDUSTRY WIDE ARCHITECTURE TALENT PROVEN TOGAF METHODS EXTENSIVE INDUSTRY REFERENCE MODELS AND BUSINESS VIEW POINTS FOCUS ON SKILLS AND KNOWLEDGE TRANSFER VENDOR AND TOOL NEUTRAL EXTENSIVE INDUSTRY RELATIONS AND PARTNERSHIPS COMPLETE INDEPENDENCE IN CLIENT OUTCOMES AND RECOMMENDATIONS Strategy & Architecture Delivery Business Architecture Capability-based Planning Information Management Strategy Digital Investment Roadmaps I.T Strategy and CIO Baseline Application Strategy and Roadmaps Infrastructure Strategy and Roadmaps Information Security Strategy Architecture Capability Improvement Maturity assessment Service model definition Architecture operating model Staff capability assessment Team training and mentoring TOGAF Kick-start and mentoring Resourcing and talent management services Architecture Accelerator Frameworks Enterprise business architecture framework Enterprise security architecture framework Enterprise cloud framework TOGAF Accelerator Enterprise architecture foundation pack Managed Services Blueprint and roadmap maintenance Transformation blueprint management Managed architects and architecture teams Repository and tooling as a service Diagramming as a service

7. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 47 A SHAKE-UP IS OCCURRING AND ITS QUITE DISRUPTIVE

8. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 48 WHAT IS DISRUPTION? Innovation that creates a new market Innovation that creates a new value network Eventually disrupts an existing market and value network Displaces an earlier offering or technology

9. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 49 DISRUPTION Rips through an existing market DIFFERENTIATION on its own does not cause disruption combining DIFFERENTIATION + LOW COST

10. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 410 BLUE OCEAN Create uncontested markets Make competition irrelevant Create & Capture new demand Break value / cost trade-off Align with differentiation AND low cost RED OCEAN Compete in existing markets Beat the competition Explore existing demand Make the value/cost trade-off Align with differentiation OR low cost WHY DOES DISRUPTION OCCUR?

11. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 411 WHEN DOES DISRUPTION OCCUR? First stage of disruption, an innovator makes a product much more affordable and simpler to use (for the user) than what currently exists. The second stage of disruption is when additional technological change is added which makes it simpler and less expensive to build and maintain the products. The new change eventually displaces the existing market and value network, resulting in a radical improvement in performance Disruptive technologies take a while to change the market Christensen, Clayton M. (2010-09-06). Disrupting Class, Expanded Edition: How Disruptive Innovation Will Change the Way the World Learns PERFORMANCE TIME Market for old technology Market for new technology New replaces old technology

12. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 412 What have these brands got to do with disruption? DISRUPTION AND DIGITAL DISRUPTION

13. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 413 DISRUPTION AND DIGITAL DISRUPTION Larry Downes - Three laws direct the revolutionary changes wrought by computer technology. Digital technologies are the disruptive innovation creating a sweeping revolution The digital and material economies function differently. The laws of supply and demand are different for digital disruption than what they are for physical disruption Most material products are rivalrous goods. If one person uses them, another cannot - two people cant build a house on the same site. Digital goods are nonrivalrous: Multiple people can use them simultaneously. Copying a song doesnt use it up, destroy it or keep anyone else from using it

14. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 414 DIGITAL ECONOMY General Principles of the Digital Economy. These are the principles of Digital Strategy Enablement RENEWABILITY You can renew data, but not exhaust it. Once created it can be used over and over again. It is a renewable resource UNIVERSALITY Everyone can access the same data simultaneously, and use it for a completely different reason MAGNETISM Information grows in value as more people absorb it, which, in turn, creates a network effect, drawing more people who want to learn. Metcalfe's law LACK OF FRICTION The more smoothly information flows, the more valuable it is. VULNERABILITY Criminals can harm or misuse information. They can destroy it, ruin it or steal it (as in identity theft). In this one sense, data is like physical goods Larry Downes - Three laws direct the revolutionary changes wrought by computer technology.

15. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 415 THE LAW OF DISRUPTION The dissemination of change is uneven. Various elements of society struggle to keep up with rapid technological change. Technology changes exponentially, but social, economic and legal systems change incrementally and struggle to keep up. Larry Downes - Three laws direct the revolutionary changes wrought by computer technology.

16. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 416 METCALFES LAW Networking pioneer Robert Metcalfe said that networks become more valuable the more people use them. Every time someone joins Twitter, Facebook or, by implication, the Internet, that network becomes markedly more constructive. Larry Downes - Three laws direct the revolutionary changes wrought by computer technology.

17. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 417 MOORES LAW In 1965, Intels founder, Gordon Moore, predicted that computer chip processing power would double every 12-18 months without a rise in users costs. This has held true since. While inflation harms other goods, deflation rules computer technology. Because software is manufactured and distributed electronically, it has zero marginal cost, unlike the carrying costs of older consumer goods - time is right. Larry Downes - Three laws direct the revolutionary changes wrought by computer technology.

18. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 418 WHAT HAS BEEN THE RESULT OF THIS DISRUPTION?

19. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 419 DISRUPTION ALTERS ENTIRE VALUE NETWORKS Example: Disruption will alter the entire value chain and place the student at the centre Faculty & Staff CONTENT CLASSES SOCIAL INTERACTION LECTURERS STUDENTS Students & Social Interaction CONTENT CLASSES FACULTY STAFF FACILITATORS Teach at SCHOOL and do Homework at HOME Teach at HOME and do Homework at SCHOOL

20. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 420 DIGITAL DISRUPTION IS REDUCING THE DELAY Action Reaction Immediate Feedback Delayed Feedback B R Life is indeed speeding up, but mans ability to deal with it, is slowing down

21. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 421 THIS ACCELERATION IS PUTTING PRESSURE ON CURRENT BUSINESS MODELS Technology commoditising from below Business roles taking on more architecture accountabilities

22. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 422 ANALYTICAL THINKING INTUITIVE THINKING * From Roger Martin (2009) The Design of Business GOAL: Exploitation; Reliability Produce consistent, predictable outcomes GOAL: Exploration; Validity Produce outcomes that meet an objective THE RESULTS OF DISRUPTION A stronger focus on the exploration and intuitive aspects of business are producing a strong drive for innovation within the business and in corresponding business models Unresolved Business Challenges Heuristics Rules of thumb Robust, repeatable and replicable processes A reliable system will produce the same test results every time A valid system will produce a result that is shown, through the passage of time, to be correct

23. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 423 THE KNOWLEDGE FUNNEL Non-core but complex - Outsource Innovation, chaos & unresolved mysteries HIGH HIGH LOW LOW Must be done but adds little value to product or services Very important to success, high value added to products and services STRATEGIC IMPORTANCE & VALUE COMPLEXITYANDDYNAMICS Complex negotiation, design, or decision process Many business rules; expertise involved Some business rules Procedure or simple algorithm Non -Core Competencies Core Differentiating Competencies Everyday, highly repeatable and automated Make repeatable and reliable to gain efficiency Core Competitive Competencies THE RESULTS OF DISRUPTION THE SPEED THROUGH THE KNOWLEDGE FUNNEL IS ALSO INCREASING Source: Adapted from Business Process Change by Paul Harmon GOAL: Reliably produce consistent, predictable outcomes GOAL: Validity- Produce outcomes that meet desired objectives

24. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 424 THE RESULTS OF DISRUPTION THE COMMODITY SPACE IS GROWING, MAKING THE DIFFERENTIATION SPACE MORE COMPETITIVE Non-core but complex - Outsource Innovation, chaos & unresolved mysteries HIGH HIGH LOW LOW Must be done but adds little value to product or services Very important to success, high value added to products and services STRATEGIC IMPORTANCE & VALUE COMPLEXITYANDDYNAMICS Complex negotiation, design, or decision process Many business rules; expertise involved Some business rules Procedure or simple algorithm Non -Core Competencies Core Differentiating Competencies Everyday, highly repeatable and automated Make repeatable and reliable to gain efficiency Core Competitive Competencies Non-core but complex - Outsource Innovation, chaos & unresolved mysteries HIGH HIGH LOW LOW Must be done but adds little value to product or services Very important to success, high value added to products and services STRATEGIC IMPORTANCE & VALUE COMPLEXITYANDDYNAMICS Complex negotiation, design, or decision process Many business rules; expertise involved Some business rules Procedure or simple algorithm Non -Core Competencies Core Differentiating Competencies Everyday, highly repeatable and automated Make repeatable and reliable to gain efficiency Core Competitive Competencies Opportunity or Threat?

25. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 425 DISRUPTION IS SHIFTING THE FOCUS TO CUSTOMER LIFETIME VALUE This shift is the essence of what drives the emergence of the chief digital officer (CDO). It also forces a stronger focus on the chief marketing officer (CMO) SELLER DRIVEN ENTERPRISE CUSTOMER CENTRIC ENTERPRISE CUSTOMER DRIVEN ENTERPRISE Maximize product profitability Push Selectively Target Pull (collaboration) DATA ANALYSIS SERVICE Interactive & Proactive UNDERSTANDING Segmented Individualized CUSTOMER OFFERS Intra-enterprise bundles Inter-enterprise bundles ORGANISATION Integrated Function Customer Outcome CHANNELS Segment Driven Integrated and Seamless Maximize market share Maximize customer lifetime value MARKETING Passive & Reactive Interactive & Reactive Insight as Art Factual insight Predictive insight Broad Product Driven Singular Functional Silo Digital Strategy Focus

26. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 426 THE CUSTOMER DRIVEN SHIFT Production Products Selling and Promotion Profit Through sales volume Target individual Customer Intention Outcome Marketing Profit through customer lifetime satisfaction The Selling Concept Product Driven The Value Concept Customer Driven The Marketing Concept Customer Centric Target Market Segment Segment Needs Integrated Marketing Profit through Increased Market Share The digital strategy focus

27. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 427 4PS ARE OUT 4ES ARE IN From Product to Experience From Place to Everyplace From Price to Exchange From Promotion to Evangelism EXPERIENCE - Discover and map out the full Customer Journey on your own brand in your own country. EVERYPLACE - Develop your knowledge of new media and channels the way a chef masters new ingredients. Try new things do something that doesnt start with TV or print. EXCHANGE - Appreciate the value of things, not just the cost. Start by calculating the value of your customers and what their attention, engagement and permission are worth to you. EVANGELISM - Find the passion and emotion in your brand. Inspire your customers and employees with your passion. The Change is disrupting some age old marketing fundamentals Source: Brian Fetherstonhaugh Ogilvy & Mather: http://www.Ogilvy.com

28. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 428 WHAT IS DIGITAL? Digital is a participatory layer of all media that allows users to self select their own experiences and affords marketers the ability to bridge media, gain feedback, iterate their messages, and collect relationships. BUD CADDELL Enterprise Architects, March 2011 Slide 28

29. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 429 Consumers expect personalised product experiences Digitization shifts POWER to the consumer and access ANYWHERE, ANYTIME

30. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 430 THE SHIFT TO CUSTOMER DRIVEN IS SHIFTING THE FOCUS TO CUSTOMER VALUE BASED INTENTION Increased mobility of population Growing elderly population (Baby Boomers) Decreasing job security and increasing educational requirements Increasing tendency to multiple careers High divorce rates More small businesses and outsourcing Increasing diversity Increasing travel and cross-border activity Broadening understanding of effects of nutrition, exercise and vacations Increase in single parent families and a growing number of dual-career families A consumer intention is a fundamental life need or objective that requires extensive planning, decisions and coordination across several dimensions, such as finances, health, career, family, social and other concerns. Moving to a New Community Managing for Productive Elder Years Upgrading Professional Career Changing Career Rebuilding Lifestyle Building Personal Independence Integrating into Culture Gaining Cross-Cultural Experience Remaining Healthy Throughout Life Starting a Family Environmental Influencers Value Based Intention

31. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 431 VALUE BASED INTENTION - EXPAND BEYOND THE CORE BY CREATING INNOVATIVE VALUE PROPOSITIONS AROUND A CONSUMER INTENTION Current New -MARKETS- - PRODUCTS/SERVICES - CurrentNew - GROWING - Existing Business CORE

32. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 432 TRANSMEDIA EXAMPLE

33. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 433

34. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 434 THE LAWS OF DISRUPTION Law One: Convergence When Worlds Collide - When the physical world and the digital world clash, society has to negotiate the chaos Law Two: Personal Information From Privacy to Propriety - Personal information issues are shifting from matters of privacy to issues of propriety Law Three: Human Rights Social Contracts in Digital Life - Technological disruption has radically changed human rights. Law Four: Infrastructure Rules of the Road on the Information Highway AT&T Use Case - The digital world will change the existing infrastructure and its use. Law Five: Business All Regulation Is Local - Governments should fund research and provide safety nets, but should not apply outdated, moralistic or in the modern marketplace Innovative and disruptive solutions cannot be contained by social, legal and economic systems that cannot keep up. Disruption is causing a rethink on a number of these issues Larry Downes - Three laws direct the revolutionary changes wrought by computer technology.

35. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 435 THE LAWS OF DISRUPTION Law Six: Crime Public Wrongs, Private Remedies - In the digital world, crime is just another kind of information use. Law Seven: Copyright Reset the Balance - Existing copyright law is partly archaic and partly useless in a digital world, where copying files is so easy. Law Eight: Patent Virtual Machines Need Virtual Lubricants - Current law tries to treat software like a patented product. This doesnt work because of the speed with which software is developed and becomes obsolete. Law Nine: Software Open Always WinsEventually - Copyright and patent laws now protect software, but the way these laws are drafted fundamentally misunderstands the nature of software and the digital economy. Innovative and disruptive solutions cannot be contained by social, legal and economic systems that cannot keep up. Disruption is causing a rethink on a number of these issues Larry Downes - Three laws direct the revolutionary changes wrought by computer technology.

36. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 436 THE RESULTS OF DISRUPTION & DIGITAL THE BALANCE IS SHIFTING AS ACCOUNTABILITIES CHANGE CIO CMO CDO COO ROI TCO

37. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 437 THE CMO AGENDA FOCUS ON THE HERE AND NOW Exploration & Validity Produce outcomes that meet an objective For a CMO or LOB executive focused on making his or her numbers, getting to a solution and starting to earn margin more quickly is more important than getting the lowest possible cost for something. Source: CIO Magazine: http://www.cio.co.nz/article/466738/big_shift_when_cmos_grab_it_budget_from_cios/

38. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 438 This CMO focus will lead to. GARTNER PREDICTION Gartner made a big splash late last year with its prediction that by 2017 the CMO will spend more on IT than the CIO Likewise, IDC predicts that what it terms "line of business executives" will control 40 percent of IT spending by 2016

39. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 439 EVERYONE NEEDS TO RETHINK THEIR ASSUMPTIONS ABOUT IT BUDGETS when considering how they're spent by CIOs and CMOs. CIOs across Asia Pacific now directly control less than 60 per cent of enterprise IT spending and time is running out for CIOs to partner with the business, according to Forrester Researchs 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 organisations IT. Source: CIO Magazine: http://www.cio.co.nz/article/466738/big_shift_when_cmos_grab_it_budget_from_cios/

40. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 440 LESS BUDGET VISIBILITY MEANS SPENDING UNPREDICTABILITY Source: CIO Magazine: http://www.cio.co.nz/article/466738/big_shift_when_cmos_grab_it_budget_from_cios/ In the new, CMO-controlled world, much of the spending will be focused on public cloud computing, where no capital investment is required, but where all costs will fall into an OpEx category. The fact that this spending does not require CapEx means that less visibility into budgets will be possible on Jan. 1 of a given year. In short, the new world moves from predictable CapEx to unpredictable OpEx. You can expect many more midyear budget recalculations as cloud-based application costs move all over the map.=

41. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 441 THE CMO AGENDA WILL FOCUS MORE ON EXPLORATION & VALIDITY Budgets will further be exacerbated by the fact that CMO-oriented applications, by their very nature, have much higher variability of load and user base Consider the costs of cloud hosting for a viral event Source: CIO Magazine: http://www.cio.co.nz/article/466738/big_shift_when_cmos_grab_it_budget_from_cios/

42. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 442 DISRUPTION OF THE PLANNING CYCLE CMOs frequently are presented with new business opportunities that don't fall neatly into "beginning of the year" launch timeframes. If it's a good opportunity, you want to pursue it right away, not wait for the next budget cycle. Budget cycles are affected by the un-reliable nature of the CMO agenda Source: CIO Magazine: http://www.cio.co.nz/article/466738/big_shift_when_cmos_grab_it_budget_from_cios/

43. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 443 Source: Building Bridges to the Promised Land, The CMO Club, 2014 THE CMOS DILEMMA

44. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 444 HOW DO WE ARCHITECT FOR DISRUPTION?

45. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 445 Enterprise Lifecycle's 2014 Enterprise Architects PTY LTD PERORMANCE TIME ENTERPRISE BRAND PLATFORM BUSINESS MODEL BUSINESS CAPABILITIES PRODUCT CONSTANT CHANGE IS MOVING UPWARDS FASTER ORGANIZATIONSAND ARCHITECTS NEED TO BE ABLE TO PROVIDE THE MEANS TO ENABLE THIS CHANGE

46. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 446 Improve project performance Improve enterprise wide investment performance Improve Business Performance Improve Market Performance A B VALUE MANDATE C E Improve Product and & Service Performance D THE CMO DILEMMA IS BEST DEALT WITH BY ARCHITECTURE.BUT WHERE IS THE MANDATE Business Architecture is seen as a positive progression away from IT Maximize Product Profitability Maximise Market Share Maximise Customer Lifetime Value but in fact business architecture spans this entire curve. Therefore the higher the mandate, the higher the value *Adapted from Ruth Malan, Dana Bredemeyer

47. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 447 THE IMPERATIVE TO ACT SOME INDUSTRIES ARE ABLE TO REALIZE THE VALUE SOONER Improve Business Model Portfolio Performance Ahead of the curve Behind the curve ARCHITECTURE MANDATE TIME A B C E D F RETAIL MEDIA& ENTERTAINT ICT ACCOM. FINANCE SERVICES EDUCATION Industry distribution

48. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 448 THE EA DIGITAL STAKEHOLDER MAP A digital strategy requires coherency between the CMO and CIO as they seek to deliver the customer driven outcomes The Digital Stakeholder Map 2014 Enterprise Architects PTY LTD

49. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 449 THE EA DIGITAL STRATEGY APPROACH A business architecture is central to the development of a digital strategy The Digital Strategy Approach 2014 Enterprise Architects PTY LTD

50. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 450 THE DISCIPLINE OF BUSINESS ARCHITECTURE THE ROLE OF THE BUSINESS ARCHITECTURE FUNCTION IS TO FACILITATE A MORE EFFECTIVE AND EFFICIENT MOVEMENT THORUGH THE KNOWLEDGE FUNNEL Unresolved Business Challenges Rules of thumb Robust, repeatable and replicable formulas & processes Ultimately all innovative algorithms will become utility. * From Roger Martin (2009) The Design of Business

51. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 451 THE EA APPROACH TO ARCHITECTING FOR DIGITAL An end-to-end view is required to enable the CMO agenda using Architecture Thinking EXPERIENCES

52. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 452 Improve project performance Improve enterprise wide investment performance Improve Business Performance Improve Market Performance A B VALUE MANDATE C E Improve Product and & Service Performance D ARCHITECTING FOR DIGITAL DISRUPTION Business Architecture is seen as a positive progression away from IT Maximize Product Profitability Maximise Market Share Maximise Customer Lifetime Value *Adapted from Ruth Malan, Dana Bredemeyer Value System Engineering the use of tools like the canvas tend to occur at a higher mandate, but the value of business architecture at this level is much higher

53. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 453

54. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 454 BUSINESS MODEL INNOVATION IS REQUIRED Disruptive Business Models can be found when you mix it up at the value system level EDUCATION POLICY & LAWMAKERS ENFORCEMENT JUDICIAL PENAL COMMERCIAL

55. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 455 Business Motivation Strategic Business Models Value Discipline Orientation Operating Business Models Capabilities and Resources DISRUPTION NORMALLY OCCURS WITHIN THE VALUE SYSTEM. ITS THE STRATEGIC BUSINESS MODELS THAT CAN DETERMINE WHERE VALUE LIES O P C O P C O P C MISSION STRATEGIES TACTICS VISION GOALS OBJECTIVES Pe Pr T Pe Pr T Pe Pr T LEVERS DRIVERSI N F O R M A T I O N

56. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 456 WHAT IS A BUSINESS MODEL? Some Definitions A Business Model describes the rationale of how an organisation creates, delivers, and captures value Alex Osterwalder Business Model Generation THE ENVIRONMENT BUSINESS MODEL Markets Industries Customers Market Segment Channels Customer Relationships Value Proposition Offering: Services/Products Processes/ Value Chains Capabilities Business Service Functions Data Applications Technology MARKET MODEL OPERATING MODEL SERVICE MODEL

57. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 457 THE STRATEGIC BUSINESS MODEL The canvas is a tool that is used to prototype a variety of strategic business models

58. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 458 THE STRATEGIC BUSINESS MODEL Each strategic scenario can be evaluated in line with the value disciplines of the organisation DRIVER TREES AND VALUE MAPS & GOALS These value disciplines will help decisions around the strategic balance between efficiency and effectiveness There is often fragmentation around value disciplines which results in competitive forces and flawed decision making Semi Integrated Universal Bank Product Specialist Customer Owner Infrastructure Provider

59. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 459 *Adapted from Geoffrey Moores: Dealing with Darwin Each industry moves along a life cycle, with different opportunities for competitive advantage at each stage THE STRATEGIC BUSINESS MODEL Its also great for start-ups at the early stage of the lifecycle Introduction Growth Maturity Decline TOTAL INDUSTRY REVENUE TIME DISRUPTOR ENTERS MARKET SHARE, REVENUE & COST BECOME KEY PRODUCT INNOVATION REDUCES PROCESS INNOVATION BEGINS PRODUCT LEADERSHIP CUSTOMER INTIMACY OPERATIONAL EXCELLENCE VALUE DISCIPLINE ORIENTATION THROUGH THE INDUSTRY LIFECYCLE

60. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 460 STRATEGIC BUSINESS MODEL MATURITY Measuring the Maturity of a full business model is a complex task. The Key is to look for certain heuristics to use as a litmus test. *Rita Gunther McGrath

61. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 461 BUSINESS MODEL MATURITY 1. Switching costs how easy or difficult will it be for your customers to switch to or from your business? 2. Recurring revenues how much recurring revenue does the business model bring in? 3. Earn before spend does the business model allow for the organisation to earn money before it is spent? 4. Game Changing cost structures are there cost structures in place that create a new market 5. Shifting the burden does the business model get others to do the work for you, or pay your bills for you 6. Scalability can the business scale to include massive volumes as well as support different markets 7. Competition how well does the business model protect the organisation from competition A Strategic Business Model health can be evaluated based upon 7 criteria

62. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 462 WHERE TO FROM HERE?

63. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 463 MOVING STRATEGIC BUSINESS MODELS INTO THE DETAIL STRATEGIC BUSINESS MODELS CAN ONLY GO SO FAR. THE NEXT LEVEL OF DETAILS IS REQUIRED

64. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 464 WHAT WE HAVE FOUND IN LARGE ACCOUNTS Cohesion Mandate Undefined - Enterprise Planning Ownership An ownership gap for business architecture exists - Lines of responsibility around coherency and business architecture, are often unclear EnterprisePerformance Capabilities X-FunctionalCapabilities FunctionalCapabilities CONTEXT Markets Industries Customers Market Segment Channels Customer Relationships Value Proposition Offering: Services/Products Processes/ Value Chains Capabilities Business Service Functions Data Applications Technology MARKET MODEL OPERATING MODEL SERVICE MODEL Strategic Architecture Mandate Business Ownership IT Architecture Mandate IT Ownership Business Architecture Mandate Undefined

65. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 465 THERE IS OFTEN A CHASM BETWEEN THE CUSTOMER EXPERIENCE VISION, PRODUCT DEVELOPMENT AND OPERATIONAL REALITY Value Chain Analysis Cross Functional Models Capability/Business Anchor Models Process Models Application Models Data and information Models Technology Models Value Maps Product and Offering Maps Design Models Customer Storyboards & personas Journey Maps & Lifecycles Learning Maps Motivation Models Business Model Innovation GAP GAP THE ENVIRONMENT BUSINESS MODEL Markets Industries Customers Market Segment Channels Customer Relationships Value Proposition Offering: Services/Products Processes/ Value Chains Capabilities Business Service Functions Data Applications Technology MARKET MODEL OPERATING MODEL SERVICE MODEL

66. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 466 FOR THE DIGITAL STRATEGY TO BE REALISED, YOU NEED TO LOOK FOR THE MOST EFFECTIVE WAY TO ALIGN THE BUILDING BLOCKS OF YOUR BUSINESS MODEL Value Chain Analysis Cross Functional Models Capability/Business Anchor Models Process Models Application Models Data and information Models Technology Models Value Maps Product and Offering Maps Design Models Customer Storyboards & personas Journey Maps & Lifecycles Learning Maps Motivation Models Business Model Innovation THE ENVIRONMENT BUSINESS MODEL Markets Industries Customers Market Segment Channels Customer Relationships Value Proposition Offering: Services/Products Processes/ Value Chains Capabilities Business Service Functions Data Applications Technology MARKET MODEL OPERATING MODEL SERVICE MODEL

67. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 467 Customer Outcome Customer Expectations Customer interaction map : Customer Segment ABC Establishing my account is quick and simple Integration is quick and easy, with the right help available Efficient, with choices that make it convenient I know when the goods will arrive I can find out whether my goods were delivered; I get a meaningful resolution to my problem I want to set-up my account I want to get ready to send goods I want to send a shipment I need to know when my goods will arrive I want confirmation that my goods have arrived Something has gone wrong with my goods delivery KPIs % of accounts set-up in

68. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 468 Customer Outcome Customer Expectations Customer interaction map : Customer Segment ABC Establishing my account is quick and simple Integration is quick and easy, with the right help available Efficient, with choices that make it convenient I know when the goods will arrive I can find out whether my goods were delivered; I get a meaningful resolution to my problem I want to set-up my account I want to get ready to send goods I want to send a shipment I need to know when my goods will arrive I want confirmation that my goods have arrived Something has gone wrong with my goods delivery KPIs % of accounts set-up in

69. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 469 CUSTOMER BEHAVIOUR: UNDERSTAND THE EMOTIONAL ROLLER COASTER OF YOUR CUSTOMERS Incremental, significant or transformation changes required to improve the experience

70. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 470 THE ENVIRONMENT BUSINESS MODEL Markets Industries Customers Market Segment Channels Customer Relationships Value Proposition Offering: Services/Products Processes/ Value Chains Capabilities Business Service Functions Data Applications Technology MARKET MODEL OPERATING MODEL SERVICE MODEL THE CUSTOMER JOURNEY OVERLAID ONTO THE CROSS FUNCTIONAL CAPABILITY MODEL WILL HELP FOCUS THE EFFORTS OF THE BUSINESS ON VERY SPECIFIC DIGITAL STRATEGIES Its at this point that business begins to see the true value of using capabilities Standard functional capabilities can be aligned to a value chain Cross functional capabilities assemble and mix functional capabilities to achieve outcomes in the value map or driver tree Cross functional capabilities each drive out different outcomes. Underlying functional capabilities will have varying perspectives of capability maturity and capability uplift You can also use cross functional models as scenarios to test the capability anchor model validity

71. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 471 CROSS FUNCTIONAL MODELS PROVIDE THE GLUE TO LINK THE VALUE TOGETHER FOR THE CUSTOMERS The Process Layer Plays a Strong Role in assembling capabilities for different outcomes PROCESS Sign Up & Integrate CAPABILITY 20. Information Services Management CAPABILITY 15. Sales Execution PROCESS A1. Explore and compare potential providers and services PROCESS B2. Sign up and activate account PROCESS C3. Integrate my store with Australia Posts APIs precedes precedes precedes precedes BUSINESS SERVICE Customer Sales Management BUSINESS SERVICE Partner Collaboration PROCESS C1. Receive information on how the systems and processes will work PROCESS C2. Install the necessary hardware / software on my systems is realized by LOGICAL APPLICATION COMP. Customer Sales Management LOGICAL APPLICATION COMP. Enterprise Resource Planning LOGICAL APPLICATION COMP. Partner Collaboration Management LOGICAL APPLICATION COMP. Security Management communicates with communicates with communicates with implements is realized by implements ACTOR Post Staff DATA ENTITY Sales Order ACTOR Post Staff participates in participates in is processed by consumes SAP - CRM SAP - ERP auspost.com.a u IAM - OIM is processed by ACTOR Fiona participates in Customer CAPABILITY People Process Tools Connecting these to projects provides valuable insight into coherency o the capex investment across the enterprise Within each process flow, there are typically four to five capabilities that make up the process. These typically correspond to functional silos that complete each step. Within each capability, the model identifies systems or applications that are used to execute the capability. This is where the model forms the alignment between business and IT. Archimate Notation

72. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 472 THE CAPABILITY ANCHOR MODEL PROVIDES THE UTILITY BUILDING BLOCKS REQUIRED The capability anchor model represents the "map" of the organisation THE ENVIRONMENT BUSINESS MODEL Markets Industries Customers Market Segment Channels Customer Relationships Value Proposition Offering: Services/Products Processes/ Value Chains Capabilities Business Service Functions Data Applications Technology MARKET MODEL OPERATING MODEL SERVICE MODEL

73. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 473 THE BUSINESS ANCHOR MODEL The Business Anchor Model Anchors the organization on the set of blocks they can use to drive out the digital outcomes CUSTOMER EXPERIENCES VALUE DRIVING CAPABILITIES SUPPORTING CAPABILITIES SUPPLIERS&PARTNERS CUSTOMER TOUCHPOINTS PRODUCTS AND SERVICES VALUE CHAIN VALUE CHAINVALUE CHAIN CUSTOMERS,STAKEHOLDERS CROSS FUNCTIONAL VALUE STREAMS VALUE BASED INTENTIONS THE EA APPLIED BUSINESS ARCHITECTURE COURSE

74. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 475 Questions?

75. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 476 1. In the old, IT-controlled world, yearly budgets were more or less set in stone by Jan 1. Beyond the obvious fact that headcount costs were more or less fixed and could be forecasted by that date, most other spending was fixed as well. Because non-maintenance, non-headcount spend was primarily capital expenditure for long-lived assets, it had to go through long planning and budgeting exercises before the year it would be spent, often two or more years in advance. It's common for IT organizations to be researching something in one year, putting it into the budget planning the next year and spending the following year. In the new, CMO-controlled world, much of the spending will be focused on public cloud computing, where no capital investment is required, but where all costs will fall into an OpEx category. The fact that this spending does not require CapEx means that less visibility into budgets will be possible on Jan. 1 of a given year. LESS VISIBILITY MEANS SPENDING UNPREDICTABILITY Source: CIO Magazine: http://www.cio.co.nz/article/466738/big_shift_when_cmos_grab_it_budget_from_cios/ This new CMO cloud world will cause IT spending within a company to be far less predictable for the following reasons: 2. This unpredictability will be exacerbated by the fact that these CMO-oriented applications, by their very nature, have much higher variability of load and user base. If your application is tied to a movie's release, and the star of the movie experiences a personal scandal that drives enormous interest in the movie, your app may experience 10 times the traffic you expected-and 10 times the cost for your cloud computing. 3. A third factor increasing the unpredictability of IT spending lies at the intersection of the decision-maker profile and cloud computing itself. CMOs frequently are presented with new business opportunities that don't fall neatly into "beginning of the year" launch timeframes. If it's a good opportunity, you want to pursue it right away, not wait for the next budget cycle. In the past, when you had to budget capital to pursue an opportunity, the process meant the increased spending was quite predictable, as it had to be planned for and slotted into the yearly budget. Today, when cloud computing makes resources available in minutes, there's little to prevent you from starting right away. Even if there's a budget forecast at the beginning of the year, you can expect significant variation as CMOs choose to pursue promising new business opportunities.

76. | USING BUSINESS ARCHITECTURE TO ENABLE CUSTOMER EXPERIENCE AND VALUE STRATEGIES | ENTERPRISE ARCHITECTS 201 477 DISRUPTIVE BUSINESS MODELS Predictions