NASSCOM ILF 2017: How to Monetize Digital Through X2X Business Models - Cathy Tornbohm, Gartner

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How to Monetize Digital through x2x Business Models

Cathy Tornbohm

2 © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.

What Do CEOs Think Digital Business Is?


What Outcomes Do Clients Want From Digital?

Q: Please choose the top three expected outcomes and/or impacts that digital represents for your enterprise.

Insurance(n = 62)

Banking(n = 88)

More business through digital channels 66% 59%

More revenue from better operations 65% 67%

Tighter partnerships 48% 33%

Changing the basis of competition 32% 20%

Cost reduction 27% 30%

Creating new markets 26% 32%

Engaging and empowering employees 21% 25%

Crossing industry boundaries 8% 15%

Expanding to new geographies 6% 14%

Source: Gartner, January 2016


Top Three Digital Business Technology Related ChallengesQ21. What are the top three digital business technology-related challenges in your organization?

n=304

Lack historical data

Consumerisation of IT

Need for scalable storage and backend platforms

Difficulty with identifying the opportunities

Regulation and privacy issues — sharing data with other or-ganizations

High-level investment or hype

Making sense of the data or semantic standardization

Trust in IT industry

IT organizations’ mindset

Justification of investments

Digital enablement of employees

Need for new competencies, lack of skills

IT security — such as greater need for user validation and au-thentication

IT leadership

Data management

3%

5%

3%

5%

4%

7%

5%

6%

6%

9%

6%

6%

10%

13%

13%

5%

4%

5%

6%

6%

6%

8%

7%

7%

5%

8%

9%

8%

9%

9%

4%

3%

5%

3%

5%

6%

6%

7%

8%

7%

8%

8%

11%

7%

11%

Ranked First Ranked Second Ranked ThirdSum33%

29%

29%23%

22%

21%

21%

20%19%

19%

15%

14%

13%12%12%


The Necessary Change of Focus in Back and Middle Office

20th CenturyBusiness Software

Supporting the Administrative Drone

21st CenturyBusiness Software

Supporting Multitasking Knowledge Workers

Author

https://commons.wikimedia.org/wiki/File:Elmer_Candy_Co_Inc_Office_New_Orleans.jpg


Mode 2 World: Task Support Through App-Style Software

Clients Need an Holistic Approach: Making the Legacy Work with the New

Mode 1 World: Heterogeneous and Hybrid Services

On-Premises Packaged Custom

Exposing APIs: API Management: Security: Integrity: QoS

CorporateApp Store

BUApp Store

RegionalApp Store

PublicApp Store

Cloud

C JE F H K L M N O PA D IGB Q R


The Internet of (Very Different) Things

0

200

400

600

800

1000

1200

1400

1600 Connected LED lamps

Livestock sensors

Sports equipmentShipment condition monitor

ATM machines Traffic lights

Vending machines

Parking metersHotel door locks

Vehicle sub-systemsWearables

ToysAnti theft and loss tags

Smart electric meters

Outdoor security camerasElectronic shelf edge labels

Thermostats

• Expect 8 billion shipments in 2020.• Many smart versions of existing product markets.• Key challenge: Where to focus?

Shipments in 2020(millions of units) (Selected items for illustration)

Activefreightpallets

Agricultural sensors


Target Topics by Vertical Industry: Example: IoT

0%

20%

40%

60%

80%

0% 20% 40% 60% 80%

Already implemented IoT

Pla

nnin

g to

impl

emen

t IoT

in th

e fu

ture

Utilities

Oil and Gas

Manufacturing

Technology and Service

Banking

Government

Transportation

Services

Retail

Healthcare Providers

Education

Insurance

Indicators of IoT potential include:

• Own physical assets or real estate

• Culturally and financially able to innovate — both businessand technology

• Looking for novel ways to enhance customer experience

4Q15 Gartner Research Circle IoT Survey, n = 359 organizations who had either implemented IoT or planned to implement IoT. Due to the sample sizes involved for some industries, this graphic should be treated as directional and indicative of general trends but isn't highly statistically significant.


Target Key Challenges: Example Top IoT ChallengesCybersecurity

Integration

Determine/manage business requirements

Analytics

Networking and communications

Data management

Architecture

Device management

Orchestrate workflows and processes

Application development

0% 10% 20% 30% 40% 50% 60%

Percentage of organizations rating the specified issue as being in their top three IoT challenges. 4Q15 Gartner Research Circle Survey, n = 121, all respondents were from organizations currently using IoT.


By 2020, autonomous software agents outside of human control will participate in 5% of all economic transactions.


Permutations of b2b, b2c, m2c, m2b, m2m, b2g and g2g

Shopping bot

IOT thing

Real person consumer

Organization

Shopping bot

IOT thing

Real person consumer

Organization

BuyerSeller

Smart machine Smart machine


Phase 1: Things as Announcers

Products: • Fitbit

• Turbines• Babolat

Tennis Racket

• Cars, • Hospitals, • Factories,

• Cities

Key Enabling Technologies

• Motion, sound, heat sensors

• Internet connectivity• Recommendation

engines


Phase 2: Things as Fixed Purchases


• CRM Systems• Internet Services

• Decision Management

RequestsService

Receivesmessages

ReportsDisputes

Makes itsown purchases


Phase 2: Things as fixed purchases…

Take action on behalf of parameters set by

humans

The SneakerBot


Phase 3: Things as Adaptable Purchasers


• CRM Systems• Internet Services

• Decision Management

Chooseamong

multiple options, with outcomes set by humans, such as,

urgency, location, cost- benefit trade off


Phase 4: Things as Autonomous Purchasers

Key Enabling Technologies:

• Digital IdentityDirectional Examples:

• Roboadvisors• Autonomous vehicles

• Smart homes• Smart cities

• Precision agriculture• Mobile health

monitoring

Decide and take action independentof humans


Algorithmic Business Sales Models

Demand /Supply Algorithm Heat mapping for demand Real time aerial view of car movement Other analytics (opening app,

destination probabilities)

Surge Pricing Algorithm Automatically detect situations of high

demand and low supply to adjust price


How does a “Beam Toothbrush” get in on the act?


Spotting the Opportunities: Smart Machines Are Accelerating Disruption in Every Industry

Advertising: Sensor-driven customization

Agriculture: Precision thinning for plants

Education: Grading essays

Financial: Writing earnings reports

Legal: Finding the most-likely-to-win strategy

Medical: Differential diagnosis and treatment plans

Oil and Gas: Machine diagnosis and usage optimization

Retail: A/B testing for physical locations

Transport: Robot valets parking and retrieving cars


Old marketing models wont work!


Thing Marketing: Appealing to Algorithms

Low Fat

High Fiber

Sugar Free


Source: https://wwwwwwwwwwwwwwwwwwwwww.bitnik.org/r/

Random Darknet Shopper


Opportunity– Chinese families often want to give their babies English names for future study

or business in Western countries

Data and analytics – A 16-year old British schoolgirl developed a website to match a dozen desired

personality traits selected by the parents, along with the gender, to a database of English names

– Candidate names are shared on WeChat social media platform with family and friends to help make a final decision

– After the name is chosen, a printable certificate is generated with the name, its meaning and examples of famous people with that name

Results– Has named nearly 250,000 Chinese babies to-date (Sept 2016), and has

generated almost £50,000

– Avoids embarrassing names like Gandalf or Cinderella pulled from films

Oh Baby! ( 宝宝 )


Opportunity– Cromaretail.com was dealing with the problem of plenty. Amid varied product

offering, customers were confused and conversions suffered.

– Data and analytics – Worked with Infinite Analytics which helped it understand customer’s social

profile, brand affinity, recent activities, household and macroeconomic data.

– For the product catalog, it utilizes a mix of NLP, Semantic technologies, Machine Learning to match and enrich the product understanding.

Results– In 6 months time, revenue share was up 24.9% and conversions shot up by a

staggering 217%.

– Deployment also resulted in 28.8% increase in orders with recommendations.

Croma converts onlookers into customers with analytics


Opportunity– Wanted to minimize driving time by taking the best route with the least

amount of traffic and stoplights, and optimize travel expenses

– Data and analytics – UPS engineers devised a plan for route-optimization and used Orion, short for

On-Road Integrated Optimization and Navigation.

– The algorithm used 1,000 pages of code to analyze 200,000 possibilities for each route in real time.

Results– UPS saved 10 million gallons of gas and carbon emissions were reduced by

100,000 metric tons

– The company saved 98 million idle minutes which is about $25 million worth of labor cost each year.

UPS creates its own best possible Route


Spotting the Opportunities: How to Reimagine Consumption and Consumers

Capital

Production Line

Hotel

Buy a Car/Daily Rental

Taxi and Delivery

Trust and Reputation

Knowledge

Personal Experience

Crowdfunding

Local 3D Printing Service

Airbnb

Share a Car/Hourly Zipcar

Uber Car and Driver

Social Recommendation and Reputation Score

Cloud-Based Virtual Assistant

Community/Network

Fixed Purchase Fungible Access/Time Slice

Reimagining the Nature of "Business"


Spotting the Opportunities: Network Aggregator Model

Units of physical work

Units of knowledge work

Units of physical product

Units of lending

Units of service

Units of value

Units of funding

Phy

sica

l

Inta

ngib

leH

uman

Digitalize

Automate

3DP

Robots

IoT Wearables

Autonomous VehiclesCognitive

Agents

DemocratizeSharing economy

Drones


Marketing Essentials Create a seamless process don’t silo off digital offerings Build a branded methodology to unify your story. Collect great publically namable case studies Focus communications on use cases and value of your product or

service not features and functions — Ensure these communications are vertical industry specific and able to

accommodate various audiences. Publish a book on your angle of digital business technology

and strategies, or align with key academics. Create one of more digital business "innovation" center (site, themes).


Recommended Gartner Research

Mandate Investigation of Smart-Machine-Enabled Services to Accelerate Business Outcomes

Frances Karamouzis and Ruby Jivan (G00269974) Sourcing Smart-Machine-Enabled Services Drives Competitive Advantage and F

uture Patent Revenue

Frances Karamouzis (G00272722)Maverick* Research: When Things Become 'People‘

Don Scheibenreif Jenny Sussin Jim Tully Kristin R. Moyer (G00278110) Digital Business Innovation With Smart Machines

Tom Austin and Hung LeHong (G00265758) Toolkit: Accelerate Digital Business With a Product Creative-Thinking Workshop

for Your Executives

Mark Raskino (G00262520)For more information, stop by Gartner Research Zone.

http://www.gartner.com/document/2965217




http://www.gartner.com/document/2818821?ref=QuickSearch&sthkw=Digital%20Business%20Innovation%20With%20Smart%20Machines&refval=147675482&qid=b1a20b9cfc2f28ed49e76efffefa802c

http://www.gartner.com/document/2824824?ref=QuickSearch&sthkw=G00262520&refval=154898267&qid=17eaf6e67d0acae8ddc07820d491eb85

http://www.gartner.com/document/2824824?ref=QuickSearch&sthkw=G00262520&refval=154898267&qid=17eaf6e67d0acae8ddc07820d491eb85