A few weeks ago, I posted an article on, Business as Unusual with SAP, on how eight megatrends will shape the world and impact businesses across various industries. These trends are critical for EAs to be aware of. There is an abundance of forward-looking trends, ideas, and opportunities to consider, not only with the eight megatrends, but how they inter-relate. The megatrends presented in the book include; Everything as a Service, Integrated Mobility, New Customer Pathways, Lifelong Health, The Future of Capital and Risk, Sustainable Energy, Circular Economy, and Resilient Supply Networks which will shape future businesses and business models.
So, what does this mean for enterprise architecture teams that support the business vision and strategy. Assuming the architecture team is mature and provides holistic enterprise architecture services that collaborate strategically with the business strategy and lines of business, then these high-level activities are relevant with emphasis on staying abreast of emerging trends.
The enterprise architecture team need to have an intimate understanding of their industry, corporation, and lines of business (LoB) including a value-add relationship with the key business stakeholders. A complete understanding and participation in the corporate/LoB strategy is also required to aid in supporting the planning of strategy execution for all dimensions of the business capabilities in scope.
This is where Business as Unusual fits in. Given the defined scope of the business strategy each of the Enterprise Architects who are experts in various domains (Business, Application, Information, Security, Technology) should explore how other industries, corporations, and competitors are transforming their business to evaluate how it can be incorporated. This includes, potentially new business models, new innovations, transforming existing capabilities, and introducing new business capabilities. The opportunities can then be confirmed by the EA team, socialized with key business stakeholders, followed by integrated into the collaborative business strategy execution planning, roadmap, and innovation sessions.
Support the business strategy process to collaboratively define the target architecture and roadmap of initiatives to realize the business strategy.
Innovations will need to be assessed, planned, and evaluated on a regular basis to confirm they meet or exceed the business requirements to fulfill the business strategy. If they do not, the dependent capabilities and target architecture / roadmap may need to be collaboratively and continuously re-assessed and re-planned.
Executing on the business strategy will require the enterprise architects to be continuously involved to ensure enterprise architecture relevant governance is in place and business value is being realized. Additionally, the target architecture and roadmap will need to be updated on a regular basis to reflect any execution deviations.
There are many examples and suggestions in the book from very forward looking individuals that should be considered for your business, including how SAP is supporting and/or planning for these trends. Some of these trends may be outside your particular industry, however, should be considered as they may impact how your business functions in the future. Others may not explicitly fit your business, but this may spark new ideas and innovations.
Share Business as Unusual with your strategic stakeholders to provide compelling customer stories from other executives and thought leaders on how organizations have shifted and adapted their business models for tomorrow’s market.
Below, I have included a few trends that stood out for me in Business as Unusual.
Everything as a service
Hilti “has built a subscription model based on tagging, logging, and tracking pieces of highly portable equipment used on construction sites and workshops. Hilti uses customer feedback and equipment data to improve the company’s model and its products. It also launched a fleet management service with outcome-based lease fees for power tools.”
“One early and successful adopter of as-a-service models is warehouse robotics. You’ll see pure subscription models there. You’ll see outcome-based models where the customer may be charged on the number of pick-and-place actions.”
“In addition to selling and leasing their equipment, Tetra Pak sells packaging materials (production consumables) and services on a recurring basis directly to customers. Today, 40% of our services revenue comes from multiyear agreements based on a fixed price per unit produced and a performance guarantee commitment.”
“Down the line, we may also see some really interesting scenarios. In Germany, a power plant is defined as a facility that can deliver at least one megawatt. Combine seven Porsche Taycans and you have a power plant that can push electricity from the Taycan battery packs to the grid. You could sell it when the price is highest, and then recharge the cars shortly before you drive—at possibly a cheaper rate. This arbitrage business is interesting if you scale it to millions of electric vehicles.”
“You have the e-mobility service providers. There are charge point operators. If you travel long distance, you may have to deal with roaming providers, as we have with mobile telephones. These providers have contracts with many charge point operators. As a driver you need a charging box in your garage or apartment parking space. Of course, these days we are seeing many more ‘prosumers’ who don’t just buy electricity, they sell power back to the grid. They may have solar panels and store surplus energy in the car battery and at times sell it back to the grid. Or they may be part of a growing number of virtual power plants, which share energy across communities of consumers.”
Employees “tell our fleet manager, ‘I am not interested in a company car. I’d rather have a mobility budget from SAP, and I can decide how to use it: do I want my own dedicated car, do I want to subscribe to a ride-sharing system, or do I want to have micro-mobility with e-scooters combined with public transportation.’”
New customer pathways
“Consumers don’t care if a brand is owned by a traditional consumer products company, by a retailer, or by a healthcare or financial services company. They go for products and services that meet their needs and preferences, and don’t care about historic industry boundaries. This also motivates players to venture into new territories and to experiment with disruptive business models.”
“If you shop in a convenience store, you’re happy if you’re in and out within a minute and you get exactly what you need. At a fashion retailer, like Louis Vuitton, you may have a glass of champagne, and stay a couple of hours and expect service to get your selection right.”
“By selling directly to consumers online, you can avoid exorbitant retail markups and therefore afford to offer some combination of better design, quality, service, and lower prices because you’ve cut out the middleman.“
"We knew it even before COVID, but the pandemic has made us realize how important it is to have a comprehensive and portable patient record. Today, the data is fragmented across multiple providers, across claims in payer systems, across clinical trials conducted by pharma companies, and across databases in public health agencies. The patient’s fitness tracker and imaging records are rarely readily available at the point of care. The healthcare systems were designed to be hospital-centric and insurance company-centric, not patient-centric."
"Natural language processing [NLP] helps doctors transcribe their voice recordings, finally making doctors' scrawl readable and processable. … But what if we could support a tumor board in diagnosing and creating the treatment plan by having doctors from the different disciplines look jointly at the patient data. You might say, ‘This is state of the art.’ But what if we could show the board the history of patients with similar symptoms and diagnoses, how they were treated, how they responded to different treatments, and what their outcomes were? I think this would tremendously help determine the best treatment path for this patient. And that’s where the current discussion is heading."
"Current technologies support medical and administrative staff in their daily work and decision-making processes. Integrating artificial intelligence into data- and image-driven decisions is a significant cultural change in a classical hierarchical culture. We expect human doctors to take their silicon colleagues seriously when they offer a diagnosis that deviates from their own opinion. But mistaking a malignant for a benign tumor (or the other way around) can have disastrous consequences for the patient."
Future of Capital and Risk
“Our insurance customers are looking at mobility of the future, health of the future, housing of the future, travel of the future, and wealth management of the future. They are embedding themselves and looking to increase their services, expanding beyond their traditional insurance premium revenues.”
“The story is that Ping An is a tech giant masquerading as an insurance and financial services conglomerate. Annually, Ping An commits 1% of revenue— roughly 10% of profits—to R&D across its ‘five ecosystems’: financial services, healthcare, auto, real estate, and smart city. In another stroke of strategic clarity, they then cut those five ecosystems with three core technologies: AI, cloud, and blockchain.”
“We need to better understand the profile of the person driving under each business model and come up with better individual pricing. We need to think about drive style analytics; it’s much more than the classical telematics approach, which gives some benefit to careful drivers. Cars that are used only one hour a day [by one driver] are a different risk than shared cars that are and used for three to five hours a day [by different drivers].”
“What we’re looking for now are opportunities for using data, using intelligence, using different approaches to find the right pathways to bring today’s infrastructure forward, to monetize what we can.”
“If you look at what software companies are providing, including SAP, the focus is on outward-facing reporting, as with the SAP Sustainability Control Tower. But in addition, our CEO, Christian Klein, talks about a green ledger. For finance, companies have their credits and debits. They now require the ability to track their environmental, social, and governance credits and debits as well. SAP is the only company that can extend the financial ledger with a green ledger to integrate emission-related factors in daily operational decisions.”
Shell – “It includes participating in the Clean Skies for Tomorrow initiative for aviation and our effort around Sustainable Aviation Fuel (SAF). It currently accounts for less than 0.1% of the world’s consumption of aviation fuel. We announced our ambition to have at least 10% of our global aviation fuel sales as SAF by 2030. We are working with Rolls-Royce to test 100% SAF in airplane engines for the first time.”
“We know that nearly two-thirds of the world’s population don’t have access to a decent waste management infrastructure. On one hand, you have the industry looking to massively increase its output. On the other hand, we see a society that is completely ill-equipped to do anything with that output after its end of useful life other than burn it or leave it to a fate in the natural environment. That’s the key challenge. At the end of the day, these materials are not being produced to deliberately harm the environment. They’re being produced because there’s a demand for the product.”
“We now have data that shows that products marketed as sustainable are growing much faster than conventional products in about any category that you look at. What’s more, the margins for these products are higher. The data have been robust through COVID, and robust across generations. Generations Y, Z, and younger are pushing change, and they’re not even at their full spending power yet.”
“With molecular recycling, you can regenerate the plastics exactly as if you would create them in its raw form. You have no deterioration, no problem with coloration. You can recycle molecules as often as you want. Mechanical recycling is more limited in the number of times that you can recycle.”
“It’s a pretty cool product. It’s very similar to silk, so it has a luxurious, cool touch which glides smoothly over the skin, even though it’s synthetic. Naia™ Renew is an innovative solution for the fashion industry’s sustainability— enabling circularity at scale. The fiber is produced from 60% sustainably sourced wood pulp and 40% certified (mass balance approach) recycled waste plastics. Naia™ Renew is a beautiful product, created from hard-to-recycle waste materials that would otherwise be going to landfills or waste incinerators.”
“We take production data of what was sold in which location. Then we use machine learning and geospatial analytics to predict the ultimate route and fate of these materials. We can then go back to our customers’ product managers and tell them what will happen to their products downstream. And if they have the budgets in place to make this downstream flow circular, that’s where we think they should spend the effort. And if they don’t have the budget, our insights help them build the business case to get it.”
Resilient supply networks
“What used to be kind of linear, sequential supply chains where you make it over here and sell it over there, have now become much more intertwined and connected. Supply chains are more like networks than they are vertically integrated, linear, or sequential. That has created a whole new level of dependencies that never existed before.”
“Additionally, you can’t even get close to proclaiming that you’re a sustainable company if your supply chain is not sustainable. Most of the company’s carbon footprint, most of the cost, is typically tied up in the supply chain. So, if you’re not thinking of sustainability in the supply chain, then don’t even pretend to be thinking of sustainability at all.”
“Customers are asking us, ‘How can I run and monitor my operations from a control tower? I shouldn’t need to walk around on the shop floor with safety gear and a helmet. I should get push notifications triggered by events and exceptions in production and the supply chain. For example, for production planners, if a supplier can’t deliver or a shipment is delayed, what are my options for corrective actions?’
“We are connecting the enterprise business (IT) processes to the operational technology layer. Industry 4.0 started with machine-to-machine communication. Now, we are communicating enterprise IT processes directly with the robots, using the right exception handling procedure for specific situations. For example, if an electronic board fails a test on the assembly line, I need to push it out to rework and if this impacts a customer commitment, the system triggers an alert.”
“The consumer behavior is changing. Consumers consistently say they want to know what fertilizer and crop protection was applied to their food (if any). This is driving change in the way that retailers and consumer good companies order products. There’s a new generation of consumer, a new sense of what is important to me, and it is driving innovation all along the food chain.”
“If you can do maintenance in a more predictive way with IoT-enabled sensors, you can anticipate when maintenance is needed as opposed doing it reactively, resulting in downtime, or just preventively with sometimes unnecessary work and service parts expenses. You could even then use third parties to more easily come in and do the maintenance on that supply chain. For businesses that sell equipment: perhaps they can offer their equipment as-a-service, so that activates the whole servitization theme. They can say to their customers, ‘Look, we’ll make sure that this equipment is performing, and we’ll do the maintenance proactively to keep it up and running.’”
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