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Role of ESOA in Business Model Innovation

CEO Speak In a recent global CEO study, majority of the CEOs expect their organizations to face significant changes over next two years. They believe that fundamental business changes will be required due to intense competition, enhanced customer expectations and globalization. They are viewing Business Model Innovation as the answer.  Business Model Innovation as Differentiator CEO’s see Business Model Innovation as important differentiator since this kind of innovations do not invite imitation or commoditization the way product, service and operational innovations do. Hence the competitive advantage from these innovations is more durable over the long run. Analysis also revealed that business model innovation leads to better top-line growth and its a way to preempt competitive threats.  CIO Has a Role to Play in Business Model Innovation Having executive responsibility for the IT organization, the CIO is a very important player in company’s business model innovation efforts. CIOs need to take some key steps to enable and drive business model innovation within the organization.  Obtain Strong Business Understanding through Process Elements In order for IT to enable a dynamic business model, that business model must first be understood. The business needs to be granularized into its process elements and business value of these process elements needs to be analyzed. Business leaders can then learn where improvements need to be made to reduce costs, enhance productivity and accelerate growth.  Innovate the IT Business Model CIOs need to reaffirm that they are business executives first and technology executives later. They need to view IT as a strategic partner to the business. This requires rethinking IT’s current business model and managing IT like a business. IT organization can also be granularized into process elements to understand how it can be innovatively transformed to better serve the business.  Implement a Flexible Infrastructure Today’s complex IT environments are difficult and costly to manage. They consume an increasing share of IT budget just to maintain basic operations. Hence companies are looking for flexible and simpler IT infrastructure.  Enabling Business Model Innovation with Flexible IT Infrastructure using ESOA Business Model Innovation introduces significant changes into the organization. It relies on the infrastructure to be agile and flexible enough to respond to those changes. For example, if a company’s new business model demands B2B collaboration among the value chain partners and the infrastructure is unable to accommodate these requirements in time, the new model will invariably fail.   It is necessary to deal with complex software architectures if companies want to be able to respond quickly to changing business needs. Enterprise Service Oriented Architecture (ESOA) offers a solution, facilitating system and application integration across a heterogeneous IT environment. With ESOA, company’s application assets get transformed into services such as “Check Customer Credit” or “Create Sales Order” – that can be flexibly combined, configured and reused to address changing business needs.   With ESOA you can separate automated processes from any specific application infrastructure or hardware platform creating enormous business flexibility, allowing you to evolve systems without having to “rip and replace” hardware or software. So you can change your infrastructure quickly and as often as business model innovation demands.
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