It’s taken some time to catch on since Geoffrey Moore first outlined the concept of Systems of Engagement and Systems of Record as two separate Enterprise functions back around 2010, but now the term is increasingly used in blogs and presentations. Unfortunately, increasing usage doesn’t necessary equate to increased understanding, particularly as technology vendors naturally apply the term to the aspects that correspond to their product focus. The full Enterprise functionality lies in the word ‘Systems’ meaning an interlocking cohesive integrated environment, in the same manner as IT is understood to be an across Enterprise cohesive integration of Systems.
Digital Enterprise Business architecture, as with any business architecture defines the specific roles and functions for Systems of Engagement. More recently under the title of Systems of Intelligence the functionality relating to applying various new forms of Intelligent Analytics, (AI), within the Enterprise has been added. It is tempting to define these respectively as the Front Office, Middle Office and Back Office, but this categorization trivializes the hugely important role of Systems of Engagement, (and indeed that of Systems on Intelligence). in a Digital Business model.
Constellation Research reports and blogs have long positioned the need for, and role of, the Middle Office as the new intelligence hub of Digital Enterprise operations. (see Appendix for details). These reports were specifically focused on an emergent requirement in Digital Business Architecture, and accordingly Constellation’s use of the term Middle Office is interchangeable with the recent introduction of the term Systems of Intelligence.
However, the same is decidedly not the fact when comparing the role and functionality of Systems of Engagement in a Digital Business versus the generally understood view of Front Office in current Enterprises business models. Originally a large part of the definition came from describing the activities that Enterprise IT did not support, latterly the arrival of sophisticated CRM systems, brought a sharp focus on direct revenue creating activities associated with Sales and Marketing.
More recently technology has introduced the need for specialized skills in the use of Social Media and Apps as business tools suggesting the possible need for a Chief Digital Officer; now IoT adds yet a further set of Internet based technologies that enable yet another set of business values. The point to grasp is that Digital Business is Internet Connected Business, with the Web merely one of the ways that a Digital Enterprise is engaged with Business activities.
The only reason it is possible to shift from selling Products, the transaction orientated Business model of the past, to an Outcome, or Services, Business model of Digital Business is because a raft of new technologies that support a myriad of methods of engagement is now driving transformation.
This could be, and indeed can be, an extension of capabilities to still further empower the Sales and Marketing functions of a Front Office in the current Business model, but a Digital Business model has very different requirements.
Outcomes, or Services, are inherently a market/customer pull model based on continuous satisfaction to obtain reoccurring revenue, and a public reputation spread by social media as the principle methods of customer acquisition, and retention. In contrast Product sales is a push model concentrated on an opportune moment, created by Marketing, and with a strong probability of no further relationship. While it is true that Social Media, and after sales services can, and are playing an increasing part in extending product sales relationships, there is a fundamental shift between the two business models.
Product centric sales are based on ‘push’ activities to create a transaction, whilst revenue from Digital Outcome Services comes through alignment with market and customers ‘pull’ activities. Systems of Engagement refers to any and all technologies, capabilities and functions that play a part in ensuring that the Enterprise is fully engaged, embedded even, in its market.
When reading the following consider as a illustrative point the challenges of customer churn that mobile phone operators face as they are measured by their customers on their satisfaction in the ‘outcome’ of calls, web browsing, Apps, etc. rather than traditional fixed phone telephone provision of a connection.
The following are all important elements in the make-up of an Enterprise System of Engagement;
Engagement across Markets; Digital Markets are continuously dynamic as factors ranging from demand levels, and events, combine with supply and pricing, to change competitive positions. As an example, consider how traders in Financial markets use market feeds, (and Intelligence from their Middle Office/Systems of Intelligence), to successfully trade.
Engagement with People; A great deal of market shaping now occurs through engaged, or involved, people creating, sharing and exchanging views and opinions. Never before has so much information as to factors that influence decisions, and create Markets been available.
Engagement with Buyers; Events and circumstances create revenue opportunities that engagement capabilities must recognize and provide a contextual aligned optimized response. Buyers expect recognition of significant factors as part of the engagement process interactions.
Engagement with Customers; Successful reoccurring revenue from the provision of Digital Business Outcomes extends relationship management into a much broader engagement around recognition of continual satisfaction in the provision of the agreed Outcome.
Engagement with Machines; The first level of Service provisioning will be dependent on using ever increasing amounts of IoT sensing either added to existing equipment, or built into new equipment. This presents a new challenge in establishing connecting and acquiring the data, but into full-fledged engagement with each machine to ensure continuous operational efficiency and effectiveness.
Engagement with Outcomes; The Services management of individual machines, (Air Conditioners, Heating plant, etc.) has to be consolidated with the bigger picture of an Outcome, (Maintenance of a selected Temperature in a Building). Outcome Management is at the heart of the Digital Business model and represents a completely new manner of engagement to produce and maintain revenues.
Engagement with Ecosystems; Ecosystems of specialist providers have long been a feature of sophisticated Service Management provision, (a full Building Management Service contract provider would use different companies for different elements). The shift from providing a ‘break fix’ maintenance Service through orchestrating responses to breakdowns to the management of a high-level outcome requires new levels of engagement and interaction across supporting Ecosystems.
Engagement across the Enterprise; Systems of Engagement do not exclude the need for internal engagement across the Digital Enterprise, as it too represents a similar dynamic environment to any of the above. Internal Enterprise engagement to monitor the availability of resources, capacity, capability, etc. is as important as the external engagement factors above.
Blockchain part of Systems of Engagement or Systems of Record? Functionally and architecturally this question is unresolvable at this time simply because the answer depends on the functionality of individual Blockchain solutions. If a Blockchain solution is deployed as a Transaction settlement system directly related to Book to Bill processes then it is architecturally required to integrate with Systems of Record. An alternatively type of deployment distributing data within an Ecosystem of specialist maintenance providers to maintain dynamic availability of spares and Engineer availability. This type of functionality provides data for Systems of Engagement to make available to Systems of Intelligence in the event or circumstances, require this input.
Systems of Engagement functionally and architecturally require a very different approach around ensuring the dynamics of data flows are maintained to make the latest data available if it is required, rather than the recording and holding of data for historic analytics as in Systems of Record.
The sheer scale of the data that Systems of Engagement provides makes the case for Systems of Intelligence. Process and Rule based systems lack the flexibility to continually adjust to the ever-changing circumstances that lie outside the control of the Enterprise. Equally Systems of Intelligence cannot function without the data derived from Systems of Engagement, as such the two together form the backbone of a Digital Business model. A very important point to grasp as the better Systems of Engagement function in the provision of data, the better Systems of Intelligence can operate to maximize operational actions.
Systems of Engagement READ and Systems of Intelligence REACT to dynamic Data Flows
Systems of Engagement and Intelligence are architecturally most likely to be Loose Coupled and Stateless whereas Systems of Record are Tight Coupled and statefull.
Appendixes;
Report; The Case for the Middle Office; Dec 2016
Report; The CxO Guide to Digital Business
Report; Blockchain explained in plain English
Blog; Blockchain or Distributed Ledger? – requirement definition
Blog; Digital Business Distributed Business Models