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Warwick Business School Copyright 2014 Mark Skilton
Professor Mark Skilton
Professor of Practice in Information Systems and Management
23 September 2014, Ovum Next Generation Infrastructure Forum 2014http://nextgeninfrastructure.com/
Warwick Business School
Agenda
Are you providing the right types of business services to the business?
Commodification of infrastructure and how to optimize the cost of infrastructure
Moving beyond thin provisioning and dynamic pricing mechanisms
Looking at the Capex and Opex budget and the impact of different approaches to service delivery
Copyright 2014 Mark Skilton
Warwick Business School
What is the problem, opportunity space ?
Illustration
Capex
Opex ?
Charge
Advertizement
RelationshipValue & Worth
Recovery?
New investment
Maintenance
Legacy modernization
Heritage ?
Copyright 2014 Mark Skilton
Warwick Business School
Physical Economy, Digital Economy and role of digital ecosystems
Copyright 2014 Mark Skilton
Warwick Business School
The digital Enterprise
Copyright 2014 Mark Skilton
Warwick Business School
Vertical and Horizontal Value Chain integration
Consumer electronics vertical value chainEnergy Industry vertical value chainFilm Media vertical value chain
Examples
ExamplesAutomotive parts horizontal value chainPublishing horizontal value chainRetail horizontal value chainICT commodity hosted value chain
(embedded telematics)
Copyright 2014 Mark Skilton
Warwick Business School
Value Network Ecosystems
Examples
2 sided Market platforms
Financial services payments 2-sided platformsCitizen services two-sided platformsEducation online course 2-sided platformsCustomer support call center 2-sided platformsPackaging logistics 2-sided platforms ICT integration hosted 2-sided platforms
Multi-sided Market platforms
Healthcare multi-sided platforms• Patient care monitoring• Translation researchAutomotive multi-sided platforms• Connected car infotainment • Logistics VMI News and entertainment media multisided marketICT hosted broker multi-sided platforms
Examples
Copyright 2014 Mark Skilton
Technological investments enabling value networksDigital Enterprise relation to Value Network Ecosystem
Warwick Business School Copyright 2014 Mark Skilton
Warwick Business School Copyright 2014 Mark Skilton
Warwick Business School Copyright 2014 Mark Skilton
Warwick Business School
What are your Strategic value proposition choices ?
Close coupledEmbedded (Telematics <->big data) ?Market capture
General scalable ?Technology insertion ?Technology cannibalization ?Managing the boundaries ? (Public, private, hybrid..?)
Market Enterprise ecosystem enabler ?CommunitizationServicization
Copyright 2014 Mark Skilton
Cost of integration (incl source& service management)Cost of securityBusiness Model Monetization mechanisms
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B2B, B2C, C2… is not Value Networks
SocialValueNetworks
“DOVES”DigitalOperating ValueNetworks
A commercial charging mechanism
B2B, B2C, B2G, G2C, C2C,….x2x
Copyright 2014 Mark Skilton
Warwick Business School
One ecosystem view…
Technology in the supply chain ecosystem cluster
Copyright 2014 Mark Skilton
Warwick Business School
Its driving a digital enterprise technology constituency
At least 7 technological ecosystems….
Copyright 2014 Mark Skilton
Warwick Business School
Commodification of Infrastructure
Copyright 2014 Mark Skilton
Cost of
Acquisition
Cost of
Migration/
Disconnection
Cost Of
Running
“Future
Proofing”
Upgrades and patches
Future enhancements and features
Technology refresh
Value –added services
DR, BC service strategies
Selection of platform provider
Selection of instance
Selection of subscription and
usage
Data migration to environment
Software porting to environment
Development and testing validation
Security authentication of external
service use
Staff training
Governance of usage compliance
Fixed data services costs increase with
the increase in the network traffic
Electrical energy use
Staff support
Maintenance
Additional CostsLower Costs
Spend on services increases
as a result of access to new software and
hardware capabilities. These include:
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Capex and Opex delivery models
Copyright 2014 Mark Skilton
Public
Cloud
Private
Cloud
Hybrid
Cloud
“Mixed”
CatalogManagement
User InterfaceSelection
Cloud Services
Selection & Acquisition
Platform & Location
DeploymentOptions
Data Transfer, Migration
Cloud Operations& DR
Transformation & Cloud Usage
Imp
lem
ent
Req
uir
em
ents
Op
era
te
Performance Management
Security Management
Strategy
End to End
Performance Largely
provider
managed
Provider
Managed
Consumer
ResponsibilityProvider
Responsibility
Audit
Responsibility
End to End
Assessment
Consumer
Managed
Consumer
Managed
Vendor tool
dependencies
Vendor tool
dependencies
Consumer/
country
legislation
dependencies
Provider
Managed
Some
consumer
responsibility
Provider
Managed
Some
consumer
choice
Some
consumer
choice
Sys admin
and consumer
catalog mixed
Some
user policy
control to
burst to hybrid
May have
element of
CoLoc /
partner / broker
optionsSome policy
choices for
hybrid partners
Some policy
choices hybrid
capacity and
load balancing
Capacity Planning
Provider
Managed
TC
O
Roles and responsibilities of consumers and providers change depending on the type of deployment model. Example
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Cost analysis in comparing different deployment options – example scenarios Total Cost of Ownership comparison is a key process
for consumers in Infrastructure environment selection and management.
Scenario 1: Managing Infrastructure Usage Growth in Data Traffic Communications Data Volume Sensitivity Scenario
Infrastructure services can become very expensive if the selected pricing mechanism and the demand change significantly from the original capacity forecast
Scenario 2: Managing Infrastructure Usage Growth in Compute and/or Storage - Storage and compute Data Volume Sensitivity Scenario
Cost options selected may change the basis of TCO comparison. These kinds of cost analyses may miss the overall business model costs and growth.For example, hybrid infrastructure may be able to optimize extra computer and storage capacity options but what cost of hybrid management? Can Privacy data be premium charged for public access etc.. ? Is thuis a true business case ?
Copyright 2014 Mark Skilton
illustrative
illustrative
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Monetization mechanisms
Secure Operating Platform
Dynamic PricingThin Provisioning
Copyright 2014 Mark Skilton
Capacity Mechanisms for Managing Asset Utilization Automated Elastic Provisioning and
De-provisioning mechanisms
Value of PrivacyModularity Generativity
Vertical WorkloadSolutions
Horizontal Workload Solutions
Capacity Value of assets drivenrecovery of costs
Price (Value of time)drivenrecovery of costs
Agency value drivenrecovery of costs
NEW BUSINESSMODELS Looking at the overall
Business strategic costs and value, and of theInfrastructure needs
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Old world versus new world monetization
OperationalMonetizationStrategies
Operating demand and supply, bundlingcapabilities
Market channel,business processand supply chaincapabilities
Capital funding,contract, IPmethodscapabilities
Ts & CsMonetizationStrategies
GrowthMonetizationStrategies
CommunityMonetizationStrategies
ChannelMonetizationStrategies
Industry StandardizationMonetizationStrategies
Community identity, feedbackConnectionscapabilities
Structureof channelsto markets,Channel mixCapabilities
Access specialization,reward, consistencyand interoperability
NEWECONOMY
OLDECONOMY
This is the “radius effect”Of monetization
It is the value of spatial connections and its contextual content
relevance
These monetization strategiesare levers that pull or push
inside your own company as ways to generate revenue and
profitability.“Network effects” may be
advantageous if designed and business model ran correctly
Platforms are good at these
Copyright 2014 Mark Skilton
Warwick Business School
Conclusions The Digital Enterprise is about value network
ecosystems
Competition is moving to the ecosystem
Selling capacity annuity is a dying method….
Moving towards agency annuity selling
Traditional provisioning not added value – its commoditized…..
Create your Enterprise Value platforms to direct (ecosystem) traffic and usage volume => revenue flows based on capacity/headcount returns
Copyright 2014 Mark Skilton
Warwick Business School
Thank you
Copyright 2014 Mark Skilton
New Book 2015
Warwick Business School
Profile
Mark Skilton has held senior global Director Positions in Information Technology in internal and external consulting internationally inmany industries and organizations.
He has over 30 years' experience in a wide variety of customer facing and provider solutions strategies, consulting to board level inoperating model transformations and value creation. He has direct experience of digital strategy solutions to market launch in socialmedia, mobile web apps, big data, content management, eMarketing at BskyB where is served as head of new media systems workingdirectly with the Marketing and sales organizations.
Mark has held International standards body chair positions with The Open Group and is currently a member of the ISO JC38 distributedcomputing standards for distributed computing. He also currently consults to companies with eSupplychain and digital operating modeltransformation challenges including Content to purchase (C2P) for a international consumer goods company; Smart city strategies for anumber of UK cities; eHealth solutions for a multi-national medical and health products research and development organization; co-presence and digital branding for a global financial services payments company; design of hospitality immersive customer servicestrategies with a global Hotel chain and various logistics and lean strategies using digital technologies for automotive and transportdelivery and embedded systems engineering companies. He is also supporting a next generation data hub platform, “The hub of allthings” HAT a research and development program with UK universities including Warwick, Cambridge university and industry partnersincluding Intel.
Mark has an extensive record of accomplishment in direct strategy and delivery engagements of digital technologies, and enterprisestrategies including big data, social media, and digital infrastructure transformation.
He has spoken internationally on digital technology strategy appearing regularly in the international press including recently on SkyNewsand quoted in major digital news and tech industry sites including the BBC, Die Welt, TheStreet, CRN, CIO.com, and many others. He isan accomplished published author of books and guideline papers on Architecture practitioner standards and currently writing a book onbuilding the Digital Enterprise – a guide to digital workspaces, for Palgrave Macmillan international series on the Digital Economy.
He is a graduate of Sheffield and Cambridge University and Warwick Business School where he is currently a part-time Professor ofPractice in Information Systems Management Group at Warwick Business School His teaching and research includes consulting bestpractice, CIO excellence and digital strategies.
Copyright 2014 Mark Skilton