Creating IT that enables online business strategies

2020-12-15

Jarmo Suoranta

Jarmo Suoranta
CEO

Digital transformation has been a megatrend for a while. Yet, based on Mackinsey’s 2017 study, on average, industries are less than 40% digitized. Covid-19 has accelerated the pace and increased companies’ investments towards becoming truly digital. By reimagining ways to deliver products and services, companies can improve their top line as well as their bottom line.

If you work as a CTO or in a similar technical key role, I believe one of your main tasks is to support business and implement strategy in practice. Strategies of course vary from company to company. On the high level, there are two types of strategies:

1) Delivering better or more efficiently than the market
2) Doing something new, unique or different

In many cases today, the strategy focuses on online-based business models. When I say online-based business models, I mean e.g. subscription billing services and end-to-end automated self-service patterns for customers. If the IT team has previously been a supporting function, now it’s at the core of the action.

In our discussions with CTO’s, CDO’s and CIO’s, we talk about the questions that these roles need to answer revolving around how IT can meet the needs of these new online strategies. We can roughly divide those questions under the two categories of strategies I described above.

Delivering better or more efficiently than the market

How much of our business process can/should be automated? Should we automate more?

New services can be tested with manual back-office work but if the idea flies, you have to automate most of the work. The best organisations have hyper-automated all their processes, and can serve tens of thousands customers with only a few employees. The level of automation that can be achieved depends on your business. The first step would be to get a clear view of the business processes and identify the manual steps.

“The best organisations have hyper-automated all their processes, and can serve tens of thousands customers with only a few employees.”

Where are our bottlenecks for scaling? Is it our IT, or something else?

It’s not acceptable if your customers meet mainly Request Timeout responses. If your IT doesn’t scale for loads, it will most definitely become a bottleneck for scaling. But the bottlenecks can also be elsewhere: personnel, back office processes, manual steps, or something different. The “starting level” is to ensure that the IT can handle business scaling up. The next question is, how much of the business processes can be automated, and how to ensure the IT infrastructure enables automated processes?

The nice thing about it is that the benefits of automation grow as the business scales or during transformation, for big and small companies alike. Once you’re on this road, it’s a gift that keeps on giving.

How can we differentiate from competitors who are selling the same thing and serve customers better? How can we drive users from impression to order and increase conversion?

Answering these questions starts from looking at your user experience. State-of-the-art eCommerce platforms, like WooCommerce, Shopify, or Magento, offer good enough user experience for many use cases. But if you really want to differentiate, you have to put efforts into UX design and have capability to build fully custom-made user interfaces. When building self-serving patterns, you have to remove all the obstacles from buying. The hygiene level is no longer enough.

How can we follow the impact of our development projects? How do I provide business with visibility in metrics that are relevant and understandable?

If your business models rely heavily on marketing, inbound and self-service, it’s critical to know where potential customers might flee. Having real-time and historical visibility of your processes makes the difference.

How do we build something that’s maintainable and time-proof?

In the longer run, maintaining costs might eat away all benefits gained building the IT that enables all previous points. You have to be careful not to use too much bubblegum and duct tape.

Doing something new, unique or different

How can we ensure our infrastructure is flexible enough to allow new products, services and business models?

Too often companies come across this problem that business wants to innovate but the IT systems are too inflexible to allow it. Let’s take an example from the electricity sales business. Let’s say, up until now, you’ve sold electricity based on consumption, billed afterwards. Our observation has been that IT architectures and systems have been built around these kinds of traditional business models with traditional invoicing methods. Often, systems are also bound to the domain.

Now, let’s say your company wanted to sell additional services, like charging stations with monthly subscription price. Does your IT setup allow the flexibility to shape these kinds of new products and services with monthly billing from customers’ credit cards? If you’re a company selling electricity and using an ERP of the electricity sales domain, it might be nearly impossible to model any other products and service models in your system. IT becomes the blocker for innovating new services and developing the online business.

The recipe for fully automated, self-service online business

My colleague and I had a session where we drafted the recipe of a modern subscription based online service, which is (at least mostly) automated. You need:

  • Strong authentication, e.g. TUPAS in Finland
  • Credibility checking
  • Possibility to accept credit card payments
  • Smooth UX
  • Product and billing management solution that enables subscription based services

Now you can tick the boxes – how many of these can you enable? If all, wow! If none, it may be that you’re in a luxurious position where you get to start from scratch. In most of the cases when we talk about established companies, there’s at least some existing infrastructure where you have to integrate. In either case, from scratch or integrating to existing infrastructure, remember to add the secret ingredient as well.

The secret ingredient

To really meet requirements of online based business strategies and to be sure the questions above don’t slow you down, you need the secret ingredient. It’s Process Automation (PA), such as Camunda. Using a Process Automation platform means you model your process workflows. These models are also executables – you can really execute the same models.

Having Process Automation as a backbone has multiple benefits. Low-coding is one of them, but only one. Let’s mention a few more, but not comprehensively all: PA ensures full realtime and historical view of your process, as well as an interface to manage exceptions in processes. Isolating the process to its own layer helps integrations between components of the IT architecture. Basically, PA binds all the needed pieces together, both new services as well as what we can use from the existing stack (authentications, payments, UX-rock-star webshops, credibility check, etc). Also, you can develop and maintain your IT infrastructure part by part, without compromising business processes. Last but not least: with the PA approach, you’ll get a visual discussion interface between IT and the business side. No more misunderstandings and delays – the focus can be in fast and continuous development.

Product and service models

I won’t dive into authentication, credibility checks, and credit card payments. In most cases, these are services provided by third parties via APIs. One thing to consider is where to model your product and service configurations. Like mentioned above, many ERP and similar products are domain specific. It means you must follow existing patterns when formulating your products, without the capability to shape whatever innovative service you could think of.

Our recommendation is really to think whether you want to take the same route as all of your competitors or see domain-independent solutions. Even if you have your existing products modelled to some system, like an existing ERP, you can have a separate platform for new services. Remember, you have the secret ingredient, and you don’t need to use duct tape. There’s multiple domain-independent solutions. For example, if you plan to build heavier load subscription based business models, the order-to-revenue platform Zuora has often been our weapon of choice.

Jarmo is a digi-savvy CEO with a passion to shape business with better use of technology. He has 20 years’ experience from different domains and business sizes, private and public, and working with systems like ERP, Asset Management and Tracking, Reporting and Location Analytics.

If you’d like to have a chat about digitalising your business processes, please book an appointment in Jarmo’s calendar through this link:

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