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Value Fabric Wikipedia Page

A value fabric is a mesh of interwoven, cooperating organizations and individuals collectively called parties. The value fabric shows the interaction among collaborating parties. Some parties engaged in a value fabric deliver value directly to their customers and assure that the value continues to meet their customers’ expectations. Other parties deliver and assure value indirectly. Customers also play a role in the value fabric. The concept comes from the digital world and was introduced by John Reilly in a series of his blogs and his often-read 2014 book, Frameworx: Mastering the Digital World. The fabric’s use continues to expand in the world of digital services. The example of a fabric below shows a cloud broker and its interactions with other parties engaged in the fabric. The arcs and their labels represent key points of interaction among the parties.

Key to making the most of the value fabric is the ability for all the parties to effectively collaborate in delivering value to the customer. The digital bridge is a pathway among engaged parties that simplifies partnering, integration and end-to-end management of digital services or any service. It provides a common language, business processes, information, key performance indicators (KPIs) and application programming interfaces (APIs) for successful digital partnerships.

Comparing the value fabric to the value chain

A value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. The concept comes from business management and was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance. In the value chain, inbound logistics, operations, outbound logistics, marketing and sales, and service are categorized as primary activities. Secondary activities include procurement, human resource management, technological development and infrastructure. A value fabric is more like a value system than a value chain. A value system, or an industry value chain, includes the suppliers that provide the inputs necessary to the firm along with their value chains. After the firm creates products/services, they pass through the value chains of distributors (which also have their own value chains), all the way to the customers. All parts of these chains are included in the value system.

Similarities

Value system and the value fabric can be used by any industry. Although the value system was originally envisioned for products or tangible goods, such as those offered by the manufacturing industry, it has been adapted for the service or intangible goods industry.
Value system and value fabric involve collaborating parties.
Value system and value fabric focus on value of products/services offered to the market.
Value system and value fabric involve the customer.
Value system and value fabric contain a set of underlying activities and information.

Differences

Value fabrics represent the next step in the evolution of the value chain and value system in order to more fully accommodate how enterprises conduct business in today’s digital world.

Collaboration versus chaining

Even though the value system resembles a mesh or network the linkage appears visually to be sequential. In today’s digital world, sequential collaborations among parties are viewed as out of date. Straight lines often imply a single collaboration, while arcs imply a more involved, closer collaboration that is not sequential and often involves multiple parties.

In the value fabric, more importance is placed on value threads/streams (a group of interrelated activities) in which parties, including the customer, engaged in the fabric participate. This is quite different when compared to the concept of an implied chain of value activities in the value system.

Definition of value

The value system places a high importance of the value of the product/service being offered to the market by an enterprise. The value fabric expands this to include value added by other parties, value delivered to the customer and value provided directly to customers by other parties engaged in the fabric, as well as value continuing to be realized by the customer.

Increased focus on the customer

Unlike in the value system, the customer can/does play an integral role in the value fabric. They are can/are directly involved with value threads/streams which are woven into the fabric and they carry out activities within the threads not traditionally performed by them. These include configuring their own products/services, assisting in the diagnosis of problems associated with them, and monitoring the status of their service level agreements with an enterprise.

Underlying the value fabric are a set of processes and the associated information that manage the entire lifecycle of a customer. This also includes metrics that measure how well an enterprise is delivering value to the customer. This is all part of managing the customer experience and included are best practices on how to do so.

Use of standardized frameworks

The value system references a Value Reference Model (VRM) developed by the trade consortium Value Chain Group that offers a proprietary information model for value chain management, encompassing the process domains of product development, customer relations and supply networks. It includes an integrated process framework that guides the modeling, design and measurement of business performance by encompassing the plan, governance and execution requirements for the design, product, and customer aspects of business.

While proprietary models are a step in the right direction, standard, industry-wide and agnostic models are preferred, such as those provided by the TM Forum. The models should also be accompanied by an application framework, an integration (interface) framework, and a metrics framework, as well as best practice guidance, such as how to enter into service level agreements with multiple parties. All of this provided by TM Forum Frameworx, which enables an enterprise to conduct business in the digital world.

The digital bridge

Key to making the most of the value fabric is the ability for all the parties to effectively collaborate in delivering value to the customer. The digital bridge is a pathway among engaged parties that simplifies partnering, integration and end-to-end management of digital services or any service. It provides a common language, business processes, information, KPIs and APIs for successful digital partnerships. All collaborations among engaged parties are facilitated using the digital bridge and this is where standardized frameworks, such as TM Forum Frameworx, provide important capabilities, including component frameworks (process, information, application, integration), open digital service interfaces and best practices, such as service level agreement KPIs, that support the collaboration.

The digital bridge

One of the keys to making the most of the value fabric is the ability for all the parties (individuals and organizations) to effectively collaborate in delivering value to the customer. This is realized by deploying and using digital bridges, as shown in the figure above. The digital bridge is a pathway among engaged parties that simplifies partnering, integration and end-to-end management of digital services or any service. It provides the common language, business processes, information, APIs, KPIs and best practices/how-tos necessary for successful digital partnerships. All collaborations among engaged parties are facilitated using the digital bridge. These same capabilities also enable more effective operation of an enterprise and collaboration among an enterprise’s organizations. This is where standardized frameworks, such as TM Forum Frameworx, provide important capabilities. The development of Frameworx is driven by three strategic programs: Agile Business and IT, Open Digital and Customer Engagement. The underlying Frameworx component is explored in more detail here for each capability provided by the bridge.

A common language

Not having a common language makes it quite difficult for collaborating parties to communicate. Imagine the challenges if two or more parties attempt to communicate in their native languages when each only knows their own language. Each of Frameworx’ component frameworks – Process, Information, Application, and Integration – provides a common language in which parties can communicate. These cover not just the name of a term, such as customer order handling, but a description of it, along with a description of the associated customer order, a description of a customer order management application and a description of customer order APIs.

Business processes

A standards-based description of the processes is a step in the right direction in building the bridge. Process Frameworks, like the TM Forum Business Process Framework, contain much more than is needed to enable effective collaboration. The processes are organized into an easy to understand structure (decomposition/outline) that contains what is called a core process, such as order handling, as well as up two levels of sub-processes into which a core process decomposes.

The Business Process Framework also contains example process flows (value stream/threads) that can be used as a starting point to develop enterprise-specific flows. A set of best practice guidelines that can be used by an enterprise to further extend the framework is included as well.

Information

Like the Business Process Framework, the TM Forum Information Framework provides a detailed information model that contains not only definitions of entities (things of interest to the business), such as a customer order, but also facts that describe each entity, such as customer order number, and the associations (relationships of interest) between entities, such as a customer places a customer order. Details such as these are necessary to effectively communicate information among collaborating parties engaged in the fabric. This level of detail is also needed for APIs that are used to interchange information among parties. Also included are a set of best practice guidelines that can be used by an enterprise to further extend the framework.

APIs

APIs that exchange standards-based information are also part of the digital bridge. They are being and have been developed as part of the Open Digital strategic program (REST APIs) and the TM Forum Interface program (Java, XML, Corba, web service APIs) and as needed have driven enhancements to the Information Framework. For example, catalog and order management REST APIs facilitate the interchange of product/service catalogs and orders among parties.

KPIs

KPIs are essential to the bridge and to the internal operation of an enterprise. Common KPIs associated with service level agreements that measure the performance of product/services can be exchanged via the digital bridge using APIs. A customer’s experience/engagement with an enterprise can be measured using a set of common KPIs developed as part of TM Forum’s Agile Business and IT, and Customer Engagement, strategic programs. Other KPIs can be used to monitor the internal operations of an enterprise.

Best Practice and how-tos

It is all well and good to provide all the capabilities above. However, what is also needed is best practice on how to and when to apply and use them. Scenario-based how-tos, including many web-based ones in development, are being driven by ongoing work in all three strategic programs. These, in addition to those specific to the frameworks, include the Digital Services Reference Architecture, B2B2X partnering, and SLA management. B2B2X and SLA management web-based how-tos are now appearing on the TM Forum web site.

Having a digital bridge is important, but having it soundly constructed using a set of standards and best practices developed by a large and growing group of world-wide industry experts, such as the TM Forum and other industry groups, is even more so.

Participants in the value fabric

Who are the cooperating organizations and individuals, collectively called engaged parties, that participate in the value fabric? How is a vibrant fabric composed of these engaged parties developed? What are the keys to successful participation? An engaged party represents an individual or an organization, or an organization unit, that is of interest, involved, or that provides value directly or indirectly from an enterprise perspective. (enterprise is to be understood here as any individual or organization that makes offers to a market or markets). Hence an engaged party plays one or more roles with the enterprise or with another party, playing a role with the enterprise (indirectly). So the only party an enterprise would be interested in and will consider in its applications is a party playing a role (directly or indirectly). Roles can be added to the fabric as needed. Digital ecosystems are represented using value fabrics to depict the roles parties play within the fabric.

Examples of roles played by engaged parties include those:

of interest, such as competitors and sales prospects
involved, such as customers and users
that provide value directly or indirectly, such as service providers, operators, cloud brokers, infrastructure providers and application developers.

A value fabric must enable new roles to be included in the value fabric, actively creating the conditions for every engaged party to collaborate in order for the fabric to deliver the value expected by its customers. The development of enterprise-specific value fabrics is crucial to an agile enterprise. One way to do this is to construct an as-is and to-be fabric and use them as part of any planned/in-process enterprise transformation project. CxOs should be involved in their development from very beginning, because a value fabric puts the entire enterprise and those with whom it collaborates into context. And the fabric sets the part of the overall strategy on how an enterprise will conduct its business with other engaged parties. Note that the context provided can also be used to support transformations that are not enterprise wide but rather involve the addition of new parties to the fabric. The as-is and to-be value fabric can also be used to show examples of how the parties are involved, as shown in the figure below, which depicts a cloud business broker/integrator value fabric. For example, three parties playing the role of cloud provider are cDev, cStorage and cData.

A specific value fabric representation is a stakeholder view (in the architectural sense) or a viewpoint (generalization of a view as a pattern), so a diagram depicting a value fabric should always be in the context of a specific value fabric stakeholder (engaged party). In the figure the view is from the perspective of the cloud business broker/integrator. Depicting the fabric is a first step in its development. In order to be competitive and to sustain innovation, a value fabric requires of its stakeholders a high degree of specialization and operational efficiency through processes automation. Subsequent steps involve employing standards and their associated best practices, such as TM Forum Frameworx, to optimize, streamline and automate how the enterprise goes about conducting its business. These standards and best practices provide the superstructure for the digital bridge that enables collaboration between/among participants in the fabric as well as the internal operations of an enterprise. Standards should contain generalized processes, information and APIs that support parties engaged in the fabric. TM Forum is currently in the process of doing so and has recently released a preliminary set of these standards. Development of them continues. Every participant develops its own fabric and employs the same standards. This also provides an effective way in which to link value fabrics. It is important to note again that the best practices include both those that support partnering with other parities who provide value to customers as well as those that assist in assuring successful engagements with customers.

Value threads (streams)

A close look at any fabric, including the value fabric, reveals that it is woven by interlacing threads as shown in the figure below.

What are the value fabric’s threads? How are the threads related to the value chain’s value activities? How are the threads represented and developed? The threads can be viewed as value streams or process flows. Each thread represents the detailed collaboration between/among parties engaged in the fabric, for example, the activities involved with entering into an agreement with another party or on-boarding a party’s offerings. The value chain focuses on a set of primary value activities and support value activities rather than streams/flows. One reason for this focus is that threads/streams are often dependent on the way an enterprise conducts its business. There are many techniques that can be used to represent and analyze threads/streams based on an enterprise’s value activities. In general, they are represented by some form of activity (process) flow. Among the techniques that can be used to develop flows are swim lane diagramming, business process management notation (BPMN) and use cases/scenarios. Each of these representations depict the involvement of engaged parties in the activities that make up a thread/stream. The figure below shows a simple BPMN diagram that depicts the interaction between two parties, one of whom is informed of an order that is in jeopardy of being fulfilled by the requested due date.

The interaction uses the general terms ‘supplier’ and ‘buyer’, but these could be replaced by specializations, such as service provider for buyer and content provider for supplier. The benefit of this generic flow is that it can be reused and adapted as needed. It would be woven into the service provider’s value fabric to provide further details about the collaboration with the content provider. The importance of process flows grows with the introduction of the value fabric. The flows should be part of an automated workflow management application that is integrated with other applications, rather than one dimensional diagrams that cannot or are not automated. This enables the flows to be quickly updated and integrated when there are changes in any aspect of the flow, such as changes in the execution sequence or the introduction of new roles to the flow. Automation also enables execution of the flows to be analyzed using simulation tools and they can be optimized by employing value stream analysis techniques. It is preferable that the value fabric’s threads/streams, represented by flows, are developed using activities contained in a standards-based decomposition, or outline, of activities. The benefits of using this type of decomposition include reduction in duplicated activities, ensuring consistency of flows, removing ambiguity caused by undocumented activities and reuse of activities. TM Forum’s Business Process Framework includes such a decomposition. The framework and other TM Forum deliverables also include a number of flows that can be used as a starting point to develop enterprise-specific flows.

Significance

In today’s digital world enterprises no longer employ chains, even linked chains, to deliver value to their customers. A post to TM Forum’s Inform channel, Unleashing service innovation to a new value fabric, referenced a TM Forum Quick Insights report entitled, Digital Services: Assembling the building blocks of success.

This report states:

“Rapid innovation at this scale necessitates a new level of service agility that fosters collaborative development between operators and other parties, such as content owners, and even other industries, such as automotive (think of the connected services already being provided through today’s high-tech dashboards). Multi-media, video, service mash-ups, e- and m-commerce, M2M, B2B, B2B2C, vertical market opportunities – all are pushing toward development, management and delivery ecosystems that are less like traditional value chains and much more like interwoven value fabrics. Operators, partners, suppliers and developers are intimately interrelated as symbiotic players in the fabric.”

References

Porter, Michael E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Simon and Schuster. Retrieved 9 September 2013.
Allee, V. (2014, March 6). Verna’s Work in Value Networks.
CSMIC. (2014, March 6). Understanding SMI.
Kelly, J. P. (2006). eTOM - A Business Process Framework Implementer’s Guide. Morristown: TM Forum.
Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press.
Recklies, D. (2001). The Value Chain. Recklies Management Project GmbH.
Recklies, D. (2014, March 12). The Value Chain.
Reilly, J. P. (2012). Implementing the TM Forum Information Framework (SID). London: Huawei.
Reilly, J. P., & Kelly, M. (2011). eTOM - A Business Process Framework Implementer’s Guide. Morristown: TM Forum.
TM Forum. (2011). GB941-A Revenue Assurance KPI Metrics Workbook Instruction Booklet. Morristown: TM Forum.
TM Forum. (2012). GB954 - Fraud Classification Guide. Morristown: TM Forum.
TM Forum. (2012). TM Forum Portfolio and Product Management Quick Start Pack: Fulfillment. Morristown: TM Forum. Retrieved from
TM Forum. (2013). GB962 Customer Experience Management - Introduction and Fundamentals. Morristown: TM Forum.
TM Forum. (2013). GB962-A CXM Service Metrics. Morristown: TM Forum.
TM Forum. (2013). GB969 - Fraud Management Implementation Guide, Release 1.0. Morristown: TM Forum.
TM Forum. (2013). GB979 Big Data Analytics Guidebook. Morristown: TM Forum.
TM Forum. (2013). IG1104 - Introduction to the Digital Services Reference Architecture, Release 1.0. Morristown: TM Forum.
TM Forum. (2013). Introduction to the Digital Services Reference Architecture, Release 1.0. Morristown: TM Forum.
TM Forum. (2013). Open Digital Ecosystem: Business Partnering Guide. Morristown: TM Forum.
TM Forum. (2013). QI: New Services - Bridging the Gap into the Digital World. Morristown: TM Forum.
TM Forum. (2013). TR192 - Workplace as a Service Requirements. Morristown: TM Forum.
TM Forum. (2014). GB921-U Business Process Framework (eTOM) Users Guide. Morristown: TM Forum.
TM Forum. (2014). GB978 Catalog to Catalog Interface, V.12. Morristown: TM Forum.TM Forum. (2014). OSS/BSS Change-Out Results in New Services - Fast - and Happier Customers. TM Forum Case Study Handbook 2014, pp. 21-24.
TM Forum. (2014, March 12). Procurement Download Center.
TM Forum. (2014, March 17). SP B2B Processes for Wholesale.
TM Forum. (2014). Telekom Malaysia Launches Metro Ethernet within 10 Months. TM Forum Case Study Handbook 2014, pp. 14-16.
Willetts, K. (2012). Unzipping the Digital World. Morristown: TM Forum.

External links

Media related to Value chain diagrams at Wikimedia Commons

Using a Value Chain Analysis in Project Management