Salo IFP I3E 2014 China Sanya Keynote presentation Future of Value based digital business: Perspectives on organizations, processes and people

Value based digital business:Perspectives on organizations,

processes and peopleJari Salo

Professor of MarketingHead of doctoral program

Adjunct Professor (Aalto University School of Business)Associate Editor of Journal of Information Technology Research

Oulu Business SchoolUniversity of Oulu, FinlandDepartment of Marketing

P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi

13th IFIP I3E conference on digital services and information telligence27-30 November Sanya, Hainan, China

© Professor Salo

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Table of contents

1. Laying the foundation for Value based digitalbusiness (VBDB)

• Concept of value• VBDB: Strategy and technology perspective• VBDB: Change in organizations and processes

2. Data rich environments3. Mobile commerce4. Social commerce/media5. Change in digital everyday of people


Presentation availablehttp://www.slideshare.net/jarisa

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Value

• Value equation = Benefits (tangible/intangible) –Costs (price, total costs)

• + CALT (comparison of alternatives)• + Over life time evaluations (e.g. CLV)

Holds for all people - organizations, individualsand employees


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Value based digital business (VBDB):People

• Not the process• Not the strategy• Not the philosophy• Not the technology• Not the organizational abilities / competencies / resources

• But, knowing who the people are and personalizing as wellas delivering the digitally created and mediated experienceto them


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Value based digital business (VBDB):Strategic change1. Understanding possibilities created by new

technologies (location based and context aware mobileEB, social commerce/media, augmented/extendedreality)

2. Understanding change in individual experiences(customer, employee, manager)

3. Creating and leading the experience

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Value based digital business (VBDB):Technological change (a)

1. Ecosystems and SW development are evolvingrapidly (competing clouds, SW business models e.g.Paas, Laas, IaaS, SaaS, better GUIs, data analyticsfor big data, social and virtual worlds)

2. Understanding different digital ecosystems (platformcompetition, externalities, spillovers, networks,migrations and integrations). How to excel in theplatform competition?

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Value based digital business (VBDB):Technological change (b)

3. Rapid development and use of mobile technologies(tablet, smartphones, apps, location based SW withinorganization and between organizations, augmented &extended reality)

4. Public and private (company) internal data mashups(data and functionality integrated, possibility to integratedifferent apps/functionalities, databases to presentinformation in one seamless service to customer (singleview Dominos Pizza (Pizza builder for customers +mobile apps, Pizza Tracker).

Technological trends from 1-4 enable creation of andmanagement of compelling experience

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VBDB: Change in organizational practices (a)

• Enterprise SW - Internal performancemanagement• Big management data (influencing employees &

managers e.g. data visualization and analytics)• From internal history data towards social behavior data• Increasing productivity of employees and industrial

partners while deepening the customer experience andlowering costs (cost to serve customers) (enterpriseSW – mobile functionalities + B2B integrations)

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VBDB: Change in organizational practices (b)

• Identifying relevant internal management data fromdifferent channels (use of service, posting opinions, liking& comments) and using that data to understandemployees and management in order to systematicallyand continuously use data in influencing employee jobsatisfaction, effectiveness of workforce, HRM practices ingeneral and at the same time creating positiveexperiences that increases workforce commitment(employee turnover decrease) while managing the overallexperience chain and at the same time measuring andautomating this process

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Data rich environments


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Its the way we analyze and utilize datarich environments

(rather than big data itself)


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Data rich environments: Organizationalperspective• Potential is obvious for managers but what kind of

infrastructure is needed? How to govern / managethe exploration and exploitation of data?

• Should managers in-house or outsource datacollection, analysis and action to companies likeIBM? Or use in-house big data analytics (with SAP)like eBay?

• How to manage effectively ”with cloud computingand real-time data processing” ? - Amazon


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Data rich environments: Processperspective

• Who is taking care of the process? Data unit?• Who has access to the data?• How it can be utilized internally or in B2B

relationships or with government agencies?• How is data visualization / dashboards designed and

utilized?


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Data rich environments: Industrialperspective• Trucks• Busses• Dumpers (e.g. used to carry iron ore in mines)

• Autonomous vehicles• Telematics (outsourced e.g. to Volvo)


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General retailingexample


• Lush sales team can change thelayout of their stores in response toreal-time sales data.• "Not only has this helped to tap in to the ambitious spirit of staff -

competing over which store can do best in terms of sales andperformance - but it also gives them information to improve thecustomer experience."

• For example, if staff notice a particular bath bomb is selling wellwith a certain shampoo, they can change the store layout so theitems are closer together.

(Source BBC)

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Data rich environment - consumertracking

• Digital economy aspect: selling digital footprint• Ethical considerations• Privacy issues• Security issues• Legal issues - who owns the footprint?


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Data rich environment - researchResearch team and infrastructure issues:• Big data computing power & storage• Big data SW and experienced staff (data based

programming skills etc.)• Time-series analysis / econometric modelling

researchers• Data visualization techniques• Data rich environment analytics SW (Campalyst, Klout,

SAS, SAP, IBM etc.)• Theoretically interesting and relevant questions?


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Mobile commerce


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Management view

• What is value of mobile?• What are the costs and revenues in mobile are IT

leaders pondering?• Mobile browsing (pads + other devices) and

popularity of apps• Bring your own device (BYOD)


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Business potential

• Apps are used to drive content and services tocustomers (B2C/B2B)

• Using data rich environment which is collated viaapps can drastically improve value to consumers.

• Businesses that develop data tracking and analyticswill improve delivery to customers, increasingcustomer loyalty and acquisition


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Business potential

• More efficient development and shorter PLC withcloud + integrated enterprise SW for mobile apps andservices.

• Expanded user interface models including richervoice and video.

• Appification (freemium / in app purchases)


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Context / location awereness• Apple's iBeacon technology - in-store

Bluetooth location trackers designed tointeract with smartphones - enablesretailers and app publishers to identifypeople individually the moment theyenter a shop

• iBeacon available with many vendors

• Similar to iJack service developed byTeliasonera in early 2000 which theyabandoned in 2004


Sales/deals80%

Content relevant to interest/Location 62%

Swirl 2013

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Research potential

• Location specific services – consumer reactions /emotions e.g. in retailing

• Are Bluetooth e.g. iBeacon services influencingconsumers in the way we planned?

• What creates successful apps? Why Angry Birds,Class of Clans etc. are so popular?

• How is company internal use of mobile apps andmobilization of processes influencing bottom line? Orinfluence to B2B/Industrial relationships betweencompanies?


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Social commerce / media


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Organizational perspective

• Social collaboration, sharing and processes arebecoming more commonplace

• Who governs social commerce / media?• Digital business / marketing department? Public

relations?• Focus in internal use of social media (knowledge

sharing – social extranet / FB), customer facing orboth?

• How value is measured ?


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Process perspective•Two months ago, Urban Research, afast-growing and popular fashion, homeand lifestyle retailer, launched anexperiment in Tokyo’s Parco Ikebukuro.•Allows customers to stand in front ofone of two 60-inch screens, selectclothing items they want to try on andsee themselves dressed in the productswithin seconds.•Customers’ movements arerepresented fluidly on the screen in 3Dand customers can use an integratediPad to take pictures of themselves andshare them with friends on socialnetworks.


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Process perspective• Virtual service allows companies to sell product

without the burden of managing inventory, directlyfrom their existing e-commerce back ends.

• In the Wearable Clothing pop-up, to purchase anitem, customers need only scan a QR code and click‘buy.’

• Virtual changing is also relatively effortless forcustomers, saving time and lowering resistance totrying on clothes — especially among men.


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Process perspective• Social login - Facebook or other SNS enabled social

commerce by given retailer• Authenticate identities• Pull customer information from particular SNS• Tailor / customize in real-time the retailers website• Social labs study showed that in 2012 only 6% of top 500

online retailers used social login


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Too much of Facebook?


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People perspective

• Social media addiction• Social media privacy• Trust towards companies / individuals• Selling / using digital footprint• How is analytics information used and stored?

• New mediums and their safe use devianArt,Instagram, Whatsapp, Path, Pinterest - Learnist,Medium, Impossible, Sulia, Sharebloc etc.


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Research

• How are social commerce / media influencing pathto purchase?

• How social influence can be commercialized?• Mobile social?• Emotions and social commerce?• Multichannel operations?• Increasing number of services and platforms?


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Change in digital everyday of people


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Change in ”digital” everyday of people?Key question to ask - What kind of experiences are sought after ingeneral and specifically by customers, employees, managers?

• Search online recipes - by the ingredients / goods online(Foodie.fm) delivered to your home/office

• Music (Spotify)• Phone - video (Skype)• Movies, TV-series (Netflix)• Health and wellbeing (Polar activity bracelets)• Coffee machine / tea boiler with LCD display and times


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Change in ”digital” everyday of people?Key question to ask - What kind of experiences are sought after ingeneral and specifically by customers, employees, managers?

• Online learning (younger generation)• Young people share sports / events of everyday to Instagram, FB

and Flickr• Sharing baby pictures?• Smart houses (Bluetooth, infrared enabled devices, digital locks,

fire alarms e.g. Nest Labs bought by Google)• Smart cars (telematics run by e.g. Volvo)• Routine work done by computers / robots while idea generation/

creativity left to humans (Eero Aarnio said without ideas anddesigns industrial machines wouldn't produce anything)


What's next?

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Change in ”digital” everyday of people?

Digital Nomads (work follows where person goes)• Working for the same company as before but

leaving country for somewhere nice (weather, costof living)

• Popular places for Finns are Thailand e.g. ChiangMai or Bali Indonesia

• Using internet to do the work (and renting viaAirbnb)

• Remote connections to enterprise SW e.g. mobileERP/CRM/SCM/Innovation


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Change in ”digital” everyday of people?

• Privacy,• Security,• Trust,• Identity theft / cheats and• FB /SNS Addictions


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Other VDBD important topics not coveredspecifically here:

• Open data, SW, innovation

• Crowdsourcing/funding

• Gamification, digital economy

• Internet of everything (people, things,information, place) / machine to machineinternet


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To summarize

• Value is the key (increasing benefits, decreasingcosts, providing better than alternative experienceover life time)

• People and their experiences are to be maximized• VDBD is strategic change from ”me too” IT to value

based IT• VDBD is technological, organizational and process

change from ”lets have it” to lets use it wisely• VDBD is leveraging data rich environments to create

experiences in social, mobile and web.


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Q&A !


[email protected]@aalto.fi

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