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
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
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
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
ST
Economic Factors
Social FactorsTechnological 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
LevelofEffortRequired
Expected Impact of Disruptions
BusinessActivity
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…

References
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Sincere thanks to…
Dr. S. Thamarai Selvi
Dean of MIT, Anna University,
Chennai

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