Whilst the cloud is an efficient way for businesses to cut their costs, there are a number of ways in which it can be leveraged for innovative services, tailored to the needs of customers, and at affordable cost.
Known as mass customisation, this is a manufacturing concept that was first described 20 years ago by writer and business consultant Joseph Pine, and sees differentiation postponed until as late as possible in the production process, combined with lowest possible unit cost.
There are, however, steps that business should be taking before applying this concept to their IT functions. For example, they should first be using the cloud to consume services on different XaaS (everything as a service) levels where and whenever possible, and making sure that they’re using a BPM platform as an “assembly line” to integrate, aggregate and orchestrate these services.
In manufacturing terms, make-to-stock production is typically for commodity goods where mass production allows for lowest possible price per unit. On the contrary, engineer-to-order is typically suitable for capital-intense industrial goods such as high-end machinery that is built uniquely or in small series.
In between the two extremes is the assemble-to-order concept which allows companies to assemble a product with unique characteristics but built up from standard modules and assemblies that, in turn, could be make-to-stock, or produced on demand based on pre-defined specifications. Assemble-to-order combines elements of make-to-stock and engineer-to-order to produce larger series at affordable cost.
The manufacturing principle known as mass customisation is a smart form of mixing these concepts, effectively postponing the task of differentiating a product for a specific customer until the latest possible point in the supply network. It combines the low unit costs of mass production processes with the flexibility of individual customisation.
First of all, a business requires the right set of standard components, assemblies and modules to be used as building blocks, along with the definition and routing of the operations to be performed to get the final product.
Secondly it needs the production line to perform the assembly tasks and operations and, finally, the end-customer must have the tooling needed to actually configure the product within the applicable rules and constraints.
The industry has building blocks on various levels of the “stack” and various levels of granularity, and a BPM platform, assuming that it is supported by solid integration and application development capabilities, is the perfect assembly line for leveraging the mass customisation principle using cloud services.
To illustrate this point, Cordys has replaced a Siebel CRM system at one of the leading emergency centres in The Netherlands with a BPM/Case Management application that combines core application logic built as per customer specification (engineer-to-order) with a set of standard public and private cloud services which allow this company to handle road assistance support calls very efficiently and effectively.
BPM is essentially used as the mechanism to steer the application (assemble-to-order). Dynamic workflow is then mixed in so as to support the call handlers with straight-through workflows calling and generating the right mix of services to coordinate all stakeholders in the value chain.
Mass customisation is applied here in integrating Google Maps with the application to plot salvage companies, hotels etc. in the neighbourhood of an incident on the map, the call handler receives visual support for selecting the right services for the client that’s in trouble. Similar services are called for number plate checks, insurance policy checks and the like.
It would be impossible to build an equivalently rich solution at an affordable cost level that would be so tailored to the needs of the customer without leveraging these public and private cloud services. In this example, the BPM platform acts as the decoupling layer between different types of services, supporting the aggregation on multiple levels of granularity, and introducing a level of flexibility to influence (Business Rules), change and replace these services at an unparalleled level of productivity.
Should this approach be industrialised with “service configurators” on the front end and an assembly line that takes and personalises the right mix of services, it could soon lead to the widespread adoption of mass customisation in IT.
Those companies that are already adopting this approach are driving innovation at a cost level substantially lower and at a pace significantly higher than doing it on premise. Those that fail to take advantage of this opportunity to leverage the cloud and to apply mass customisation are likely to face greater competition the longer it is left ignored.