With the Z1 of Konrad Zuse in the early forties of the last century, the first electronic computer was created. However, the fifth Kondratiev that announced the information technology as a disruptive change in the economy and society started not before the 1970s. The access to the global network is possible anytime, anywhere with mobile devices of all kinds. Together with the gigantic computing power of today’s computers, a big wave to implement well-known concepts is being piled up: the automation of processes, embedded systems in all moving and unmoved objects, data management in the cloud as well as the processing of unimaginably huge amounts of data with Big Data. But what do all these approaches mean for the commercial Canvas ?
Every business can be depicted on the Business Model Canvas. In the following bullet points, the momentum of the digital transformation is considered.
Already in the course of e-business more than twenty years ago, three customer areas were identified: business, consumer and government. Business describes the commercial enterprises, consumer the private customers and government the state/public institutions. In the beginning ventures should explore the digital reality of their own clientele. How digital are the customer areas? Where and when are the customers active? What do the customers want?
Customer relationships E-business already elaborated the possible customer relationships at an early stage: namely, all possible combinations of the axes business, consumer and government (i.e. B2B, B2C, B2G, C2B, C2C, C2G, G2B, G2C, and G2G). For most fields famous examples are available, like Amazon (B2C), eBay (C2C). A look at one’s own relationship structures and the degree of its digitization provides initial starting points for the digital transformation. What relationships exist or are possible? How, when and where does the customer wants to get in contact with the provider? What kind of digitization is needed?
The path through which the participants get in contact with each other is determined by the previous routine. These channels range from personal visits, telephone calls, publications, trade shows, to the Internet. It is an advantage to use all possible channels. Which media is already used? Which channels should be developed?
The proposals are split into two groups. 1) Physical products and on-site services as well as 2) digitizable products and remote services. While the second group comprises purely digital propositions, the first group can be extended with digital building blocks, e.g. the remote maintenance of a machine, the 24-hour hotline, online training. The digital opportunities of the propositions are often not clear. Which parts of the assortment can be digitized? Which new digital services fit into the product range?
Revenue streams In addition to the core business, the accumulated knowledge and contacts provide additional sources of revenue. The digital transformation opens up these information-rich opportunities. Which digital sources of income are available in the field of the propositions? What else can one earn with the existing knowledge? What can you do with the contacts?
Activities It is always surprising how far or how little the internal possibilities of the IT are used. Thus, value creation continues to take place with traditional, paper-based practices. At the latest when the customers are no longer satisfied with the slow, manual processes and if a closer involvement is desired, nothing else remains but adapting digitally. The affected activities can be derived from the digitizable proposals. Which processes are partly or fully automatable? How does the transformation take place?
Digital companies have virtual resources, i.e. the IT with its networks. A look at the degree of internal digitization, the already automated processes, the data landscape and the applications quickly shows the need for action. Which processes are already IT-based? What data is available? Which applications have a digital future?
Partners The participants in the provision of deliverables are the internal and external co-workers. They need new skills in the digital world, such as strong customer focus, lifelong learning, teamwork, change management as well as IT-specific knowledge of computer literacy, data security, data analysis, the Internet, etc. Who are the internal and external partners? Which skill profiles are there or are required? Which skills are missing?
Cost structure The digital transformation is not free of charge. The savings in expenditure and the increases in sales can not be realized overnight. Looking at Amazon, sales are growing steadily, but profits are not developing in the same way. Before you start with the digital transformation, you need an honest commitment concerning the costs. Where do the expenses arise? How long may the digital transformation take? What is the cost of not digitizing?
Bottom line: The complete Business Model Canvas is affected by the digital transformation. The already achieved digital penetration and readiness of all components determine the expected effort. The first step into the digital future is the conscious decision of all involved people for the necessary efforts. The Business Model Canvas provides the required overview.
Time flies and the employees are working step by step until they are finished. Being finished means that the customers, who are willing to spend money for the result, receive the deliverable. Very few, who collaborate on it, are lucky enough to be in direct contact with the paying customer. Mostly they have internal „customers“ who contribute their part of the value chain to the deliverable. The entire process is determined by the involved people. Over the past decades, we have learned that deliberately designing these procedures, the business processes, has many benefits for everybody: the employees know what to do and the people in charge can control the process. In some cases, companies are taking care of the processes for the first time. In other cases, the design is done for the umpteenth time. Why do they make this effort for Business Process Management (BPM)?
There are many justifications for the development of business processes.
Toppling silos into tunnels
Overcoming the silo boundaries is a major reason for BPM – double work disappears, delays in crossing the border are eliminated, silo-egoisms will be dissolved. The tunnel also has its boundaries, but they are aligned to the results and the customer. Nevertheless that’s not the main reason for BPM.
Letting the data flow
In the future the floods of information will continuously rising, since more and more processes will be digitally transformed – automation of processes; digitization of deliverables; network-based access to everything, anytime, anywhere. Nevertheless that’s not the main reason for BPM.
Getting a neutral rating
It is hard to estimate how strongly individuals engage into their work. It gets even more difficult when it comes to all employees of a large company. The solution of the past years is the certification by a neutral third-party. The processes are a favorable goal for all people concerned – and as soon as the processes are described, they are also practiced – or not. Nevertheless that’s not the main reason for BPM.
Enabling IT solutions
A specific manifestation of the processes can be found in the IT systems. Since the procedures are encrypted in executable program code, at this point in time clear procedures must be available at latest. Nevertheless that’s not the main reason for BPM.
Redistributing resources The organizational structure will continue to be the most important tool for distributing means and raw materials. However, the proximity to the value creation suggests assigning employees and resources of the production more likely to the business processes, because they can be better aligned with the results. As long as both approaches are pursued, decision makers have to accept that they will not get consistent figures for their decisions. Nevertheless that’s not the main reason for BPM.
Without the description of the processes, all business players lack an objective basis for discussion, evaluation or changing the processes, to make clear allocations of resources and data, to be certified and to realize the IT. Only something printable is valuable. Nevertheless that’s not the main reason for BPM.
As apt as all these reasons are, they are always only means to an end. Eventually it’s not about the process description, it’s about actual business. The essential reason for BPM is:
based on applied best practice.
This only works, if the wishes of the customer are known along the value chain and the best practices are consistently applied to deliver the service that customers are willing to pay for. The following aspects support the essential reason for BPM.
Only do what is required – not less
Every process has customers: internally the neighboring department, which benefits from flawless inputs even if it does not pay for it; external institutions that are eligible for reporting; and above all the customers, who finance the whole thing with their payment.
Meet the requirements with minimal effort In all cases, it is only necessary to do what the recipient of a deliverable actually needs: all employees must do their part to avoid errors, so that there is no need to constantly rework; the tax office and the shareholders are entitled to accurate reporting; Customers determine the required quality with their payment and sustained loyalty.
Carpe diem Above all, processes are characterized by their speed. It is not about maximum acceleration, as this would lead to situations which would be hard to control. Also, the vanishing flow is not desirable because it makes timely results impossible. The goal is to adjust the gradient so that as many results as possible are delivered quickly and punctually.
Being able to recognize what is worth seeing
As early as possible being able to react to an obstructive incident requires visibility of the current situation. Even the soloistic craftsman has several workpieces in progress at the same time. In business it is an indescribably large number of processes that take place simultaneously. The only chance for an overview is the designed process – together with a contemporary approach of the resulting flood of data.
Again and again and again Not the number of processes is crucial, but the fact that these processes run repeatedly – preferably always the same way. On the one hand, the effort of designing the processes pays off that way. On the other hand, repeating the same process always creates routine and safety for the employees, what improves the quality of the results.
Bottom line: While in the past the value chain took place predominantly inside the factory fence, today we have an intense, global network of companies of all sizes. The connecting element is the business process that starts and ends with the customer. The process does not become important with the printable description, but with the applied practice that is shared between man and machine. People are the deciding factor because even machines need the human operator. Without involving the employees, only the offices are decorated with A0 plots and the process design happens far from the business in the ivory tower. Do not undermine the essential reason of BPM with the wrong focus: Deliver customers reliably adequate deliverables based on applied best practice.