CEO and Service Orientated Architecture

EXECUTIVE SUMMARY

This article discusses what is Service Orientated Architecture (SOA), how it is used, what are its benefits and what are the challenges when adopting it for your organization. It explores the business and technology perspectives of where SOA can be applied internally and externally by showing the following benefits of SOA to your organization:

  • Enhanced Operational Insights
  • Increased Business Agility
  • Better Customer Experience
  • Reduced Technology Costs
  • Creation of New Business Models

Keeping the benefits in mind, your organization has to also assess the following challenges that SOA brings for your organization:

In a nutshell, SOA is a framework that allows business processes to be highlighted to deliver Information Technology (IT) interoperability and rapid delivery of application functionality. A successful adoption of SOA would result in enhanced alignment between Business and IT. So, while there are challenges to overcome by your organization but overcoming these challenges would make your organization aligned from top to bottom and across people, processes and technologies.

1. WHAT IS SOA?

1.1. What is a Service?

In order to understand SOA, lets first explore the concept of a ‘service’. Depending upon the context, Merriam-Webster defines a service in 11 different ways. These include a service being “the occupation or function of serving”, “the work performed by one that serves” to many other religious, military, public utilities and organizational definitions (“Service.” Merriam-Webster. Merriam-Webster, n.d. Web.). In economics and marketing, a service is the exchange of non-material equivalent of a good.

In organizations, a service can have business contexts and technological contexts. From a business context, a service can be activities that are performed inside the organization (e.g., Accounts Receivables), outsourced to another organization (e.g., Payroll Processing) and performed for the internal or external customers (e.g., Helpdesk Support). From a technological context, a service can be provided within an operating system (e.g., Windows EventLog), for software (e.g., log service) and where a user exchanges messages with a program to interact with it.

1.2. What is Service-Orientation and Service-Orientated Architecture?

Now that you have an understanding of what a service is, lets define what is service-orientation and what is service-orientated architecture. Microsoft defines SOA to be “a design philosophy independent of any vendor, product, technology or industry trend” (Linthicum, David. “Chapter 1: Service Oriented Architecture (SOA).” Chapter 1: Service Oriented Architecture (SOA). Microsoft, n.d. Web.). Oracle on the other hand says SOA “provides a unified approach with a single interface for all of your current and future integration requirements” (“Oracle SOA – Service-Oriented Architecture.” Service Oriented Architecture. Oracle, n.d. Web.)

In light of the varying definitions from vendors and practioners, a working group was established in 2009 to remove the confusion. This working group had a mix of practioners and vendors and came up with the SOA Manifesto that states “service-orientation is a paradigm that frames what you do” and that “SOA is a type of architecture that results from applying service-orientation” This group also prioritized SOA as a business initiative rather than a technological initiative and thus states the importance of (1) business value over technical strategy, (2) strategic goals over project-specific benefits, (3) intrinsic interoperabilityover custom integration, (4) shared services over specific-purpose implementations, (5) flexibility over optimization and (6) evolutionary refinement over pursuit of initial refinement. (Erl, Thomas et al. “SOA Manifesto.” SOA Manifesto. N.p., Oct. 2009. Web.)

As you can see, SOA is an organizational journey that spans across business and technology. From a business perspective, business objectives drive the integration of applications within the organization and between business partners. From a technological perspective, integration of applications is modeled using loosely coupled services that can be combined and orchestrated to achieve business objectives. Thus, you can say that SOA is a framework that allows business processes to be highlighted to deliver interoperability and rapid delivery of functionality.

1.3. How does SOA work?

In SOA, you have three roles that include the Service Provider, the Service Requester and the Service Registry. The Service Provider role (1) describes what the service does, (2) deploys the service over the network and (3) publishes service in a service registry. The Service Requester role (1) finds service in a service registry and (2) uses the service description to invoke the service. The Service Registry advertises the availability of a service that is published by the Service Provider. The interaction between Service Provider, Service Requester and Service Registry is shown below:

Business Objectives and SOA

From the above figure, you can see that business objectives are the drivers for SOA within an organization. While the main idea behind SOA is the reuse of generalized software components modeled as services, but due to its ability to encourage collaboration between business and IT, it can create alignment and can help the organization respond to the rapidly changing business environments.

2. WHAT ARE THE BENEFITS OF SOA?

In order to understand how SOA can help your organization, you have to explore some of its benefits and how other organizations were able to use SOA for their strategic advantage. Following are some of the benefits of SOA:

2.1 Enhanced Operational Insights:

It is often observed in organizations that the left hand is unaware of what the right hand is doing. This type of disconnects cause organizational silos where the approach to developing business processes and the technologies that support it have a very narrow focus. Due to this, the business processes and technologies are tightly coupled with the functional needs at the time when they were created. While this gets the job done for a particular functional need but now if you multiple this scenario across the entire organization and its various functions then you start to see a spaghetti of business processes and its enabling technologies (“Why Enterprise Architecture?” YouTube. Mastering ArchiMate, 19 Apr. 2013.)

The ‘spaghetti architecture’ can result in duplicative business processes and technologies across different organizational divisions. These business processes and enabling technologies are rarely documented which increases the risk of costly mistakes when these business processes change and when the underlying technologies that support these business processes become outdated. In spaghetti architecture, there is also rarely any thought put into the future needs of the organization as whole, this can also result in using technologies that might become obsolete for future needs.

SOA addresses the spaghetti architecture head-on by creating operational insights into the different organizational processes of the organization. Since the main driver of SOA is business objectives that encompass business processes, your organization can start to view the various unique, duplicative and interdependent business processes holistically across the entire company. This holistic view gives your organization the ability to see which business processes can be completely eliminated, which ones can be combined and which ones can be used to make rapid decisions. An example of an organization that used SOA to address its spaghetti architecture is FedEx, a $32 billion multinational organization. By overhauling FedEx’s entire spaghetti architecture to SOA, within 3 years it was able to better manage acquisitions and process changes (Ganesan, Suresh et al. “What Business Executives Must Know About SOA.” Cognizant White Paper (2007): n. pag. Bloom Group, 2007. b.)

2.2 Increased Business Agility:

In today’s competitive business environment, business agility is the ‘holy grail’ that organizations strive to achieve. This business agility can entail many things and can range from bringing a product/solution quicker to the market to providing efficient troubleshooting support for customers. This also implies that business agility is a moving target and can be achieved partially and holistically depending upon the business objectives. The underlying thought behind business agility is the idea of continuous improvement to get better and better at what the organization does.

As your organization looks to be agile, SOA provides the foundation to do this. Due to operational insights and an understanding of the shared services within your organization, SOA can help accelerate what you are trying to achieve. An example of an organization that used SOA to become agile was Wachovia Bank. Using SOA, Wachovia was able to promote a product engineering mentality and make IT an advisor to the business (Ganesan, Suresh et al. “What Business Executives Must Know About SOA.” Cognizant White Paper (2007): n. pag. Bloom Group, 2007. Web.). In 2008, Wells Fargo bought Wachovia for $15.4 billion and when in 2014 Wells Fargo became the highest earning bank in the United States, its CEO gave credit to their smooth acquisition of Wachovia due their cultural similarities (Raice, Shayndi. “As Wells Fargo Hits Profit Milestone, CEO Gives Credit to Wachovia.” MoneyBeat RSS. The Wall Street Journal, 14 Jan. 2014. Web.). You can extrapolate that Wachovia’s SOA might also have been a factor in the smooth acquisition since most acquisitions fail due to cultural and technological differences.

2.3 Better Customer Experience:

If customer is king, then customer experience must be the only priority. Traditionally, organizations have considered customer experience to be the point of transaction when a purchase is made. But a more holistic view of customer experience entails the pre-sales and post-sale processes as well. Due to the many touch points (e.g., physical, website, mobile, social media etc.) of the customers with business; customer experience is not a point of transaction anymore. Forrester® goes on to say that in today’s era of empowered and always connected customers, organizations need customers more than the customers need organizations. [9] Forrester® goes on and talks about creating a “customer experience ecosystem” that entails the people, processes, policies and technologies. (Fenwick, Nigel. “Nigel Fenwick’s Blog.” Why Customer Experience Will Become The #1 CIO Priority. Forrester Research, 27 June 2013. Web.)

When you talk about customers, you have to take into account both the internal customers and the external customers. The ease by which internal customers can provide customized and quick services to external customers can increase productivity and improve the bottom line for your organization. An example of an organization where SOA was used to improve customer experience was The Hartfort Group, a $26 billion organization. By implementing SOA, The Hartfort Group was able to enable its agents to create, assemble and complete transactions with the external customers (Ganesan, Suresh et al., “What Business Executives Must Know About SOA”).

2.4 Reduced Technology Costs:

As discussed earlier, “spaghetti architecture” can prove to be costly to the organization due to duplicative business processes and the underlying technologies. These costs can quickly add up and start to affect the bottom line of your organization. On the flip side, since SOA allows reuse of services across many functional domains, this can free up money for other endeavors that your organization might be interested in pursuing. An example of this would be Starwood Hotels who are on their way to saving $20 million per year simply by moving from tightly coupled mainframe applications to loosely coupled SOA services (Ganesan, Suresh et al. “What Business Executives Must Know About SOA.” Cognizant White Paper (2007): n. pag. Bloom Group, 2007. Web.).

2.5 Creation of New Business Models:

In today’s competitive business landscape, organizations are continuously looking for ways to differentiate themselves from their competitors. This differentiation can also come in the form of determining new business models enabled by SOA services that would not have been possible in the past. Due to SOA, your organization can look across the various services and make intelligent decisions on what services can be combined to create additional value for the customer that in turn can increase the bottom line. An example of where SOA is best used and enforced is that of Amazon, a $74 billion online retailer (“Amazon Booms in 2013 With $74.45 Billion in Revenue.” Digital Book World. Digital Book World, 30 Jan. 2013. Web.). In 2002, Jeff Bezos of Amazon issued a mandate that stated, “All teams will henceforth expose their data and functionality through service interfaces” and “anyone who doesn’t do this will be fired” “The Secret to Amazons Success Internal APIs.” The Secret to Amazons Success Internal APIs. API Evangelist, 12 Jan. 2012. Web.). Bezos’s commitment to SOA and betting the entire future of the company speaks volumes about what SOA can do for an organization.

3. WHAT ARE THE CHALLENGES OF SOA?

So, while SOA provides great promise for your organization, it is by no means a panacea. Thus, you have to also carefully assess the following challenges that SOA brings to your organization:

3.1. Governance & Organizational Maturity:

Governance in a way is the policy of how things ought be done. It provides a framework in which business processes can operate under regulatory, time and other constraints. Thus, governance is an organizational responsibility even for SOA and not only an IT activity. In order to accomplish this, your organization should setup a governance board that consists of a cross-functional team from both business and IT. Additionally, governance should not only include the overall organization and management of SOA activities but also creation of success and failure measurements. These measurements should be used to actually determine the state of SOA within your organization instead of people doing vaporware measurements that have no grounds in reality.

3.2 Not Only an IT thing:

If the burden of implementing SOA across your entire organization is on IT then it takes away the business-side’s responsibility and involvement. While IT is responsible for creating SOA services but business has to work collaboratively with IT to define what those services are. Additionally, the business-side has to understand how did the current state of misalignment between business and IT came into being and how this can be avoided in the future. Thus, SOA is not an IT issue but an organizational endeavor that affects all parts of your organization.

3.3. Organizational Processes Need Reevaluation:

While the presence of too many point-to-point integrations in your organization can reduce your ability to be agile but there is a bigger perspective that you also have to consider. This perspective revolves around your organizational processes that led to misalignment in the first place. These organizational processes not only entail IT but also the business-side. Typically, IT does what business asks but then there has to be some mutual understanding that the requests for services have to be understood holistically. Even after SOA migrations, if your organizational processes are not optimized they might still result in ad-hoc requests from the business leading back to point-to-point tightly couple services that you try to avoid in SOA.

3.4. Long-Term View of Legacy Systems is Needed:

In the short term, it may seem like a good idea to not replace your organizational legacy systems but in the long term there are issues when you do this. These issues entail the constant “patching” to upgrade underlying hardware and software in addition to overburdening legacy systems where new services are being added on top of systems that should be replaced rather than being continued to extend their life. While it may not be possible to replace legacy systems altogether but you should have a plan to retire these systems with new systems eventually.

3.5. No Measurement Means No ROI:

If your organization does not measure pre-SOA activities then how would you know if what SOA promised for your organization is what you really wanted to achieve. So, since SOA often requires long-term commitment from both business and IT, you have to develop performance metrics upfront before you embark on your journey towards SOA-fication.

4. CONCLUSION

Due to your organization’s desire to compete in today’s competitive business landscape, you have to carefully weigh the benefits of SOA’s value in terms of operational efficiencies and organizational improvements. Based on the information provided above, using SOA will help your organization have enhanced operational insights which can increase your organization’s agility to provide better customer experiences, reduce technology costs and explore new business models. Also, you need to keep in mind that SOA presents the challenges of honestly looking at yourselves in terms of maturity and business-IT collaboration by having a long-term view of what you want your systems to accomplish and how you measure what success looks like. Consequently, if you lack foresight into how SOA can be used as a business transformation effort then your desire to be the best would just be a pipedream.

References:

  1. “Service.” Merriam-Webster. Merriam-Webster, n.d. Web. <http://www.merriam-webster.com/dictionary/service&gt;.
  2. Linthicum, David. “Chapter 1: Service Oriented Architecture (SOA).” Chapter 1: Service Oriented Architecture (SOA). Microsoft, n.d. Web. <http://msdn.microsoft.com/en-us/library/bb833022.aspx&gt;.
  3. “Oracle SOA – Service-Oriented Architecture.” Service Oriented Architecture. Oracle, n.d. Web. <http://www.oracle.com/ca-en/products/middleware/soa/overview/index.html&gt;.
  4. Erl, Thomas et al. “SOA Manifesto.” SOA Manifesto. N.p., Oct. 2009. Web. <http://www.soa-manifesto.org/&gt;.
  5. “Why Enterprise Architecture?” YouTube. Mastering ArchiMate, 19 Apr. 2013. Web. <http://www.youtube.com/watch?v=qDI2oF1bASk&gt;.
  6. Ganesan, Suresh et al. “What Business Executives Must Know About SOA.” Cognizant White Paper (2007): n. pag. Bloom Group, 2007. Web. <http://bloomgroup.com/sites/all/files/Cognizant%20SOA%20paper.pdf&gt;.
  7. Raice, Shayndi. “As Wells Fargo Hits Profit Milestone, CEO Gives Credit to Wachovia.” MoneyBeat RSS. The Wall Street Journal, 14 Jan. 2014. Web. <http://blogs.wsj.com/moneybeat/2014/01/14/as-wells-fargo-hits-profit-milestone-ceo-gives-credit-to-wachovia/&gt;.
  8. Fenwick, Nigel. “Nigel Fenwick’s Blog.” Why Customer Experience Will Become The #1 CIO Priority. Forrester Research, 27 June 2013. Web. <http://blogs.forrester.com/nigel_fenwick/13-06-27-why_customer_experience_will_become_the_1_cio_priority&gt;.
  9. “Amazon Booms in 2013 With $74.45 Billion in Revenue.” Digital Book World. Digital Book World, 30 Jan. 2013. Web. <http://www.digitalbookworld.com/2014/amazon-booms-in-2013-with-74-45-billion-in-revenue/&gt;.
  10. “The Secret to Amazon’s Success Internal APIs.” The Secret to Amazon’s Success Internal APIs. API Evangelist, 12 Jan. 2012. Web. <http://apievangelist.com/2012/01/12/the-secret-to-amazons-success-internal-apis/&gt;.

 

Future Considerations for Hewlett Packard Enterprise

A year ago Hewlett Packard (HP) decided that it was going to split into two companies. This decision became real last week when HP officially split into HP Inc. and Hewlett Packard Enterprise (HPE) as announced by Meg Whitman on her LinkedIn post. The main reason given for this split was focus. HP Inc. would focus on selling consumer products such as personal computer and printers. HPE would focus on selling enterprise products, enterprise software and enterprise services such as cloud computing, big data, cyber security to improve operations.

It seems that on the surface the announcement of the split of HP into HP Inc. and HPE has received a mix bag of optimism and skepticism from different corners of the tech industry. On the optimistic side, this is a good move since it would help these companies focus on their core competencies and provide focused customer service and client experience. On the skeptical side, this is a little too late since the tech industry has been moving from merely selling computer products to selling more technology software and services for at least 20 years.

If we observe the tech industry from a modern economics lens we would find that this split is not something that is novel but it is very predictable. From a modern economics lens, the ‘primary sector’ for the tech industry focused on hardware and products, the ‘secondary sector’ for the tech industry focused on software and the ‘tertiary sector’ for the tech industry focuses on technology services. What is interesting is that this split lets HP Inc. focus on the ‘primary tech sector’ for consumers while HPE focuses on both the ‘secondary tech sector’ and the ‘tertiary tech sector’ simultaneously for enterprises. Eventually though, HPE would increase their focus on the ‘tertiary tech sector’ since the margins are much better in services as compared to just products and software. In order for HPE to become a bigger player in the services market, they should consider the following:

Currently

In the Future

Who is leading the services division?

 

Who should be leading the services division?
What processes are being followed to provide services? What processes should be followed to provide services?
Where mix of tech and non-tech services are being provided? Where mix of tech and non-tech services should be provided?
When are services bundled with hardware and software? When should services be bundled with hardware and software?
Why standalone services are provided? Why should standalone services be provided?

HPE leadership has to realize that any organizational splits are not without consequences. These consequences could entail: (1) Stocks becoming more volatile as any budget cuts with client enterprises could affect the bottom line, (2) Competitors might be able to provide same level of service at a cheaper cost with better client experiences and (3) Lack of optimized processes with no flexibility to adjust for enterprise clients needs could reduce overall reputation of HPE.

One of the ways to address the above mentioned split issues would be to create independent mock enterprise client teams that would rate how easy or difficult it was to deal with HPE in light of changing economic conditions, client experiences and efficient and effective processes. These independent mock enterprise client teams would be used to further refine HPE and put itself in the shoes of its enterprise clients.

Organizational Changes - HPE

Future Considerations for Alphabet Inc.

A couple of weeks ago Alphabet Inc. emerged as a parent holding company of Google as announced by Larry Page on Google’s blog. The two main reasons given for this move is to make the company cleaner and more accountable. By cleaner, it means that products that are not related to each other would become separate wholly owned subsidiaries of Alphabet Inc. which includes Google, Calico, X Lab, Ventures and Capital, Fiber and Nest Labs. By becoming more accountable, it means that leaders of these wholly owned subsidies would be held to even higher standards and accountability of where money is and should be spent. This move would help Wall Street understand that Alphabet is willing and structurally capable of going into areas that are unrelated.

It seems that on the surface the announcement of creating Alphabet Inc. has deemed to be a good move as many pundits and professors have pointed out ever since its emergence. The reasons of cleanliness and accountability are great for internal purposes. However, if we dig a little deeper we would find that there are external purposes that are at play here as well. Firstly, due to Alphabet Inc.’s cleaner approach, mergers and acquisitions of unrelated industries would become much easier and thus accountability of each wholly owned subsidiaries would be justifiable to Wall Street. Secondly, Alphabet Inc. would now be able to enter into industries or create new industries altogether. This move could mean that Alphabet Inc. could also be the next big 3D manufacturer of electronic equipment or even the next Big Bank that finally removes paper-based transactions. While both of these examples are interesting and achievable due to Alphabet Inc.’s deep pockets. In order for Alphabet Inc. to really disrupt or create new industries, strategic consideration should be taken into the following:

Currently

In the Future

Who is leading the organization(s)?

 

Who should lead the organization(s)?
What processes are being followed? What processes should be followed?
Where are products and services being deployed? Where products and services should be deployed?

 

When do people, process, technologies, products and services disrupt/create markets? When should people, process, technologies, products and services disrupt/create markets?
Why already bought companies make sense? Why companies should be bought?

Alphabet Inc. leadership also has to realize that any organizational structural changes are not without consequences. These consequences could entail: (1) Stocks could become more volatile as even any slightly negative news concerning the wholly owned subsidiaries could affect Alphabet Inc. stocks, (2) Due to autonomy and fiefdom creation, collaboration across people, process, technologies, products and services among the wholly owned subsidiaries could be compromised and (3) There could be rise of duplicative functional teams (e.g., HR, Finance etc.) across all wholly owned subsidiaries thus taking resources away from core business pursuits.

One of the ways to address the above mentioned conglomerate issues would be to create a task force with enough teeth within Alphabet Inc., and cross-organizational teams across all wholly owned subsidiaries who can help find and remedy these issues. This task force and its teams could be similar to internal consultants whose lessons learned and methodologies could help Alphabet Inc. become more efficient and effective. Perhaps these practices could also open the door for Alphabet Inc. to dominate the Management Consulting industry as well.

Organizational Changes

Understanding and Applying Predictive Analytics

Executive Summary

This article proposes looking at Predictive Analytics from a conceptual standpoint before jumping into the technological execution considerations. For the implementation aspect, organizations need to assess the following keeping in mind the contextual variances:

Strategies

Tactics

Operations

  • Top Down
  • Bottom Up
  • Hybrid
  • Organizational Maturity
  • Change Management
  • Training
  • Practical Implications
  • Pros and Cons of Technology Infrastructure
  • Providing Enabling Tools to Users
  • Best Practices

Describing Predictive Analytics

Predictive Analytics is a branch of data mining that helps predict probabilities and trends. It is a broad term describing a variety of statistical and analytical techniques used to develop models that predict future events or behaviors. The form of these predictive models varies, depending on the behavior or event that they are predicting. Due to the massive amount of data organizations are collecting, they are turning towards Predictive Analytics to find patterns in this data that could be used to predict future trends. While no data is perfect in predicting what the future may hold there are certain areas where organizations are utilizing statistical techniques supported by information systems at strategic, tactical and operational levels to change their organizations. Some examples of where Predictive Analytics is leveraged include customer attrition, recruitment and supply chain management.

Gartner describes Predictive Analytics as any approach to data mining with four attributes:

  1. An emphasis on prediction (rather than description, classification or clustering)
  2. Rapid analysis measured in hours or days (rather than stereotypical months of traditional data mining)
  3. An emphasis on the business relevance of the resulting insights (no ivory tower analyses)
  4. An (increasing) emphasis on ease of use, thus making tools accessible to business users

The above description highlights some important aspects for organizations to consider namely:

  1. More focus on prediction rather than just information collection and organization. Sometimes in organizations it is observed that information collection becomes the end goal rather than using that information to make decisions.
  2. Timeliness is important otherwise organizations might be making decisions on information that is already obsolete.
  3. Understanding of the end goal is crucial by asking why Predictive Analytics is being pursued and what value it brings to the organization.
  4. Keeping in mind that if the tools are more accessible to business users then they would have a higher degree of appreciation of what Predictive Analytics could help them achieve.

Relationship of Predictive Analytics with Decision Support Systems or Business Intelligence

University of Pittsburg describes Decision Support Systems as interactive, computer-based systems that aid users in judgment and choice activities. They provide data storage and retrieval but enhance the traditional information access and retrieval functions with support for model building and model-based reasoning. They support framing, modeling and problem solving. While Business Intelligence according to Gartner is an umbrella term that includes the applications, infrastructure and tools, and best practices that enable access to and analysis of information to improve and optimize decisions and performance. These descriptions point to the fact that Decision Support Systems or Business Intelligence are used for decision making within organization.

Interestingly, it seems like Predictive Analytics is the underlying engine for Decision Support Systems or Business Intelligence. What this means is the predictive models that result in Predictive Analytics could be under the hood of Decision Support Systems or Business Intelligence. It should be noted that organizations should proceed with caution with regards to the Decision Support Systems or Business Intelligence since if the underlying assumption are incorrect in making the predictive models then the decision making tools would be more harmful then helpful. A balanced approach would be to create expert systems where Decision Support Systems or Business Intelligence is augmented by human judgment and the underlying models are checked and verified periodically.

Implementation Considerations for Predictive Analytics

As the descriptions above have indicated that the aim of Predictive Analytics is to recognize patterns and trends that can be utilized to transform the organization. This requires organizations to firstly educate themselves on what value they want and what can be derived from Predictive Analytics. Predictive Analytics is about business transformation and it needs to show what value it brings to the organization. In this regard, we have to assess people, processes and technologies of the organization in terms of current state (where the organization is right now) and future state (where the organization wants to be). Typically, this revolves around Strategies, Politics, Innovation, Culture and Execution (SPICE) as shown below.

SPICE Factors

SPICE Factors

The assessment of people for Predictive Analytics means to understand what users will be leveraging Predictive Analytics and if they understand that simply relying on Predictive Analytics is not enough but in order to have an effective system they need to be part of the system. This means that the analytics insights need to be augmented by human expertise to make intelligent decisions. The assessment of processes for Predictive Analytics entails looking at how organizations make decisions right now and how future decisions would be made if Predictive Analytics is put into place. This includes having appropriate governance structures in place. The assessment of technology entails looking at what technologies exist within the organization and if they could be leveraged for Predictive Analytics. If not then looking at what Predictive Analytics products are in the market that would work for the organization and are they flexible enough in case the underlying assumptions for the predictive models change and when predictive models become obsolete.

The advanced techniques mentioned in the book, Seven Methods for Transforming Corporate Data into Business Intelligence would be applicable to Predictive Analytics. These methods are:

  1. Data-driven decision support
  2. Genetic Algorithms
  3. Neural Networks
  4. Rule-Based Systems
  5. Fuzzy Logic
  6. Case-Based Reasoning
  7. Machine Learning

Technologies Used for Predictive Analytics

Gartner has been publishing their Magic Quadrant on Business Intelligence and Analytics Platforms since 2006. Due to the increased importance of Predictive Analytics in the marketplace, Gartner decided to create a separate Magic Quadrant for Advanced Analytics Platforms which focuses on Predictive Analytics and published its first version on February 2014. Since it is the first version of the Magic Quadrant, all vendors listed are new and no vendors were dropped.

 

Gartner's Magic Quadrant for Advanced Analytics Platforms

Gartner’s Magic Quadrant for Advanced Analytics Platforms

As we can see from this Magic Quadrant that it includes well-known vendors but also vendors that are not as big or as well-known. It is interesting to note that open-source vendors such as RapidMiner (a Chicago company) and Knime (a European company) are in the same Leaders Quadrant as well-established vendors such as SAS and IBM. While there are some issues with these open-source vendors as stated in the report but perhaps this Magic Quadrant is also an indication of where the next generation of analytics would come from. Due to the very nature of open-source, there are more opportunities for cheaper customization which would give the organizations the flexiblity to be as granular as they want to be. Ofcourse code stablity and lack of proper documentation are issues that organizations need to be cognizant about. Organizations may also want to “try out” these open source tools before they make a big commitment to propertary software to see if Predictive Analytics is something they want to invest heavily in.

Using Predictive Analytics in Specific Industries

There are many industries that utilize Predictive Analytics. The organizations in these industries either use Predictive Analytics to transform their business and/or to address certain areas that they would like to improve upon. Following is a list of some of the industries that utilize Predictive Analytics:

Industry How is Predictive Analytics used?
Retail
  • Customer Retention
  • Inventory Optimization
  • Low-Cost Promotions
Oil and Gas
  • Well and Field Asset Surveillance
  • Production Optimization
  • Equipment Reliability and Maintenance
Automotive
  • Adjust production schedules
  • Tweak marketing campaigns
  • Minimize Inventory
Food
  • Human Resources Allocation
  • Supply Chain Optimization
Healthcare
  • Electronic Health Records
Government
  • Nation-wide Blood Levels
Social Media
  • New Business Models

While there are many examples of industries that have embraced Predictive Analytics but there are other industries that have not fully accepted it as a new reality. These industries have many excuses for not considering Predictive Analytics but typically revolve around scope, quality, cost and fear of the known. However, the tide might be changing for these industries as well since industry bloggers are beginning to insist how Predictive Analytics could be leveraged for competitive advantages.

My Opinion

Predictive Analytics can come in handy in making organizations analytical and becoming a better version of themselves. However, Predictive Analytics can be a deal-breaker if organizations have attempted and failed in the past and for this very reason Predictive Analytics should start as a discussion first. This discussion should revolve around asking which areas need improvements and among other things determine if Predictive Analytics could be something that could help. After a successful Predictive Analytics initiative other areas could be potential candidates as well.

An important thing to note is that Predictive Analytics is an organization-wide initiative that has touch points across the organization and thus the maturity of the organization has to be seriously considered prior to going on a Predictive Analytics journey. No matter how good Predictive Analytics can be for the organization but if the organization is not mature enough and it does not have the right governance, processes and feedback mechanisms in place then it might turn out to be another attempt at glory but nothing to show for it.

References:

  1. Predictive Analytics for Dummies
  2. Seven Methods for Transforming Corporate Data Into Business Intelligence
  3. IBM Journal Paper on A Business Intelligence System by H.P. Luhn
  4. Gartner report (G00258011) Magic Quadrant for Advanced Analytics
  5. Gartner IT Glossary on Predictive Analytics
  6. Gartner IT Glossary on Business Intelligence
  7. SAP Predictive Analytics
  8. Decision Support Systems by Marek J. Druzdzel and Roger R. Flynn
  9. 5 Questions to Ask About Predictive Analytics
  10. 5 Factors for Business Transformation

3 Benefits and Challenges of Content Management Systems (CMS)

Content Management System (CMS) is a software system that helps to organize and facilitate collaboration of content. Some of the benefits and challenges that could arise from/during implementation and use of CMS are discussed below.

  • CMS Programmatics – In a CMS, content, display of content, content revisions, canned functionality, integration with other systems and security mechanisms can be manipulated programmatically. This means that organizations can set content display schedules, allow only a revision from certain people and even set the level of security for who has access to the content. However, this benefits comes with the following challenges:
    • Due to this programming aspect of CMS, technical experts are required to develop, update and maintain the CMS. Depending upon the complexity of the organization, this type of programming can prove to be costly to the organization.
    • CMS is susceptible to hackers who can programmatically manipulate content and content displays that can result in loss of organizational reputation and perhaps even customers.
  • Content Authorship – One of the benefits of a CMS is that users don’t have to worry about display of content since it is already predefined through templates and thus there is no knowledge or use of HTML required. However, content authorship can result in the following challenges:
    • Users are stuck with the presentation templates that have been created and do not have any flexibility in changing them easily.
    • If content authorship is centralized and it has to go through an approval process then this can create bottlenecks if approvals are not done in time.
    • If content authorship is distributed then how does the organization make sure that the content being created complies with organizational policies?
  • Training on CMS – The other benefit of CMS is that once it is created, people have to be potentially trained in only one system that is being used for content creation, distribution and collaboration. However, CMS has challenges when it comes to training especially when it is first being rolled out. These challenges include:
    • Since CMS is a system user have to be trained on how to create content that complies with the policies and procedures being used in the system. Depending upon the user base, this training can prove to be difficult if people are not willing to change their habits.
    • Ineffective and complex training can lead to a CMS no one is willing to use.
Content Management System

Content Management System

References:

  1. Boye, Janus. “Benefits and Challenges with a Consolidated Web CMS.” J. Boye. JBoye.com, 2 Mar. 2011. Web. http://jboye.com/blogpost/benefits-and-challenges-with-a-consolidated-web-cms/

How to select an Enterprise Architecture Framework?

EXECUTIVE SUMMARY:

This article provides in detail the elements of an Enterprise Architecture (EA) framework that would be selected and deployed at a fictional United States (US) Federal Government contractor called FedCon. FedCon is divided into 3 Business Units (BUs) that are focused on providing Management Consulting, Information Technology (IT) Consulting and Systems Integration (SI) Services in Healthcare, Environment and Finance.

This article analyzes FedCon in terms of Strategies, Politics, Innovation, Culture and Execution (SPICE) as shown below:

  Stakeholders Domains
Strategies CEO, COO and CIO Business-IT alignment
Politics BU SVPs, PMO and program/project managers Technology products and services
Innovation Employees directly interfacing with customers Technology products and services
Culture PMO, HR and Accounting/Finance Leverage the massive intellectual property
Execution All employees Organizational performance

Based on the above, it is determined that The Open Group Architecture Framework (TOGAF) would be the appropriate EA framework at FedCon since (1) it is supported by multiple vendor tools (2) it is constantly being improved upon and (3) it has an Architecture Development Methodology (ADM) which can be used as a guide.

ABOUT FEDCON:

FedCon is a fictional 30 year old large publically traded US Federal Government contractor that provides Management Consulting, IT Consulting and SI services to civilian agencies. It has over 5,000 employees nationwide and it is structured into three Business Units (BUs). Each BU has domain expertise in Healthcare, Finance or Environmental information systems. This structure allows the BUs to work directly with the civilian agencies based on their missions. Each BU has its own account/business development (BD) team that reports to the BU Senior Vice President (SVP). The Program/Project Managers report to the BU SVP and provide status updates on programs/projects to the corporate Program Management Office (PMO). The PMO conducts weekly meetings to provide guidance on corporate standards, compliance and general project templates.

Organizational Structure

Organizational Structure

PROBLEM STATEMENT:

Over the past couple of years FedCon has lost 20% of its business. The CEO has been under pressure by the shareholders to turn the company around. Thus, the CEO hired a management consulting firm to determine what were the pain points within FedCon that were preventing it from staying competitive in the marketplace. The management consulting firm’s report revealed that due to inefficient business processes and outdated technologies FedCon’s BUs were not able to collaborate efficiently to manage business and technology changes. Based on these findings in the report, the CEO mandated the Chief Operation Officer (COO) and Chief Information Officer (CIO) to work together to find areas that they can improve in the next 12 months.

ANALYSIS:

In order to address the CEO’s concerns, the COO and CIO came to the conclusion that in order to help FedCon create a disciplined approach to managing strategic intent and its execution they had to look into the field of Enterprise Architecture. Thus, the COO and CIO decided to standup an Enterprise Architecture Program Management Office (EAPMO) that would report directly to the CIO. Initially, the EAPMO is tasked with determining the high level criterions to select a framework. This task includes providing elements of the framework to be used and how the framework would be applied within FedCon..

In this article, we assess the feasibility of an EA framework that can be used in FedCon by making observations about Strategies, Politics, Innovation, Culture and Execution (SPICE) factors. These factors would focus on understanding the people, processes and technologies at FedCon to create an effective EAPMO.

 

SPICE Factors

SPICE Factors

Strategies at FedCon:

At FedCon, there are multiple levels of strategies that are developed. These strategies include: (1) the corporate strategy determined by the CEO, (2) the operational strategy determined by the CFO, COO and CIO, (3) the BU strategy determined by the BU SVPs and (4) the PMO strategy determined by the PMO office. This is shown below.

Multiple Corporate Strategies

Multiple Corporate Strategies

As we can see from the above figure, each strategy layer addresses different domains for the various stakeholders. Even though these strategies are developed to increase the bottom line and decrease costs, they are created in isolation. Additionally, since each BU is somewhat autonomous it can create technology products and solutions for the civilian agencies that overlap with corporate products and solutions. This is a problem since not leveraging the corporate assets where applicable for client delivery can result in program/project delays and duplicative systems.

The primary strategic concerns in choosing an EA framework are:

  1. Stakeholders – CEO, COO and CIO are the strategic stakeholders and the executive sponsors of the EAPMO.
  2. Domain – Strategically, FedCon is interested in alignment of business and IT operations and efficient processes.

FedCon has never stood up an EA practice and thus it would be wise to select an EA framework that could guide them in what to do and that it has been proven in the industry to be useful for organizations that are just starting out their EA journey. These high level strategic criterions are fulfilled by The Open Group Architecture Framework (TOGAF) that provides an Architecture Development Methodology (ADM) as a step-by-step guide and includes how to do stakeholder management.

Politics at FedCon:

Generally, when we talk about the politics in an organization we are referring to the negative connotations attached with it. But for our purposes we will define politics to mean the formal power or informal power of an individual or group within an organization. The power exhibited by these individual and groups can turn into obstacle or support to bring about organization-wide changes. In this sense, here we refer to formal power as the reporting structures while informal power refers to the influence yielded based upon size of the BU, revenue generated by BU, headcount of BU and close relationships of BU leadership with the executives.

At FedCon, even though the BU SVPs have the same title, they don’t have the same power. Taking this into account and the emphasis by the US Federal Government Executive Branch to focus on healthcare issues, the largest and most profitable among the FedCon’s BUs is the healthcare BU. Due to this reason the healthcare BU SVP has more informal power among its peers. This means that if the healthcare BU can be convinced of the merits of the EA practice then we can come one step closer to a FedCon-wide EA practice.

The primary political concerns in choosing an EA framework are:

  1. Stakeholders – BU SVPs, PMO and program/project managers are the political stakeholders. The BU SVPs have formal power to bring change within their respective BUs. The PMO is a well-established office and it has visibility into the various kinds of projects and has informal power by pushing down changes to the project level within different BUs. Lastly, the program/project managers within BUs are stakeholders as well since they have to indoctrinate their teams on how EA can be used as leverage when developing client technology products and services.
  2. Domain – Politically, agreement, collaboration and coordination across BUs and the corporate team seems to be the area of focus to rapidly bring technology products and services.

Due to the “friendly” competition among BUs to become bigger and yield more influence in FedCon, politics has to be carefully considered. Sometimes BUs are not willing to share if there are possible overlaps with what they are developing and what is already available in a different BU or at the corporate level. Convincing BUs to work together could be hard and caution has to be taken in which players to involve in development of the EA practice. Additionally, there has to be some sort of collaboration between the EAPMO and PMO for lessons learned and organizational improvements. These high level political criterions are also fulfilled by TOGAF where it recommends how Architecture Governance and Architecture Boards should be setup.

Innovation at FedCon:

Broadly speaking, innovation in organizations is disruptive, incremental or a combination of both. Disruptive innovation as described by the world-renowned management theorist Clay M. Christensen’s institute is such that it “transforms an existing market or sector by introducing simplicity, convenience, accessibility, and affordability where complication and high costs are the status quo.” This disruption can come in the form of unique business models, products and/or services that can give rise to new industries and improve existing industries. On the other end of the innovation spectrum, incremental innovation is where small changes are made to existing business models, products and services to improve existing industries.

Being a US Federal Government contractor, innovation at FedCon is mostly incremental since it tries to improve upon its existing products and services that are provided to the civilian agencies. FedCon accomplishes incremental innovation by obtaining customer feedback and assessing the competitive landscape. However, since BUs only focus on their own expertise, there are less opportunities for collaboration across BUs, which means technology products and services, are being developed without leveraging what already exists in the organization.

The primary innovation concerns in choosing an EA framework are:

  1. Stakeholders – FedCon employees that work directly with customers are the stakeholders that need to be considered since improvement of existing technology products and services are highly dependent upon customer feedback and conveying of the feedback to FedCon.
  2. Domain – In terms of innovation, FedCon is interested in creating technology products and services that meet customer expectations and exceed what the competition can offer.

EA is a disciplined approach to accomplishing enterprise objectives through alignment between business and IT. This disciplined approach can also be leveraged to make FedCon more competitive, which can result in bringing technology products and services quicker to the marketplace. This high-level innovation criterion also point towards using TOGAF since it is constantly being improved upon based on the feedback from technology vendors and solution providers.

Culture at FedCon:

The “father of modern management” Dr. Peter Drucker once said that, “Culture eats strategy for breakfast.” Culture can affect the ability of any organization to adopt or resist changes to the organization. While culture is typically considered a fuzzy attribute of an organization but there are tangible things that we can observe to decipher corporate culture which include (1) corporate values, (2) employee recognition and risk taking, (3) salaries, commission and hourly rates, (4) location, (5) clothes and (6) domain expertise and product/service subcultures.

At FedCon, the culture is such that change is welcomed as long everyone who is affected by it understands its purpose and there is no disruption to normal business processes. This is a two-pronged issue for the selection of an EA framework since even if the value of EA is understood by senior leadership but it is not understood at the BU, program/project and individual levels then it becomes just another information collection exercise.

The primary cultural concerns in choosing an EA framework are:

  1. Stakeholders – FedCon has a process-driven and metrics-monitoring culture. This is one of the reasons that Program Management Office (PMO) is an important part of FedCon since it provides a consistent process by which program/projects can be evaluated. In order to incentivize employees to change their behavior for the organizational transformation, human resources and accounting/finance offices are also stakeholders in EA success.
  2. Domain – Culturally, FedCon is interested in creating an atmosphere that encourages employees to take risks and leverage the massive intellectual property it has developed over the years to stay competitive.

One of the reasons for the success of the PMO within FedCon is its process-driven culture. So for the selection of an EA framework we have to consider what plays into strengths of FedCon. This high level cultural criterion leads us to TOGAF that provides a methodological approach for EA within an organization. The EAPMO would make use of lessons learned from the PMO to create a successful EA practice.

Execution at FedCon:

Intention without execution is simply thoughts without results. An organization can have great intentions but if it does not operationalize those intentions then all the strategy discussions and documentation it did just an exercise in futility.

At FedCon, execution has two views. One view is the execution based on winning a government contract to deliver technology products and services. The second view is execution of the corporate strategy that looks into entering new markets, mergers and acquisitions and creating superior technology products and services.

The primary execution concerns in choosing an EA framework are:

  1. Stakeholders – All employees of FedCon at every level are stakeholders in the successful execution of EA.
  2. Domain – In terms of execution, best practices have to be applied/created for all of FedCon and metrics developed that assess organizational performance.

STANDING UP AN EAPMO:

After assessing the business environment of FedCon to determine an appropriate EA framework, next we have to determine people, processes and technologies needed to standup the EAPMO. These needs are discussed below:

People:

In order to assess the skillsets needed to run the EAPMO, we have to look at the current skillsets available, skillsets that people need to be trained on and hiring of people with the necessary skillsets at FedCon. The hard skills needed to join the EAPMO require the knowledge of the chosen EA framework (i.e., TOGAF) and the ability to find common themes to enhance collaboration. The soft skills needed to join the EAPMO require (1) being politically aware, (2) ability to create bridges/connections and (3) high emotional intelligence. Additionally, metrics will be created to evaluate EAPMO team members based on their hard and soft skills.

Processes:

The business processes followed by EAPMO would be determined by TOGAF best practices and what has worked within FedCon. At a high level this would be the architecture governance process and at the lower lever this would the cross-functional teams processes for being advocates and collectors of information across FedCon. The various processes would be tested in the first 6 months to work out any wrinkles and get a baseline understanding of what needs to be done.

Technologies: 

Now that we have selected the FedCon’s EA framework to be TOGAF, we have to select a tool that supports this framework. This tool can be selected by looking at Gartner’s Magic Quadrant for Enterprise Architecture tools.

 

CONCLUSION:

Due to FedCon’s expertise as a technology company and for all the reasons stated in the analysis section, TOGAF is the right EA framework since it provides a roadmap of what needs to be done. One thing to keep in mind is that a framework needs to be flexible enough so it can adapt with changing organizational needs rather than the organization becoming a slave to the framework.

References:

  1. Khan, Arsalan. “5 Factors for Business Transformation.” Arsalan Khan. WordPress.com, n.d. Web. https://arsalanakhan.wordpress.com/2013/07/16/5-factors-for-business-transformation/
  2. “Stakeholder Management.” ADM Guidelines and Techniques – Stakeholder Management. TOGAF, n.d. Web. http://pubs.opengroup.org/architecture/togaf9-doc/arch/chap24.html
  3. Schekkerman, Jaap. Enterprise Architecture Good Practices Guide: How to Manage the Enterprise Architecture Practice. Victoria, BC: Trafford Pub., 2008. Print.
  4. “Architecture Governance.” Architecture Governance. TOGAF, n.d. Web. http://pubs.opengroup.org/architecture/togaf8-doc/arch/chap26.html
  5. Christensen, Clay M. “Christensen Institute.” Christensen Institute Disruptive Innovation Comments. Christensen Institute, n.d. Web. http://www.christenseninstitute.org/key-concepts/disruptive-innovation-2/
  6. “The Business Executive’s Guide to IT Architecture.” The Open Group Architectural Framework (TOGAF) Executive Overview. TOGAF, n.d. Web. http://www.opengroup.org/public/arch/p1/oview/
  7. Caldbeck, Ryan. “Why Execution Is Everything In Business.” Forbes. Forbes Magazine, 16 Sept. 2014. Web. http://www.forbes.com/sites/ryancaldbeck/2014/09/16/why-execution-is-everything/
  8. “Organisational Culture Eats Strategy for Breakfast and Dinner.” ORGANISATIONAL CULTURE EATS STRATEGY FOR BREAKFAST, LUNCH AND DINNER. Meliorate, n.d. Web. http://www.torbenrick.eu/blog/culture/organisational-culture-eats-strategy-for-breakfast-lunch-and-dinner/
  9. Lapkin and Weiss. “Ten Criteria for Selecting an Enterprise Architecture Framework”. Gartner report G00163673. Gartner http://my.gartner.com/portal/server.pt?open=512&objID=260&mode=2&PageID=3460702&resId=838915&ref=QuickSearch&sthkw=G00163673
  10. Brand, Saul. “Magic Quadrant for Enterprise Architecture Tools.” Gartner report G00263193 http://my.gartner.com/portal/server.pt?open=512&objID=260&mode=2&PageID=3460702&resId=2859721&ref=QuickSearch&sthkw=ea+tools+magic+quadrant

Gamification

OVERVIEW:

People who have not heard the term “gamification” before perceive it to be about games but this is inaccurate. In order to address this misperception, Deterding and his team researched the various uses of gamification and came up with a definition that states gamification as “the use of game design elements in non-game contexts.” (Deterding et al.) We can see from this definition that gamification distinguishes itself from games by implying that while games are for fun without real world implication but gamification has implications in the real world. Broadly speaking, gamification continues to be applied to various areas of business, technology and society.

For this research paper, the focus is on the business and technology aspects of gamification. This leads to the definition by Gartner that states gamification as “the use of game mechanics and experience design to digitally engage and motivate people to achieve their goals.” In this definition, game mechanics refers to the points, badges and leaderboards that are applied to computers, smartphones and wearables and experience design refers to game play, play space and story line(s) to motivate people to change behavior. What this means is that gamification is used to change the norms, attitudes and habits of people and organizations from a current state to a future state through today’s technologies.

For organizations, gamification is looked at from a strategic perspective in the following ways:

  1. External Purposes: Organizations use gamification externally for customer engagement. The idea is that if customers are more engaged then this can create customer loyalty. This customer loyalty can lead to brand awareness and consequently more products and services being sold. In this sense, organizations use gamification as a sales and marketing tool that is often applied using websites, online communities, mobile devices and other digital devices.
  2. Internal Purposes: Organizations use gamification internally for employee engagement. The idea is that if employees are more engaged then this can help achieve various organizational objectives. Thus, in this sense, organizations use gamification in hiring, training, product enhancements, innovation, performance improvement and change management that is often applied through technologies in the organizations.

Initially, when gamification started to pick up steam in 2010, organizations were only interested in its external uses up until 2013. However, Gartner states that this started to change in 2014 where now organizations are interested in using gamification for external and internal purposes. This change is using gamification is reflected in Gartner’s Emerging Technologies Hype Cycle where in 2014 gamification moved to Trough of Disillusionment from 2013’s Peak of Inflated Expectations. By simply looking at the 2013 and 2014 Hype Cycles one might think that gamification’s days are numbered. But a closer look reveals that organizations are beginning to understand how gamification can be used to not only increase the bottom line but also how it can help them transform themselves.

Thus, in a nutshell for our purposes, gamification for organizations is the use of game design thinking to change behaviors internally and externally through technology.

2013 Emerging Technologies Hype Cycle

Figure1: 2013 Emerging Technologies Hype Cycle

2014 Emerging Technologies Hype Cycle

Figure 2: 2014 Emerging Technologies Hype Cycle

BACKGROUND:

The idea of using gamification for external and internal purposes is not new. One of the earlier applications of gamification can be attributed to the Cracker Jack company who more than 100 years ago introduced the idea of having a toy prize in its boxes. While basic but it worked and soon other organizations started to follow the same route. However, currently gamification implies making real-world activities more game-like through the use of technological advancements. In order to understand the current view on gamification, we have to look at a few significant events that have occurred over the last 40 years. These include:

  • In the 1970s, the invention of the microprocessor that led to the PC revolution
  • In 1980s, the development of the first massive multiuser computer game called Multi-User Dungeon (MUD) created by Richard Bartle at University of Essex in England
  • In 1984, Charles Coonradt explored why people were more engaged at sports and recreation activities that at work which led to the following 5 principles of making work more game-like:
    • Clearly defined goals
    • Better scorekeeping and scorecards
    • Frequent feedback
    • A higher degree of personal choice of methods
    • Constant coaching
  • In 2002, the Serious Games Initiative was launched that brought together the private sectors, academia and military to develop battlefield simulations for training
  • In 2010, Jesse Schell’s presentation goes viral and starts to resonate with the business community.

Today, the video games industry is a $70 billion industry. Over these last 40 years, it has figured out how to keep people engaged and motivated for longer periods on time. During this time we have seen the explosion of computer devices being used and the creation of the Internet that has given rise to video games that can be played simultaneously online with many users. From a business perspective, some of Coonradt’s principles have been used for creating performance reviews and loyalty programs. As time passes we will see technology and business fields coming together for gamification purposes.

EXAMPLES OF GAMIFICATION IN ORGANIZATIONS:

The Good Examples:

Gamification can be beneficial for organizations that know how to correctly and thoughtfully use it for internal and external purposes. Following are some examples of where gamification was used to produce positive results for organizations:

  • Increasing System Usage and Engagement: Salesforce sells Software-as-a-Service (SaaS) subscription services to organizations. One of these subscription services is the Customer Relationship Management (CRM) service in the cloud that is mostly used by the customer’s sales staff. In order to increase the adoption of the CRM services with the customer’s sales staff, Salesforce turned to gamification by creating a game called Salesforce’s User Hunt for Chicken. In this game, game mechanics such as status changes were used to motivate sales staff to use more of the CRM services features. In one case, the customer’s sales staff compliance in using the CRM service increased by 40%. This example shows how gamification was used to create a win-win-win scenario where (1) the customers’ sales staff wins since they become more aware of how to utilize the CRM service to its full potential by using its features, (2) the customer wins since their sales staff is using the features that they have already paid for and (3) Salesforce wins since it creates opportunities for itself to stay competitive by keeping the customer’s sales staff reliant on their CRM services.
  • Increasing Customer Interaction: Dodgeball was the predecessor to Foursquare that used check-ins for events. It was sold to Google in 2005 but after four years of getting very little traction, Google decided to shut it down. Foursquare on the other hand took the check-in concept and used gamification to gain traction. They did this by using game mechanics such as badges and perks to incentivize users to check-in. Today, Foursquare is one of the most popular applications in the world. It has 50 million registered users, 1.9 million listed businesses and it has crossed 6 billion check-ins. This example shows how gamification was used to enter and dominate a market by creating value for the users in the forms of perks.

The Bad Examples:

Gamification can be detrimental for organizations that don’t know how to correctly and thoughtfully use it for internal and external purposes. Following are some examples of where gamification produced negative results for organizations:

  • No Value for Users: Google’s social network is called Google+. Google+ has 300 million users who spend an average of 7 minutes per month on the social network. In order to increase the time spent on Google+, Google decided to use gamification. Thus, Google decided to use game mechanics such as badges to give to Google+ users who read Google News. The problem with this approach was that it was not clear what value these badges provided to the users since they were private and added no value to the search being conducted. This example shows how a half-baked attempt at gamification resulted in creating something that users did not find appealing.
  • Lack of Proper Cost Benefit Analysis: Marriot was interested in recruiting and training associates for its management program. In order to do this they turned to gamification by creating a game called My Marriot Hotel. While the initial idea was not bad but as Kevin Kleinberg states in his article, the amount of money spent in creating this game versus the number of people who would actually become managers at Marriot seems to be miscalculated. This example shows gamification is not a remedy for management’s lack of foresight into the actual user base versus the amount of money spent on gamification.

RISKS AND CHALLENGES: 

Gamification as an emerging technology has its risks and challenges as any new technology would have but since it is heavily dependent upon people either as players/users or game designers, it needs to consider areas of human psychology and motivation as well. Following are some of the risks and challenges of gamification:

  • Points Obsession by Players: The competitive nature of gamification in organizations can result in players being too obsessed with the points, badges, statuses rather than understanding why the game is being played in the first place (e.g., training, change management, innovation etc.). The main question to ask here is, “How do you prevent players from becoming obsessed with just collecting points?”
  • Manipulation: Gamification has elements of manipulation in it either by the game designers and/or by the players themselves. These are discussed below:
    • Game Design: A game with a predefined agenda to change behaviors can be considered by some to be manipulation by the game designers. The main question to ask here is, “How do you avoid manipulation baked into gamification that is based on the game designer(s) biases?”
    • Players: The competitive nature of players can result in them cheating the system that is supposed to be equal for everyone. The main question to ask here is, “How do you prevent players gaming the system?”
  • Regulatory and Legal Issues: Depending upon the nature of gamification in the organization, there might be laws and regulations that the organization needs to abide by. If careful attention is not paid, this can result in fees and fines. The two main questions to ask here is, “What are the federal, state and local regulatory concerns that need to be considered?” and “Are there any laws/rules that are applicable nationally and internationally?”

While the above questions are not a comprehensive list but it is a starting point when organizations are thinking about how gamification can be used externally and internally.

RECOMMENDATIONS:

Based on research done on gamification, its examples, its risks and challenges, I recommend the following:

  • General Recommendations: Following are some general recommendations that should be considered for both external and internal uses of gamification:
    • Clearly defined goals: For organizations and players, it should be clearly stated what the gamification initiative is intended to accomplish.
    • Not a Panacea: While there is great promise in gamification for organizations but it should not be considered an answer for everything. Blindly applying gamification without thinking through organizational repercussions can be a recipe for disaster.
    • Measure, Measure, Measure: Gamification is used for organizational improvements whether it is used for external purposes or internal purposes. Since it is about organizational improvements, its progress needs to be measured, feedback should be obtained from its users and should be updated as needed.
  • External Use Recommendations:
    • It is about Values: When using gamification, organizations need to understand that it is not a one-way street but a multi-way street where value needs to be created for everyone involved.
  • Internal Use Recommendations: When using gamification, organizations need to create a balanced approach between intrinsic considerations and extrinsic rewards. This balanced approach should include understanding the organization in terms of Strategies, Politics, Innovation, Culture and Execution (SPICE) factors as shown below:
SPICE Factors

SPICE Factors

CONCLUSION:

As we have seen throughout this research paper, gamification has implications across many different aspects of an organization whether it is applied externally and/or internally. Due to the continuous improvements in technology and our desire to be better, there will always be new business models where gamification can prove to be useful. Here organizations have a choice of ignoring it as a passing fad or getting ahead of it to understand how it can help them transform themselves. Thus, gamification will continue to be an emerging technology regardless of where it stands in Gartner’s Hype Cycle.

References:

  1. Sebastian Deterding, Dan Dixon, Rilla Khaled, and Lennart Nacke. 2011. From game design elements to gamefulness: defining “gamification”. In Proceedings of the 15th International Academic MindTrek Conference: Envisioning Future Media Environments (MindTrek ’11). ACM, New York, NY, USA, 9-15. DOI=10.1145/2181037.2181040 http://doi.acm.org/10.1145/2181037.2181040
  2. “Gamification – Gartner IT Glossary.” Gartner IT Glossary. Gartner, n.d. Web. http://www.gartner.com/it-glossary/gamification-2/
  3. “Gartner’s 2013 Hype Cycle for Emerging Technologies Maps Out Evolving Relationship Between Humans and Machines.” Gartner’s 2013 Hype Cycle for Emerging Technologies Maps Out Evolving Relationship Between Humans and Machines. Gartner, 19 Aug. 2013. Web. http://www.gartner.com/newsroom/id/2575515
  4. “Gartner’s 2014 Hype Cycle for Emerging Technologies Maps the Journey to Digital Business.” Gartner’s 2014 Hype Cycle for Emerging Technologies Maps the Journey to Digital Business. Gartner, 11 Aug. 2014. Web. http://www.gartner.com/newsroom/id/2819918
  5. “About Us.” About. Foursquare, n.d. Web. https://foursquare.com/about
  6. Shaw, Elizabeth. “Elizabeth Shaw’s Blog.” Gamification: Defining A Shiny New Thing. Forrester Research, n.d. Web. http://blogs.forrester.com/elizabeth_shaw/11-06-30-gamification_defining_a_shiny_new_thing
  7. Werbach, Kevin. “Coursera – Gamification.” Coursera. Coursera, n.d. Web. https://www.coursera.org/course/gamification
  8. Krogue, Kevin. “5 Gamification Rules From The Grandfather Of Gamification.” Forbes. Forbes Magazine, n.d. Web. http://www.forbes.com/sites/kenkrogue/2012/09/18/5-gamification-rules-from-the-grandfather-of-gamification
  9. “Getting past the Hype of Gamification.” PwC. PwC, n.d. Web. http://www.pwc.com/us/en/technology-forecast/2012/issue3/features/feature-gaming-technology-acceptance.jhtml
  10. Palmer, Doug, Steve Lunceford, and Aaron Patton. “The Engagement Economy.” Deloitte Review. Deloitte, n.d. Web. http://www.deloitte.com/view/en_US/us/Insights/Browse-by-Content-Type/deloitte-review/c7cee86d96498310VgnVCM1000001956f00aRCRD.htm
  11. Stanley, Robert. “Top 25 Best Examples of Gamification in Business.” Clickipedia. Clickipedia, 24 Mar. 2014. Web. http://blogs.clicksoftware.com/clickipedia/top-25-best-examples-of-gamification-in-business
  12. Kleinberg, Adam. “Brands That Failed with Gamification.” – IMediaConnection.com. – IMediaConnection.com, 23 July 2012. Web. http://www.imediaconnection.com/content/32280.asp
  13. Khan, Arsalan. “5 Factors for Business Transformation.” Arsalan Khan. WordPress.com, n.d. Web. https://arsalanakhan.wordpress.com/2013/07/16/5-factors-for-business-transformation
  14. Khan, Arsalan. “5 Questions to Ask About Gamification.” Arsalan Khan. WordPress.com, n.d. Web. https://arsalanakhan.wordpress.com/2014/10/27/5-questions-to-ask-about-gamification