Thursday, February 23, 2012

Using the Business Model Canvas in an IT Transformation

The Context
Our client is initiating an end to end transformation of both business processes and IT systems used to deliver services to its customers. The goal of this transformation is to enhance the ability of their IT Organization to execute on the delivery of new applications, changes to existing applications, and support/maintenance activities. The organization also requires enhanced capability to better execute on delivery strategy, governance, and standards. This transformation will enable our client to better meet the demands of its clients by increasing throughput and quality, while simultaneously reducing delivery lead time.

As part of our initial discussions with directors and managers we decided that the business model canvas can be effectively applied to describe the client’s current software and services delivery model. Based on insights from Directors and Managers, we filled up a 6 x 8ft canvas with sticky note insights.

What is the Business Model Canvas?
The business model canvas is a tool that helps you describe, design and visualize a business model. The canvas helps an organization describe how they intend to deliver value by focusing on 9 building blocks:
  1. Customer Segments
  2. Value Proposition
  3. Channels
  4. Customer Relationships
  5. Revenue Streams
  6. Key Resources
  7. Key Activities
  8. Key Partners
  9. Cost Structure
It is not enough to look at the building blocks as a checklist – they are assembled in the canvas below to help visualize the relationship and interactions between them:
The building blocks focus on a set of key questions that help collaborators capture their insights and facts about the current or target model. These insights and facts are captured on sticky notes so that they are never permanently fixed to the canvas. We adapted the original canvas from the book, Business Model Generation, to suit our unique need.

If you want to learn more about this tool, you can purchase the book, Business Model Generation. There is a 72 page sampler of the book at

The Custom Canvas
The client environment is quite different from the examples and cases available in the book so we modified the building blocks to suit our particular needs. After several iterations we landed on the following building blocks:
These building blocks were used to create a 6 x 8 foot canvas on a wall in our war room. We had multiple stakeholders from the client team join our business model canvas workshops to capture their insights on some key questions to help us populate the canvas:
  1. Who are your customers? Which customers use which services? How is demand communicated to your department? How does intake work?
  2. What vendors do you currently work with- both internal and external to your organization? How do they contribute to delivering value?  How do you coordinate to deliver?
  3. How do you measure performance? What does your performance look like for the various kinds of work that your department does?
  4. What types of tools, processes, and accelerators do you leverage to add value? Which ones are you thinking of using in the future?
  5. What do you believe are the major risks or issues that interfere with delivering business value? What counter measures have been attempted to solve these problems or mitigate these risks?
As we conducted the sessions, we started to identify 3 major types of insight. The sticky notes were tagged with a colour corresponding to the types below:
  1. Pain Point (red) – something the client wants to change because it is not working well
  2. Target State (blue) – something the client wants to have because it will help to deliver more value to the customer
  3. No Change (green) – something that is working well and do not want to change
We not only used sticky notes, but also modeled using blank sheets of paper and affixed it to the canvas with painters tape. After the first wave of workshops, we communicated an open-door policy. Anyone can walk in and start adding things to the canvas with our help. Below is a photo of the results:

We ended up with a canvas that helped us get an understanding of the client’s delivery model, pain points, and things that are working well. We also started to look to the target state with many suggestions for positive change. This canvas is in a constant state of flux and changes daily capturing thoughts and facts as we learn and discover. Finally, right at the top of our canvas, we wrote the client’s vision on a sheet of paper to anchor the discussion overall.

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