Component business models - IBM

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IBM Business Consulting Services By employing this framework, executives can begin to envision how current business activities might function as an interlocking set of modules. Categorizing activities by business competency yields a high-level view of components according to the type of value they provide to the enterprise. Different firms in different industries will model their competencies differently, but, in every case, each activity should line up under a particular competency. Assigning each activity to one of three accountability levels – direct, control and execute – can also help executives begin to flesh out the component vision. The level of a given component should be intuitive, although exceptions will exist. • Direct. Components at this level provide strategic direction and corporate policy to other components. They also facilitate collaboration with other components. • Control. These mid-tier components serve as checks and balances between the “direct” and “execute” levels. They monitor performance, manage exceptions and act as gatekeepers of assets and information. • Execute. These “boots on the ground” components provide the business actions that drive value creation in the enterprise. They process assets and information for use by other components or the end customer. The three accountability levels imply different priorities. At the “execute” level, for example, the emphasis is on keeping people fully occupied and productive. Components at this level tend to be structured in ways that make information easily available. From a technology standpoint, speed of data entry and realtime availability are key. When customers go to an ATM, for instance, they want a simple interface that provides accurate information in a straightforward format: how much money is in my account? Contrast this with activities related to the “direct” tier, where such high-level activities as launching new products are handled. This level houses a small number of people who have a very large impact on shareholder value, so the design imperatives are nearly the opposite of those at the “execute” tier. Launching a new product requires collaboration among several elements, including 8 marketing, risk, finance, regulatory and credit. Input from all of these stakeholders is needed to make the launch a success, so workflow is a key requirement. From a technology standpoint, activities typically require people to discern patterns and trends from rich, multidimensional data, usually stored in a data warehouse. So, systems at the direct level are not designed for speed of data entry, but rather for ease, breadth and depth of analysis. Realtime interfaces are not needed, as data is often months old and processed in batches. Embracing CBM: A strategic road map CBM is not simply a way to imagine the future of the organization. It can also be used to put theory into action and drive the evolution toward a specialized enterprise, both internally and externally. This process involves three dimensions: one, developing a component view of the existing organization based on analysis of the business and the market environment; two, evolving toward specialization based on a reinvention plan within the context of changing industry dynamics; and three, advancing the organizational and operational infrastructure toward component-based enterprise optimization. Developing a component view of the enterprise A firm can begin to develop a component view of the enterprise by using the CBM framework as an analytical tool to identify the gaps and redundancies it must resolve on the way to becoming a component-based enterprise. A good way to start is by mapping the current business as a network of components. As described in the previous section, this initial analysis involves identifying and grouping cohesive activities into discrete units and testing the overall logic. The result is a “component map.” Figure 6 shows an example of a component map for the retail industry. Of course, every business will have its own, unique perspective on its component structure, despite substantial commonality with other players in its industry. The component map provides a basis for developing strategic and operating insights for the business. By gauging the relative business value of different areas of the map, executives can determine which components demand immediate attention. As Figure 7 illustrates, this type of analysis yields a “heat map” that highlights the components that represent the greatest economic value.
Figure 6. Mapping the enterprise as a network of business modules: an example from the retail industry. Accountability level Direct Control Execute Source: IBM Business Consulting Services. Customers Market strategy Customer service strategy Marketing strategy Campaign management Service management Customer service Customer communications Marketing Advertising Public relations Products/ services Merchandise planning Channel planning Assortment planning Space planning Promotion planning Product development Sourcing Product fl ow Planogramming Allocation Inventory mgt/OTB Demand forecasting Price management Content management Vendor management Item management Product management PO management Vendor management Replenishment Revenue/clearance management Figure 7. Heat maps identify “hot” areas to exploit business value. Accountability level Direct Control Execute Source: IBM Business Consulting Services. Customers Market strategy Customer service strategy Marketing strategy Campaign management Service management Customer service Customer communications Marketing Advertising Public relations Products/ services Merchandise planning Channel planning Assortment planning Space planning Promotion planning Product development Sourcing Product fl ow Planogramming Allocation Inventory mgt/OTB Demand forecasting Price management Content management Vendor management Item management Product management PO management Vendor management Replenishment Revenue/clearance management Business competencies Channels Logistics Channel strategy Store design Real estate strategy Internet design Catalog/call center design Channel management Labor management Order management Real estate, construction and facilities management Loss prevention Order management Inventory management Merchandise management Price/sign management Business competencies Network design Warehouse design Demand/fl ow planning Inbound routing Receipt scheduling Delivery scheduling Carrier management Warehouse management Transportation management Fleet management Reverse logistics Channels Logistics Channel strategy Store design Real estate strategy Internet design Catalog/call center design Channel management Labor management Order management Real estate, construction and facilities management Loss prevention Order management Inventory management Merchandise management Price/sign management Network design Warehouse design Demand/fl ow planning Inbound routing Receipt scheduling Delivery scheduling Carrier management Warehouse management Transportation management Fleet management Reverse logistics Component business models Business administration Corporate strategy Corporate planning Financial planning Corporate governance Business performance management Treasury and risk management Legal and regulatory compliance Inventory control Cash and banking Financial accounting and reporting Indirect procurement HR administration IT systems and operations Business administration Corporate strategy Corporate planning Financial planning Corporate governance Business performance management Treasury and risk management Legal and regulatory compliance Inventory control Cash and banking Financial accounting and reporting Indirect procurement HR administration IT systems and operations Hot components 9
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Component business models - IBM

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