Customer Beyond Process Innovation BMI (Business Model Innovation) · PDF file · 2016-07-13Beyond Process Innovation – BMI (Business Model Innovation) ... Business model innovation

Beyond Process Innovation –

BMI (Business Model Innovation) Sung Kwon Kang, SAP Business Transformation Services

Seoul, July 2016

Customer

© 2016 SAP SE or an SAP affiliate company. All rights reserved. 1 Customer

Agenda

Digital Economy and Digital Transformation

Business Model Innovation

SAP dBMI (digital BMI) Program

2 © 2016 SAP SE or an SAP affiliate company. All rights reserved.

Can we survive?

How to win digital?

How to become agile?


Digital economy: The next economic revolution

1850

Industrial

economy

2020

Digital

economy

1990

Internet

economy

IT

economy

1970

$0.36T

$12.10T

All figures are in Trillions; 1990 international dollars; Source: Department of Economics, UC Berkeley, BAIN 8 MacroTrends Brief.

$27.50T

$90.0T

Gross

world

product


Economic revolution and Digital Triangle

The 2010s:

Industry 4.0 &

Internet of Things

2015+:

Merge into core digitalization Things People

End of 90s:

Internet Economy

Companies start using SAP software for business

The 70s:

Transactions & Processes

Reimagine Business Model, Product, Process

Build the Digital Core

Digital Core


Société de Transport de Montréal

Hyper-connectivity is everywhere Innovators connecting people, devices and business


Digitalization brings a new wave of challenges & opportunities

1) Seeking Alpha, Increasing Churn Rate In The S&P 500, 2) McKinsey, Unlocking the potential of the Internet of Things, 3) MIT Sloan Management Review, Is Your Business Ready for a Digital Future? McKinsey & Company,

75% of companies in the S&P will be new in 11 years1

Annual IoT impact $4T to

$11 trillion in 2025.2

78% of employees want to work for a

digital leader3


Opportunities New technologies create new levers for competitive advantage

Reimagined digitized products integrating new services and commerce

Reimagined digitized processes procure, produce, supply using Industry 4.0 and Big Data

Reimagined business models and value networks such as the outcome based economy.

Challenges

The rate of change is ever increasing need new ways to manage the complexity

Digital Darwinism extinction of players through blurred competitive lines

Startups disrupt every industry

The empowered digital Customer is on center stage. the digital touchpoint is critical.

Technology dynamics Every company must be a technology company

The Digital Transformation offers opportunities and challenges


Roche Diabetes Care and SAP created a

mobile app based on the SAP HANA Cloud

Platform to enable doctors to follow health

stats from fitness trackers and blood tests of

their patients in real time.

Learn more here: https://www.youtube.com/watch?v=5uBopSYtfIc

Still has partnered with SAP to launch an

entirely new business model in the area of

logistics through full digitalization of forklifts –

starting Still’s evolution from a pure product to

a services company.

Learn more here: https://www.youtube.com/watch?v=xJ-1psHSTbI

Nespresso

revolutionizes the way

millions of people enjoy

espresso and uses SAP

Cloud for Sales solution

to extend its premium

coffee experience by

understanding and

engaging customers to

grow their loyal

international customer

base.

Learn more here: http://consumergoods.edgl.com/Libraries/C

GT_Media/PDFs/cgbtlc14_sap.pdf

Siemens has partnered SAP to deliver the

Siemens Cloud for Industry, helping Siemens’

customers to proactively optimize their

service processes and generate new revenue

streams by selling services instead of

products.

Learn more here: http://www.sap.com/asset/detail.2015-07-jul.siemens-hana-cloud-platform-iot-

ctv-mp4.html

WeissBeerger is making beer

smarter at the tap through sensors in beer

taps in bars across the globe to collect real-

time insights of beer serving activity and

analyzes the consumption patterns SAP

HANA platform.

Learn more here: http://www.sap.com/customer-testimonials/wholesale-

distribution/weissbeerger.html

SAP customers’ digitalization success stories


Digital Transformation is organisational change through the use of digital

technologies and innovative business models to improve business success

Innovation

Process of re-imagining a new

business model, a digitized product,

business process or work

Digital Technology

Leveraging Digital technologies to

deliver innovation

Innovation and Digital Technology are both required to generate value

What is Digital Transformation?


Agenda





Business model innovation allows companies to stay in the game by adapting to changes in their environment


Why these strong companies suddenly disappeared

after successful business for decades?

• invented the first digital camera

• went bankruptcy in 2012

• because stuck to film camera

All these giant companies didn’t innovated their business model to

effectively cope with changing business environment

• was major manufacturer in home

appliances and display market

• went in bankrupt crisis from 2012

and acquired by Foxconn in 2016

• because stayed in their insular

R&D system

• was No.1 video rental chain in US

• went bankruptcy in 2011 and was

acquired by Dish Network in 2012

• because collapsed by VOD

service

• Was No.1 in cellphone market

• sold the mobile division to

Microsoft in 2013, and resold to

Foxconn in 2016

• because didn’t catch the change

of market paradigm to smartphone


Business model innovation is the most effective way to

competitive and sustainable Business

(Source: Business Week / BCG Innovation Survey, 2008, BCG Value Science analysis)

Business model innovation is a major source of competitive advantage which

is superior to other forms of innovation

(Source: IBM, 2006, Business Model Innovation – The New Route to Competitive Advantage)

The competitive advantage of business model innovation is more sustainable

as compared to other forms of innovation

Operating Margin Growth

of innovations

Sustainability of Business Model Innovation

on Performance

Opera

ting M

arg

in

Gro

wth

(%)

*Total shareholder return (TSR) premium: % by which innovators' average total shareholder return

exceeded that of their industry peers

TSR premium

over industry peers,

median performance

(%)

Business Model

Innovation

Process

innovations Product/service

innovation

Percent compound annual growth rate over 5 years

6

5

4

3

2

1

0


Source: Kim/Mauborgne (2005)

“The only way to beat the competition is to stop trying to beat

the competition.”

Business model innovation allows companies to escape cutthroat

competition by changing the rules of the game


Technology Adoption Curve

Maturity

Connect

Transform

Reimagine Value-add for

Company

tap into the network of

connected things, people,

transactions

automate the business to

achieve operational excellence

empower new business

models, value-added

products and services

Business Model

as one of agendas

Technology adoption curve

All Begin from

Business Model

A special focus should be on business models, that require the integration of enterprise data

: Business Model Matters


Leaders are Emerging from Nowhere Industry Boundaries are Blurring. Embedded software is changing everything.

Aware but Unsure 90% of CEOs believe the digital economy will impact their industry, but but only

25% have a plan in place, less than 15% are executing on a digital strategy.

It’s not about you, it’s about your customers Customers expect a new type of experience –one that is frictionless, where

commerce is seamless, and where technology is invisible –one that makes their

lives easier.

Early Adopters are Winning Early adopters are achieving +9% revenue creation, +26% impact to profitability,

and +12% market valuation.*

Digital business models are disruptive.

The rules have changed.

Siemens is not just an industrial powerhouse,

they are a software company connecting

their industrial assets in the cloud

Uber is not just another taxi company, it is

transforming into an “urban logistics”

company

Facebook is not just a social network, it is

the largest media company even though it

doesn’t create content

Under Armour is not just selling shirts and

shoes, they are connecting 170 million people

on a digital health platform

The rules have changed Digital business models are disruptive

Source: * MIT Sloan and CapGemini, 2013,


Business

Models

Service /

Process

Product /

Technology

Lonely inventor Corporate

Innovation Open Innovation

Solutions

Era

Source: adapted from O. Gassmann (HSG)

PAST

PRESENT

FUTURE

Evolution of Innovation Management: trend towards

Open Innovation and Business Model Innovation


Agenda





History of Business Transformation program

Large Korean Customers are also joining in Transformation Academy Program to enhance internal capabilities

and Digital Technology and Design Thinking Topics are added to new Academy Program

DIT

Academy

BT Academy (2011) DIT Academy (New)

2012 2013 2015 2014

http://en.wikipedia.org/wiki/File:Samsung_Logo.svg


1. Value Realization

2. Cost Control

3. Organizational Change

4. Risk Mitigation

5. Program Management

1. Digital Strategy

2. Target Business &

IT Architecture

3. Processes

4. Organization &

Governance

TRANSFORMATION

Digital Transformation Execution

1. Re-imagine customer business models

2. Holistic approach, not point solution

3. Proven method with credible external

references

4. Business conversation

5. Repeatable and scalable

Reimagined business models

Low fidelity prototypes

Technology enablers identified

High level value proposition

Digital Business Model Innovation

Program

SAP BTS End to End Digital Transformation Method to guide customers to reimagine business models


Business Model Innovation plays a key role in Digital Transformation

Product / Process

Innovation Value

Business Model

Innovation

Traditional

Business Model

X

+ =

Old Competition

New gaming rule

New Environment Capturing new value

of technologies

Specialty in

Digital Technology

Systematic Methodology

for Business Model Innovation

Empathy of customer /

Creativeness Enabler


No tools Strategy

tools

60

0

20

40

60

80

100

Source: Frankenberger et al., (2013), International Journal of Product Development

Brainstorming

techniques

Which methods and tools are used to develop

business model ideas?

20 20

«There are multiple tools and

methods to come up with new

product ideas but nothing to

support idea generation for

business models»

«Business model innovation

is more like a coincidence

and connot be initiated

sytematically»

«The real innovative

business model ideas can

only be developed by the

creative genius»

Lack of systematic tools to develop innovative business models

In percent


Design Thinking as mindset

Desirability Needs

Viability Business Model

Feasibility Technology

Optimal

Solution


SAP dBMI Framework & Toolkits Globally proven methods as foundation for this program

Digital Transformation Landscape/

Technology Radar for IoT

Business Modeling Canvas

CUSTOMER JOURNEY

TOUCHPOINTS

ACTIONS

MINDSET

MINDSET

ACTIO

NS

TOUCHPOINTS

• 55+7 business model patterns

Business Model Pattern Library IoT Sensor & Cloud Demo

InnovationMatrix


How can business models be innovated in a systematic way?

We can creatively imitate and recombine the successful business model

innovations by using business model patterns

More than 350 Business models

within 50 years

55+7 Patterns for

successful model innovation

Creative Imitation

the Power of

Recombination

90% of business Model

Innovation is a recombination

of the Patterns

“You don’t need to

Reinvent the Wheel”


55 + 7 Business Model Patterns:

Rank based on potential value to be derived from Internet of Things


Pattern Name, Pattern Description

Example companies

Affected Business

Model component

Value

Proposition

Value

Chain

Revenue

Model

What?

Why? How?

Who?

Impact / Significance of New Digital

Technology, IoT

Impact / Significance of

Traditional IT functions

Business Model Pattern Card


Creative Recombination of Business Model Patterns

Iterative approach for new business model ideation considering the role of

digital technology(IoT, Cloud, Big data, etc.) and traditional IT

Value

Proposition

Value

Chain

Revenue

Model

What?

Why? How?

Who?

Business Model Components

Developed in collaboration with

Business Model Pattern Library

Recombination

Role of Digital

Technology(IoT..)

Role of

IT


dBMI Method – Key Steps

Ecosystem Context Discovery

Digital Economy Overview

Innovation Matrix

Opportunities Threats

Value Proposition

Empathy

Ideation

Business Model

Pilot IoT device

Experience

Ideas using

digital tech.

Deep Understanding

of Targeted Customer

Customer Pains/Gains

Pain relievers/

Gain Creators

Digital Business

Model Patterns

Best Practices

Digital Constraints

Prototype,

Test,

Feedback

Sales Pitch

Design Challenge

Idea Sketch

Customer & Value

New Model design

Hypothesis

Improvement

Requirements

Specific Customer

Definition

Improvement

Requirements

Improvement

Requirements


Digital BMI Workshop Agenda (5 days)

Day 1

Discovery

Day 2

Empathy to

Value

Day 3

Business

Model

Day 4

Digital

Challenges

Day 5

Prototype

Sales

Introduction

Discovery of Business

context

Digital Economy

Overview & Digital

Trends

Innovation Matrix

Business Model Patterns

Library

Destroy Your

Own Business

Make a startup

Define Customer Segment

Interview with

customer (role play)

Empathy map,

Customer Journey

Touch & Feel Demos

Idea Sketch &

Value Proposition

Design

1st Prototyping

- Story board

NUF Test

Value Proposition to

Business Model

Business Cases from

Business Model

Pattern

New Model Design

Disruptive Digital

Business Models

Design constraints

in digital

Better Business

Model & Value

proposition

Simulate Business Model

Hypothesis Test &

Feedback

Evaluation & Question

Sales Pitch & Voting

Thank you!

Sung Kwon Kang

Senior Business Consultant

SAP Business Transformation Services

E: [email protected]

M: +82 10 2338-3238

Nam Ho Lee

Head of BTS Korea

SAP Business Transformation Services

E: [email protected]

M: +82 10 8923-6423

Documents

Customer Beyond Process Innovation BMI (Business Model Innovation) · PDF file · 2016-07-13Beyond Process Innovation – BMI (Business Model Innovation) ... Business model innovation