Blog Series 2/3 Digital Transformation – Creating innovative business models by utilizing a Process-Driven IT Architecture

In the previous blog of this series we’ve learnt that companies who want to be leaders in the race towards a digital future need to focus on their individual and differentiating business processes.

We have also learnt that using the right notation and methodology is key when transferring process-knowledge from the heads of a few into common knowledge and into implementation.

If you haven’t read the previous blog yet, you can find it here:
Empower your business by utilizing a Process-Driven IT architecture and the flexibility of the cloud

But how can you actually transfer an innovative idea into reality using the process-driven approach? In order to see a process-driven IT architecture put to use, we will take a look at a concrete example where an innovative business model has been implemented by using this methodology.

May we introduce? The smart laundry scenario

It is meanwhile common knowledge that companies that set their sights on innovative business models, should invest in the digitization of their individual processes. But how could such an innovative business idea look like? And how could it concretely be put into action by a process-based IT architecture?

Be inspired and join us on our fictional story about how to realize new business models – like the smart laundry – and how to profit from digital technologies. Get to know our protagonists: Businesswoman Angelina, customer Marcus and IT specialist Christian:

If you are more of a visual type and want to view the story in video form, we have you covered: https://www.youtube.com/watch?v=JOedgg-zeZc

In the following paragraphs the story will be explained as well, but with some additional details sprinkled in here and there. Now have fun, joining Angelina on her path to building a digital business model.

Focus on the customers problem

After another long day at work, manager Markus wants to drop off his dirty laundry at a laundry. As he approaches the door, he realizes that the store is already closed for the day.

Business woman and owner of the laundry store Angelina also recognizes this issue. She is getting less and less customers. Her numbers are dropping into red. She is asking herself what she could do in order to fulfill her customers’ needs better and how to open her store at the right times.

Initially she is thinking about longer opening times or to introduce working in shifts. But she realizes that these options would not be profitable for her and also would this really be what her customers want? After analyzing her customers’ needs more deeply and thinking about how she could disrupt her current model, she comes up with a plan:

With a 24-hour laundry service she would be able to satisfy her customers. To make that possible, she cannot keep her store as it is. She plans to sell all her washing machines and to build up her business as a platform offering a broker service instead- similar to what Uber or Airbnb have been doing in their respective industries.

Creating a digital business-model

In order to transfer her idea into the digital world, she needs to have a solid business-model first. She starts out researching how her plan could be realized. She stumbles upon lots of technical buzzwords and various options. Therefore she decides to get support from consultant Christian.

They meet up for a first workshop and start by sorting out Angelina’s requirements for the platform: She wants to be able to take orders 24/7 by placing mobile laundry service points closer to her customers – for example within companies. Since she is a very process-oriented person, she wants the technical implementation to be as close to her business process as possible. In order to be able to react to changes in the market quickly, she wants the implementation to be flexible and transparent.

They document all the requirements and additional aspects of the new business model using a business model canvas.

Discussing the requirements and the different options, Christian and Angelina decide to use BPMN 2.0 to model her business processes and to make use of its automation capabilities for the implementation later.

Process models in BPMN 2.0

Having the business model clear, Angelina can now start to model her requirements within a business process in BPMN 2.0 together with Christian. At first they focus on the pure business perspective and leave out technical aspects.

The scenario consists of three roles: Customers, Angelina as the platform provider and laundries as service contractors.

Creating orders should be triggered by sensors. The system then automatically picks the best service contractor for a specific order based on various criteria such as distance to the service point and workload.

The chosen supplier then picks up the laundry, cleans it and drops it off at the service point afterwards.

Once the laundry is back at the service point, the customer is being notified by mail, SMS or on a web portal.

As soon as the customer checks out the laundry from the service point again, follow-up processess like the invoicing can be triggered.

Transferring the process models into a digital platform

At this point in time, the BPMN 2.0 model only describes the business process. Now, IT-expert Christian can take care of the technical implementation in SAP cloud platform. Following the PDA-approach, he is creating a so-called “service contract implementation layer” or in short SCIL. For each activity or task within the business processes that requires more complex technical handling, the technical details are being resolved within a SCIL-process. For example such tasks as creating an order or invoice inside the connected backend are being handled within SCIL-processes.

By following this approach, the business process stays flexible for changes or enhancements and is still exactly the same as Angelina defined it. Technical changes (e.g. if the backend implementation changes) have no effect on the business process, but are instead handled within the technical SCIL-process.

Christian is using different services available in the SAP cloud platform (SCP) in order to build and orchestrate the process and all its components such as interfaces, UIs, Business rules and so on.

By using the services from SCP, there is no need for Angelina to host or maintain her own infrastructure. The implementation can start right away and without any pre-invest. Also short innovation cycles are possible since updates and new services in SCP are directly available to customers.

In parallel to creating the digital platform, also the service points are being built and equipped with IoT-sensors. Each customer gets his own personalized clothes-hanger using sensors as well. The user-integration is being handled via a Fiori Launchpad on the portal service in SCP, SCP workflow handles the process flow, S/4 HANA is being used as a backend.

Full flexibility

After a while, many mobile laundry service points have been built and placed around the city. The customers are making frequent use of the new service. New customers are being acquired and Angelina is making profit again.

Fast forward two years later: the numbers are going down again. Angelina is doing some research and finds out that the competition has copied her idea and is offering the same service cheaper. She has to react to the market quickly.

Angelina is thinking about her business-model and how she could adapt it. Analyzing her costs, she realizes that she could offer the service cheaper if she would rent an old factory floor in the suburbs and starts to clean laundry herself again. Only orders which exceed her capacity would still be outsourced to other service providers. By implementing this change, she will be able to offer her service at a competitive price level again.

To realize the idea, the architecture only needs to be changed at one point to add an additional gateway. The result? After having changed her business model once more, her margin rises and business is once again gaining momentum.

Since the process offers a high degree of automation and has been built based on BPMN 2.0 using the PDA-approach, Angelina always stays in control of her process and has the necessary time to challenge and improve it constantly.

You want to learn more about IT architecture and process optimization? Feel free, to contact me, I will be glad to support you.

Building the scenario in real-life

When we were building the smart laundry scenario, we also wanted to create something presentable on trade fairs and at customer visits. So we’ve decided to actually build one of the service points.

You can find details about the physical service point and the technology we have used to build this scenario in the last blog of this series.

As a small teaser, here is a picture of our service point: