Challenges and Implications for Enterprise Modeling

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0: Challenges and Implications for Enterprise Modeling Kurt Sandkuhl Rostock

1 Invited Talk at PrOse Workshop (PoEM 2017), November 2017, Leuwen Digitization, Digital Transformation: Cyber Physical Systems and Industry 4.0: Challenges and Implications for Enterprise Modeling Kurt Sandkuhl Rostock University, Germany rostock.de Chair of Business Information Systems

2 Overview Short Introduction to Digitization: Why investigate Internet of Things, Cyber Physical Systems and Digitization in the context of Enterprise Modelling? Example for Digitization Husqvarna Smart Garden Challenges for Enterprise Modeling Conclusions 2

3 Internet of Things (IoT) Initially: tagging things (RFID) Now: things are smart and interact things bring services New business models Changed value creation New kinds of services

4 Cyber Physical Systems and Industry 4.0 Connect physical systems (machines, vehicles, tools) and IT-systems in real-time Communication, coordination and control in both directions Physical World / Control Systems P CS Identity Manufacturing Order Realtime Update & Control IT-World / Enterprise Computing Manufacturing data

5 Digital Transformation Source: IBM Institute for Business Value (2011) Digital transformation: Creating new business models where digital meets physical. Executive Report 5

6 Digitization: From Traditional to Digital Business Model Traditional (physical) business models rely on places (such as bank branches, bookstores or department stores) people (such as sales teams or insurance agents) and/or physical products (such as cars, TVs, shampoo, or cookies) to delight a customer Within an enterprise, digital business models challenge the (physical) model in three main areas: internal power: who owns the customer s experience often changes from product groups to the unit that manages the multi product customer experience; business processes: require rethinking to be seamless across channels; customer data: become an enterprise wide resource rather than remaining hidden in one area. 6

7 Industrial Cases of Digital Transformation Digital Signage Utility Industry Financial Industry Smart Garden Courtesy of and (c) by Husqvarna AB, Sweden 7

8 Industrial Digitization Example: Husqvarna Automower

Husqvarna Automover (lawn mowing robot) http://www.husqvarna.

9 Husqvarna Automover (lawn mowing robot) lawn mowers/ Courtesy of and (c) by Husqvarna AB, Sweden 9

10 Business Model according to Wirtz Market model: describes the market structures incl. Competitor model Demand model Procurement model: What parts of the product/service are prcured from external suppliers? Value creation model: How are goods and services transformed into value propositions? Value offer model: what value propositions are offered to what customer groups Distribution model: what products or services are offered to what time at what price to the customers and how are they delivered? Capital Model Procurement Model Distribution Model Market Model Business Model Value Value Creation Model Capital model: describes the financial resources Financial model: sources of the capital Kinds of revenues and revenue streams Offer Model 10 Wirtz 2015

11 Initial Business Model of Husqvarna PROCUREMENT MODEL DISTRIBUTION MODEL MARKET MODEL Compon. Provider Motor, Chassis Payment VALUE CREATION MODEL Plan Produce Phys. Prod. QA VALUE OFFER MODEL Automated lawn mowing Price P 1 Automower End Consumer Bosch Integrated Product-/ Sservice Offer Stihl FINANCIAL MODEL REVENUE MODEL CAPITAL MODEL UNIVERSITÄT ROSTOCK Fakultät für Informatik und Elektronik 11

12 Husqvarna Digital Business Model, Part 1: Automower connect Automower connected to the hub and customer uses tablets and smartphone Control Saving Time Perfect Care Courtesy of and (c) by Husqvarna AB, Sweden

13 (Extended) Business Model of Husqvarna PROCUREMENT MODEL DISTRIBUTION MODEL MARKET MODEL Compon. Provider Electr. U. Provider Teleco Motor, Chassis Payment FPGA Payment Connectivity Payment VALUE CREATION MODEL Plan Plan Produce Phys. Prod. Produce Phys. + Electr. Pr. Produce Plan Prod. Service Design QA Q A QA Service Bundle VALUE OFFER MODEL Automated lawn mowing Aut. Mowing & Remote Monitoring Aut. Mowing, Monitoring, Maintenance Integrated Product-/ Sservice Offer Price P 1 Automower Price P 2 Mover + Autoconnect Price P 3 Fleet Services End Consumer EC with digital affinity Housing Service Company Bosch Stihl FINANCIAL MODEL REVENUE MODEL CAPITAL MODEL UNIVERSITÄT ROSTOCK Fakultät für Informatik und Elektronik 14

14 Husqvarna (Extended) Business Model, Part 2: Smart Garden System System structure... All products are connected to the hub and the user can simply interact with all devices thru apps. Control Saving Time Perfect Care Courtesy of and (c) by Husqvarna AB, Sweden

15 Business Model of Husqvarna PROCUREMENT MODEL DISTRIBUTION MODEL MARKET MODEL Compon. Provider Electr. U. Provider Telco Electr. U. Provider Computing Center Motor, Chassis Payment FPGA Payment Connectivity Payment Sensor, Net Payment Operation Serv. Payment VALUE CREATION MODEL Plan Plan Produce Phys. Prod. Produce Phys. + Electr. Pr. Produce Plan Prod. Service Design Produce Plan Prod. Service Design Service Design QA Q A QA Service Bundle QA Service Bundle Service Bundle VALUE OFFER MODEL Automated lawn mowing Aut. Mowing & Remote Monitoring Aut. Mowing, Monitoring, Maintenance Autom. & Sync. Garden Services Garden Services + Security & Comfort Integrated Product-/ Sservice Offer Price P 1 Automower Price P 2 Mover + Autoconnect Price P 3 Fleet Services Price P 2 Mover + Autoconnect Price P 3 SG Platform End Consumer EC with digital affinity Housing Service Company EC Digital Native 3rd party Service providers Bosch Stihl FINANCIAL MODEL REVENUE MODEL CAPITAL MODEL UNIVERSITÄT ROSTOCK Fakultät für Informatik und Elektronik 16

Challenge: Product IT and Enterprise IT integration Product-IT

embedded in the product traditionally constructed separately from

Cyber-Physical Systems or Internet of Things CPS and IoT require

IT and changes in EA IT-World / Enterprise Computing Enterprise IT: Support

16 Challenge: Product IT and Enterprise IT integration Product-IT Enterprise-IT Physical World / Systems and Infrastructure Product-IT: embedded in the product traditionally constructed separately from enterprise IT (due to reliability requirements, different lifecycle, different funding strategy, etc.) Connections to enterprise IT often specific point-topoint solutions Cyber-Physical Systems or Internet of Things CPS and IoT require interaction in real time, closer integration of product IT and enterprise IT and changes in EA IT-World / Enterprise Computing Enterprise IT: Support for value creation and support processes and functions Usually structured into different layers Currently main focus of EAM Product-IT usually out-ofscope for enterprise IT

17 Product driven EAM Enterprise layer Application layer Technology layer Product-IT (P-IT) Strategy Business model Processes Traditional coverage of P-IT Enterprise-IT (E-IT) Current EAM coverage EAM coverage as it started Mode 2, requires: fast turnaround frequent update rapid path Bimodal processes Mode 1, designed for: stability efficiency low cost traditional EAM 18

18 Husqvarna (Extended) Business Model, Part 3: SOLEA Courtesy of and (c) by Husqvarna AB, Sweden

19 Implications for Enterprise (Architecture) Modeling

20 Implications of Digitization for Enterprise Modeling Enterprise Architecture is changed on several layers by digitization Enterprise Models can serve as glue between other model types System Modeling Enterprise Modeling Business Modeling Software Modeling Business Model can be captured in an enterprise model 21

21 More Implications for Enterprise (Architecture) Modelling We have to integrate Product IT into Enterprise Architecture Models The process, roles and principles for synchronizing Product IT and Enterprise IT need to be redefined Different paces in Product IT and Enterprise IT development will lead to different granularities and update cycles in enterprise models Highly dynamic situation in the field What has to be part of the model, what should be excluded? Potentially incomplete and quickly changing models 22

22 More Implications for Enterprise Modeling Model the product and service structure Understand dependencies between process and product/service Identify usage contexts of products/services and influences on processes Model the customer side of services Integration of design time and run time Design depends on real time context, and context is affected by design 23

23 Conclusions Digitization, CPS and IoT will not just pass or go away. These trends are affecting enterprises and thus also affecting Enterprise (Architecture) Modeling Implications Let us share experiences on IoT, CPS and Digitization projects or cases! Let us find ways to better support agility in enterprises Let us take the lead in modelling support for IoT, CPS, etc. 25

24 Thank you for your attention! Time for questions! 26

CPS, IoT and Industry 4.0 for the Smart Enterprise: What are the implications for enterprise and process modeling?

Invited Talk at PROMOS Workshop (EDOC 2016), September 2016, Vienna CPS, IoT and Industry 4.0 for the Smart Enterprise: What are the implications for enterprise and process modeling? Kurt Sandkuhl Rostock