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BOARDROOM DILEMMA - RISKS in a Digital enabled & Integrated business - Marketplaces, SaaS, P/IaaS

  • Feb 27, 2020
  • 5 min read


Marketplaces: Marketplaces result in a change in your business model. Internet access available at lower costs and extended reach enabled the creation of a new way of commerce, eCommerce. This evolved to B2B and B2C. The old-world digital marketplaces were about the ability to showcase your products, sell your products, invoice, receive payment and seek up-sell and cross-sell more of your own products to generate more revenues from the account. You would either have your own Marketplace or co-habit with others on a public B2B, B2B2B, B2B2C marketplaces. The current day marketplaces are getting more sophisticated. It is also about the ability to collaborative selling with partners with extended reach leading to creation of X2X2X. It is also about sharing data and buy-back analytics to help your business or help your customers’ businesses. New business models have evolved which has led to Platform-led businesses and the actual creators of products, the traditional enterprises, substantially disintermediated from the end customers. There are the risks of missing out on the opportunities but also impact of new-age threats. Does this apply for your industry? If so, what are they?


Usage of SaaS, PaaS and Cloud computing will likely effect change in your business model but almost certainly, result in changes in your business execution. SaaS has begun to replace many traditional ERP and back-office business process execution systems. Many SaaS products offer an ease of configure-to-use and ready-to-consume capabilities compared to the traditional long-drawn ERP implementation process to help your business units execute business processes efficiently. There are many examples of Software as a Service as a part of Cloud computing extending from personal use to corporate use. One of the early examples are Email and Messaging services much before corporates were able to buy, implement and use their own software within their data centres. SaaS has now extended to Marketing, CRM (Customer Relationship Management), Contracting & Procurement, HR & Payroll, Finance, Audit, Projects and every type of traditional Enterprise management system including manufacturing, logistics, distribution and what have you. Platform as a Service integration of business services with customers, partners and suppliers. Infrastructure as a Service (IaaS) is available to those who want to just take compute, memory and storage capacity from the cloud and believe that their existing legacy business applications are good enough. Cloud computing provides advanced capabilities and capacity that are continuously upgraded with ever more sophisticated features and security without or less interruption to business, which cannot be matched by in-house systems.


What are the risks of missing out on the opportunity to your business?


Marketplaces. Higher traditional marketing costs, higher cost of sales, loss of market visibility, loss of market-share, reduced revenue growth, buyer inability to compare, greater competitive capabilities when products and service quality is great, poor buying experience. You would also miss out any in-line machine learning analytics that these systems offer.


SaaS, PaaS, IaaS. You lose the opportunity to capitalise on in-line business process improvement capabilities that are available from SaaS providers. Your business may not be competitive. Your business ability to generate higher shareholder value becomes limited. Your business may not be able to respond to customers, partners and suppliers at the same speed as your more sophisticated competitors can engage. For example, in the traditional model, you would have either a continuous business process improvement team or a six sigma (lean) team who would iterate improvements initiatives, establish requirements and then ask your IT teams to deliver. Even when executed in an agile model, these improvements are typically undertaken in the next financial year following a budget approval cycle. In the new world, SaaS providers continuously stream in the improvements. They are available to your business. You just start using it – when it is free. The business process improvements team only must think of those that are unique to your business. Some of the SaaS providers also offer advanced analytics and machine learning based intuitive insights all part of the package. You can leverage these to begin with if you are not already on the journey of exploiting Data Analytics. Your Analytics and Insights team only must work on the really challenging ones. These providers also have learnt from security requirements across many industries and this tightened cybersecurity is available to your business. Your IT department can elevate itself to be able to focus on the new challenges of federated systems.


What are the risks of taking on Digital marketplaces for your business?


Investments on continuous product and services capability improvement, impact of publicly available feedback on quality if poor, cultural change to manage from seller-driven market to buyer-driven market, higher sales volume not matched by production capabilities if digital transformation is a silo’ed effort. The biggest risks in the X2X2X marketplaces is data protection ownership and data exchange traceability.


What are the risks of adopting SaaS, PaaS and IaaS cloud computing?


Not all of the business capabilities relevant to your business are available on the cloud – whether it is SaaS, PaaS or IaaS. More often than not, most of the capabilities that are offered are traditional business processes that are digitised however added functionalities that are made available to you as and when they are ready. You will still need to have many systems continue within your enterprise and you have to therefore plan for a hybrid of multi-cloud and traditional systems but with seamless and secure connectivity with each other. Are the added capabilities free? What are the costs of added capabilities and how does it change the Total Cost of Ownership (TCO)? Are your buying decisions influenced by an attractive Total Cost of Acquisition (TCA) and instead are the TCO greater? Are the costs transparent? Are the service performance metrics transparent? Are security breaches and actions taken transparent? How are Identity and authentication mechanisms secured in a federated, multi-cloud scenario? What is the ease of consumption of the added capabilities? What is the cultural change within the business units and IT to adapt towards the continuous transformative capabilities’ adoption? How effective are the inline machine learning and analytics available? Does it give your business a head-start to effectively disrupt the digital disruptor? Are your business units ready to engage your customers, partners and suppliers differently using the new systems of engagements and the insights available through these SaaS systems? Are your business units ready to work to work at speed in the age of API-led X2X integration? Are the systems secure? Are you able to secure ownership of data? Are you able to establish data traceability? Is your compliance posture enhanced?

These are indicative risks – opportunities and threats – and not meant to be exhaustive. Benefits are far more since they enable your organisation to execute business processes efficiently to deliver a better customer experience, partner experience and supply chain optimisation.


 
 
 

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