Tuesday, March 22, 2011

Systems of Engagement and Indirect Value

I've just been reading Geoffrey Moore's new white paper Systems of Engagement and The Future of Enterprise IT : A Sea Change in Enterprise IT (AIIM 2011). He calls out a major shift of emphasis in IT, from what he calls Systems of Record (focused on transactions) to Systems of Engagement (focused on interactions). See also presentation by John Mancini and commentary by Jacob Morgan and James Taylor.

Why is this shift necessary? According to Moore, it is because most organizations are dependent upon suppliers or distributors or partners to deliver their fundamental value proposition to their customers. Which means that the new communication and collaboration systems are essential competitive tools. Grab onto them, says Moore, or you will simply end up as roadkill.

(Of course, these challenges aren't just for commercial organizations. Public sector organizations are under just as much pressure to deliver value, even if this pressure is transmitted politically rather than commercially.)

Moore identifies five steps for the CIO to develop systems of engagement for B2B enterprises.

  • Make meetings work better across time zones.
  • Address complex issues collaboratively.
  • Keep collaborators connected for faster decision making.
  • Mine community content to extract insights to enhance the business.
  • View collaboration and social systems in context.

And five steps for B2C enterprises. Note the strong emphasis on social media.
  • Use social media to attract and hold consumer attention. 
  • Use social media to extend and improve customer service. 
  • Use social media to develop deeper brand relationships and consumer insights. 
  • Integrate social media with systems of record to provide a better end user experience.
  • Mine metadata to personalize offers for greater relevance and conversion.
I think these lists leave out lots of important issues, but they are a fair start. Clearly, a shift of emphasis from transaction to interaction raises some important questions for the whole enterprise, not just the IT department, which will trigger wide-ranging changes to business operations and governance (from command and control to collaboration).

In his "Confused of Calcutta" blog, JP Rangaswami (now with Salesforce) talks about how Systems of Engagement need to deal with Jyri Engeström's concept of social objects, and explores some of the architectural implications of the granularity of these social objects within the enterprise. (JP also puts in a plug for the Salesforce Chatter platform, which I plan to look at in more detail soon.)

But Moore's thesis about Systems of Engagement only provides part of the story. To take this thinking further, we need to look not just at more collaborative ways of delivering value to customers, but also at the ways in which that value is indirectly experienced by the customers and by the customers' customers and so on. In his paper Creating Value in Ecosystems (December 2010), my friend and associate Philip Boxer argues that "for a supplier to sustain its identity within a dynamic environment ...  it needs to change the way it understands how it creates value, in order to include the indirect forms of value it creates within the larger ecosystem".

Similar ideas have been emerging from the Harvard Business School. In their piece on Shared Value, Michael Porter and Mark Kramer complain about companies "trapped in an outdated approach to value creation", which "view value creation narrowly, optimizing short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their longer-term success". Porter and Kramer believe that the principle of shared value "involves creating economic value in a way that also creates value for society by addressing its needs and challenges" and argue that markets are defined by societal needs, not just conventional economic needs.

Given that organizations must deliver indirect value as well as direct value, the required systems of engagement will take the form of an agile sociotechnical platform to support collaborative composition of value-creating activity. That's a bit of a mouthful, so I'll try and explain it in a future post. Or you could come to my workshop.

See also

 book now  Workshop: Managing Complexity Using Enterprise Architecture (April 13th, 2011)
 book now  Workshop: Organizational Intelligence (April 14th, 2011)

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