Business Agility Concepts

Business agility is defined here as innovation via collaboration to be able to anticipate challenges and opportunities before they occur. Accordingly, a gap analysis methodology can be used to evaluate the business agility readiness (BAR) needed to implement successfully an information management system of customer engagement for creating the business agility that produces the culture needed to enable a sustainable competitive advantage.

The recognition of the business value of business agility is not new. It was articulated several decades ago as “management productivity”—timelier decisions with greater insight and impact on business performance. This was as a result of implementing corporate management information systems with an integrated database enabling real-time decision support systems (Heisterberg 1985). Such a computer data-driven “silicon crystal ball” capability creates a culture of adaptive decision-making processes. With the advent of commercial Internet technology, this internal agility evolved as a competitive advantage with ubiquitous corporate intranet deployments.

In order to see the future of business agility that lies ahead, it's useful to look back 20 years across the previous generation of revolutionary business practices, in which innovation has resulted in continuous decision process reengineering (Heisterberg 2001):

• Electronic commerce (e-commerce) along the “information superhighway”
• E-business in the dot-com era
• Collaborative commerce (c-commerce) by virtual enterprises as value chains at the turn of the twenty-first century
• Social business evolution of Web 2.0 over the past decade
• Business ecosystems as the twenty-first-century business model for competition within and between industry markets

Even as these stages have progressed for more than two decades, the enabling technologies have changed more quickly. Information technology (IT) evolution has been measured in terms of Internet time as a set of next-generation hardware, software, and network system technologies that are continually deployed in faster enterprise implementation cycles.

This technology evolution has produced the ability to monetize innovative ideas. During the same period strategic business management theories, principles, and practices have evolved with the development of “customer value” as a framework for organizing resource allocation decision making. The associated abstract concept of Intellectual Capital for measuring the creation and delivery of customer value expressed as intangible assets has become a core element of today's customer-centric business models. As illustrated in Figure 1.1, this new rule of competitive advantage has become the driver for digital business in a knowledge-based marketspace.

Digital Business Organization

Ubiquitous Internet connectivity has created a data-rich business environment. Access to information at any time, in any place, and in any way is now expected as a routine practice that provides a digital “state of presence” that drives personal experience delivery as the new normal of customer relationships. As their customers become increasingly connected to their suppliers and distributors via the Internet, businesses need to develop strategies and organizational structures that reflect this dependency on their digital ecosystems of trading partners. Such a new digital business has both physical and virtual relationships that must be managed for successful execution of that strategy.

Businesses today are now reliant on these trading partners to be able to deliver a whole product with an experience that matches their customer expectations. This expression of the customer-centric value proposition in terms of the bundle of tangible goods and intangible services as a whole product provides insights into the necessary structure of a market-leading organization. A winning digital business strategy requires collaboration with trading partners that have compatible core competencies for developing and delivering a whole product. The organizational structure that is formed by a set of digital businesses around a whole product value chain is called a virtual enterprise. Likewise, coevolution of the collection of virtual enterprises collaborating to grow a rich business environment for their mutual benefit while competing to lead their market space is known as a business ecosystem. For example, Apple and Google as digital businesses with their respective virtual enterprises of iOS and Android whole products compete to lead their tablet business ecosystem while collaborating in order to build it more strongly as a vibrant competitor against the personal computer business ecosystem.

The basis of business competition has also evolved from product-centered financial assets to customer-centered information assets. This business model paradigm shift has moved away from “past is prelude” thinking characterized by business-as-usual planning. With this traditional practice, extrapolation of strategy plans was based on assumptions that the future will continue like the past using historical time-series sales forecasting and static regression analysis models. Now best practices lead to outside-the-box thinking. This is reflected by scenario-based planning that anticipates change via adaptive sense-and-respond business intelligence processes, real-time customer-facing decision support, and dynamic prescriptive analytic models. The growing criticality of digital customer relationship channels that augment conventional physical customer relationships and the inexorable progression of digital relationship management as a core competency are now fundamental enablers of agility for digital business success.

Business Ecosystem Strategic Concepts

This approach builds on the work of James F. Moore in The Death of Competition: Leadership and Strategy in the Age of Business Ecosystems by identifying and defining the business ecosystem as a strategic interenterprise organizational paradigm (Moore 1996). He describes the linking of synergistic core competencies in terms of four stages of strategic business coevolution. This process dynamically strengthens the ecosystem as a whole through an iterative cycle of collaboration and competition. These concepts of coevolution will be explored and elaborated throughout this book.

Collaborative commerce strategic concepts provide the foundation for digital business practices that enable business ecosystem trading partners to create, manage, and use data in a shared environment to design, build, and support their whole product throughout its life cycle, working separately to leverage their core competencies together in a value chain that forms a virtual enterprise (Heisterberg 2003). Sustainable competitive advantage has been realized by creating a culture for adoption of digital business strategies and customer-centric business models. This definition of digital business is made actionable by blending the elements of operations management, performance management, and information management in order to realize virtual enterprise integration within business ecosystems. It is important to understand that a precondition for success of this integration is creating an ecosystem culture that rewards innovation as a strategic customer value proposition based on mutual trust. (See Figure 1.2.)

These concepts for business ecosystem success are predicated on collaboration, as the Internet “killer app” and cloud technologies enable the IT agility that drives the sense-and-respond processes that create business agility. Taking a systems approach to business ecosystems, referred to as “ecosystemism,” fosters business agility thinking with twenty-first-century strategic goals: grow revenue, reduce cost, and manage risk. This provides the organizing principles for development of customer-centric business models. As such an approach to articulating a contemporary vision of creating business value, ecosystemism is based on systems theory in general, and specifically the fundamental first two laws.

The first law is known as “synergy” or commonly referred to as “the whole is greater than the sum of its parts.” It has been adopted as the mainstream business practice of collaboration and often implemented using “crowdsourcing” processes. The second law is known as “suboptimization.” This concept may be understood as simply “a chain is as strong as its weakest link.” It is best reflected by the business practice of innovation utilizing core competencies.

An ecosystemism digital divide is defined by the ecosystems that are characterized by their associated enterprise system scale:

• Digital business intranet → Developing a partnership between the chief marketing officer (CMO) and the chief information officer (CIO) that leverages the business value of IT
• Virtual enterprise extranet → Enabling competitive parity of small and medium-sized enterprises (SMEs) versus big enterprises by executing c-commerce strategies
• Business ecosystem Internet → Creating global market spaces in a flat world driven by social business models

As a matter of fact, just as e-business concepts have been subsumed into twenty-first-century standard practice for the management of business, c-commerce concepts are now simply expressed in the context of collaboration. Clearly, the business world has recognized they are all strong at something, yet not everything, and have concluded that two or more heads are better than one. This is evidenced by how ubiquitous the term collaborate is in everyday business conversation, as well as its widespread use in the trade press and in advertising copy of all media.

The expression of digital business management in terms of c-commerce principles and practices is both broad and deep. A complete treatment of this subject is worthy of several books covering strategies, tactics, and operations across the full spectrum of business value chain functions. Furthermore, coverage needs to include virtual enterprise integration issues such as the formation and management of virtual organizations at various levels from the enterprise to the project team. Then there is also the articulation of the critical success factors associated with a collaborative culture, as well as the critical role of trust in building an effective business ecosystem. Obviously, such a treatment is beyond the scope of this book. In order to make the definition of digital business actionable, we will focus on introducing experienced business managers to ecosystem-level strategic concepts of business agility.

Stages of Business Ecosystem Coevolution

In today's business management climate, the four stages of strategic business coevolution of business ecosystems may be viewed as intense innovation leadership challenges that can be enabled by the strategic business value of IT. The role of innovation as a critical success factor has been growing rapidly because of the climate change due to technology advancement, globalization of markets, and the diffusion of knowledge expressed in terms of intellectual capital as well as financial capital. Innovation as cultural imperative is a hallmark of leading digital businesses. They work collaboratively and competitively with the trading partners in their virtual enterprise to develop new core and whole products, satisfy customer demands, and integrate the next cycle of innovation.

Moore (1996) describes this climate of innovation in terms of the “opportunity environment.” This is the “space of business characterized by unmet customer needs, unharnessed technologies, potential regulatory openings, prominent investors, and many other untapped resources…shaping cohesive strategy in the new order starts by defining the opportunity environment…strategy making revolves around devising novel ways to seize opportunities and create viable networks with other business ecosystems.”

According to Moore, business ecosystems develop over four stages of strategic business coevolution:

1. Stage I: Pioneering an ecosystem. Link capabilities to create core offers on which to build; create value that is much superior to the status quo.
2. Stage II: Expansion of an ecosystem. Start with a core set of synergistic relationships and invest in increasing their scale and scope to establish critical mass within whatever market boundaries you wish to respect and exploit.
3. Stage III: Authority in an established ecosystem. Concentrate on embedding your contributions within the heart of the ecological community to maintain your authority within the business ecosystem.
4. Stage IV: Renewal or death. Find ways to insert new ideas into the order; stay competitive with other alternatives.

The following example describes how business ecosystems develop over these four stages of ecosystem maturity, viability, and growth. This coevolution is analyzed using the story found in the following Marriott Kauai ecosystem case study published by The Center for Corporate Citizenship at Boston College in 2002. It deals with the problem of creating and sustaining food and beverage customer experience management as a core competency. These business ecosystem insights are amplified by Brad Snyder, General Manager, Kauai Marriott Resort and Beach Club. His experiences provide a context for how virtual enterprises may leverage their understanding of these converging technologies to share their intellectual capital in order to fulfill the expectations of their trading partner community. The resort management used a balanced scorecard approach to building their business ecosystem strategy based on a customer-centric business model.

Digital Business Stakeholders

A digital business consists of a set of digital stakeholder relationships. They empower employees and engage trading partners to form a virtual enterprise. The digital businesses operate separately with social business principles, practices, and processes. Today, a customer-focused digital business model leverages stakeholder relationships using digital collaboration channels in their virtual enterprise to deliver a great customer experience that will produce a market leader. Yet the only way to sustain their competitive advantage is for digital businesses to sense changes in their business ecosystem, and then adapt their plans based on predictions of how these insights will produce customer delight and advocacy. A discussion of these agile business practices here provides a context for this new way of doing business—digitally.

Today, forward-looking enterprises are seeking to achieve the benefits of c-commerce by leveraging the Internet as an enabling technology in order to transform their core business management decision-making practices. These real-time enterprise value propositions for decision making are based on managing information rather than inventory. The business case for digital businesses is predicated on IT investments to facilitate collaborative business practices with shared demand/supply data and virtual enterprise visibility information in real time that will reduce uncertainty to improve decision effectiveness. Here is where digital businesses develop and execute a customer experience management strategy enabled by social business technology to drive a customer-centric value chain as a virtual enterprise.

The collaborative commerce architecture is described throughout the book with use case scenarios from the ubiquitous global multitrillion-dollar travel, tourism, and hospitality industry to provide clear examples to demonstrate the “what-why-how” story. Such familiar scenarios utilize a virtual enterprise integration methodology that is illustrated by a virtual Visitor Information Center (vVIC) platform as an Ecosystem Hub that is developed using an iterative incremental implementation road map (Heisterberg 2009).

The key for building next-generation digital businesses is integrating the business ecosystem with customer engagement solutions. Our approach was created by utilizing the two fundamental elements of enterprise information systems engineering. These methodologies have evolved over the past 25+ years of virtual enterprise integration research and development:

• Ecosystem Hub architecture that employs the Force 5 Tornado technologies using collaborative commerce principles
• Ecosystem Hub implementation road map that is an extensible, robust, scalable model for digital business transformation in accordance with business agility readiness gap analysis concepts.

Both of these subjects are introduced in this chapter in order to provide an overview of our strategic framework for creating business agility. Ecosystem Hub architecture concepts will be further elaborated in the next chapter, while the Ecosystem Hub implementation roadmap will be illustrated by use case scenarios throughout the remainder of the book.

Ecosystem Hub Concepts

What are the lessons learned from this accelerating pace of information technology disruption that has created a climate of innovation further multiplied by the convergence of those same technologies? The global consumerization of IT and the resulting “bring your own devices” (BYOD) phenomenon in the business world are driving the winds of change—generating the “perfect storm” of technology convergence with cloud, social, mobile, video, and big data acting like a “Force 5 Tornado” disrupting the business playing field.

Note that we have created this metaphor as a “conceptual shorthand.” The use of the term “Force 5” refers to both the five technology trends as well as the highest strength level of the winds in such a storm. The “Tornado” terminology is based on Geoffrey Moore's technology adoption model associated with disruptive innovations described in Crossing the Chasm, and in Inside the Tornado where he refers to technologies evolving from niche markets into the business mainstream.

In the context of the disruptive technology metaphor, enterprises that are forward-looking can harness this disruptive power to their advantage via big data with prescriptive analytics in order to:

• Produce early warnings to strengthen infrastructure via the cloud
• Collaborate for real-time problem solving in their communities via social networks
• Communicate vital decision-making information to the right people, place, and time via mobility solutions
• Provide interactive messages for alerts and instructional information via videos

By developing readiness for creating business agility, and harnessing the five technological forces that have converged in our present business environment, market leaders will transform the Force 5 Tornado spawned by this perfect storm into a coherent pattern of light, creating a rainbow that leads to a pot of gold—achieving success.

This book describes the Ecosystem Hub architecture as an enterprise information management system (EIMS) in terms of three integrated layers consisting of business, applications, and technology. We leverage the top five information technology trends in the context of building collaborative commerce business architectures and putting the “data” back into “data processing” by incorporating master data management principles and practices into a big data strategy for building a digital business. It is a strategy for the next stage of digital business evolution. Collaborative commerce business practices enable trading partners to create, manage, and use data-driven processes in a shared environment to design, build, and support products throughout their life cycles, working separately to leverage their core competencies together in a value chain that forms a virtual enterprise.

Traditionally, technology has been utilized within the four walls of the enterprise to facilitate improvements in business processes. With the advent of the Internet, enterprises have extended their use of information technologies to include external transactions based on digital touch points with trading partners termed electronic commerce (e-commerce). The emerging digital business models provide the enterprise with a collaboration capability across suppliers and customers that facilitates ease of information sharing and improved decision making. This in turn requires the development of virtual enterprise management principles with new business practices for the formation and operation of alliances with collaborative partners having a mutual interest in their shared value. This is a proven approach and has been accomplished in accordance with the evolution of business information management best practices over the past 20 years. An Ecosystem Hub is a standards-based, secure, shared data platform:

• Developed as the proprietary Integration Hub for Lockheed during the 1990s to create, manage, and use shared program/project/product data in the aerospace industry in accordance with a standard for providing contractor integrated technical information management software as a service via the Internet.
• Evolved as commercially sourced independent enterprise information portal (EIP) software packaged products.
• Now available as an integrated turnkey EIP software suite via the cloud as software-as-a-service (SaaS) packages.

As previously stated, Business Ecosystem Hubs provide the environment that facilitates digital business web services for applications such as inventory visibility, business process management, and performance metrics displayed in real-time dashboards. Application software developed using a service-oriented architecture (SOA) and deployed as web services has provided the technology base for the concept of the next-generation Internet—Web 2.0.

The customer relationship management (CRM) application software product that led the demand chain integration movement was Salesforce.com, a sales force automation package that was delivered as an online service for an affordable monthly subscription fee. This spawned establishment of a new sector of the software industry now referred to as the cloud and software as a service (SaaS) applications. The widespread adoption of SaaS products that support collaboration within and between small, medium-sized, and large corporations around the world has enabled Enterprise 2.0.

Social network SaaS applications are enabling Enterprise 2.0–driven business cases in terms of virtual enterprise collaboration. Note that the cloud and SaaS sector has its early roots in the computer time-share industry with the deployment of corporate accounting and payroll services, and then later with the aerospace industry delivery of contractor integrated technical information services (CITIS) on U.S. Department of Defense (DoD) programs via an extranet using EIP technologies. The Digital Business Ecosystem (DBE) Initiative launched by the European Union introduced the concept of “extended dynamic clusters” for deployment of c-commerce solutions via SaaS applications targeted for small and medium-sized enterprises (SMEs) to enable their participation in global value chains (Nachira, Nicolai, Dini, Leon, and Le Louarn 2007).

The DBE project provided an opportunity for innovative software application development by software producer SMEs and for the achievement of greater information and communication technology adoption by SMEs in general. SaaS changes the way SMEs navigate their ecosystems by dynamically linking internal and external resources and associated value networks for allocation according to their business goals in order to achieve virtual enterprise integration (Dini and Nicolai 2003).

Thought leaders such as McKinsey, Gartner, Forrester Research, Harvard Business Review, and the MIT Center for Digital Business agree that companies that adopt digital information asset-based policies and processes generate significantly higher growth, market share, and profits. Industry leaders are building new data-driven customer-centric businesses leveraging information-based assets with agility derived from big data analytics (BDA) to create innovative revenue streams. This is now becoming a mainstream business model across many industries, with big data technology challenging conventional information infrastructures using innovation to provide opportunities for collaborative customer-facing applications enabled by predictive customer insights. Information management is becoming a critical success factor for business leaders around the globe.

This concept was articulated by Regis McKenna at the dawn of the Internet era in his seminal book Real Time: Preparing for the Age of the Never Satisfied Customer (McKenna 1997). He observed that for Silicon Valley companies, “Growth forecasts, such as five- and ten-year projections for product sales, are routinely ignored because they are seen as mere extrapolations from history. Instead, people are in constant touch with the technological and competitive environment of the moment. Change is treated as an opportunity that, if spotted ahead of competitors and acted on as fast as possible, can transform the ranking of companies in an industry virtually overnight.”

These “perfect storm” technologies have emerged separately over the past decade and been widely written about in much detail. Several thought leaders have come forward recently to address the symbiotic character of this set of technologies that are trending together, such as Geoffrey Moore in terms of the “chasm” decision making for enterprise information technology adoption, Malcolm Frank of Cognizant with the “SMAC Stack” concept (social, mobile, analytics, and cloud), as well as the Gartner “Nexus of Forces” (social, mobile, cloud, and information). We will take a “whole product” approach to digital business strategy for virtual enterprise formation and operation with digitization of customer-focused business practices, processes, and protocols. We will explore this convergence in more detail in Chapter 2 and add video as a fifth force of the perfect storm, which has strong implications for transforming the way businesses relate to and engage their customers via technology.

Ecosystem Hub Implementation Concepts

The Ecosystem Hub implementation roadmap that is a model for digital business transformation has also been developed in accordance with the corresponding business performance management best practices over the past 25+ years:

1. Developed as proprietary advanced manufacturing technology system integration methodology by the Computer Aided Manufacturing–International research consortium and deployed for consortium members, such as General Motors and General Electric, to provide interoperability for factory management planning, execution, and shop floor control systems.
2. Augmented with the Department of Defense contractor-integrated technical information service business case methodology project in accordance with Military-Standard 974 for CITIS.
3. Deployed integrally to Gartner IT balanced scorecard projects, as well as numerous c-commerce IT management consulting engagements worldwide.

Collaborative business practices require the sharing of business and technical data that are often proprietary or at least competition-sensitive information. It is important to emphasize that relationship management is a fundamental core competency for digital businesses and trust is the associated critical success factor. A relationship portfolio approach provides a framework to facilitate intelligent partnering. Trust as the foundation of the business ecosystem culture is realized by means of:

• Developing a capability-based strategy
• Building a portfolio of relationships
• Managing the relationship portfolio

Trust is the key to relationship management by increasing the velocity of the value chain. In the real-time virtual enterprise, trust is an economic driver and not trusting is a bigger risk (Covey 2008).

Trust as well as information integration and business process management standards are imperatives for effective digital businesses management. This decision making necessitates establishing business rules that are driven by value chain needs in formation and operation of the virtual enterprise. This is based on the trading partners' risk/reward contributions and value-added core competencies. A set of digital business critical success factors includes:

• Leveraging Internet technologies for first internal and then external data sharing
• Providing loosely coupled application interoperability via Ecosystem Hubs across the virtual enterprise's value chain
• Focusing on core competencies associated with the established collaborative business practices for the demand chain and the supply chain
• Building virtual enterprises on trusted value chains in one or more business ecosystems to redefine competitive advantage
• Generating real-time visibility, event notification, and performance measurement throughout the value chain
• Reengineering value chain management decision-making processes using a knowledge management approach

We will further elaborate on the role of trust as a critical success factor for virtual enterprise formation and operation, as well as business ecosystem optimization of the delivery of customer value in Chapter 2. Our approach to multidimensional scoring (MDS) for balanced scorecard initiatives can become an actionable methodology for measuring business agility readiness (BAR).

The business transformation that is being realized via digital business can be described in terms of management decision-making processes utilizing feedback to leverage real-time virtual enterprise information. The fundamental elements of digital business are business processes that facilitate collaboration that are enabled by Internet technology. Originally, c-commerce focused on the supply chain back end of the value chain. Now, using Web 2.0 technologies, this scope has been expanded to embrace the demand chain activities incorporating social networking functionality, which will ultimately enable optimizing the holistic virtual enterprise value chain from beginning to end.

There are two key adaptive strategic planning processes for virtual enterprise integration in a business ecosystem:

1. Building virtual enterprise infrastructures using the Ecosystem Hub architecture
2. Making decisions to optimize business performance of the virtual enterprise value chain

They both play a role in our strategic framework for creating business agility and are explored in the following section and further in Chapter 2.

Ecosystem Hub Implementation Roadmap for BAR

Enterprises may employ a business agility strategic planning methodology to build a roadmap for the design, development, and deployment of a virtual enterprise enabled by an Ecosystem Hub based on the perfect storm of technology convergence with cloud, social, mobile, video, and big data acting like a Force 5 Tornado, disrupting the business playing field to create a competitive advantage.

Step 1: Visioning via the Strategic Framework

During this step, the enterprise must establish a corporate business agility vision, and therefore, a resulting high-level digital business strategic direction for the enterprise's “to be” state in the envisioned future. A top-down and bottom-up approach is adopted in Step 1 to ensure that the entire organization has input into establishing the corporate business agility vision for the system of engagement (SOE) and buys into it with CEO leadership.

Strategic virtual enterprise scenarios using an Ecosystem Hub reflect the different applications of value chain management under four main categories:

1. Demand chain management
2. Customer/partner relationship management
3. Supply chain management
4. Supplier relationship management

Any c-commerce initiative can be positioned according to one of these four headings. Using the iterative incremental implementation model for pilot project development, enterprises can develop business agility competencies by investing in a portfolio of IT initiatives that may include the following examples:

• Ecosystem Hub infrastructure development via SOE technologies
• Intranet integration via Ecosystem Hub
• Virtual enterprise extranet integration via Ecosystem Hub
• Business ecosystem membership for virtual enterprise integration

Having identified the four ways in which virtual enterprises can be applied, strategic scenarios are ranked through a robust evaluation process in terms of both the value of opportunity each scenario represents to the enterprise as well as the ability to deploy it. The resultant ideal target zone can be represented diagrammatically as illustrated in Figure 1.3.

Enterprises must formally evaluate each of the candidate scenarios against a number of business factors. These business factors relate to either opportunity or capability and are scored under each heading, which generally consists of from eight to 12 metrics that correspond to the enterprise balanced scorecard.

The business agility visioning process requires three perspectives. The enterprise perspective provides insight into a company's current capabilities, culture, and vision. The marketplace perspective provides a view of realities and changes in industry practice, barriers to entry, competition, constituent behavior, and offerings. The technology perspective, with its associated policy impacts on the enterprise and marketplace, extends strategic thinking outside of the box by discounting commonly held beliefs about markets, products, and competition. This forces enterprises to address new methods of doing business, new product offerings, and new competitive paradigms within the business ecosystem.

Development of the business agility vision and digital business strategy is not a one-time process. Because of the evolving nature of best practices, state-of-the-art product offerings, quality expectations, and cultural changes, strategy development is iterative. Virtual enterprise business models and their associated digital business strategies must be dynamically updated on a continuous basis.

Balanced Scorecard Delivering Business Value

A challenge in the new twenty-first-century economy is to adapt quickly to new business opportunities or threats by realigning enterprise strategy to efficiently and effectively create value. An adaptive strategic planning solution for enterprise business management decision making can provide a holistic approach to strategy management, business planning, target setting, rolling and event-driven forecasting, and business performance management based on financial and leading nonfinancial key performance indicators (KPIs). Big data analytics (BDA) applications can be used to support these activities in executing c-commerce strategies across a virtual enterprise that consists of multiple value chains with diverse organizational structures and management decision-making processes.

Identifying and analyzing value chain performance trends enables enterprises to adapt their strategic plans, redesign virtual enterprise configurations, and reallocate resources for their core competencies in order to optimize profitability in response to customer and market dynamics. The benefits of digital business can then be realized via leveraging the Internet as an enabling technology in order to transform virtual enterprise core business management decision-making practices.

This trend has amplified business interest in the balanced scorecard as part of a strategic business planning methodology that is being used to communicate the enterprise business strategy throughout the value chain. Kaplan and Norton, the creators of the balanced scorecard, describe adaptive strategic planning in the context of “making strategy a continual process.” Accordingly, there are three key e-business drivers for including the balanced scorecard as a fundamental model for the solution to the digital business strategy management problem (Kaplan and Norton 2001):

1. Linking strategy and budgeting. Strategic initiatives and performance targets on the balanced scorecard link the enterprise strategy to the specific resource allocations for operating each value chain using rolling forecasts in a manner that reflects operating in continuously changing environments.
2. Closing the strategy loop. Digital business messaging applications, including systems displaying performance metrics in real-time dashboards, can be linked to the balanced scorecard, providing a new framework for exception reporting and adaptive business management practices, as well as a focus on intangibles with leading indicators, such as intellectual and social capital, management talent, core competencies, and customer loyalty assets that are neglected by traditional lagging financial measurement.
3. Testing, learning, and adapting. Virtual enterprise management can be more proactive by testing and evaluating strategic value chain hypotheses with the information from the c-commerce messaging applications. Strategies for each value chain can evolve in real time in response to market dynamics.

An adaptive strategic planning system enables value chain management teams to make strategy a continual process by: monitoring performance against enterprise and line-of-business strategies, updating the performance measures on the balanced scorecards using actual operations data in real time, collaborating as virtual teams with an executive dashboard to interpret the performance metrics, developing strategic insights with knowledge management tools in order to formulate new competitive directions, and then reallocating enterprise resource allocations to continuously reflect the dynamics of the business environment.

Such a digital business planning and control application, implemented using a big data analytics (BDA) model, can be based on an enterprise and line-of-business balanced scorecard as well as real-time customer relationship management/supply chain management (CRM/SCM) performance analytics. It enables progress in executing the strategy to be monitored, as well as supporting corrective actions to be performed in a timely manner. This adaptive strategic planning system serves as an enabler of a digital business strategy improvement process that links the real-time value chain performance as feedback for the business operations control process via BDA with the business ecosystem–level strategy.

It is important to understand that collaborative strategies emphasizing demand chain optimization need to be focused on customer relationships, which require interactive and individualized communications. Trading partners must have bidirectional communication in a cooperative manner in order to recognize and respond to their mutual needs, not simply broadcast information without knowing that it is both received and understood. Also note that CRM systems are most successful when delivered as a community environment enabled by trust as a critical success factor.

Change Management Imperatives

Change management initiatives need to cultivate competitive information asset value. This means developing capabilities and competencies for business agility asset management. Such a stewardship of enterprise data requires roles and responsibilities for handling the transition from tangible SOR product data transactions to intangible SOE customer data relations. Thus, relationship management must become a core competency of any enterprise that aspires to be a leader in its business ecosystem.

The true value comes from an integrated view of analytics and technology that connects marketing operations with multichannel campaigns. This is where CMOs and CIOs can jointly calibrate the financial, operational, and customer impacts of every single marketing activity. The result is that businesses not only create better customer experiences, but do so more efficiently and cost-effectively. This capability reflects the evolutionary stages of the Gartner Business Analytics Maturity Model in order to answer the questions:

• Descriptive → what?
• Diagnostic → why?
• Predictive → when?
• Prescriptive → how?

Customer-Centric Business Strategy

The CMO Council and SAS have conducted a study titled “Big Data's Biggest Role Aligning the CMO & CIO: Greater Partnership Drives Enterprise-Wide Customer Centricity” that provides insights that can help the CMO and CIO align around the following four imperatives to achieving customer centricity:

1. Enable a single customer viewpoint. Successful customer-centric organizations tend to have a more centralized data and information management system for a single view of the customer. Marketing and IT must enable the different parts of the organization to gather customer interaction data from all internal and external customer channels in a consistent way.
2. Develop actionable insight by automated, predictive analysis of the data. The next challenge for marketing and IT will be for the analytics team to create actionable insights that support specific customer-centered outcomes. These customer analytics will need to run in real time for an ever-increasing number of customer segments and more elaborate microsegments by audience attitude, location, channel, and more.
3. Distribute contextualized customer insight to support specific marketing actions. BAR also helps marketing and IT to create output from the customer data that targets the employees and other partners who have the potential to interact with customers. More than just information, they need to agree on the answers and actions that are most relevant at a specific touch point and design interactions that are adaptable to different skill levels.
4. Deliver an outstanding customer experience based on insight, not only data. Like their partners in marketing, CIOs are recognizing the importance of the external customer as the primary driver of technology strategy. BAR strategies provide marketing analytics and customer analytics technologies to help redirect IT's traditional focus on delivering value to the internal IT customer to align with marketing in its external customer centricity.

That change in IT focus from SOR to SOE puts the customer at the locus of IT planning, deployment, and support. In addition, frontline agents and customer-facing systems can now consistently deliver answers to a specific customer need at a specific touch point to create a compelling and customized brand experience.

Business Agility Alignment Issues

Business ecosystem insights focus on how digital business teams may leverage their understanding of these converging technologies to share their intellectual capital in order to fulfill the expectations of their trading partner community. Digital business insights focus on how CXO teams (the chiefs of business functions and units) may leverage their understanding of these converging technologies to create business agility in terms of innovation via a collaborative culture that mitigates risk by celebrating failure as lessons learned in order to drive future success.

The chief information officer (CIO) insights focus on how CIOs may leverage their understanding of these converging technologies to use the top 10 characteristics for CIO success to deliver the business value of IT for digital businesses. Featured on the applications dimension is marketing in general, with a specific focus of the framework on the chief marketing officer (CMO) insights that leverage the CMO use case studies created in conjunction with development of the “CMO-CIO Partnership for Collaborative Marketing Agility” theme by enhancing the balance sheet with a balanced scorecard. We have been developing a strategy for collaboration with the CMO Council for CMO-CIO alignment around big data analytics based on collaborative marketing best practices. A digital business practice can be created for using a balanced scorecard to describe and measure how to best vet the internal/external collaboration activities associated with management of big data for driving predictive analytics as a critical success factor in managing the business ecosystem. These insights focus on how CMOs may leverage their understanding of these converging technologies to better communicate with their customers through the media they prefer, to engage prospective customers through common interests, and to utilize information to build stronger, more personal, and more lasting relationships.

Business Agility Readiness Roadmap

Business agility, defined as innovation via collaboration to be able to anticipate challenges and opportunities before they occur, produces a sustainable competitive advantage. The business value of IT is realized by creating business agility using a strategy of innovation for CIO-CMO alignment around big data analytics based on collaborative marketing best practices. This is made actionable as a decision framework by incorporating a holistic customer-centric performance management system using an IT balanced scorecard as the basis for a Business Agility Readiness (BAR) Roadmap.

The BAR Roadmap is defined in terms of an enterprise architecture that consists of the following three elements, integrated by data:

• People → Business architecture
• Process → Application architecture
• Tools → Technology architecture

BAR is actionable by means of using a gap analysis methodology to measure the change in business value associated with each of the four elements as scored in terms of a customer-centric model of business agility. The model is defined by four customer moments of engagement dimensions: profile, engagement, life cycle, and conscience. As the enterprise architecture evolves from the “as-is” state of the current system of record (SOR) to the “to-be” state of the envisioned system of engagement (SOE) supported with multidimensional scoring (MDS), the business is transformed in terms of its competitive position in the business ecosystem.

The basis of the gap analysis is documented in the form of two social graphs reflecting both the current and the future states of the enterprise architecture. The social graph for the SOR is articulated by a concept of operation that describes how the product data is created, managed, and used by internal/external stakeholders in the context of their roles in the keystone use scenario. A corresponding social graph for the SOE depicts the concept of engagement for the shared customer data environment expressed as one of the following four levels of relationship:

1. From the initial state of Communication → exchange of information in a relationship,
2. Through Coordination → communicating status while working separately,
3. Then Cooperation → working separately together,
4. To fully realize Collaboration → working separately together using intellectual capital for sharing risk and reward.

Note that each higher level inherits the properties of the lower levels.

The change management rationale for evolving the enterprise IT systems is to transform the corresponding business model and its fundamental strategy from product-centered to customer-centered. This transformation drives data management practices that enable reengineering decision-making processes.

The roadmap is presented using a balanced scorecard to describe and measure the CIO-CMO partnership alignment gap in the context of the moments of engagement that drive the transformation from a system of record to a system of engagement. Such a tool is used to assess how to best vet the internal/external collaboration activities associated with management of big data for driving advanced business analytics initiatives. This is accomplished by measuring the strategic readiness of the intangible assets associated with human capital, information capital, and organizational capital, which describe the knowledge perspective of the balanced scorecard. Illustration of how the Business Agility Readiness Roadmap works is shown in terms of a gap analysis for a travel industry scenario based on a “Selling Sonoma County Wine Country” case study contained in the Epilogue.

Sonoma County Tourism Sneakaway Marketing Campaign Leverages Hybrid Cloud Deployment as Platform for Ecosystem Hub

Operation of a central Ecosystem Hub as a hybrid cloud with integrated private and community cloud platforms by a DMO will facilitate a SOA-based infrastructure for the virtual enterprise enabled as a network of Ecosystem Hubs providing collaborative marketing campaign management services for their business ecosystem. Such an information system architecture is both robust and scalable, as well as extensible to a wide variety of travel industry scenarios (Heisterberg, 2010).

In an endeavor to build virtual Visitors Information Center (vVIC) Sonoma County Tourism (SCT) evaluated various cloud deployment models. They finally chose a hybrid approach to deploy various business applications such as ecosystem social media applications on public clouds hosted and managed by third parties. While back-end applications such as Financials, as well as customer-facing CRM, are on a Private cloud.

The travel life cycle is intended to provide the foundation of a vVIC architectural concept for building a collaborative travel planning community as a social media network. This system architecture may be described in terms of the hardware, software, and Internet resources needed for implementing the distributed multiplatform portal as an Ecosystem Hub for a DMO ecosystem. Development is recommended to be performed in accordance with a DMO technology plan describing an iterative incremental implementation strategy expressed as a multiyear vVIC roadmap documenting the business ecosystem keystone scenarios (Heisterberg, 2008).

SCT launched the winter/spring 2013 promotional campaign, called “Sonoma Sneakaway,” to encourage overnight visitation to Sonoma County during the slower months from January to May.

The “Sonoma Sneakaway” campaign, hosted on a public cloud with a stakeholders and visitors engagement portal, allows tourism-related businesses to promote themselves, for free, to the millions of potential travelers they reach globally. Thus breaking all geolocation boundaries with access to pervasive devices.

Tourism businesses who are interested in participating in the Sneakaway campaign submit their specials to Sonoma County Tourism through the partners section of their website, www.sonomacounty.com/partners. The campaign, which is free for tourism-related businesses in Sonoma County, was centered on the website, www.SonomaSneakaway.com, which held all the offers.

Refer to the Epilogue for the full story on business agility readiness at SCT for the Sneakaway campaign. This overview of the concept of operation for the Ecosystem Hub via the cloud-based Simpleview platform further describes the SCT Ecosystem. The bottom-line is that successful execution of this Sneakaway keystone scenario strategy is enabled by CIO-CMO alignment as a critical success factor. This case study will continue to evolve in order to provide a rich and real-time story of how to leverage the Force 5 Tornado technologies to create the business agility needed to gain and sustain your competitive advantage. It may be accessed via the Creating Business Agility blog. Stay tuned for more…!