Customer and Billing in focus …

The new cloud delivery model of IT puts much more focus on the customer information, and how to charge / bill for the services.

The new economy that comes from online sales, but also from the fact that the customers are easier and easier to identify, and connect to a purchase. The customers use credit cards, and also every possible kind of loyalty card imaginable. This ever growing stream of information is a source of value that is very much unused.  With this information there are great opportunities to increase the sales in any enterprise, this has been known for many years and realized by IT systems called CRM systems (Customer Relationship Management systems) but it needs to be elaborated and built out with new and modern functionality. In a modern CRM system you have to classic information, what did the customer buy, when, in what store, maybe even some loyalty information. In addition to this it becomes essential to add information around where was the purchase done, this becomes essential when we add the online shopping dimension to any normal purchase. It is also great if you can add information from social media, like friends, their interest, the interest of the customer itself and more.

Adding this kind of information will open a new world of possibilities to sell more and better to the customers. And more sales equals (often) higher revenue and more profit.

As important as having control of your customers it is also essential to get control of the ways the customers pays; billing … Billing is rapidly moving from a cash with some credit card payments to more or less only credit card payments into a new world where you can pay also with your phone, with tokens earned in other ways through subscriptions or through loyalty.

Ease of billing/payment will of course result in more sales, but it is not as easy to just add functionality to handle the new way of settle the payment with, even if this is the first essential step for the enterprise. In the new world of internet it is also essential to handle the different personas of a customer, as well as the customers different ways of paying for items. With personas means the different types of personalities the customer have, private person, professional, mother, father, member of the swim team and more … It is quite safe to say that everyone have been out searching for something on the internet on behalf of your kids or in behalf of the local sports club you are active in, and then the preferred search engine company that you are using collects the fact that you now are suddenly very interested in information about blue-whales or quality of water purification systems. The next time you go online you will get this into your results … or suggestions … what is missing here is the fact that when you helped you kid with gathering information about the blue-whale you where actually searching with one of your personas. When this persona functionality available in the future it will enable even more possibilities to targeted sales. More and more of the sales these days are conducted over the internet channel, and there ease and secure payments becomes more and more important, and with the smartphone usage a new and obvious way of buying will be one of the prime choises of every customer; the mobile payment connected to either a mobile subscription or to a pre paid mobile number. Again the obvious need of personas bubble up to the surface; what if/when I only have my company cell phone on me and I need to buy a private-bus-ticket with a NFC or SMS payment?  This can sound like a stupid example, but it is a fact already in some places (Helsingborg, Sweden) where you can either buy pre-paid ticket cards in dedicated central places or if you do not have a pre-paid card or the pre-paid card is out of money you can only pay with SMS, no cash or no credit cards are accepted on the bus. So maybe a small dilemma, but still without a persona functionality attached to my company phone billing I can not use the bus. Then there are tons of interesting design and use interface challenges to solve everything, not to mention all the interesting algorithms in the background to keep the personas in control.

Sales functionality

The customers will over time not just expect to get better targeted offerings, but also more enhanced offerings based on the information and history gathered. Some classic ways of getting the customers to buy more is to bundle items and give a discount if you buy the bundle. Or buy three of one kind and get one for free. Or just get some percentage discount because you are a loyal customer. Or discount everything or a set of the items and call it a sale. In common for all of the above is that it is tied to one particular time or occation of buying, and to one store. Soon we will see new functionality; like bundling over stores, why would not inter company agreements and collaboration result in item bundling over the store boundaries? As a customer you would be interested in this, you have bought three bottles of fine wine, and as a bonus you get the possibility to bundle it with a plate of cheese that will be delivered by another company, but the bundle makes it attractive as an offering. Creating this kind of inter-company bundles also means that you will share customer information, either direct by simply sharing the customer information stored in the CRM system or indirect by the fact that when setting up the bundle the second company (the cheese company) will know that now the customer have bought a set of wines, and in particular also the type, and volume to be able to use their special knowledge, and recommend the correct type and volume of cheese.

The same principle of bundling will also be applied to the time dimension as we just did to the store dimension. Why would you only be allowed to get the benefits of the bundles if you buy everything at the same purchase? Why is not the bundle offering valid for 24 hours? a week? This is just because historically the selling company did not have the sales/customer information available. Now the technology exits to integrate CRM information in-between different customers, and of course independent of where the CRM system is deployed. It will have to be real time integration, and there will be challenges regarding master data, and or if it should be synchronization/copying of data or if you should allow lookups.

In the same way as always, there will be a need for both types of integrations. The synchronization scenario will be applicable for some companies, but then you have the giants of gathering customer information like Facebook, Google, Yahoo and Microsoft who most likely will sell their gathered information with some kind of lookup functionality, and micro payments. The new players in this arena will be the telecom providers that will both provide customer information that is totally new to all companies, and they will also provide the a new way of billing for goods.

The new information that the telecom operator today have about their customers are a gold mine that is unused. Many people will start shouting about privacy issues and privacy laws, but end of the day that will be solved, and a lot of the information will be available for sales to companies that wants to use it. Information that can be provided is for example, location based information telling where and how the customers are moving, either in real time, or in patterns. This can be used in real time by companies to send out real time marketing offers to potential or loyal customers passing buy a physical store or other place. It can also be used to buy sets of information, for example the top thousand persons that most times during a month passes close to a certain restaurant. Other type of information that the telecom operators are in possession of is the customer internet surfing habits, all surfing on smart phones, and more and more also with mobile broad band connections to lap tops and tablets is passing through the telecom network, and is tagged to a user. (not if the user using a wireless connection)

The other functionality that the telecom operators bring to the party is the functionality of easy billing, every online surfing transaction is as stated above going through the telecom networks, and is in touch with the telecom billing system to constantly determine if the data is allowed. This can be either a subscription that will be invoiced to the customer, or it can be a pre-paid usage, and then need to be constantly monitored.

This functionality can be integrated into both online, and into normal shopping through NFC or SMS payments, and also the same when it comes to online payments, you can use the fact that your telecom operator have some kind of contract with you. (pre or post paid)

What about the functionality behind, the complex combinations price setting parameters can become a real challenge if you need to code it from the beginning, and even if you have more than basic functionality, the borderless, time-less new era will make things extremely complex.

Borderless means to sell/use items from more than one provider in bundles or discount schemas, this will mean contracts in between suppliers, on how to split revenue, length of valid opportunities, history of purchases, and when combined with the timeless dimension also keeper of old non valid offerings.

Timeless means that an offering do not have to be valid just during one purchase activity. For example, if you have a discount offering of buy 3 get one for free, then you normally assume that you have to buy the three items at the same time, but it could be possible to allow patterns where you first buy one item, and then add two more another day (time limited in the offering) and get one for free. This would make the offering a timeless offering.

Where do we get this functionality, normally in a sales/ERP system, where the sales ledger have rich functionality. If we compare to a CRM system it do not always have the same rich sales functionality.

High level functionality needed;

• Customer information
• Purchase history
• Multi Currency
• Advanced Pricing functionality
• Agreements / Contracts
• Usage monitoring
• Tax, where is it sold?
• Inventory for physical items
• Supply chain management (delivery, order promises)
• Supplier items

The marketing, and sales functionality as well as customer service of the MS Dynamics CRM is key of course to improve and increase sales of any kind.

A quick look at this will first disqualify the MS Dynamics CRM product, and you get a feeling for that MS Dynamics AX would do the job. If you then take into consideration that AX also have a full solution for retail that most likely can be used here, even if you buy stuff online with you PC, or with you phone.

Very much of services that will be sold in the future are so called IT services, that is rather consumed online than being delivered, but in the same way as we added timeless and borderless to the new way of selling we will also see patterns where you buy a physical item, and get some IT services to consume. To make it even more interesting some of these services will be subscription based where you will get a volume of consumption every new time period, and there will be an end date to the subscription.

In the telecommunications world that have been standard for a while to sign up for a subscription of SMS, where you get for example 3000 SMS to spend during a month, and every new month it gets reset to the initial amount.

Other examples of consumption could be for example backup, where you either buy a subscription for a certain amount of storage that you pay a fixed price for each month, or you could easy visualize a scenario where you instead pay zero if you don’t backup anything, and then you pay for exactly what you use.

Here we get introduced to functionality that normally is not in a ERP system or a CRM system, but very common in the billing system of the telecom operator. So basically what we are thinking of is that we need to be able to integrate and use functionality [/ provision] from the billing system.

But end of the day, the customer (CRM information) is the main data object here, so the owner of the customer information can sell more. The new integration with the providers of customer information, interests, behavior, friends, etc, etc will be key to future success as well as integration to new payment mechanisms.

Cloud service models of today?

The last years we have all read, and talked about cloud computing. That everything will be executed in the cloud … To some extent that is probably true, but for an enterprise there will be systems that there are no business case in moving into the cloud, as well a there are systems that definitely needs to be executed from a cloud platform.

Many different types of cloud will exist, and I argue that a company benefit from selecting a mix of these.

The first, and most simple version of cloud is the hardware cloud (IaaS or Infrastructure as a Service), the characteristics of this cloud is that you buy the amount of computing / hardware that you need for the moment, and can release capacity that is not needed with very short notice. In a perfect world the scaling up, and down would be automatically and in real time, and depending on what service level agreement (SLA) the buyer have with the cloud vendor.

e.g. if performing for example computing intensive supply chain planning calculations the cloud would understand that to keep the SLAs it need to scale up the allowed performance. This sometimes also is called “cloud burst”. One big difference in the IaaS cloud is how you pay for your services, the most common is that you pay for allocated resources, but some cloud providers actually invoice per used resource unit. If the cloud bursting shall work it is very important that the invoicing mechanism is per usage and not per reserved capacity.

The next common abstraction level in the service model dimension is the PaaS or platform as a service, here we have abstracted away the hardware, and get access to a computing platform like a database, or a web server or a execution runtime engine. When reaching this abstraction level it can be interesting just to quickly reflect on the differences of IaaS and PaaS from a cloud owner perspective. The IaaS will most likely be owned by the hardware vendor, that owns and manufactures the computing platforms, or the storage. The margin that these vendors can play with to get the correct price is directly dependent on the hardware. In the second case the PaaS we will on top of some hardware add a layer of executional functionality like a database or a runtime execution engine on where some kind of software will execute.

When we look at the third abstraction layer of cloud in the same dimension we will come to the SaaS or software as a service level and this is where the service offered is access to a piece of software. Examples of this can be email, CRM, and even ERP systems. Now we are looking at a cloud that is handled by a software company. The margin that now is regulating the sell price of the services offered by the cloud vendor comes from the licenses that a using company have to pay. The hardware is still needed, as well as the platform to execute the software upon. We now have three different service cloud models that spans from one extreme of hardware only to software only. I will now argue that this is not the end of this dimension. To come close to the end we need to add a fourth cloud type that I will call the industry solution cloud (Ind aaS, Industry solutions as a service)

The highest business value is received when a company selects to run a industry solution that is standardized and managed in a separate cloud, a Industry solution cloud. In this end of the service dimension the cloud provider will by definition own a solution that is a compilation of several software entities that together result in a higher value to the end customer than each piece of software on it own. To be able to run this successfully the added value need to be higher than the cost of software license, platform cost and hardware cost.

So far I have not seen any clear provider of industry cloud, but I am sure that they will soon turn up. When there are a white spot in the market it will be filled by someone very soon, but the reason that we don’t see anyone here yet might be that there are no mature offerings that have a good enough business case. It is quite easy to argue against the IndaaS, for example the most common argument that I have heard is that you will not get any differentiation to your company if you chose this route. I believe that the IT industry in mature enough to understand that a solution in a IndaaS will have to be a set of black-box components that have well defined interfaces and can be exchanged for some other black-box component that will interact with the rest of the components in the same way. One ERP system that is closing in, and can be argued to play in this area is the Microsoft Dynamics AX where you have industry solutions, and also a powerful workflow engine where you can exchange sertain functionality in the standard ERP system with your own unique solution that would give the enterprise that key advantage that they need over their competitors.

Sometimes I use the term “Vendor Cloud” to describe a type of cloud that is in between the SaaS and the IndaaS, example of this could be a ERP vendor that have a cloud where the customers can run the ERP suit of software. This definition limits the control to the vendors software, and hence it still is a license play when it comes to cost, but some very large software vendors own suits of software that makes it close a industry cloud, but I think the difference is in the fact that an ERP system in it self do not give a business value, the business value is received when all the parameters, and most external integration are in place.

Trade Promotion Management (TPM) an important part of CPG business

My last year have been filled of products, and some of them had a obvious fit in the system map in almost any company. Advanced planning systems has developed a lot in the last years, the product that Kineticsware have (KAPS) is a new generation advanced planning system, that handles the input information in a new way, and uses new algorithms to speed up the calculations, it has a great interface to present the information to the end user. It also gives the posibility to to "What if" scenarios because it have the new way of doing the calculations that gives the speed.

Another very interesting functional area that I personally had not spent a lot of thoughs of is the Trade Promotion Management. After reading research from companies like AMR, AT Kerney, SAP, Kineticsware, and Infosys it is obvious that this area have need for end to end solutions. There are some products out on the market that claims to have the holistic view of the challange. I am sure that many of the big consultant firms, like EDS, can provide expertise in the area but with the area being quite new to the product companies (Microsoft, SAP, Oracle …) the interesting thing here is that new products have the possibility to position themself in the market, and make a big difference. So … what is Trade Promotion Management? TPM is the business process of managing incentives between manufacturer and retailer to improve the sales of a product. That can at first sound quite easy, right? But when you start to dig into the problem space you soon find that it is more complex to get right than you imagined in the beginning. And that insight is usually the first sign of that some automated support might be good to have. Do everyone need a new product? No of course not, but the market now offers products for companies in every size from the small to the large enterprises. When scanning the market for good solutions I think it is important to find a solution that gives the functionality that you need, and can grow with your business. It might be the correct thing to go for SAP if you have the strategy of using SAP solutions, but a Microsoft solution will be a extremly good alternative for many companies. There are of course other vendors that should be evaluated, but do not forget to take things like stability, scalability and other non-functional aspects into consideration as well as the functionality.

The ROI of implementing automated support of the TPM activities is very often very good, but do not forget to apply som organisational changes when you are doing it also so that you actually use the new features. And the change of business processes is not only in the sales and marketing department … it will affect more parts of your business. I think that a TPM solution can be the innovation that often is talked about in BPR that is needed to lift the company performance to a new level. If/when you get that advantage of the solution it is also possible to repeat the activity and continue to be successful.

 

Technorati-taggar: Microsoft Dynamics AX,SAP,Oracle,AT Kerney,EDS,Infosys,AMR Research,KAPS,Kineticsware,TPM,CPG,ERP,Microsoft,Trade Promotion Management,BPR

Data on 15m benefits claims ‘lost by Customs’ – Telegraph

Data on 15m benefits claims ‘lost by Customs’ – Telegraph

Wow … I think this will change the view on security, or at least I hope so … Im sure that the solution to prevent things like this is not the most expensive to implement. The solution would definitly not just be an IT solution, but it should also be a business process change.

I guess that the security consultants just became more expensive :-) it also shows that even if you have full control in some places if you dont have the full picture it is hard to find the week links in the chain.

One can wonder what the value of this information is on the market … … a very quick search with Google finds information from among others, NY Times, that stolen credit card information is "worth" between $50 USD and $100 USD. Perhaps this is then 15 000 000 times $100 USD …

Even if we cant set a price on information, I think that this shows how important it is to protect the information that holds the business value. Security is and should always be part of architecture, spanning from Enterpise Architecture to Infrastructure Architecture.

 

Technorati-taggar: Enterprise Architecture,Business Value,Security

What is the content of the next hype curve and why? Lets be interactive !!!

We have all seen the Gartner technology hypecurve, and also used it for doing market planning . I found a version on the net that I have inserted here … I thought that I should try to use the power of internet and web 2.0 … and also to see if there is someone that reads my blog :-)

My hope is that you out there adds a comment to my blog and adds one or more "technologies" that you think belongs somewhere on the curve. Below I created a template. What I want is a comment with a maturity between 1 and 15. To be able to follow this up and get some legimity to the figures I think that it is important that when you post your coordinates it is also important to write a couple of sentences that explains why you think that the technology belongs at the coordinate! Together with the number a letter (S, M, or F) to indicate if the technology is moving with Slow (S), Medium (M) or with Fast speed over the hype curve.

I want the hype curve to show where we are on new years evening 2008/2009!

It would be very nice to get the contributors name, title, and organisation/company also … That is not to discreminate anyone, but to help other persons that wants to use this "blog" created information.

Depending on the traffic and volume of information, I will update the hypecurve, and summarise the discussions … and try to do some analysis of the information once a week.

It could also be the fact that some of your opinions is regional, and that you are aware of that. If so please then also write that and the reason. It will probably help the discussions.

My first contributions (could change after some discussions) are;

• 11S – SOA – I think that SOA is mature, but not mature enough that everyone understands it
  It will become more mature when the abreviation is demystified … We need to understand that SOA is not all about technology, it is also very much about SOE or Service Oriented Enterprise. And the real boost that will kick off SOA is when we get a more mature Enterprise Architects community in the IT industry
• 7F – SaaS – Because it is becoming more common in the market place I think that this is a fast mover from the top of the curve into the slope, but it will get up of the valley quite fast and into the area of maturity
• 13S – BPO – The companies with the business strategy dares to take the step, and they are becoming quite common. The technology behind the offering has become mature, and so have also the delivery model
• 4F – Agile BPO – Agile BPO is a new approach that will be very attractive to a lot of customers, that is why I think it is very fast moving and I also think that by 2008/2009 it will have reached the top of the hype, and fast slide down and into the maturity area
• 8S – Demand Driven Supply Chains – This is one of the challanges in the supply chain to go from push to pull, it will incorporate collaboration in all the steps of the supply chain to get it to work. And when noramally complex supply chain it will involve advanced planning solutions to be effective. It will also put new demands on supplier relationship management.
• 12F – APS – The first generation advanced planning systems has been around for a while, and is working very well, but will soon be replaced by newer technology. But there is still a lot of companies that will make their first generation installation with these systems.
• 4F – APS 2.0 – The second generation of Advanced Planning Systems will be recognizde during this comming year, and the companies that realise the benefit of parallell planning of both resources and capacity at a speed that allows for making "what if" scenarios will get to ROI very fast.

Do not forget that there could be other fun/interesting/valuble technologies that belong in the curve, please help out to find them!

 

Technorati-taggar: BPO , hype curve , SOA , SaaS , supply chain management , Agile BPO , SOE , Enterprise Software , ROI

CTO Blog | Enterprise Architects versus Business Architects

Origin; CTO Blog | Enterprise Architects versus Business Architects (Capgemini CTO blog)

The normal talk about aligning Business with IT, and can the Enterprise Architects do the business architecture? I think that most of us agree that one big challange of today is to align the business with the IT. We can then of course also add SaaS or BPO to the discussion, and go down to details like business processes and business services, but is that the starting point? I am convinced that we have to start one step before that in most of the cases and ask if we really have a willingness to align the business strategy with the IT strategy, and how do we think that this will be done?

Shall we ask the IT guys that has no idea about business issues to do the alignment? Shall we ask the business people to tell the IT how things should be done? Hmm … hard question? ;-) No, I thin it is not a hard question … the alignment of the two "classically" parted camps is probably the hardest thing to do, not to descide if it should be done … Who should do it?

Should the business architects do it? Or should the SOA (IT architects) do it? or do we have a group that is specialised in doing this? To be an Enterprise Architect is also to be able to know when to use an expert … a business architect or an infrastructure architect …
As everyone … even the Enterprise Architect has a legacy, and has developed himself/herself over the years, and become more skilled in some part of the architecture spectrum … If the horizontal axis is business to infrastructure (covering also information and systems in between) not all Enterprise Architects will be experts in the business architecture, and neither will all be experts in information architecture … the curve will probably follow some kind of normal distribution as the most in our world. The same kind of distribution will apply when you look at the "depth" of the architects, some will work with concepts, and strategies, and some will work with more physical issues …

My point is that yes we have new challanges, both in technology (SOA, SaaS) and in business (BPO …) but the biggest thing we are facing is to accept that IT is a essential enabler in the modern business, and thus it has to enable the business strategy … Nothing new, but take a look around you and be honest, is this really the case in your company?

The fact is often that we find great IT systems but they can not fullfill the business strategy … and we also have no clear picture of how to do the alignment, and what kind of alignment we need.

I think that this is the space where the Enterprise architects fit, a role that is expert in connecting the different areas in the enterprise, and fulfilling the strategies to the best possible degree, by using expert architects in the different aspecs … like Business Architects and Infrastructure Architects or SOA Architects.

 

Technorati-taggar: Enterprise Architecture , Business Architecture , SOA , SaaS , BPO , Infrastructure Architecture , Information Architecture

SAP buys Business Objects

SAP, Oracle, Microsoft the three large ERP vendors in the market today … (sorry if someone else feels that they should be mentioned, but then you have the oportunity to make a comment.) Some days ago SAP bought the french company Business Objects that are specialized in Business Intelligence. By doing that they left the normal organic growth strategy … This is very interesting from a business strategy point, and I think it will be very interesting to follow SAP and what they will do in the market.

What BI (Business Intelligence) tool providers are still out there?

• Business Objects – aquired by SAP
• Cognos
• Hyperion Solutions – aquired by Oracle
• MicroStrategy
• Microsoft

What is the value of buying a BI tool? Well, I usually say that it is perfect to have a tool, at least when you have so much controll over your information (data) so that you know what to measure, and what information to use when measuring … Will you know that when you buy a tool? Probably not! How will you know that? The easiest and probably the only way is to structure your business/enterprise. The most effective way to get to result is to use an Enterprise Architecture method, and focus on finding the correct performance indicators (KPI). Without control and connected business and IT it will be very hard to know what to put into the tools … and yes the ERP vendors have some insight of what is usually used, but I think it needs business expertise to really nail the correct information.

What about Microsoft Dynamics AX and BI? Yes, MS Dynamics AX has for a long time been prepared for using techniques like OLAP cubes for analysing the information, and furthermore with the usage of the latest Microsoft SQL server the integration to the Microsoft office suite has become excelent, reducing the cost of learning and maintainig new applications. Some might say that you have to do more yourself with the Microsoft tool set, but my strong belief is that the fun (hard) work is to structure your company and find out what you want to measure …
It is still also very important to remember that even though you have a ERP system installed and running it will probably not contain everything that you want to measure, there will be other sources in your business that are important … and here the use of some ETL tool becomes very important. I usually talk of best of breed in companies, but that is an approach to use when it can really give a business advantage.

The business intelligence market is supposed to be worth $8 billion a year, and grow at 11% a year between now and 2010 according to Forrester Research (see link)

It is very valuble to have control of what happens and can happen in your company, and that information will help you to make the right descisions, but without modern IT support that enables the users to work effectivly you will bot get the correct information into the systems, and with the wrong information you will get wrong answers ;-)

Technorati-taggar: SAP , Business Objects , BI , Business Intelligence , Microsoft Dynamics AX , KPI , Enterprise architecture , ETL