Next generation digital ecosystems and the impact of costs and monetization strategies. Part of the Next Generation Infrastructure Forum, Ovumn, London September 23, 2014

1. Warwick Business School Copyright 2014 Mark Skilton
Professor Mark Skilton
Professor of Practice in Information Systems and Management
m.r.skilton@warwick.ac.uk
23 September 2014, Ovum Next Generation Infrastructure Forum 2014
http://nextgeninfrastructure.com/

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Agenda
Are you providing the right types of business services to the business?
Commodification of infrastructure and how to optimize the cost of infrastructure
Moving beyond thin provisioning and dynamic pricing mechanisms
Looking at the Capex and Opex budget and the impact of different approaches to service delivery
Copyright 2014 Mark Skilton

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What is the problem, opportunity space ?
Illustration
Capex
Opex ?
Charge
Advertizement
RelationshipValue & Worth
Recovery?
New investment
Maintenance
Legacy modernization
Heritage ?
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Physical Economy, Digital Economy and role of digital ecosystems
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The digital Enterprise
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Vertical and Horizontal Value Chain integration
Consumer electronics vertical value chain
Energy Industry vertical value chain
Film Media vertical value chain
Examples
Examples
Automotive parts horizontal value chain
Publishing horizontal value chain
Retail horizontal value chain
ICT commodity hosted value chain
(embedded telematics)
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Value Network Ecosystems
Examples
2 sided Market platforms
Financial services payments 2-sided platforms
Citizen services two-sided platforms
Education online course 2-sided platforms
Customer support call center 2-sided platforms
Packaging logistics 2-sided platforms
ICT integration hosted 2-sided platforms
Multi-sided Market platforms
Healthcare multi-sided platforms
•Patient care monitoring
•Translation research
Automotive multi-sided platforms
•Connected car infotainment
•Logistics VMI
News and entertainment media multisided market
ICT hosted broker multi-sided platforms
Examples
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Technological investments
enabling value networks
Digital Enterprise relation to Value Network Ecosystem

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What are your Strategic value proposition choices ?
Close coupled
Embedded (Telematics <->big data) ?
Market capture
General scalable ?
Technology insertion ?
Technology cannibalization ?
Managing the boundaries ? (Public, private, hybrid..?)
Market Enterprise ecosystem enabler ? CommunitizationServicization
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Cost of integration (inclsource& service management)
Cost of security
Business Model Monetization mechanisms

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B2B, B2C, C2… is not Value Networks
SocialValueNetworks
“DOVES”
DigitalOperating ValueNetworks
A commercial charging mechanism
B2B, B2C, B2G, G2C, C2C,….x2x
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One ecosystem view…
Technology in the supply chain ecosystem cluster
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Its driving a digital enterprise technology constituency
At least 7 technological ecosystems….
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Commodification of Infrastructure
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Cost of Acquisition
Cost of Migration/ Disconnection
Cost Of
Running
“FutureProofing”
Upgrades and patches
Future enhancements and features
Technology refresh
Value –added services
DR, BC service strategies
Selection of platform provider
Selection of instance
Selection of subscription and usage
Data migration to environment
Software porting to environment
Development and testing validation
Security authentication of external service use
Staff training
Governance of usage compliance
Fixed data services costs increase with the increase in the network traffic
Electrical energy use
Staff support
Maintenance
Additional Costs
Lower Costs
Spend on services increasesas a result of access to new software and hardware capabilities. These include:

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Capex and Opex delivery models
Copyright 2014 Mark Skilton
PublicCloud
PrivateCloud
HybridCloud“Mixed”
CatalogManagement
User Interface
Selection
Cloud Services
Selection & Acquisition
Platform & Location
DeploymentOptions
Data Transfer, Migration
Cloud Operations& DR
Transformation & Cloud Usage
Implement
Requirements
Operate
Performance Management
Security Management
Strategy
End to EndPerformance
Largelyprovidermanaged
Provider Managed
ConsumerResponsibility
ProviderResponsibility
AuditResponsibility
End to EndAssessment
ConsumerManaged
ConsumerManaged
Vendor tooldependencies
Vendor tooldependencies
Consumer/ countrylegislationdependencies
ProviderManaged
Someconsumerresponsibility
ProviderManaged
Some consumerchoice
Some consumerchoice
Sys adminand consumercatalogmixed
Some user policycontrol toburst to hybrid
May haveelement ofCoLoc/ partner / brokeroptions
Some policychoices forhybrid partners
Some policychoices hybridcapacity and load balancing
Capacity Planning
ProviderManaged
TCO
Roles and responsibilities of consumers and providers change depending on the type of deployment model.
Example

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Cost analysis in comparing different deployment options –example scenarios
Total Cost of Ownership comparison is a key process for consumers in Infrastructure environment selection and management.
Scenario 1:Managing Infrastructure Usage Growth in Data TrafficCommunications Data Volume Sensitivity Scenario
Infrastructure services can become very expensive if the selected pricing mechanism and the demand change significantly from the original capacity forecast
Scenario 2: Managing Infrastructure Usage Growth in Compute and/or Storage-Storage and compute Data Volume Sensitivity Scenario
Cost options selected may change the basis of TCO comparison. These kinds of cost analyses may miss the overall business model costs and growth. For example, hybridinfrastructure may be able to optimize extra computer and storage capacity options but what cost of hybrid management? Can Privacy data be premium charged for public access etc.. ? Is thuisa true business case ?
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illustrative
illustrative

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Monetization mechanisms
Secure Operating Platform
Dynamic Pricing
Thin Provisioning
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Capacity Mechanisms for Managing Asset Utilization
Automated Elastic Provisioning and De-provisioning mechanisms
Value of Privacy
Modularity
Generativity
Vertical WorkloadSolutions
Horizontal Workload Solutions
CapacityValue of assets drivenrecovery of costs
Price(Value of time) drivenrecovery of costs
Agency value drivenrecovery of costs
NEW BUSINESSMODELS
Looking at the overallBusiness strategic costs andvalue, and of the
Infrastructure needs

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Old world versus new world monetization
OperationalMonetizationStrategies
Operating demand and supply, bundling
capabilities
Market channel, business processand supply chaincapabilities
Capital funding, contract, IPmethodscapabilities
Ts & CsMonetizationStrategies
GrowthMonetizationStrategies
CommunityMonetizationStrategies
ChannelMonetizationStrategies
Industry StandardizationMonetizationStrategies
Community identity, feedback
Connectionscapabilities
Structureof channelsto markets,
Channel mixCapabilities
Access specialization, reward, consistencyand interoperability
NEWECONOMY
OLDECONOMY
This is the “radius effect”
Of monetization
It is the value of spatial connections and its contextual content relevance
These monetization strategiesare levers that pull or push inside your own company as ways to generate revenue and profitability.
“Network effects” may be advantageous if designed and business model ran correctly
Platforms are good at these
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Conclusions
The Digital Enterprise is about value network ecosystems
Competition is moving to the ecosystem
Selling capacity annuity is a dying method….
Moving towards agency annuity selling
Traditional provisioning not added value –its commoditized…..
Create your Enterprise Value platforms to direct (ecosystem) traffic and usage volume => revenue flows based on capacity/headcount returns
Copyright 2014 Mark Skilton

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Thank you
Copyright 2014 Mark Skilton
New Book 2015

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Profile
MarkSkiltonhasheldseniorglobalDirectorPositionsinInformationTechnologyininternalandexternalconsultinginternationallyinmanyindustriesandorganizations.
Hehasover30years'experienceinawidevarietyofcustomerfacingandprovidersolutionsstrategies,consultingtoboardlevelinoperatingmodeltransformationsandvaluecreation.Hehasdirectexperienceofdigitalstrategysolutionstomarketlaunchinsocialmedia,mobilewebapps,bigdata,contentmanagement,eMarketingatBskyBwhereisservedasheadofnewmediasystemsworkingdirectlywiththeMarketingandsalesorganizations.
MarkhasheldInternationalstandardsbodychairpositionswithTheOpenGroupandiscurrentlyamemberoftheISOJC38distributedcomputingstandardsfordistributedcomputing.HealsocurrentlyconsultstocompanieswitheSupplychainanddigitaloperatingmodeltransformationchallengesincludingContenttopurchase(C2P)forainternationalconsumergoodscompany;SmartcitystrategiesforanumberofUKcities;eHealthsolutionsforamulti-nationalmedicalandhealthproductsresearchanddevelopmentorganization;co- presenceanddigitalbrandingforaglobalfinancialservicespaymentscompany;designofhospitalityimmersivecustomerservicestrategieswithaglobalHotelchainandvariouslogisticsandleanstrategiesusingdigitaltechnologiesforautomotiveandtransportdeliveryandembeddedsystemsengineeringcompanies.Heisalsosupportinganextgenerationdatahubplatform,“Thehubofallthings”HATaresearchanddevelopmentprogramwithUKuniversitiesincludingWarwick,CambridgeuniversityandindustrypartnersincludingIntel.
Markhasanextensiverecordofaccomplishmentindirectstrategyanddeliveryengagementsofdigitaltechnologies,andenterprisestrategiesincludingbigdata,socialmedia,anddigitalinfrastructuretransformation.
HehasspokeninternationallyondigitaltechnologystrategyappearingregularlyintheinternationalpressincludingrecentlyonSkyNewsandquotedinmajordigitalnewsandtechindustrysitesincludingtheBBC,DieWelt,TheStreet,CRN,CIO.com,andmanyothers.HeisanaccomplishedpublishedauthorofbooksandguidelinepapersonArchitecturepractitionerstandardsandcurrentlywritingabookonbuildingtheDigitalEnterprise–aguidetodigitalworkspaces,forPalgraveMacmillaninternationalseriesontheDigitalEconomy.
HeisagraduateofSheffieldandCambridgeUniversityandWarwickBusinessSchoolwhereheiscurrentlyapart-timeProfessorofPracticeinInformationSystemsManagementGroupatWarwickBusinessSchoolHisteachingandresearchincludesconsultingbestpractice,CIOexcellenceanddigitalstrategies.
Copyright 2014 Mark Skilton