Competing on information unlocking new business and revenue models

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Competing on information unlocking new business and revenue models

  1. 1. SOCIAL MEDIA STRATEGY INFORMATION VALUE BUSINESS MODEL MARKETING 2.0 Competing on Information Unlocking new business and revenue modelsInitiated by
  2. 2. AgendaIntroduction to Competing on InformationWhy Competing on Information is a hot topicImplications and follow up Initiated by 6805-01P.1
  3. 3. IntroductionCompeting on Information is the phenomenon which increasingly sees companiesturning information into a core part of their customer value propositionsDeveloping towards Competing on Information Definitions • Virtually every business (by default) creates a tremendous amount of data and information. This information can represent a significant untapped value which the company is not yet aware of Information as a residual Information as a resource • Competing on Information is the phenomenon which sees more andValue from information Type IV: ‘Dominant more companies recognising the hidden value of turning proposition’ information into a key part of their customer value propositions Essence of value • There are four stages indicating the extent to which this information Type III: proposition contributes to the company’s top and bottom line: ‘Extension’ Stage Definition Add-on to value I • Information is simply used to (financially) report on business activities proposition Type II: ‘Business II • Information is used to support the business by offering actionable Intelligence’ analytics1 Discontinuity III • Information is added to the current proposition leading to an Support extended customer value experience & analytics • Information is the essence of the value proposition, with its own Type I: IV ‘Traditional’ profit objective Registration • The shift from using information as a resource rather than a residual & reporting requires a completely different approach; implementing strategies which focus on Competing on Information may have an effect on Impact on business organisational structure, capabilities/people and technologySource: CoI team analysis, 2011 Source: 1 Competing on Analytics, Davenport and Harris, 2007The tools and techniques for harvesting the value of information are increasingly mainstream; with the rightapproach and the readiness to regard information as a core asset, its hidden value can be unlocked Initiated by 6805-01P.2
  4. 4. Introduction to Competing on InformationThere are many examples which show that companies have started to Compete onInformation; they manage to create value with information-driven propositionsExamples “Wells Fargo and Citi “Access to consumer Bank start targeted data prominent “TomTom sells advertising on factor in Heineken- driving behavior customers’ financial Google million dollar patterns to Dutch overviews” deal” and Belgian police” “Facebook sells demographic statistics of users to market researcher “KLM builds on user Nielsen” “Tesco sells shoppers’ generated content behavior patterns to for online booking FMCG companies” service” “Credit card companies use customer data to “Access to 5% of compete with Twitter’s database “Realtime car traffic Groupon” costs $ 60.000 data company Inrix “Facebook ads hauled a year” is valued a shy in nearly $2 billion in revenues last year” $500 million”Sources: CoI team analysis, 2011 Initiated by 6805-01P.3
  5. 5. Introduction to Competing on Information Our survey shows that companies recognise the need to Compete on Information, but have not sufficiently mobilised their resources yet to fulfil this need Outcome 1: Need is evident Outcome 2: Stakes are high Outcome 3: More follow up is needed 35% of respondents expect that in 10 years time 57,5 % of respondents perceive the need to 57,5% of respondents’ companies have not CoI related activities will account for more than Compete on Information as ‘high’. Only 5% of sufficiently mobilised their resources yet to fulfil 40% of their turnover. Another 30% expect that respondents think of this need as ‘low’ the need to Compete on Information this will be more than 20% 7High 35% [80% - 100%] 10% 6 [60% - 80%] 70% Perceived opportunity (rating) 7,5% [0% - 20%] 35% 60% 57,5% 5 Respondents (percentage of total) High [40% - 60%] 17,5% 50% 4 57,5% 40% Medium 3 37,5% [20% - 40%] 65% 30% 30% 25,0% 20% 17,5% 2 LowLow 5% 10% 1 Expected COI revenue (% of total revenue) 1 2 3 4 5 6 7 0% Low High Expecting less than 40% of revenue from COI Activity > Urgency Activity = Urgency Activity < Urgency Perceived pressure (rating) Expecting more than 40% of revenue from COI Note: As initiator of the Competing on Information knowledge initiative, Nolan, Norton & Co. has conducted a survey on the need and implications of Competing on Information. The survey has been completed by 40 respondents, of which the majority work in key business and IT management positions. Those questioned typically work for large to medium sized, Dutch based companies, active across the full spectrum of business industries This raises the question why Competing on Information is a hot topic and how it can add value Initiated by 6805-01P.4
  6. 6. AgendaIntroduction to Competing on InformationWhy Competing on Information is a hot topicImplications and follow up Initiated by 6805-01P.5
  7. 7. Why Competing on Information is a hot topicA number of fundamental changes have positioned information at the core of thecompetitive arena, making Competing on Information a key boardroom topicWhy Competing on Information is relevant • The amount of information available is rapidly Amount of increasing as is the applicability of information information (real-time, individual specific, etc) Amount of information • Resources which help companies to apply their Capability to information and add value are rapidly increasing at unlock value acceptable costs, both in terms of IT and human capital Proven value Capability to unlock value • Across industries similar business models are Opportunity evolving to help companies benefit from to benefit Competing on Information, whether at the edges of Opportunity to current portfolio or to rejuvenate core offerings benefit • There is a rapidly increasing number of examples Proven value across industries which directly prove the possibilities for generating value from informationSource: COI team analysisGiven the structural nature of these changes, Competing on Information is to be regarded as a permanentchange and not a passing phase Initiated by 6805-01P.6
  8. 8. Why Competing on Information is a hot topic – The amount of informationThe way in which people, companies and devices are communicating is changingdramatically, leading to an explosive increase in the volume of information exchangeExploding volume of information Facts and figures • 150 exabytes (billion gigabytes) of data was created worldwide in 2005, increasing to 1500 exabytes by 20101,2Volume of information exchange • By the end of 2020, 20 typical households will generate more traffic than the entire internet in 20083 • Annual Mobile Data Traffic will reach 23 Exabytes by 20152 • The amount of information generated on social media platforms is exploding: - 750 million Facebook users each create 90 pieces of content every month4 Present day - 200 million Twitter users now send more than 95 million Rise of mobile and Internet of things Tweets a day5 PC era Internet takes off social platforms becomes reality - Linkedin had 100 million users and 200 billion people - 1998 1998 - 2008 2008 - 2015 2015+ searches in 20106 • In 2008 the number of ‘things’ connected to the Types of info E-mail, Static html sites, User generated Everything presentations, blogs, e-commerce, content, API’s, connected to internet exceeded the number of people on the spreadsheets, search engines, mashups, location everybody earth: 50 billion things are expected to be databases, etc. groupware, etc. based services connected to the internet in 20203Source: COI team analysis, 2011 Sources: 1 The data deluge, The economist, 2010 2 Cisco Visual Networking Index: Forecast and Methodology, 2010-2015, 2011 3 Cisco, blogs.cisco.com/news/the-internet-of-things-infographic/ ,2011 4 Big data, McKinsey Global Institute, 2011 5 blog.twitter.com/2010/12/to-trend-or-not-to-trend.html, 2011 6 Some Fast Facts About LinkedIn, www.ibtimes.com, 2011 Initiated by 6805-01P.7
  9. 9. Why competing on information is a hot topic – Capability to unlock value At every stage of the informational value chain, capabilities to unlock value from information at acceptable costs are growing Informational value chain Drivers for growing capabilitiesDistribution • Common standards for web applications To To internal To internal To Distribution • Adaptation of mobile devices consumers end users systems businesses to customers • Techniques for the integration of distribution channels (widgets, plug-ins, apps, etc) •Crunching Technologies for cloud processing of large data sets in parallel Data processing & assembly Transformation and at low cost (a.o. Hadoop, PIG) of information products into products • Capabilities to process unstructured data sources (NoSQL) • Availability of CoI savvy employees • Techniques to mine unstructured data sources (social networks, internet, user generated content, etc.)Gaining Internal data sets Capturing • Network effects and sharing of sources through API’s External data sets data sets (Application Programming Interfaces) • Growing number of sensors (mobile devices, RFID, etc.) Source: CoI team research, 2011 Information previously earmarked as ‘nice to have’ can now be raised to the next level, transforming this information into a key resource Initiated by 6805-01P.8
  10. 10. Why competing on information is a hot topic – Capability to unlock value Plugging into the existing, thriving informational ecosystem offers a low barrier entry to access relevant capabilities and external sources Informational ecosystem DATA DEVICES INDIVI- LAW DUALS EMPLOY- ENFORCE- ERS INFORMA- MARKE- MENT ANALYTICCELL PHONE MEDICAL TION ADVERTISING TEERS SERVICES BROKERS MEDICAL IMAGING GOVERNMENT INTERNETGPS iPOD DATA WEBSITES DATA COLLECTORS AGGREGATORS VIDEO SURVEILLANCE eBOOK DATA YOUR DATA RULES THE WORLD RFIDVIDEO GAME USERS/BUYERS PHONE / TV RETAIL CATALOG CO-OPS MEDIA COMPUTER CABLE BOX CREDIT FINANCIAL LIST MEDIA PRIVATE ARCHIVES BUREAUS BROKERS INVESTI- GATORS / GOVERN- DELIVERY LAWYERS BANKS EMENT SERVICESCREDIT CARD ATM READER Source: Steve Yara, Strata Conference, 2011 Initiated by 6805-01P.9
  11. 11. Why competing on information is a hot topic – Capability to unlock valueMashing up own information sets with information available in the informationalecosystem can offer completely new perspectivesExamples of potential sources User Generated Content Publicly available information Analyses made by others Royal Dutch Airline KLM has introduced a travelers In serving civilians well, governments offer more Companies are likely to make analyses which may community which fellow travelers can use to get and more transparency in their operations. The be of use to other companies. A well known inspiration and to share experiences. This provides Dutch government has opened up a database of example is Google Flu Trends, which predicts how KLM with direct sales leads on who is going to current permits (construction, food & beverage, flu epidemics will cross the globe based on the travel when and gives them opportunity to offer etc) to the public. This provides banks with direct frequency of search key words entered in relevant products insight into who might need financial support different countriesSource: COI team analysis, 2011 Initiated by 6805-01P.10
  12. 12. Why competing on information is a hot topic – Opportunity to benefitBenefit opportunities range from rejuvenating the core of the company, toinnovating at the edges and creating stand alone businessBenefit logic of Competing on Information Escape from a risky • (Partially) replace the diminishing current business model (decreasing market status quo demand, final life cycle phase, commoditisation, decreasing competitiveness) Rejuvenate the core of the company • Create competitive advantage leading to increased market share Unlock new paths to • Extend market reach; being able to serve new customers by extending offerings growth • Improve profitability by adding high margin elements to the value propositions • Provide customers with additional services Serve existing • Being able to respond to customer’s rising expectations in terms of information customers better provision and service levels Innovate at the edges Attract new • Have the ability to find and address new types of customers customers • Have the ability to personalise offerings • Create new revenue streams around existing data and analytical resources Leverage resources servicing new types of customers Build stand alone business Leverage customer • Create new revenue streams around existing customers offering completely new base types of propositionsSource: CoI team research, 2011 Initiated by 6805-01P.11
  13. 13. Why competing on information is a hot topic – Opportunity to benefit Different types of information-driven models are identified, inspired by real-life, successfully adopted business models Cluster Type Company Case description A • ‘Appie’ is a smart phone application analysing shopping behavior of customers and Increase demand giving tailored advice on offerings, ideal shopping routes and recipes Increase and capture • TomTom has opened up data sources to incorporate real-time traffic info into its B Innovating the customer surplus HD Traffic subscription and earns a monthly fee by doing so 1 customer Increase customer • The FlyingBlue ClubCHINA is a platform for frequent business travellers to China proposition C satisfaction offering networking opportunities and convenience services Introduce a low cost • Wonga is a provider of short term loans, which has developed a sophisticated D model algorithm for the instant approval of requests, minimising the chance of defaults • Vodafone sells anonymous network information to TomTom enabling the latter to A ‘Raw’ information predict congestions even before they actually occur Selling information 2 products B • Tesco is a retailer which sells customer preferences derived from its loyalty Analysis programme to 3rd parties (other retailers, FMCG producers) • Kieskeurig.nl is a product/price comparison website. After comparing products, A Lead generation consumers can buy products via a link to the retailer’s webshop Monetising an • Bol.com has opened up its algorithm based e-commerce platform for 3rd parties in 3 information platform B Dealmaking order to sell products • Facebook offers advertisers tools to profile customer groups and target them in C Advertising advertisementsSource: COI team analysis, 2011 Initiated by 6805-01P.12
  14. 14. Why competing on information is a hot topic – Proven value In on- and offline as well as information and non-information based industries, numerous value generating examples can be found Examples Online originated CoI related proposition CoI related proposition • Opening up user profiles to advertisers, • Providing short term loan propositions to providing them with analytical tools to easily customers, based on sophisticated analyses target potential customers on default chances Key facts on generated value1 Key facts on generated value2 • Ad turnover of nearly $2 billion in 2010 • Revenue in 2010 rose to $ 120 million • Revenues on track to reach $4 billion in 2011 • Net profit is unknown • Company valuation of $75 billion • Recently $ 116 million investor fundingInformation Non-information based based CoI related proposition CoI related proposition • Offering location based services (lead • Analysed customer datasets and analysis skills generation) are sold to third parties such as other grocery • Selling driving behavior patterns to thirds retailers and FMCG companies4 Key facts on generated value4 Key facts on generated value3 • TomTom announced in 2011 that services like • Tesco is estimated to generate £53 million this have to make up for their saturating profit a year by selling data on spending hardware business. Current value unknown habits to third parties Off line originated Sources: 1Technology review, MIT, 2011 2 GigaOM, 2011 3 Daily Mail, 2011 4 TomTom Annual Report, 2010 Initiated by 6805-01P.13
  15. 15. AgendaIntroduction to Competing on InformationWhy Competing on Information is a hot topicImplications and follow up Initiated by 6805-01P.14
  16. 16. Implications and follow upThe strong implications and permanent nature of Competing on Informationforces every company to select their positionImplications Customer expectations will rise: • As Competing on Information based propositions become common, customers will expect companies to act according to new standardsThe competitive ‘umfeld’ will change: Traditional business models will be challenged:• Current competitors or new entrants with • Competitive and customer pressure will force Competing on Information-like propositions incumbents to (partially) reinvent themselves will enter the arena Financial stakes will be high: • Potential impact on the company’s top and bottom line is significantSource: COI team analysis, 2011 Initiated by 6805-01P.15
  17. 17. Follow us at: www.competingoninformation.com @CompetingonInfo http://linkd.in/CompetingonInfo Initiated by 6805-01P.16

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