By Gerard de Bourbon, Chief Evangelist Officer, DigitalRoute
According to all major analyst firms, more than two thirds
of all digital transformation projects fail.
Going from selling products to services is not that easy,
especially if you require an IoT rollout. Consumption/ subscription-based
services and recurring revenue streams increase business complexity. For
instance how do you introduce new price plans, manage settlements, and separate
personal data from a value chain in a live stream? How do you make sure who is
entitled to use what? These are just a few of the valid complex issues which
need to be addressed and solved.
They key question to be asking here is how can you achieve
true business model innovation?
When transforming your business with new services offerings
your entire company needs to change and "work hard at making things simple."
The challenge is that with the use of high technological comes complexity
including the number of vendors involved, each with their own agenda, the lack
of a clear strategy by the client, a vague understanding from the SI of exactly
what you want and need all leads to a perfect storm.
If a CEO does not have a crystal-clear idea of their
transformation strategy they will fail! Transforming is the responsibility of
the entire C-Suite and board also requires a shift in thinking - digital
transformation is not a technology play. Instead, it is a cultural leading
change, and often times a re-framing organizational exercise, often, everything
will change.
HR can be one of the most important areas for a company
transforming, second to true leadership, in short supply in large corporate
environments full of operational line managers not leaders. A major challenge
is people, most are averse to change in one way or another and are afraid to
lose their jobs and tend to make even the tiniest things complicated. It is
natural that people get defensive and start questioning the change rather than
embracing it.
A question for you senior executives, If you were faced with
the task to captain an old sloop, (tall sail boat with multiple sails) and you
wanted to sail to the Caribbean from Europe, but your crew wanted to go to the Seychelles
What will you have to do first?
You either need to convince the crew to change their minds
and sail with you to the Caribbean, (you can't sail the ship alone) or they
throw you out and take the boat to the Seychelles, hence the importance of
leadership, the same can happen when transforming your company. Thus the key
here is to eliminate stress points and work hard at making things simple for
everyone involved!
So why is it so
important for a company transforming to have the agility to launch dynamically
new business models, and deploy a usage data platform?
By The Number
-
IDC estimates that by 2020 more than 55%
of all organizations will be digitally transforming and changing markets as we
know them. It is clear that organizations are reimagining the future through
new business models and digitally enabled products and services.
- By
2023, 95% of all entities will have new digital KPI sets focusing on
product/service innovation rates, data capitalization, and employee experience
to navigate the digital economy. In order to get to this maturity efficiently, organizations need to consider modern usage
intelligence tools which can handle the complexity, transaction volumes in an
agile and dynamic manner.
-
By 2022, IDC estimates that over 50% of
software revenue will come from the subscription/consumption business model,
with most of this revenue coming from SaaS applications.
Today's SaaS-based monetization systems include the latest
technology (ML/AI) and easily integrate with your existing systems to provide
fast time to value. Companies need to use Business Model Innovation to their
advantage, remaining relevant, competitive and being able to introduce new
services and price plans are the key to success.
Use Cases
Here are two use
case examples which highlight the complexity of subscription-based business
models and complex value chains.
1.-On-Line Services Commerce
Most people are not aware that online credit/debit online/in
the store represents one of the most complicated processes. In some cases,
eight or more different companies are involved in getting your card over to a
bank from a website or point of sales and back again.
Everyone takes a cut and sometimes the smallest cut is taken
from the ones who provide the most value (Visa, MC, Amex, DSC). If there's a
breakdown anywhere it all stops.
The Value chain is show below:
2. - On-Line Travel Industry
This is the sector which has the most complex value chain, payments
in the online travel industry, which pivots off the card payment model. When Booking
a ticket and getting payment may take up to 20 different middlemen!
The Value chain is shown below:
Both of these
examples highlight the need for and use of technologies that are based on
innovate business models to ultimately help ensure a smooth digital process and
revenue stream. In both cases organizations are using Usage Data Platforms
which were designed to handle the billions of transactions in real time with
the utmost complexity to handle the usage events of today's subscription-based
economy.
Transforming your business through subscription-based
services requires you to work hard at making things simple for everyone. With
the right tools organizations can take complexity out of the equation to remain
relevant, competitive and introduce new services and price plans that will
increase revenue streams.
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About the Author
Gerard De Bourbon, Chief Evangelist Officer at DigitalRoute
Mr. De Bourbon is an executive with more than 28 plus years of significant international management, sales, marketing, consulting, strategy and business development. He joins Digital Route from Tele 2 where he was instrumental for the growth of the IoT business and Tele 2’s Digital Transformation Journey, prior to Tele 2 he was at Verizon where he drove the multi-billion Euro Northern European P&L, towards their enterprise clients.