An attempt to form a general overview of virtual organisations, innovation and its requirements within a business context, leading to the presentation of a candidate method for vBusiness Operations.

1. vBusiness Operations Strategy 14/04/2011 1

2. Conduct of Session Presentation open to the audience throughout. Please raise your hand or type an exclamation mark (!) in local chat if you wish to ask a question and I will stop. Workshop at the end of the seminar, including feedback exercises. The subject of vBusiness operations within the virtual space, is MUCH more detailed and expansive than presented here. Please contact us if you have any further enquiries. 14/04/2011 2

3. Structure of Session Innovirtua - Background Innovation - What immersive environments offer, why they are important and how to use them in order to innovate business process and redefine business scope. Systems Theory - An attempt to form a general overview of virtual organisations, innovation and its requirements within a business context. Systems Approach - Highlights influencing factors on business performance in the virtual space. Workshop – Application of method to case studies provided by the audience. 14/04/2011 3

4. 14/04/2011 4 Thinking About vBusiness Operations Part 1 Who, what, why

5. Our Background About Us Innovirtua, is a professional information systems consulting group, specialising in hybrid management techniques and knowledge based systems. Through experience, client engagement, comprehensive capabilities and extensive research, we collaborate with customers to achieve milestones through prudence and mindful conversation. Our Mission To provide strategic information systems and related services, which deliver long term commercial and social benefits based upon key requirements, through a transparent, mindful and professional approach which engages the customer and communities in the consulting process. Our Vision Extending and enhancing business and social network operations, through providing high quality information systems aligned to purpose. Providing responsible foundations and practice frameworks in developing solutions which facilitate communication, community-building and sustainable innovation. 14/04/2011 5

6. The 3 Layers of IS Practice 14/04/2011 6 Strategic Information Systems planning is the formal consideration of an organisations present and future information requirements. All SIS planning will involve a combination of three key questions, involving the three layers of information systems practice: "What technology do we need?“ "How do we apply our resources to our business?“ "What benefits and advantages can be realised in doing this?"

7. Realising Benefits In business planning, the third question is better phrased: "How can we identify, nurture and realise competitive advantage?". In many organisations, this is viewed as a process for determining direction over a typical 3 to 5 year period, although some extend their vision to incorporate sustainable innovation for the longer term. In this session we will concentrate on the IS layers, using a broad spectrum view on how an organisation may best utilise Immersive Internet Applications (IIA) to gain sustainable competitive advantage. 14/04/2011 7

8. Innovation Thinking About vBusiness Operations Part 2 14/04/2011 8

9. Innovation Happens when…? We all accept that we need to innovate to progress, but there are many issues involved. In this session we will try to address a small number of them by converging three theories. Successful innovation for an organisation is one thing and difficult enough to achieve…..repetitive sustainable innovation is an entirely different matter….. What does it mean to innovate and what is required to design and build information systems to support and promote innovative technologies? Why should we strive to innovate and how do we apply it’s effects? How do we go about understanding innovation, specific to our business needs and how can we realise the benefits offered by innovation? 14/04/2011 9

10. Understanding Innovation Joseph Schumpeter (1911) sees industrial innovation as part of a long term pattern which he labelled “Waves of Acceleration” in homage to Nikolai Kondratieff who first brought them to the attention of the world. Figure from The Economist's special survey "Innovation in Industry" (20 February 1999) 14/04/2011 10

12. A new process (business process redesign, competitive advantage)

13. A new market for an existing product (e-commerce, v-commerce, distribution channels)

14. A new raw material, or a new source of an old material (titanium, coal and gas)

18. The Need for Innovation The profitability of capitalist markets are shrinking… Higher overhead costs for manufacture, warehousing, distribution, etc. Intense competition in markets, resulting in cost increases that are difficult to pass on to the customer and have to be absorbed. Innovation is a requirement to sustain organisations. Value has to be added to an organisations customers through developing the value chain. Can innovation through vBusiness operations help us stay competitive? Access to a global market. Direct B2C and B2B sales? Economies of scale through electronic distribution of product? Opportunities to build value networks and understand consumer cultures 14/04/2011 15

20. Will the Innovation Add Value?

21. Can the Innovator appropriate the Added Value?

23. Competitors (market share and positioning)

24. Suppliers (cost of resources)

25. Customers (market demand)

26. New Entrants (barriers of entry into market, sunk costs)

27. Substitute Products (coke/pepsi)

28. We have always included two more concepts when studying core competencies within organisations leading to innovation, and now we add a third…

29. Governments (monopolies commissions, legislative restrictions)

30. Owners (attitudes toward change and acceptance of ideas)

33. Value Stream – Dictates how to produce a business model and innovate

34. Revenue Stream – Dictates economic value of products or services

35. Logistics Stream – Dictates viable delivery channels

37. Value Chain Activities 14/04/2011 22 According to Michael Porter, an organisations value chain can be analysed through modelling the business process under study: Identify the significant value activities. For example capabilities and suitability of platforms, community ethos and similarities or shared values and norms with members. Identify the drivers of cost or uniqueness for each significant value activity or indeed come up with a good reason to ignore them. Examine the linkage of each significant value activity. This is important. The actions that are necessary and how they will affect members/strategic partners (even if not acting directly upon them) need to be taken into account and fully understood before action is taken. Redesign the significant tasks to lower costs or increase uniqueness. This usually means “never both”. However as the old virtual environment saying states… “Culture, Speed, Design…pick three”.

38. Closed System This model of the value chain however is most efficient in high structured and stable environments. 14/04/2011 23

39. Closed System Supply Chain In order for an organisation to become dynamically stable and display the qualities necessary for sustainable innovation, it is essential to change supply chain structures. Traditionally, an organisations supply chain is formed through movement of raw materialsand product. 14/04/2011 24

40. Open System Product design and production constantly evolves as a result of the environment and the market drivers acting upon the organisation. This is an example of an open system, whereby the organisation operates through an adapt or die belief system. 14/04/2011 25

42. Symbiosis with the Immersive Environment Immersive environments display characteristics that integrate with business process on a functional level and are also unstable. It is very difficult to legislate for the actions of people and when dealing with communities, it is certain that the unexpected will occur. eg: HR is extended to the activities within immersed communities. Engagement and feedback processes need to be designed and implemented in order to meet the needs and expectations of communities which hold shared beliefs with an organisation. IT departments are required to work alongside either third party IIA providers, or the upkeep of an isolated intranet immersive grid connection. Information Management becomes pivotal. 14/04/2011 28

43. Technological Determinism = Bad The strategic planner should promote IT related organisational change and work alongside key personnel in order to identify opportunities and add to the value proposition. This premise is often confused with technology as a change agent, a concept related to “technological determinism”, the responsibility of driving the organisation forward and achieving change through coercion based on technological means. We should not look to utilise technologies for the sake of using them! Purpose driven business activity is paramount. The technology supports this process and does not define it! 14/04/2011 29

44. Adding Value through Immersive Environments 10 Identify and document existing IT infrastructure and process. 20 Collate Service Level Agreements, Internet/Intranet functionality and additional Service Providers. 30 Define business operational requirements through understanding and modelling the organisation at the process level. 40Identify staff skill sets and strategies. 50 Work alongside in house system designers and benchmark analysts to provide a useful, workable solution. 60 Carry out feasibility study. 70 Go to 10. 14/04/2011 30

45. Immersed Value Proposition 14/04/2011 31

46. 14/04/2011 32 Thinking About vBusiness Operations Part 4 Systems approach

47. Formulating Strategy 14/04/2011 33 When formulating any kind of strategy, firstly identify all the aspects of your organisation which “add value”. This means that once the distinctive competencies of an organisation have been identified, a strategy can be formed which applies them in a market which best suits them, optimising the chances of success and profitability if there is any….John Kay, “Foundations of Corporate Success” (New York: Oxford University Press, 1993) . Internal Architectures External Architectures Innovation

48. What is a Systems Approach? These ideas give rise to the concept of “holism” when accounting for the emergent properties displayed by systems. These properties can be said to only exist when looking at the system as a whole, or in a holistic manner. It therefore follows, that though implementing a vBusiness strategy through the immersive internet, an organisation will have to account for emergent properties of the system as a consequence. vBusiness strategies have specific qualities and may improve work flows or business process and scope in ways previously unplannedespecially within an Immersive Environment. 14/04/2011 34

49. Techniques Available There are many systems modelling techniques available that are useful in coming to understand the immersive environment. Soft Systems Methodology, Systems Thinking, IDEF, Data Flows etc. However as in this case we are primarily trying to coming to understand the environment and the influencing factors within it, we are able to apply System Dynamics. The behaviour of a system over time and the decisions that have to be made is a specific type of management problem, which requires the analyst to tackle the issues of how dynamic forces and how those reactions shape the system as it moves into the future. 14/04/2011 35

50. System Dynamics Through this approach, a model can be constructed which highlights important influences that act as pivots or control factors within the system. It will provide the ability to make recommendations on processes that organisations should consider, when implementing a vBusiness strategy and aid in the formulation of a candidate method for formulating one. This can be done through the construction of feedback/causal loops and studying the influences between them. 14/04/2011 36

51. Perception and Performance For example. Focusing on Business Performance, we can construct this simple loop. 14/04/2011 37

53. Generating Revenues We can get a little more complex when thinking about revenue generation. 14/04/2011 39

54. Reliance on Immersive Internet Application The revenue factors can then be extended to include the influences of the chosen Immersive Internet Platform: 14/04/2011 40

55. The Immersive Internet Environment Adding the previous loops and studying their interdependencies, we can begin to model the Immersive vBusiness Environment at a high level. 14/04/2011 41

56. 14/04/2011 42 vBusiness Influence Diagram

57. Cultural Requirements For an organisation to be effective in implementing a vBusiness strategy, it must first align itself with a number of requirements, without which the project will hold a high risk of failure. The organisation must be: Agile Senior management must commit to the project Hold realistic expectations Must empower the required staff or resources to collaborate with communities Must execute strategy in the context of growth, expansion or efficiency Must work to a purpose, a shared vision and achievable milestones Hold sufficient development budget to see project through to completion 14/04/2011 43

58. vBusiness Operations The organisation must not be: Rigid in its beliefs Restricted in project scope Hold a narrow technical focus Manage the project by consensus Be in an unsound financial condition Have too many improvement projects underway Subject itself to fear and lack of optimism Experience animosity toward and by IS and HR specialists 14/04/2011 44

59. 14/04/2011 45 vBusiness Candidate Method

60. And there’s the basics 14/04/2011 46 Innovation should be an organisational requirement in order to provide added value. There are methods and methodologies that can be applied in order to retain control over this development. Organisations must “learn” both from their mistakes and their successes! You must not be afraid to fail! Without an attempt, innovation will not happen.

61. 14/04/2011 47 Thinking About vBusiness Operations Part 5 workshop

62. IT Infrastructure “Should we invest in buying new hardware and achieving consistency within the organisation in terms of the hardware platforms supported? What platforms should these be?” The question to ask here is, “Are you of the opinion that your systems need standardising throughout the organisation?” New hardware may not be necessary, Although this will have to be investigated (for example there is a query on the usefulness of legacy systems in terms of maintenance costs). New software maybe necessary for full functionality if the organisation decides to design and maintain it’s own “sim”, but this kind of work maybe outsourced if the required skills are not present with current employees. If the opinion is held that hardware needs standardising, then the Information Systems will need to be modelled and requirements drawn up. Even in this case, the current hardware may provide many components in filling the requirements gap, subject to existing SLA’s.

63. Service Provision “What additional services should we purchase or develop in order to implement a virtual solution?” The question to ask here is, “What additional services do you currently hold?” It would be prudent to outsource the design, development and maintenance of relevant services, that provide high availability on a stable platform. In addition to this we would recommend sourcing a hosting service utilising Web Services and Benchmarking technologies. There are many Internet Service Providers and Additional Service Providers that would provide these services under service level agreements.

64. Reduction Of Risk “How do we mitigate the risk that my business is exposed to through adopting “virtual” information strategies?” The question to ask here is “How well are the risks understood with relevance to your business?” Prudence dictates that a risk assessment is carried out, with relevance to how the organisation interacts with the value chain, based on processes and internal/external IT system integration/exploitation. The overall culture promoted by organisational structure is important here and most importantly, attitudes of employees towards the offered functionality. Understanding information as a commodity and the entrepreneurial spirit as applied to risk. Issues may include. More/Less costly in terms of infrastructure. Understanding risk vs resource. Requires direct B2C/B2B transaction handling. Can our current infrastructure cope with the demand?

65. Value Chain “What specific services would we need in order to link our systems with a value network to act as a supplier?” The question to ask here is, “To what extent do you require interaction with your Value Chain?” If we assume this relationship will be beneficial, then a higher level of interaction is often needed, which would extend to integration of the value chain through more efficient use of existing systems. Current financial and logistic packages may do the job, but investigation is needed depending of success of project. This includes business process and scope, which should be studied in order to formulate a systems solution. In reality IT systems are responsible for a low number of the factors that should be considered here.