Identifying successful business models to drive monetization of your cloud service capgemini mark skilton v1

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Identifying successful business models to drive monetization of your cloud service
Mark Skilton, Capgenmini

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  • Buyers/Consumer life cycleVendor/Provider life cycle
  • In cloud ecosystems you can have consumers with different value proposition needs
  • Identifying successful business models to drive monetization of your cloud service capgemini mark skilton v1

    1. 1. Identifying successful business models to drive monetization of your cloud service Mark Skilton CloudExpo2011 West November 2011
    2. 2. | Infrastructure Services Agenda  Identify how to target growth markets and value propositions for cloud business models  Introduce a monetization strategies framework for targeting successful ROI from cloud computing  Identify real examples of business models to take existing traditional and cloud services towards improved business performance and cash-flow 2
    3. 3. | Infrastructure Services SOME THEORY ON CLOUD ECOSYSTEMS 3
    4. 4. | Infrastructure Services On-demand characteristics Communities, Markets & Channels Incremental Demand Homogeneous/ Heterogeneous Platforms & Business Environments 12 11 10 9 8 7 6 5 4 3 2 1 Individual Demand Aggregate Demand Time Service use, user churn Consumer/ Buyer Community size Number of Vertices (Nodes) Number of User Relationships Number of channels / access to service Number of interacting relationships (demand/supply behavior) evaporation expansion
    5. 5. | Infrastructure Services Value Propositions – on-demand characteristics Faster Better Cheaper Cost and time To provision 1:5 to 10 1:300 to 500 TCA Provisioning, de-provisioning 1:5 to 10 1:300 to 500 Virtualization TCO - sourcing 1:10 to 20 1:30 to+ 50 Examples
    6. 6. | Infrastructure Services Some definitions - Cloud Ecosystems Are made up of communities, consumers, buyers, vendors, providers and intermediaries (brokers, aggregators, orchestrators, carriers..) These can be describes as nodes (vertices), resources, relationships and various interactions Process automation Business Network Market Channels Affiliate, business Network Hosting Versus Cloud Cloud is not just hosting Mash-ups On-demand processes How to create Business Functions in Cloud Aggregators / brokers of cloud-on-demand Source: CIEL
    7. 7. | Infrastructure Services Value Dynamics in Cloud Ecosystems There are groups of Users that consume Similar Value Propositions We see architecture as a design of topologies in Cloud Networks and interactions. This is related to the Community network effects and the properties of dynamic consumption patterns Value proposition Consumed Value Faster Better Cheaper Delivery Value Triskelion matrices Cluster Community Consumption PatternVertices, variables Value footprint
    8. 8. | Infrastructure Services Creation of Value networks in Cloud Ecosystems F = Faster, B = Better, C = Cheaper F F F F F F Group Cluster seeking Faster Value Proposition C C C Group Cluster seeking Cheaper Value Proposition F,C F,C F,C F,C C,B C,B C,B C,B C,B C,B Group Cluster seeking Faster, Cheaper Value Proposition Group Cluster seeking Cheaper, Better Value Proposition e.g. SaaS e.g. IaaS
    9. 9. | Infrastructure Services Cloud Ecosystems Competition in this context has a different meaning because you are considering focus between different communities and demand and supply densities. The gateways and channels become key distribution model issues The multiplexing of resources become a key deployment availability issue We see this everyday in our lives ; Traveling through a city from one district to another. This is a fractal property of ecosystems . Small scale and large scale. Physical and virtual resources and relationships change in cloud ecosystems Demand and Supply Densities interrelationships Community 1 clusters Community 2 Ecosystem boundaries Common Demand and Supply Pattern Characteristics Feedback loops Diversity factors Behavior Science
    10. 10. | Infrastructure Services Value dynamics in Ecosystems Clusters of common services with similar Value Proposition Characteristics These are 3 dimensional in the ecosystem space Topological size Of these can be used represent clusters of Consumers Ecosystem “Triskelion”
    11. 11. | Infrastructure Services Topology of ecosystem shapes Real world systems often exhibit pattern behavior Topology of triskelion lattice transformations http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1225879/?page=10 Adapted from Toplogical mechanisms involved in the formation of clathrin proteins Evolution of Clusters in ecosystems Multi-clusters
    12. 12. | Infrastructure Services Prototype Experimental Design of Ecosystem Dashboards - Cloud Triskelions Topological representation of Value to metrics focus Semiotic representations of Cloud Ecosystems Faster Cheaper Time Cost Lower percentile Upper percentile Performance Metrics – ROIValue Proposition Better Current Value Community Size & Dynamics Market Value Upper percentile Use of 3D Visualization representation
    13. 13. | Infrastructure Services ECONOMIC MONETIZATION 13
    14. 14. | Infrastructure Services How do we measure Value Proposition ? Business and Operating Metric Choice of Metrics drives Monetization Strategies How we develop Revenue / Value from the offer Delivery patterns Consumption patterns How we Measure Specific performance and Value Value proposition Macro and Micro Economic Positioning Understand what markets are we in ? Growth Markets and economics
    15. 15. | Infrastructure Services Targeting growth markets Properties of On-DemandMarket Enterprise Demand profiles Small Companies SMBs Large companies Small Demand Sizes Large Demand Sizes Core Infrastructure Services Value Added Services Agile Rapid Structural Stoic Community Size potential Supply size potential Augmented services Structural Cloud services Institutional Utility servicesMarket Dynamics Buyer/ Consumer “Consulting” “reseller” “Provisioning engines” “brokers” Buyer/ Consumer Vendor/ Provider Tend to be Micro  Macro strategy focused
    16. 16. | Infrastructure Services Market on-demand Profiles- macro-economic view Market Enterprise Demand Small Companies SMBs Large companies Market Dynamics New Markets Existing Markets Rapid growth Tech kill refresh Incremental Change Disruptive Jump Change Offer transition to on-demand Step change through on-demand channel exploitation
    17. 17. | Infrastructure Services Targeting growth markets Micro-economic view Open Source Appliance Faster, Better Faster, Cheaper Managed Hosting Cloud burst Managed Cloud Faster, Cheaper Cheaper, better Cheaper, faster, Better, Cheaper Cheaper, better Better, Cheaper Cheaper, faster, Better combinations Proprietary Cheaper, faster, Better combinations
    18. 18. | Infrastructure Services Some definitions – Individual Agents 18  Our focus on this session is on Vendors and Provider on-demand Monetization strategies (how to make money)Vendor Provider Buyer Consumer Broker Orchestrator Carrier Aggregator
    19. 19. | Infrastructure Services BUSINESS MODEL – INDIVIDUAL AGENTS 19 Vendor Provider P & L Center Cost Center Product Manager VP of Sales VP of Strategy Portfolio Manager Product Marketing Manager CFO .. CIO CTO Delivery Manager Operations Manager Controller Program Manager .. Definition of propose and actual Sale of Cloud Products Delivery & support of Cloud Services Cloud Products Cloud Products Vendor Provider Provider P&L Cost Center Cost Center In-house Providers in a Vendor Business External Providers to a Vendor Business Vendor P&L Provider Provider Cost Center Cost Center buyer buyer Buyer relationship e.g. Buyer (internal Cross charge) relationship e.g. Consumer (internal group cost) relationship Key Provider Roles Key Vendor Roles
    20. 20. | Infrastructure Services CLOUD DELIVERY MODELS 20 CIEL Framework symbolsF Vendor Vendor Provider Provider Multiple Vendor Cloud Product External Hosted Provider Vendor Cloud Product Own Vendor Hosted Cloud Product Vendor Vendor Single Vendor Cloud Product Vendor Vendor Shared Pool Service Single or multiple Buyer/ Vendor Provider Vendor Provider Single or multiple Provider e.g. Facilitator, reseller agency e.g. Broker e.g. Aggregator e.g. Managed Complete Cloud Service e.g. Community Cloud Co-location Provider Buyer Vendor Single or multiple e.g. Dedicated Capacity Cloud Service Provider Vendor Vendor Provider Single or multiple Multiple Vendor-Provider Market e.g. Orchestrator reseller = a real business entity Are there different management of cost models for Operations Directors ? Delivery Model Metrics = Outcome metrics + key Operating metrics stages QoS
    21. 21. | Infrastructure Services CLOUD DEPLOYMENT MODELS 21 Each of these delivery models will aim to serve a one to many demand pattern but could be either open shared or closed, dedicated deployments Secure Private Cloud Dedicated Private Cloud Multi-tenant Private Cloud Multi-tenant Public Cloud Open Source Cloud Hybrid Cloud Highly sensitive mission critical systems Secure marketplace & portal services , B2B, B2C Shared secure marketplace & portal services B2C Non-critical Public services Monitor, run and secure the cloud service Open source can be hosting public and private environments and subject to OCI CC license agreements Hybrid cloud is a combination of private and public clouds And legacy. It can be a bridge to other cloud services or as a platform for managed cloud services Channel strategies Delivery strategies
    22. 22. | Infrastructure Services SOME DEFINITIONS – STRATEGY FRAMEWORK 22  Value Proposition – is the offer value defined by the customer  Monetization Strategy is capabilities that generate revenue in a market (internal market, external market to the enterprise)  Performance metrics are used to measure how the value is delivered and expectations met  Investor expectations include margin, ROI and capability Offer Cloud Product and/or Service Value Proposition Monetization Strategies Performance Metrics Operating Model Investor Expectations
    23. 23. | Infrastructure Services BUSINESS OFFER PLANNING LIFECYCLES 23 Product Portfolio Operating Portfolio Investment Portfolio Strategic Portfolio New Product Development Business Case Markets Analysis Decision Analysis Metrics Analysis Decision trees, process fit Benchmarking Market projections Investment decisions How well Products meet Business expectations ? Offer Strategy What can be delivered ? What is required ? Demand Supply
    24. 24. | Infrastructure Services CLOUD PRODUCT & SERVICES – ON-DEMAND MONETIZATION STRATEGIES 24 Micro economics Macro economics Identifying factors that affect pricing and volume availability and performance in specific markets Identifying factors that affect overall performance, structure and behavior across and within markets. Operating demand and supply, bundling capabilities Market channel, business process and supply chain capabilities Capital funding, contract, IP methods capabilities Demand and supply between individual agents consumers, buyers, vendors, providers and other firms in the industry Total economic environment Local, national, regional and global economies Trading domains and finance rules Income and Output Consumption and Consumer Behavior
    25. 25. | Infrastructure Services ON-DEMAND MONETIZATION STRATEGIES - MICRO ECONOMIC 25 Types of Monetization Strategies Operational Monetization Strategies Operating demand and supply, bundling capabilities Market channel, business process and supply chain capabilities Capital funding, contract, IP methods capabilities That can enable monetization of on-demand cloud products and services Focus on Cloud Offer overall performance These monetization strategies are levers that you can pull or push inside your own company as ways to generate revenue and profitability. There are also other monetization strategies that consider the environment and ecosystems that you are operating in. These strategies recognize the behaviors and influences of networks and connected spaces Ts & Cs Monetization Strategies Growth Monetization Strategies
    26. 26. | Infrastructure Services CASE STUDY 1 – MICRO-ECONOMICS PUBLISHED USE CASE : MODERNIZATION 26 Modernization Cloud Service Crowd Innovation Sourcing Mobile Device Fat (Client) DeviceLight (Client) Device Cloud Service Provider Legacy Systems Migration service Consumer/ buyer Company Virtual Workflow Workflow Modernize Business Processes Modernize Applications Modernize Infrastructure CatalogCloud Infrastructure Cloud Applications T S B E Environments Process Governance Search and UI Shop and/or Build  Market agent access and dynamics ?  End to end Service Management ?  Data Management ?  Vertical integration ?  Horizontal integration ?  Business Processes ?  In-house, external ?  Competitor agent behaviors?  Efficiency , cost effectiveness ? Case study Source: The Open Group
    27. 27. | Infrastructure Services ON-DEMAND MONETIZATION STRATEGIES - MACRO ECONOMIC 27 Monetization Strategy is capabilities that generate revenue in a market (internal market, external market to the enterprise) Types of Monetization Strategies Community Monetization Strategies Channel Monetization Strategies Industry Standardization Monetization Strategies Community identity, feedback Connections capabilities Structure of channels to markets, Channel mix Capabilities Access specialization, reward, consistency and interoperability That can enable monetization of on-demand cloud products and services Focus on Cloud Offer overall performance These monetization strategies are more focused on macro behaviors and scale of monopolies between participants and geographic locations. These exist in physical and virtual spaces in digital networks.
    28. 28. | Infrastructure Services CASE STUDY 2 – MACRO ECONOMICS PUBLISHED USE CASE: BUSINESS ACTIVITY REPORTING  Communities ?  Channels ?  Mix of products & services attractiveness?  Interactivity ?  Portability & Interoperability ?  Emerging & growth markets ?  Differentiators ?  Barriers ?  Process abstraction, flexibility , agility, workloads 28 Composite Report Builder Report Service “Shop” Composite Report Buinder Cloud Aggregate Report Store Operations Stakeholders Finance Stakeholders General Inquries Monetize the service Interaction based on common reporting views Reporting via direct API services or throughaggre gation T S B E Cross-Company Organizational Units Business Activity Reporting Cloud Service Stakeholder Community External Internet inquiries GovernanceGroup Feedback Feedback Resources, Servers, Storage Case study Source: The Open Group
    29. 29. | Infrastructure Services ON-DEMAND MONETIZATION FRAMEWORK 29 On-demand Monetization Strategies Differentiators and competitiveness of on-demand offers need to consider both micro and macro economic strategies. Defining sustainable pricing and market channels needs to be aware of how the macro environment works in on-line digital domains and digital markets Macro-economic Micro-economic
    30. 30. | Infrastructure Services Micro-economic On-demand Monetization Strategies  Operational Monetization strategies 1. Fractionalization o Divide resources for optimal loading o Portfolio cost optimization / savings 2. High Productivity o Leverage resources o Higher operating margin 3. High Volume o Mass consumption o Exploit price-demand curves 4. High Yield o Complementary usage of resources o Thin provisioning 5. Niche o Scare resources / skills / knowledge o Knowledge leverage 6. Crowdsourcing o User sourced and developed resources, ideas, knowledge, skills o Co-innovation, collaboration 7. Litigation o Patent leverage o Trolling, market positioning  Growth Monetization strategies 1. Horizontal Market expansion o Geo, size, industry o Cross-selling, annuity selling 2. Vertical Market expansion o Supply chain, stakeholders o Cross-selling, annuity selling 3. Horizontal Service Expansion o Within one Business Process & IT stack o Aggregation 4. Vertical Service Expansion o Adjacent Business Processes with similar requirements o Aggregation  Terms and Conditions Monetization strategies 1. Innovative billing o Creative pricing, advertising and charging o Financial engineering 2. Financing o Capex sourcing o Risk allocation
    31. 31. | Infrastructure Services Macro-economic On-Demand Monetization Strategies  Community Monetization strategies 1. Community o Boundary creation, management and containment o Group behavior, membership, values, brand 2. Reward / Feedback o Incentives and feedback reinforcement experience o Preference targeting  Channel Monetization strategies 1. Channel mix o Resource / market awareness balance o Portfolio mix 2. Gateway ownership o Access methods o Addressable market  Industry standardization Monetization strategies 1. Standardization o Access specialization o Product / service grouping consistency 2. Propagation o Market Portability and interoperability o Governance domain controls
    32. 32. | Infrastructure Services CLOUD PRODUCTS & SERVICES - METRICS 32 Types of Cloud Metrics Operational Growth Ts & Cs Cloud Vendor Metrics P & L Performance Cost Performance Cloud Provider Metrics Focus on Cloud Offer overall performance Focus on Cloud product revenue growth, P&L and competitive, value for money factors Focus on Cloud Delivery performance, quality of service, Operating cost, Sourcing mix (delivery Portfolio) and Operating Investment Budget decisions to maintain and build competitive, value for money factors Operational Effectiveness & Efficiency, Bundling Metrics Sourcing Pricing & SLA Effectiveness (external) – Buy / Build Delivery QoS Cost Sourcing MixTimeliness SLA/OLA Flexibility Metrics Cost of QualityDemand Mix (short/long term demand flow) Market and Process service Metrics Summary Operating efficiency metrics Pricing and Contractual, risk/security/ Compliance value; IP and Copyright Metrics Automation & New/Maintenance Investment mix metrics Security & Compliance Cost of security Cost of Compliance Value of Compliance Cloud Buyer Metrics Cloud Consumer Metrics  Maturity of your organization ?  Maturity of your partnerships, advisors ?
    33. 33. | Infrastructure Services CASESTUDIES 33
    34. 34. | Infrastructure Services CASE STUDY 1 – CLOUD VENDOR BUSINESS ACTIVITY REPORTING PRODUCTS & SERVICES 34 Composite Report Builder Report Service “Shop” Composite Report Buinder Cloud Aggregate Report Store Operations Stakeholders Finance Stakeholders General Inquries Monetize the service Interaction based on common reporting views Reporting via direct API services or throughaggre gation T S B E Cross-Company Organizational Units Business Activity Reporting Cloud Service Stakeholder Community External Internet inquiries GovernanceGroup Feedback Feedback Resources, Servers, Storage  Buyer/Consumer Value Proposition – primary/secondary • Better, Faster (specialist reporting) • Faster, Cheaper (standard reporting)  Micro-economic monetization strategy • Primary Operating Monetization strategy High Productivity • Secondary Operating Monetization strategy High Volume • Growth Monetization strategy Horizontal Service integration Vertical Market integration  Macro-economic monetization strategy • Communities Company Platform users External Partner crowd sourcing • Channels Public Cloud sourcing • Standards Industry nice specialization
    35. 35. | Infrastructure Services CASE STUDY 2 – CLOUD BROKER / PROVIDER : MODERNIZATION SERVICE 35 Modernization Cloud Service Crowd Innovation Sourcing Mobile Device Fat (Client) DeviceLight (Client) Device Cloud Service Provider Legacy Systems Migration service Consumer/ buyer Company Virtual Workflow Workflow Modernize Business Processes Modernize Applications Modernize Infrastructure CatalogCloud Infrastructure Cloud Applications T S B E Environments Process Governance Search and UI Shop and/or Build  Buyer/Consumer Value Proposition- primary / secondary • Faster, Better • Faster, Cheaper  Micro-economic monetization strategy • Primary Operating Monetization strategy Fractionalization • Secondary Operating Monetization strategy Niche • Growth Monetization strategy Vertical Service integration  Macro-economic monetization strategy • Communities Company Platform users External Partner crowd sourcing • Channels Public Cloud sourcing • Standards Industry nice specialization Technology OS specialization ..
    36. 36. | Infrastructure Services CASE STUDY 3 : MULTI-NATIONAL PHARMACEUTICAL COMPANY 36 Client - Needs • Target shared services – Medical trials web service. Currently many trials and systems – wanted a consistent group brand and shared service. • SMBs attacking their core markets. Small competitors could use 3rd party cloud them selves to develop Medical services and sell, deliver direct into markets held by Client. Client had invested millions in IT infrastructure to vertically integrate to these markets but this was increasingly no-longer was a differentiator. • Business by-passing own central and divisional IT departments. Business unit IT departments and business people directly sourcing and provisioning IT from 3rd party cloud vendors as a service. • Inflight Cloud Pilots. With strategic technology and strategy partners and own Client IT Department. Strategic Pilots – various virtualization technologies, benchmarking and public/private cloud options. Solutions - Needs Selecting the right Cloud Deployment for Workloads Assessments and Advisory Support Single Consistent Cloud Vision and Roadmap ROI Score cards Risk Assessment Reference Models Portfolio Workload planning Vision Operating Model Roadmap Private Cloud Pilots, support Cloud Services FDA / Industry Certification & Compliance Organizational Change Management Channel Service Strategies Demand Patterns Supply Patterns Analysis Security , Performance Reliability
    37. 37. | Infrastructure Services CASE STUDY 3 : MULTI-NATIONAL PHARMACEUTICAL COMPANY 37 Barriers / Levers Differentiators Buyer /Consumer ROI Metrics
    38. 38. | Infrastructure Services CONCLUSIONS 38
    39. 39. | Infrastructure Services CLOUD MONETIZATION FRAMEWORK ON-DEMAND PRODUCTS & SERVICES 39 Micro-economics monetization strategies Macro-economics monetization strategies Select your Value Proposition Select yourSelect your 1 2 3 Select your Business Operating Metrics 5 Contractual/ non-contractual Metrics 1 /4 Target Growth Markets Macro-economic Value Propositions Micro-economic Value Propositions Differentiation Faster, better, cheaper Buyers / Consumers Vendors / Providers Select your Catalog Non- Catalog Off the menuOn the menu
    40. 40. | Infrastructure Services MAKING CLOUD WORK - STANDARDS AND RESOLUTIONS - STILL EVOLVING 40 Matching capabilities Buyer / Consumer LifecyclesVendor / Provider Lifecycles Catalog Non- Catalog Off the menuOn the menu Metrics Value Proposition Monetization Strategies Negotiating Service Provision Purchasing processesSolution Development processes Ecosystem choices , standards Level of Maturity, standards, automation Assurance, security
    41. 41. | Infrastructure Services UNDERSTANDING CLOUD ECOSYSTEMS 41 Design Affiliates Affiliates ... Distribution Market Market Sources Government / Federal rules – e.g. Sales Tax Process automation S C T B Business Network Market Channels Affiliate, business Network Virtual Organization Social Organization Super Information Process automation Metadata and Cloud Products and Services Cloud Ecosystem Industry, Business & Social Networks Physical & Virtual Business New channels, mix Standards, Devices, Augmentation Time SustainabilityPlace Feedback
    42. 42. | Infrastructure Services Virtual Business Your opinion New channels, mix Design Affiliates Affiliates ... Distribution Market Market Sources Government / Federal rules – e.g. Sales Tax Process automation S C T B Business Network Market Channels Affiliate, business Network Virtual Organization Social Organization Super Information Process automation Metadata and Cloud Products and Services Cloud Ecosystem A modern economy 42  Markets and communities  Cyber attacks  Knowledge  Innovation  Green sustainability  National and global infrastructures  National interests  Personal interests  …
    43. 43. | Infrastructure Services THANK YOU 43
    44. 44. | Infrastructure Services SUMMARY  Identify how to target growth markets and value propositions for cloud business models  Introduce a monetization strategies framework for targeting successful ROI from cloud computing  Identify real examples of business models to take existing traditional and cloud services towards improved business performance and cash-flow 44
    45. 45. | Infrastructure Services SYNOPSIS  Many businesses today are faced with the challenge of getting effective ROI from cloud computing. The cloud changes the way investment and consumption models work and has upended many traditional hosting and purchasing methods towards self service and on demand business services. It was also become a real issue in the wider picture of growth in international competitive marketplaces, governmental legislation and citizen security.  This session will identify real examples of how customers and providers of cloud services can target better growth and ROI from cloud computing by positioning and defining their operating model and value strategy. Specific issues and techniques described in the session will include methods to visualize and identify what types of business models are effective in growing cloud computing sales and demand in growth and traditional markets. This will draw upon new modeling techniques for ecosystems and a new taxonomy for classifying key decisions for cloud business models. The session will then introduce ways to define value propositions for cloud services in those target markets and customers and provide a new portfolio planning framework to select and drive monetization strategies for effective ROI cash flow. Throughout the session there will be references to real examples of cloud business models to support the guidelines for successful cloud service business models. The work is based on actual first-hand company experience and practical developments from The Open Group Cloud Computing Work Group led by Mark Skilton and Penelope Everall Gordon.  Session Takeaways • Identifies how to target growth markets and value propositions for cloud business models • Introduces a monetization strategies framework for targeting successful ROI from cloud computing • Identifies real examples of business models to take existing traditional and cloud services towards improved business performance and cash-flow The views are of the author and not of the current, previous or future employers. http://cloudcomputingexpo.com/event/session/1333

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