Business Model Transformation Peter Grant Advisor IBRS 0417

Business Model Transformation Peter Grant Advisor, IBRS 0417 005 500

Toughest Job in Government

Businesses • • • • Surveying Quarry Water and Sewerage Road Construction Parks Maintenance Fleet Services Business Licencing Animal Management Development Assistance Water Billing Building Approvals Local Law Enforcement Call Centre • • • • Customer Service Centre Rates and Searches Environmental Licencing Youth Development Library Services Caravan Parks Sports Development Swimming Pool and Life Guards Tourism Venues Childcare Counter Disaster Cemetery And many more…

The Pressure of Government 1. Increasing community demands across a broad range of products and services 2. Increasing regulation 3. Shrinking revenue sources and significant price sensitivity. 4. Resource Constraints (Skills and Numbers) 5. An IT vendor community that has learned to be sluggish.

The World is Changing Around Us

The Digital Challenges Digital Disruption IT Industry Changes Advice What Next

7 Peter Grant - IBRS

8 Peter Grant - IBRS

Some Digital Disruption Examples

Peter Grant – IBRS July 10 2014

Peter Grant – IBRS July 10 2014

Models for Distribution in Music 1. Music Industry Sold Physical Media 2. Digital Revolution brought a new approach. – Napster (Disruption but unsustainable – nobody was paid) – i. Tunes (sells the consumer a licence to play music that you buy) – Spotify (sells access to all the music in the world for a monthly fee or advertising) – Pandora (like Spotify but can predict which music you like) 3. Who lost? – Warner, Sony, EMI, Universal Studios, Middlemen Peter Grant – IBRS July 10 2014

Peter Grant – IBRS July 10 2014

Blockbuster Video

Blockbuster Video • Short History of Blockbuster Video – Blockbuster Video was a $1 Billion business in 2009. – Customers put up with the limitations of physical media until there was something better. (Net. Flix) – Blockbuster was dismantled in 2012. • Standard DIGITAL DISRUPTION Mistakes – Slow to react. Believed they were on the right track. – Ignored customer desires – one could argue they did not know what their customer’s desires were. – Initial response was to cut costs by $330 Million – seemingly in the belief that the business model only needed tuning rather than a complete replacement. – Last resort was to have a web site showing a list of videos.

Australia Post – Digital Disruption

Don’t improve what you can eliminate! We can eliminate $100 million in Mail activity (generated from billing) from governments every year by ACTIVELY looking to REMOVE unnecessary transactions. Where does this leave Aussie Post and it’s bill payment service?

Queensland Government Example • Motor Vehicle Registration – 6, 500, 000 vehicles -12, 000 registration renewals p. a. • Currently: – Send out letters informing people their car registration is due. – People take action and pay the fee – counter, BPay, etc. – Government prints sticker and sends them in the mail. • That’s 24 Million letters that SHOULD NOT BE SENT

There is a LOT of change happening and your community are doing it with or without YOU.

Digital Disruption IT Industry Changes Advice What Next

A Brief History of IT

1. 1965 – IBM 360 Mainframe computer 2. Late 1970 s – Advent of the Mini computer (Wang, Digital, IBM S 34) 3. 1990 – Client Server computing (Microsoft, Sun) 4. 2000 – Internet becomes mainstream (TCP/IP is the standard) 5. 2010 – The Big Five Emerge Simultaneously ! – – – – Cloud Computing Mobility as the default access mode Consumerisation Social Networking Big Data Internet of Things Geospatial Computing

It’s clear our approach to ICT in 2009 won’t work in 2020.

And then there is the Server Industry!

WARNING When people say CLOUD make sure you ask which TYPE they mean?

Infrastructure - as a Service Iaa. S Run existing IT systems onto someone else’s hardware on a pay as you go basis. Tactically sensible but NOT a response to digital revolution Savings possible! Software - as a Service Business Process - as a Service Saa. S BPaa. S Use someone else’s software and hardware on a pay as you go basis. Have an external party provide an entire business process – but represent this as your organisation. Allows for rapid adoption, wide collaboration. Customer has high levels of control over vendors. Savings are significant. Generally used for non-core but specialist functions like Payroll.

Can I build an entire business on these innovative Saa. S and BPaa. S services?

Lines of Business

Cloud Service Broker (Aggregation, Integration, Customisation) Lines of Business

What’s the UP Side for ICT? • ICT will be way cheaper to deploy • ICT will be way easier to deploy • Things will work (quality will be very high) • There is a huge backlog of innovative things we can do right now. – Many have been delayed because they were seen as being too hard.

Digital Disruption IT Industry Changes Advice What Next

Who is Advising You IT Team IT Vendors Association Expert at running all that IT stuff we don’t want / need anymore. Product range built around yesterday’s IT offerings. Build expertise for your vertical over time. Perceive their jobs are threatened by digital revolution. KPI’ed Quarterly based on sales of EXISTING products. Keep a performance history on vendors. Generally too busy to keep up with potential opportunities – and probably not valued for that. Connected at the hip to consulting partners whose job it is to sell their partner’s products to YOU. Interested in the success of the local government sector.

Digital Disruption IT Industry Changes Advice What Next

The Key Things to Do • There needs to be some core capabilities to manage connections to cloud offerings. – Too big for existing councils but perfect for shared infrastructure. • Need to recognise the Digital Revolution WILL IMPACT YOUR ORGANISATION. – Lack of recognition and lack of early response is why organisation have already failed. – Work out what you DON’T HAVE TO DO ANYMORE as a first step. • Need to understand (at a high level) the right technology options for Cloud. Pick the wrong one and you might get some savings but you will miss an opportunity to leverage the Digital Revolution. • Support your IT teams. Without support they may be fearful of giving you the best advice. Encourage them to be the digital thought leaders.

Valuable and Hard To Copy People and Culture

It’s all about Business Model Change

Questions