Imagine you wake up one day and suddenly there is a completely new technology available that outperforms your product or service in every way, and you didn’t see it coming. Sounds scary, right? Well, this is a reality for many companies. Take for example, navigation devices for your car. Garmin and TomTom were the major players dominating this market for several years, selling their products for hundreds of dollars each. However, that was before Google introduced Google Maps for mobile devices. As a result, Garmin’s and TomTom’s market values dropped dramatically, 85% in only 18 months.
Are mobile payments next?
Another market that might undergo the same faith are mobile and electronic payments. Banks as traditional players for providing payment services aren’t putting up a real fight against payment providers like PayPal, Google and more recently Apple Pay. E-payment’s volumes and number of transactions are growing at a really fast pace worldwide. However, companies like PayPal, technology giants, telcos and small start-ups provide new innovative ways to serve the market, mostly by means of smartphone apps. The market is very fragmented, customer demands are changing rapidly and the environment becomes more and more digitized.
“Eye of the tiger”
If banks don’t want to lose their traditional positions in the payment value chain they need to show some spirit and fight back by providing their own payment technologies or actively cooperate with others . However, banks see payments as a cost center and many banks have an outdated and monolithic IT infrastructure that prevents them from quickly developing and launching new payment technologies. In fact, with the right business strategy, payments can become a new revenue stream for banks, if they are willing to compete against these new entrants. As seen in this example, banks are paying a high price for cooperating with the new Apple Pay: US banks pay high price for cozying up to Apple.
This is where enterprise architecture comes in!
Enterprise architecture (EA) can be a useful way to help banks put their business strategy into action. It supports them in realizing a high-impact business transformation that allows them to compete with those newcomers. Via a capability-based approach, EA can contribute, in relationship to other disciplines, to deliver real value. EA provides the fundamental connectivity between these disciplines by modeling and analyzing your organization in a structured and effective manner, see: Driving Business Outcomes with Enterprise Architecture as a Knowledge Hub. In this approach, the focus needs to be on change rather than on documenting the current state of the organization. The challenge is to keep complex environments running, but also provide support for possible future business transformations.
The market can change really quick, recall that free fall Garmin’s market value made. Therefore, one needs to be prepared to react to these changes in a timely fashion. Agile methods haven proven to be useful when it comes to changing rapidly and incrementally deliver solutions. Iterations that each consist of requirements analysis, design, product development, implementation and feedback will result in a reduced time to market and a better fit with user requirements, and enable organizations to make quicker changes in a dynamic market such as e-payments.
A nice view on the functioning of EA is presented in the following blog: Enterprise Architecture: Key to Successful Business Transformations, where EA is presented as a hub between different organizational disciplines that help with the transformation. After all, your organization needs to be ready to change whenever a disruptor comes along!