Impact of SMAC on business models of enterprises

Impact of Disruptive Technologies on

Business Models of Enterprises (Casestudy : Indian Banks)

By

Dhinakar Jacob Selwyn

Guided By

Dr. S. Thamarai Selvi (Dean, MIT, Chennai)

2 Dhinakar Jacob Selwyn

• Need for study

• Study & analyze disruptive technologies

• Study & analyze business models

• Current disruptive technologies & their impact on enterprises

• Influence of SMAC on business models

• Penetration of SMAC in India

• SMAC adoption analysis, economies & stages in adopting

• SMAC adoption in Indian banking sector

• Analytical Hierarchy Process

• SMAC changing business models

• References

2

Agenda

Dhinakar Jacob S, 1212MBA1224


• Motivation – Technology wiped out 52% of fortune 500 firms since 2000. Yesteryears’ business models become

obsolete due to digitization and early warning systems influence new & innovative business models.

• Primary Objective – Analyze the impact of disruptive technologies on existing business models of current enterprises &

Adapt the disruptive technologies

• Secondary Objectives – Use of Consumer Behavior Analysis for enterprises

– Impact of Social media on spreading business campaigns and capabilities

– Shaping up business models using Business Intelligence and Business Analytics

– Larger enterprises reducing CapEx & improving OpEx for Run the Business (RTB) using cloud

• Scope – Define the model for measuring the value / impact of adopting the disruptive technologies

– Implement the model in Indian Banking Sector

Need for the Study


Study & Analyze Disruptive Technologies

1990

• The Internet

• Mobile Phones

2000

• E-Commerce

• Social Media

• Mobile Data

2010

• Consumerization

• Mobility

• Media Revolution

2012

• Big Data Info

• Cloud

2013

• Apps

• Digital Enterprise

Org. Structure : Highly Centralized

Decision Making : Management Driven

Customers : Lack Information

Role of Technology : Support Function

Disruptive Tech : PCs

Org. Structure : Semi-decentralized

Decision Making : Management Driven

Customers : More informed

Role of Technology : Strategic Function

Disruptive Tech : Internet, Mobililty, SM

Org. Structure : Highly decentralized

Decision Making : Collaboration with the

customer

Customers : Highly informed

Role of Technology : Business Enabler

Disruptive Tech : Digitalization, Artificial

Intelligence & Augmented

Reality

Pre-Digital Era

Digital Era

Post-Digital Era


Study & Analyze Business Models

• Business service/product

• Customer demographics

• Strategies System & Planning

• Geographic Spread

Traditional Business Components

New-Era Business Components


Current Disruptive Technologies creating greater

impact on enterprises – SMAC

A social media strategy has

become a must for all

enterprises including Govt.

With over billion individuals in

various social networks, people

using social media for advice

on what products to buy, where

to shop and even regarding

what firms they want to work

with. Many firms now started

using social media in tandem

with their sales and marketing

functions.

Mobile devices have changed

the way people access digital

content. Shoppers are

increasingly using their mobile

devices for everything from

browsing to comparing to

buying products.

Governments are also

reaching out to their citizens,

using mobile devices as an

efficient channel.

Every year billions of

gigabytes of data are being

generated. Enterprises start

recognizing the potential

of data can be used in time,

to gain competitive

advantage. Analytics can

help retailers predict buying

decisions of shoppers; it

can help banks weed out

fraudulent transactions.

Power of cloud computing to

foster innovations & improve

productivity is accepted by IT

vendors & Consumers.

Financial services and

government sectors mostly

moving to a private cloud due

to information security, other

industries like healthcare and

retail have adopted public

cloud.


Influence of SMAC on business models

Social • Facebook had 1.28 billion monthly active users as of 24 April 2014, an increase of

25% year-over year with 102 Million users (as on May 19, 2014) from India.

- Over 350 million Facebook users suffer from “Facebook addiction syndrome.”

- Daily users 757 Million

- 34% of Facebook users are in the 18 – 29 age group

• LinkedIn has grown from 4500 users in 2003 to 300+ million users as of May 2014.

- Every minute there are 2 users joining in LinkedIn

- Expecting 3 Billion users

- Number of monthly unique visitors 187 Million

- Geographical reach is in 200 countries

• More than 110 million users in the US and Europe access social networks and blogs

on their phones.

Cloud • 74% of enterprises are trying to use some form of cloud services.

• 84% of CIOs want to cut application costs by moving to the cloud

• One third of IT budgets will be spent for Cloud enablement


Influence of SMAC on business models Contd.,

Mobile • 42% of mobile phones in the US are smart phones. In Europe, the figure is 44%.

• More than 87% of phone owners access the Internet or email on their handheld device.

• More than 110 million smart phone users in the US and Europe access social networks

and blogs on their phones.

• Percentage of LinkedIn usage through mobile is 41% as of Feb 2014

• Average no of profile views in LinkedIn thru mobile are 15 Million as on Apr 18, 2014

Analytics • A study from IBM and Oxford University’s School of Business reveals almost two-

thirds (63%) of UK and Ireland businesses recognize the competitive advantage

associated with Big Data.

• 235 TB of data collected by the US library

• $600 B potential annual consumer surplus from using personal location data globally.

• Online retailers such as Amazon have realized increased revenues implementing Big

Data.

9 Dhinakar Jacob S, 1212MBA1224

Impact of SMAC

In India…


Usage of Social Media in India

Growth of Internet users in India (Rural Vs Urban)

Indians’ Social Network Usage in Millions

Benefits from Social Media


Usage of Mobile in India

Indian Mobile Users (with 3G handsets)

Usage of Mobile data (TB / Month)

Purpose of Mobile Internet Usage


Usage of Analytics in India

Purpose of Analytics in Banking

Expectations from Banking

0% 5% 10% 15% 20% 25% 30% 35%

Reporting

Cost Reduction

Risk Management

Data View

Regulation Compliance

Customer Behaviour

Sales Data

Decision Making

Others

35%

32%

29%

28%

26%

24%

13%

10%

2%


Usage of Cloud in India

• Dhanlakshmi Bank has opted to move all of its non-core banking

applications to Hitachi USP VM which allowed it to adopt

virtualization and reuse old storage boxes

• Nawanagar Cooperative Bank has engaged with IBM to deploy

CBS on a hosted cloud services model

• ShamRao Vithal Bank partnered with NetApp to offer cloud based

solutions to other co-operative banks in its region

• 11 Co-operative Banks in Gujarat partner with TCS for core

banking solutions

• ICICI Bank, TMB, Kotak Mahindra, IndusInd bank have replaced

its existing CBS with a newer version to become future ready –

Infosys Finacle

• Nawanagar Co-operative Bank adopted CBS on cloud (IBM

Implements OMNIenterprise)


SMAC Adoption Analysis


SMAC Adoption Analysis


Economies involved in SMAC Adoption

Formula Products / Services Geographies Customer

Segmentation

Organization

Capabilities

Social

=f(p)+f(g)+f(c)-f(i) Potential value of Social

Media per product / service

f(p)

Potential value of Social

Media in a given Geography

f(p)

Percentage of potential

customers on Social Media

f(c)

Capabilities (investment)

required to enable Social Media

f(i)

Mobile

=f(p)+f(g)+f(c)-f(i) Potential value of Mobile per

product / service

f(p)

Potential value of Mobile in a

given Geography

f(p)


customers using Mobile

f(c)


required to enable Mobile

computing

f(i)

Analytics

=f(p)+f(g)+f(c)-f(i) Potential value of Analytics

per product / service

f(p)

Potential value of Analytics in

a given Geography

f(p)


customers can be analyzed

f(c)


required to implement analytics

f(i)

Cloud

=f(p)+f(g)+f(c)-f(i) Potential value of Cloud

services per product / service

f(p)

Potential value of Cloud in a

given Geography

f(p)


elasticity based on consumers

f(c)


required to enable Cloud

f(i)


Stages in SMAC Adoption

SOCIAL

Level 1 - Dormant Level 2 - Testing Level 3 - Coordinating Level 4 – Scaling &

Optimizing Level 5 - Empowering

Resistant to any use of SM

No long-term SM strategy,

strictly task-oriented, individuals

test in isolated pockets

Coordination across all

channels, includes qualitative

measures

Shift toward growing social

channels; One full-time

dedicated resource, Takes action

from social conversations

Core business applications have

social feature, social elements

are incorporated into key

business processes

Mobile

Level 1 – Limited Mobile

Presence

Level 2 - Reactive &

Experimental Level 3 – Defined & Repeated

Level 4 – Managed &

Measured

Level 5 – Optimization &

Innovation

Limited mobile presence, not

considered core to the business

Organization is reacting to

external pressures, need for

improvement is acknowledged

but overall vision is absent

Mobile is considered a core

customer interaction channel,

global vision drives investment

in the mobile channel

Seamlessly integrated channel

experience, mobile capabilities

expanding beyond implementing

the core business capabilities

Rich, dynamic, seamless,

channel experience, focus on

continuous improvement and

optimization

Analytics

Level 1 – Web Metrics Level 2 - Behavior

Optimization Level 3 – E-Marketing Level 4 – CRM

Level 5 – Corporate

Performance Management

IT driven, few decisions,

minimal value, "feel good"

information (page views, visits)

Business driven, working on

metrics, accuracy and process,

path analysis, A/B testing/, KPIs

are defined

Channel is optimized,

Segmentation, SEO, personas

are created

Analytics generate a holistic

view of the customer,

multichannel aggregation, cost-

shifting analysis, analytics drive

decisions

Strategic web, multichannel

sales reports, strategic planning,

predictive analytics are

conducted

Cloud

Level 1 – Performed Level 2 - Defined Level 3 – Managed Level 4 – Adapted Level 5 – Optimization

Focus on functionality, isolated

use of web-based applications,

internal shift to basic

programming platforms

Focus on competency, selected

enterprise collaboration

applications, utilize full-blown

stack platform internally

Focus on effectiveness, spin off

home grown apps into cloud

service, Use of ERP

Focus on Responsiveness,

customize cloud applications,

revamp existing applications,

employ on-demand public cloud

services

Focus on Automation, Utility is

a result of commoditization and

industrialization


SMAC Adoption In Indian Banking


SMAC Adoption in Indian Banking Sector –

PEST Analysis

Political Factors

P E

S T

Economic Factors

Social Factors Technological Factors

o Monetary Policy

o Regulatory Framework

o Budget & Budget Measures

o Changes in interest rates

o More Savings

o More Capital Formation

o Increase in production of goods

and Services

o Banking channels

o Increase in Population

o Changes in Lifestyle

o Easy way of Lending Money

o Banking in rural areas

o Internet Banking

o IT Services & Mobile Banking

o Credit Worthiness

o Improvement in efficiency


Analytical Hierarchy Process

…to define SMAC adoption in Indian banking

Ranking :

1. Customer Experience

2. Cost Reduction

3. Marketing and Sales

4. Improved Efficiencies

5. Product Innovation

1. Analytics

2. Mobile

3. Social

4. Cloud

Indian Banking should adopt i.e.,

invest in SMAC in the following

priority…


SMAC changing Biz model

1. Analytics : Changes the business model based on geography & customer segment

2. Mobile : Changes the business model to reach the customer and do transactions

3. Social : Consumers’ psychological and trend analysis

4. Cloud : Changes current IT landscape from in-premise to cloud

Trigger a tipping point

Implement enabling technologies

Change in business environment

Adopt new innovations

Adopt new business model

Le

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f E

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Expected Impact of Disruptions

Bu

sin

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vit

y

Time


SMAC changing Business Model of Indian banking

Product Process Business Model

Capabilities

Enabled

• Personalization at scale

• Utilize behavioral data

not just transactional data

• Semi-autonomous enterprise

• Efficiency & Scale

• Collaboration & knowledge

sharing

• Enable “Banking Platform

as a Service” business

model

• Create new digital

products

• New distribution channels

Improved

Experience

• Social knowledge sharing

• Anywhere / anytime use

• Get 360 degree view of

customer

• Predictive marketing

• Connect from anywhere and

anytime

• Mundane tasks automated

• Improve customer experience

• Scale without adding human

intervention

• Better interaction between

customers and partners

• Faster growth & scale

Improved

Outcomes

• Top line growth

• Exceeding customer

expectations

• Self Service

• Omni Channel

• Increased speed and precision

• Reduction in headcount

• Reduction in training costs

• Data driven decision making

• Reshape organizational

boundaries & become

permeable enterprises

• Create new revenue

streams

• Lower integration costs


References…


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http://expandedramblings.com/

http://www.pewinternet.org/2011/07/11/

Sincere thanks to…

Dr. S. Thamarai Selvi Dean of MIT, Anna University,

Chennai

Documents

Impact of SMAC on business models of enterprises