1. Siemens Global Business Ecosystem (GBE)
Jose C. Lacal
Product Manager,
OpenSource Applications

2. Table of Contents Jose C. Lacal Global Business Ecosystem Definition
Plan of Action: the “Sea of Business”
„Competing for the Future“
Market Potential Pyramid
Open Standards = Open Software + Open Hardware + Open Networks
Create Your Own Future
„Virtualize“ Siemens Assets, Core Competencies
Sample Open BoIP Products and Services
Open Source Value Creation
History behind this presentation:
The author has been:
GNU/Linux user since 1996
OpenSource promoter within Siemens ICN since 1997 through white papers and the „Linux for Siemens“ (LxS) mailing list.
Business owner, entrepreneur
Owned and ran first ISP in SE Mexico in 1995
Knowledge and ideas presented here are the author‘s intellectual property
Author is actively involved in the Open Source community
„Thank you“ to Donald M. Tsusaki for his feedback and contributions that made this presentation much better.

3. Jose C. Lacal 1986 - 1994: First business at age 21.
Founder, President of industrial bakery in Miami, FL.
In charge of 40 employees, Sales, Customer Care, Marketing.
: First ISP in SE Mexico.
Founder, investor and Chief Vision Officer. 10 employees.
Introduced the Internet culture to this area.
now: founder of 02 Open Source start-up ventures.
now:
Siemens ICN Boca Raton. Customer Service engineer, daily contact with large telco operators in the US and worldwide.
Munich: Open Source, developed „Business over IP“
I know business, I know telcos, I know Open Source.

4. Reality Check
Value created in the IP market since 1984: US$_____ Billions Percentage of such value to Siemens? _____%
More of the same actions = more of the same results.
Amazing that young people, who live closest to the future, are the most disenfranchised in strategy-creating exercises.

5. Global Business Ecosystem Definition
No company is large enough to survive and prosper alone
Characteristics of a GBE:
A group of independent entities (partners, internal companies, external members) and individuals, geographically unbounded;
that share a common vision of what the future should look like;
and that join forces (temporarily and voluntarily);
to make that future happen in their own terms.
Cisco, Intel, Microsoft, Nortel nurture their ecosystems
Business ecosystems:
adapt and adopt
compete
evolve
grow or die together
adapt to changing environmental conditions: new laws, regulations
adopt new genes to improve their genetic library: learn from others, internalize knowledge
compete with other ecosystems for scarce resources: Cisco’s ecosystem vs. Nortel’s vs. Microsoft’s vs. Intel’s.
evolve together in order to perpetuate their ecosystem: migrate from selling boxes to selling solutions;
grow or die together, emphasizing need for cooperation, and dependency
Different relationships in an ecosystem:parasite, symbiotic, etc. All forms of interaction, even indirect, contribute to the overall well-being of the ecosystem (leaves falling from the tree -> fertilize the ground)
interact with suppliers
customers
developers
In a global market, companies should learn how to work in a world of business ecosystems where they can get other players to co-evolve with their visions of the future,

6. Plan of Action: the “Sea of Business”
Siemens as an aircraft carrier “task force:” provide support logistics to thousands of airplanes (startups, associates). All types: long-range reconnaissance; fighters; bombers.
Future
Opportunity
Island 01
Past
Opportunity
Island 01
Siemens is too big, slow and procedures-bound to become an effective, aggressive player in today‘s fast-paced Internet-driven arena. That is a liability. This presentation advances the concept of turning Siemens into an „aircraft carrier:“ use Siemens‘ size, stability and formalism into a strenght.
The Siemens aircaft carrier will then invite hundreds of independent pilots to use the carrier‘s facilities during their flights. Some of those pilots will operate long-range reconnaisance planes (to scout for business opportunities far into the future); other pilots will operate bombers (start-ups that attack new markets); other pilots will operate fighter planes (partner companies that compete in existing markets and industries); etc. The Siemens aircraft carrier will provide all those planes and pilots with logistical support (joint Marketing, Finance, HR, manufacturing, etc.).
Siemens aircaft carrier, and its associated „task force“ (supply ships, destroyers, landing ships with the infantry troops, etc.) will move through the „Sea of Business Opportunities“ directed by the reconnaissance planes that scout „Islands of Opportunity“ far into the future. It is very difficult to turn a large ship around fast, but it is easier when the smaller planes scout the area first and then direct the large ship into the most promising island of opportunity for a massive attack and guaranteed conquest.
``Because we're making bigger bets on investments in technology, we can't afford to spend a whole lot of money in one direction and then find out five years later it was the wrong direction.''
Future
Opportunity
Island 02

7. Competing for the Future
Envision new markets: strategic purpose
Establish the market: set standards
Lead those markets
As a result:
we drive perceptions, we make the rules => Trendsetter
create a new global business ecosystem with ICN at the center
Continued reactive planning ensures:
shrinking market share
diminishing mind-share
shrinking market (stock) value
become an economic dinosaur
„strategic intent“ -- a point of view about a company‘s future

8. Market Potential Pyramid
The phases of technological deployment (assuming increasingly available bandwidth at lower prices) using VoIP as an example:
1. Installing the pipes (the wires and fiber optic cables). E.g. Internet infrastructure.
2. Creation / distribution of usage tools. E.g. InternetPhone (January 1995)
3. Availability of content tools (to create and serve content). E.g. Internet-based VoIP gateways.
4. Mass-market acceptance. E.g. VoIP as a commodity service (MCI, AT&T, Deutsche Telekom).
Higher-level providers (such as Amazon.com) are created on the assumption that there will be a huge base of Internet-savvy users available. Amazon.com can then focus on its value proposition: content.

9. What is the market value of companies positioned at the top of the Pyramid, vs. the market value of those at the bottom?
Where is the money?

10. Open Standards = Open Software + Open Hardware + Open Networks
OpenSource software is a part of a historic shift away from proprietary systems and back to open standards.
Open Networks: (The Parlay Group, The SoftSwitch group, Geoplex)
Open Hardware: (
Open Software: (Apache, GNU/Linux)
Historically, the way we get high reliability of results in engineering and the sciences is by institutionalizing peer review. Physicists do not hide their experimental plans from each other; instead, they skeptically check each others' works. Engineers do not build dams or suspension bridges without having the blueprints sanity-checked first by other engineers independent of the original design group.
All the Internet's core software is OpenSource -- and its reliability is extremely good. This is an even stronger demonstration because the Internet is multi-platform, heterogeneous and international, and it has remained essentially backward-compatible through 30 years and several generations of technology.

11. Create Your Own Future
With right tools, create alternative futures (Isaac Asimov)
“The future is not what it used to be.” Disruptive, non-linear
Three huge industries in the XXIst Century:
edutainment (education + entertainment)
experiential tourism
safety / security
Three massive societal changes in the XXIst century:
rise of the Third Age
transnational companies = global clans
more humans per square meter
Common thread along all outcomes: I & C technologies.
The future does not match a plotting of past and present trends. The most likely future scenarios are disruptive patterns of all known past realities. Every action (or lack thereof) taken, and every decision (or lack of making one), has a definite and measurable impact on the alternative futures.
Common thread along education, tourism and safety: I & C technologies!
For the first time in history, entire countries are adjusting their societies around the needs of the oldest members of such society.
Mega-corporations have, today, more power (economical, political) power than 95% of the countries in the world. With power comes responsibility.
In the next 20 years, 80% of the world’s population will live in 500 cities.
Identify the „discontinuities“ that may have a significant impact on our r business - and our competitors' business. What are discontinuities? They are the confluence of trends and events that may be foreseen and can be influenced but cannot be precisely predicted. Discontinuities emerge from the convergence of shifts in lifestyles, technologies, demographics, regulatory and political upheavals, and other significant drivers of change. And they are made to happen by someone - discontinuities do not just happen on their own with no influence.

12. „Virtualize“ Siemens Assets, Core Competencies
Open
Standards
E-Business
Large system
expertise
Global
salesforce
distribution
Worldwide
tax, legal
Finance
certification
Customers
Brand name
130 LCs
Installed base
Manufacturing
People
Open BoIP
Trusted global
partner
Sponsor
Open Source
Integration
management
Forces
Siemens’ Unique Assets
Courses
Think of Siemens as a repository of skills rather than portfolios of products.
The concept of „virtualizing“ means the process of turning Siemens unique assets and core competencies (which are enormously valuable in the „physical world“) and turn them into valuable assets in the Internet world. Specifically:
- brand name: Amazon.com (and other Internet companies) are spending millions of US Dollars to create a valuable brand that consumers recognize; Siemens‘ brand name is already well-known.
The “dot com” definition:
business model: digitizing business processes, turning business process and relationships into the Digital arena
leading-edge
tought-leadership
nimble, flexible, aggressive
innovative
To avoid playing the high-stakes game of catch-up, Siemens must continually unearth the discontinuities in its markets. Those that gain a deep understanding - i.e., better than any customer or competitor - can create a market that doesn't exist and satisfy needs not yet articulated. They are in a position to reshape their industry to their advantage and catch competitors unaware. The process of looking for discontinuities involves going from public data to private foresight. Trends are examined, particularly the under-appreciated ones. The search is for transcendent themes, connections between trends, and second- and third-order effects.

13. What is next?
„The basic economic resource -‘the means of production,‘ to use the economist's term- is no longer capital, or natural resources (the economist's ‚land‘), nor ‚labor.´ It is and will be knowledge.“ Peter F. Drucker, „Post-capitalist Society,“ 08.
The ability to exploit the firm's „core competencies“ and strategic assets, the building blocks for new businesses.
Democratize the strategy process by handing strategic planning over to teams of line and staff managers from different disciplines. Frequently, these teams include junior staffers, handpicked for their ability to think creatively, and near-retirement old-timers willing to tell it like it is. And to keep the planning process close to the realities of markets, today's strategists say it should also include interaction with key customers and suppliers. That openness alone marks a revolution in strategic planning, which was always among the most sacrosanct and clandestine of corporate activities. But it's necessary if the process is to help produce what customers want.
Participation in strategy must be broad-based because the people at the top often lack the „genetic diversity“ to see things differently. By this, I mean, many executives have been in the same industry for years, used the same consultants, read the same publications, attended the same conferences, etc.
Instead of being called upon to eke out fractions of market share or revenue growth, strategic thinking should be seen as an opportunity to transform a corporation and change the rules of an industry to its advantage. Not merely incremental change: how do you shape the emergence of the new opportunity arenas.

14. The new role of the CEO
The notion of white-space opportunities is proving especially compelling for highly decentralized companies such as Hewlett-Packard Co. HP Chairman Lewis E. Platt now believes his most important role in strategy formulation is to build bridges among the company's various operations. „I don't create business strategies,“ argues Platt. “My role is to encourage discussion of the white spaces, the overlap and gaps among business strategies, the important areas that are not addressed by the strategies of individual HP businesses.“

15. What‘s next
Because we're making bigger bets on investments in technology, we can't afford to spend a whole lot of money in one direction and then find out five years later it was the wrong direction.

16. Sample Open BoIP Products and Services
TeleMed
Siemens’ Unique Assets
Forces
Courses
Open
Standards
Customers
Brand name
130 LCs
Installed base
Manufacturing
People
Sponsor
Open Source
Personal CO
Trusted global
partner
E-Business
Large system
expertise
Global
salesforce
distribution
Worldwide
tax, legal
Finance
certification
Integration
management
SafeLife
Open BoIP
OpenBusiness
TeleKnow
The proposed OpenBoIP business model requires adjusting the existing business model; old processes will not be adequate to capitalize on the new revenue streams created by OpenBoIP.
We are creating a richer model than the current business model:
source code allows customized products for a market of one
TeleWork
Reinvestment

17. Open Source Value Creation
Switch
- low margin - low customization
Traditional Model
Cumulative Income
Cumulative Income
After-market services
Initial Sale
Time
OpenBoIPModel
Switch
- higher margin
- higher value
==> higher volume
(bigger base)
Cumulative Income
- revenue on bigger base
- new addon-products and services
eroded traditional after-market services
Initial Sale
Time

18. Backup slides

19. Introducing OpenSource and GNU/Linux
OpenSource software (OSS)
Freely distributed with source code
Widespread acceptance
OSS is at the heart of the Internet:
Apache ( >65% of all websites)
DNS and BIND (all name resolution)
Perl (behind most CGI scripts)
sendmail (processes 90% of )
GNU/Linux, best example of OSS:
Beat common Operating Systems (OSs)
Superior stability and usability*
GNU/Linux, fastest growing Network OS
GNU/Linux is taking market share from all commercial UNIX vendors.
GNU/Linux runs on a variety of hardware: Intel x86, SPARC, even A/S 400.
A chief technical officer (CTO) at a large telecom company is going to spend millions of dollars on a strategic business system with software he cannot see inside and cannot modify, software that depends on a single vendor to service. Are those systems going to change to serve the company‘s business plan, or the vendor's plan? What happens if the vendor drops support for the systems?
* - OS of the year, InfoWorld magazine

20. The numbers behind Open Source
Red Hat: Linux distributor. IPO 30 days ago. US$90/share.
Cobalt: Linux mini-servers. IPO 10 days ago. US$100/share.
Hewlett-Packard: entire business unit only for Open Source; free e-speak (broker system) and mail server software.
Sun Mycrosystems: will release source code of Solaris; free Star Office package; publicly available Sparc64 spec files.
IBM Consulting Group: 300 out of 1,800 are Linux experts.
SCO (Santa Cruz Operation): Linux consulting group.
Microsoft was recently declared a monopoly by a US judge. That will generate a cascade of interest in Open Source.

21. Virtualize Siemens assets, core competencies
Turn around weaknesses
Trusted global
partner
Sponsor
OS “geeks”
Integration
management
Slow
moving
Large
size
Obsolete
mindset
Corporate
weaknesses
Large system
expertise
Global
salesforce
distribution
Worldwide
tax, legal
Finance
certification
Customers
Brand name
130 LCs
Installed base
Manufacturing
People
Corporate
assets
Core
competencies

22. Example of Global Business Ecosystem
Support
organizations
Open documents
Current
customers
Future
customers
Siemens
Current
offerings
Join
development
Future
offerings
Open interfaces
Telecom IT
External
content
providers
External
developers
Edutainment
Siemens should start a “gravitational force effect” such that:
generate a circle of influence
It is NOT a merge of equals. The IT part has eaten away the Telecom part. Use colors to indicate that the merged part is not the mixture of 50 / 50 but rather a dominant color.