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© Springer-Verlag GmbH Germany 2018
Claudia Linnhoff-Popien, Ralf Schneider and Michael Zaddach (eds.)Digital Marketplaces Unleashedhttps://doi.org/10.1007/978-3-662-49275-8_54
54. Digital Business Outcomes: Digital Innovation and Its Contribution to Corporate Development
Hans Rösch1 and Stefan Schumacher2
(1)Vattenfall GmbH, Berlin, Germany
(2)VOICE – Bundesverband der IT-Anwender e.V., Berlin, Germany
Hans Rösch (Corresponding author)
Email: [email protected]
Stefan Schumacher
Email: [email protected]
54.1 The Organizations Involved
In the following sections the organizations contributing to this chapter will be introduced.
54.1.1 VOICE e. V.1
With approximately 400 members, VOICE is the largest representation of IT users in the DACH region. Its members represent a cross section of DAX‑, MDAX,‐ and medium‐sized companies. The association’s network brings together decision makers in the IT and digital businesses from leading companies of different sizes and from different branches – in formats such as roundtables and business workshops, but also virtually on an exclusive online platform. VOICE offers a competent, attractive, and dynamic exchange platform for the interests of its members of which both them and their company IT and digitization projects can benefit. Trade information and best practice experiences are being discussed by decision makers across all levels. The economic power of our members corresponds with approximately 50% of German GDP. The primary goal of VOICE is to increase the competitiveness of its member companies further by using digital technologies – and a targeted exchange about the key topics of digitization by safeguarding the interests of the user companies [1].
54.1.2 Vattenfall
At Vattenfall we exist to help our customers power their lives in ever climate smarter ways and free from fossil fuel within one generation. Our climate and sustainability objectives are the basis of our strategy and our strategic targets. Our goal to be climate-neutral by 2050 – and by 2030 in the Nordic countries – entails a stepwise phase-out of fossil fuels. Vattenfall is phasing out fossil production and invests in renewables, mainly wind and increasingly in solar. Across all its markets, Vattenfall has approximately 6.2 million electricity customers, 3.3 million electricity network customers and 2.2 million gas customers. The Group is one of Europe’s largest producers of electricity and heat. Electricity generation and sales of heat amounted to 119.0 and 20.3 TWh, respectively, in 2016. Vattenfall’s main markets are Denmark, Finland, Germany, the Netherlands (operating under the Nuon brand), Sweden and the UK. The Group has approximately 19,900 employees and annual revenues of 15.6 billion EUR. The parent company, Vattenfall AB, is 100%‐owned by the Swedish state, and its headquarters are located in Solna, Sweden. Vattenfall was founded in 1909, while some of its German business originated as early as 1884 [2].
54.2 Glossary of Terms
Within an economic environment, IT has always had two major goals: supporting the company in competition and effectively and efficiently implement business operations. It is too shortsighted to regard IT as a mere cost factor. On the opposite, flat budget cuts by the management or the demand for cost savings might be contra productive if, as a result, IT merely implements projects with evident monetary success. The modern role of IT also requires the implementation of innovative tasks in order to keep the company future‐oriented. From this, one can derive the job of IT, to translate its services as well as its technical and legal framework into business language [3].
54.2.1 Value Contribution
In this article, we define the term value contribution very broadly and show how the ever increasing scope of IT supports the value chain of a modern company. With this, we move away from a purely financial perspective and explicitly include organizational and procedural improvements [4].
We identified at least the following business departments as examples for where companies can benefit from IT [5]. Some specific examples will be presented in the next section.
Communication
IT enables modern ways of using communication channels and shorten communication intervals. The market provides for an increasing number of communication tools and solutions such as Wikis, blogs, enterprise social media networks, or unified communication and collaboration.
Controlling & Finance
IT is constantly under the pressure of appropriate IT profitability. IT can install reporting tools throughout the company or check and implement suitable sourcing models.
Infrastructure & Operations
Provided IT services require appropriate hard‐ and software. This includes not only traditional IT components but nowadays also communication networks and new technologies such as Social Media, Analytics (to create value from “Big Data”), Mobile and Cloud.
Innovations
Today, dealing with innovation is regarded as an essential factor of long‐lasting success. However, renewing processes are complex and resource consuming. IT can make a crucial contribution to innovation management.
Employees & Organization
Employees are one of the most important resources. All processes in connection with Human Resources (HR) can be supported with IT: recruiting, management, qualification, and retention of staff.
Projects
One of the structuring features of corporate activity is project and portfolio management. With the introduction of sets of rules (such as PRINCE2 – Projects In Controlled Environments, version 2), IT can provide support and improve project controlling via tools.
Risk & Security
Security requirements have high priority. Incidents have a negative impact on the business result or even the entire company. IT is responsible for the introduction of a security management system and has to consider aspects such as business continuity, data governance, and data privacy.
IT Services
The constant improvement of IT services such as hosting or development provides for a Continual Service Improvement (CSI) system. Consequently, it is recommendable to introduce an IT service management system (ITSM).
54.2.2 Adaptability and Flexibility of IT
Companies are exposed to a large variety of external influences. Nowadays, competitiveness includes a high level of responsiveness. Responsiveness in turn means adapting to new challenges in a quick and flexible way. Therefore, IT has to be set up in a versatile and adaptable way. Flexibility takes different shapes in connection with technical terms and different departments. It can refer to “agile software development” or “agile company organization”. Flexibility for IT services can also mean to create suitable, scalable offerings – e. g. computing power in the scope of growing or shrinking capacities [5]. The demand for high flexibility is a huge challenge because adaptability should be implemented in a resource‐friendly way. Generous buffers with regard to staff, finances, and technology would unduly affect the value contribution of IT. In order to show how this strategic dilemma can be resolved, we are providing successful practical examples for the value contribution of IT in the next section.
54.2.3 Value Contribution and Role of IT According to Vattenfall
Vattenfall IT supports the transformation of the business, which needs to adapt to a new market environment. Business requirements on IT are getting more diverse in the race for more optimization and flexible adaptation to customer needs. They leverage technologies such as social media, mobile, analytics, and cloud (sometimes briefly referred to as “SMAC”) as well as the convergence between commercial information technology and operational technology used i
n generation and distribution. To become more efficient and concentrate its own staff on the most value‐adding projects and services, the IT department is managing a growing share of sourced services [6, 7].
Vattenfall aims to bring its IT up‐to‐date by adapting to the new business environment and taking on the challenges. The IT organization is committed to be at the forefront of digital transformation at the company
an agile service provider – focused on problem solving and speed
on top of business needs, propose and challenge the business with smart IT solutions
open to utilize and manage market potentials and buy services when beneficial
truly customer centric
Overview of Digital Use Cases
The following use cases (see Table 54.1) from Vattenfall demonstrate in how many ways modern IT solutions can contribute to the success of an enterprise. Table 54.1Overview of Vattenfall Digital Use Cases Relating to Sect. 54.2.1 (and others)
Category
Initial Situation
Challenges/Goal
Implementation/Results
Communication
Traditional intranet and e‐mail; lack of platform for networking
Improve collaboration across hierarchical silos
ConnectUs social network was set up in April 2013. Today there are > 18,000 members sharing information in > 2000 groups and projects. Its success was helped by tight integration with the intranet and phonebook
Infrastructure & Operations
Multiple in‐house data centers accumulated during a decade of growth by acquisition
Cost reduction and increased flexibility
Adoption of Azure as IaaS platform and focus on SaaS when acquiring new applications or replacing existing applications
Innovations
Since 2012 Vattenfall’s German electricity distribution business. Stromnetz Berlin publishes open data to stimulate innovative uses and foster the energy revolution or “Energiewende” (see www.netzdaten-berlin.de)
Attract young talents to experiment with the data and develop new applications for the energy of the future
Conducted “Hack Days” in 2013, 2015 and 2017 (see http://energyhack.de/)
IT Services
Videoconference rooms failed to meet the growing requirements for communication between many sites spread across Northern and Central Europe
To support Vattenfall’s core value “Cooperation” and a growing number of projects and organizational units setup across multiple (international) sites
Today 10,000 users (about every second employee) have access to desktop videoconferencing. 4000 of them use the system each day. According to the solution provider Polycom the company run the largest installation across Europe. Initial deployment started in 2009 and as usage expanded the company experienced a large variety of incidents, often testing the limits of all components involved. Nowadays the solution is stable and provides many dial‐in options ranging from stationary systems in conference rooms, over PCs and notebooks, phones (audio only) to an app running on most smartphones and tablets – even providing interconnections to external videoconferencing systems run by the business partners
Table 54.1(Continued)
Category
Initial Situation
Challenges/Goal
Implementation/Results
IT Services
Traditional PC workplaces optimized for work from the office, large group of users for videoconferencing
Need to improve support for employees frequently traveling, working from home, collaborating across the organization and with external partners
Digital Workplace based on Office365 (incl. SharePoint, OneDrive and Skype for Business) shall support new ways of working – with anyone, anytime, from anywhere with any device
Customer Service
Customers could not always reach the service team via phone or (e‑)mail
Improve customer retention by opening social media channels for communication
In the Netherlands a web care team has been established. Its 10 members respond to customer requests via Facebook and Twitter. > 63,000 followers on Facebook and a top 10 ranking among brands on social media (DVJ Insights Social Consumer Monitor 2014)
Apps
Customers mainly interact with utilities when things go wrong
Provide useful information to improve customer satisfaction and understanding for the complex energy system
Stromnetz Berlin launched 3 apps: StromTracker providing an overview on the customer’s energy use, StromTicker giving an overview of the electricity supply in Berlin, Stromwetter showing when there is a lot of “green” energy in the grid
Sales Channels
Increasing competition from new entrants and other utilities entering Vattenfall’s attractive home markets in Berlin and Hamburg
Win new customers on an existing popular market place
Cooperation with Ebay since 2008 used as an additional sales channel (https://www.welt.de/regionales/berlin/article2483951/Vattenfall-vertreibt-Strom-jetzt-ueber-Ebay.html).
Paperless power supply agreement and communication via app (“ENPURE”) only
New Business Models
An increasing number of customers want to be more engaged, have more choice and control over how the energy they consume is produced, and seek new ways of interacting. Some home owners have invested in rooftop solar panels. At times these panels produce more electricity than they consume and customers may want an alternative to the feed‐in tariff
Engaging customers to help them be more sustainable is an important step in Vattenfall’s strategy and in becoming a climate‐neutral company by 2050
In June 2016 Powerpeers started operation in the Netherlands. Powerpeers is a digital marketplace and community where customers can decide from whom they receive their energy and who to supply with their self‐generated energy (see www.powerpeers.nl, http://news.vattenfall.com/de/article/powerpeers-der-interaktive-marktplatz and www.youtube.com/watch?v=hM8sePEoslk)
In column 2 below, a description of the initial situation is given, column 3 lists the challenges facing the IT department, while the last column summarizes what was implemented and achieved.
The fourth column of the table shows practical applications. These provide valuable contributions to the company’s success. The following section outlines the IT organization is being positioned to continue to drive value from digital technologies.
54.3 Implementation of IT Strategy
One of the key elements for the implementation of an effective IT landscape is a well thought out concept that is aligned with and sponsored by the business. This section highlights key facets of Vattenfall’s digital transformation journey and how these led towards the recent redefinition of its IT strategy.
First Steps into Digitization
Vattenfall started its first digital business activities during the dotcom boom of the late 1990’s by creating a digital channel to sell electricity, broadband, telecommunications, and insurance services. Moreover, a first attempt was made to sell intelligent home services. The latter venture failed and made it very hard to get management support for other innovative solutions, particularly at a time during the industry cycle when margins from large‐scale generation of electricity were very attractive.
The foundation for the company’s current digitization activities was laid shortly after the millennium. About 10 years ago, Vattenfall was one of the first utilities to offer an online product to its customers, based on a portal with self‐service contracting and electronic bill presentment. Today the company serves more than one million customers in Germany via this platform; similar solutions are offered in Sweden and in the Netherlands. The original German platform has evolved to a mobile solution that is easily accessible using a smartphone or tablet PC.
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sp; Business Exploring Digital Opportunities
Recently, some of the most dynamic businesses, in particular wind generation and all customer‐facing units started to experiment with new digital technologies and set up governance boards to guide these developments.
The communications department of the company has set up a Digital Council as a forum for strategic digital questions and development. The members cover different stakeholders from sales, communications, HR and IT, covering all countries. The purpose of the Digital Council is to have a central forum to stay aligned about all larger digital initiatives cross markets, to share knowledge and best practices and discuss common challenges and future needs within the digital area, linked to the overall business goals and strategic direction. The Digital Council is meeting on a monthly basis. All new larger digital initiatives shall be brought to the Digital Council for information. Although it is not a forum for decision‐making, the Digital Council can guide and advise.
Positioning Vattenfall IT for Digitization
Following a number of pilots with agile development to support digital business projects Vattenfall IT has recently updated its IT strategy and is currently reorganizing to establish a two‐speed IT organization:
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