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The Virtual Enterprise

The Cognitive Enterprise in a virtual world
Technology is transforming the business models of enterprises across the globe, creating new opportunities for growth and fresh benchmarks of cost and efficiency.


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Meet the authors

Mark Foster

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ChairmanIBM Consulting


John Granger

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Senior Vice PresidentIBM Consulting

The ability to apply AI, automation, blockchain, the Internet of Things, 5G, cloud, and quantum computing at scale has made the promise of Cognitive Enterprises real.

As we place this revolution in the context of an increasingly virtual world, we see even more power arising from the ecosystems, digital workflows, and networked organizations that are made possible. The Virtual Enterprise is emerging, supported by a “Golden Thread” of value that animates the enterprise and binds ecosystem participants.

Over the past few years, we have moved toward a tipping point where enterprises across the world have looked to leverage technology holistically to transform their business models. We have seen digital transformation move from the front or edge of the organization to deep into the core. At the same time, technologies such as AI, automation, Internet of Things (IoT), blockchain, and 5G have reached a level of maturity that can be leveraged at scale to drive real impact on business outcomes.

Organizations across all industries are seeking to become technology, platform, and experience companies. We have called this evolution the emergence of Cognitive Enterprises, which are brought to life by the imagining of market-making platforms, the shaping of Intelligent Workflows, and a deeper focus on experience and humanity.

We have seen that the three main building blocks of the Cognitive Enterprise have been stretched by the new reality.

The COVID crisis has had its impact on these Cognitive Enterprises. It has accelerated digital transformation journeys; reinforced the importance of applying exponential technologies to produce more efficient, effective, and flexible processes; and clarified the case for the leverage of hybrid cloud infrastructures to deliver adaptive consumption models and services. We have seen that the three main building blocks of the Cognitive Enterprise have been stretched by the new reality.

Market-making business platforms have had to digitize even more quickly and extend their remit wider into new ecosystems and partners; Intelligent Workflows have had to prioritize the use of extreme automation and AI to meet mass customer and employee connectivity and service needs; and new definitions of experience and humanity have emerged from the need to keep customers, employees, and citizens safe and healthy.

The Virtual
Enterprise arrives

The truth is that the virtualization which has been forced by the pandemic is actually a key transformational theme that has been becoming more and more important anyway. We see this recent experience as accelerating the emergence of the Virtual Enterprise as the next generation of organization and operating model. It builds upon the drivers that we have seen for a while and takes the potential to the next level. The Virtual Enterprise re-evaluates the need for physical assets, infrastructure and captive talent and opens the potential for extreme digitalization as well as extended value chains and new partnership approaches.

The Virtual
Enterprise arrives

The truth is that the virtualization which has been forced by the pandemic is actually a key transformational theme that has been becoming more and more important anyway. We see this recent experience as accelerating the emergence of the Virtual Enterprise as the next generation of organization and operating model. It builds upon the drivers that we have seen for a while and takes the potential to the next level. The Virtual Enterprise re-evaluates the need for physical assets, infrastructure and captive talent and opens the potential for extreme digitalization as well as extended value chains and new partnership approaches.

The single most important characteristic of the Virtual Enterprise is “openness.” This openness brings value at three levels:

Inside
Inside the enterprise—connecting divisions and functions in more collaborative and agile workflows
Outside
With partners outside the enterprise who become ever more critical to deliver core purpose of the business
Out there
With the wider ecosystem that allows true platform economics to play out and the enterprise to take advantage of all those who wish or need to connect with its intent
Inside
Inside the enterprise—connecting divisions and functions in more collaborative and agile workflows
Outside
With partners outside the enterprise who become ever more critical to deliver core purpose of the business
Out there
With the wider ecosystem that allows true platform economics to play out and the enterprise to take advantage of all those who wish or need to connect with its intent

The extremes of virtual access to customers and work colleagues over the past year have also accelerated a reset of the human-technology interface. New tools and ways of working have become commonplace overnight.

The digital channel has become a primary source of engagement, unleashing new potential for markets and access, as well as creating new challenges for recreating empathy, sense of belonging, and human connection. Working relationships and collaboration have also been tested and enabled by ever-advancing software and technology solutions.

The pandemic experience has also reinforced the degree to which everything is connected around the world and the impact humanity has on itself and the planet. The Virtual Enterprise therefore operates in an environment where purpose, intent, and wider societal impact have come to the fore.

The potential to align ecosystems as solutions to the big issues of climate, health, and equality is real. As sustainability and stakeholder capitalism become C-suite imperatives, the new technology-enabled business models that are emerging have a critical role to play.

Market-making Platforms and Ecosystems
The Virtual Enterprise makes open platforms and ecosystems the heart of its strategy, illuminating new potential for growth, efficiency, and innovation.
Science and Data-led Innovation
The Virtual Enterprise fundamentally looks forward and outward, leveraging new kinds of data and intelligence to drive decisions.
Extended Intelligent Workflows
Extended Intelligent Workflows are the Golden Thread of the Virtual Enterprise that integrate the end-user experience provided by the enterprise, its platforms, and its ecosystems.
Sustainability and Impact
The evolution toward the Virtual Enterprise reinforces global trends toward more virtual work models, less travel, less urban activity, and less physical trade.
Inclusive Human-technology Partnerships
The Virtual Enterprise can be a massive accelerator of inclusion as different divisions, organizations, geographies, and backgrounds get to engage in extended workflows.
Open Secure Hybrid Cloud and Networks
Architectural choices and leverage of open secure solutions with fungible skillsets are fundamental to the success of the Virtual Enterprise.
1.
Market-making Platforms and Ecosystems
The Virtual Enterprise makes open platforms and ecosystems the heart of its strategy, illuminating new potential for growth, efficiency, and innovation.
2.
Science and Data-led Innovation
The Virtual Enterprise fundamentally looks forward and outward, leveraging new kinds of data and intelligence to drive decisions.
3.
Extended Intelligent Workflows
Extended Intelligent Workflows are the Golden Thread of the Virtual Enterprise that integrate the end-user experience provided by the enterprise, its platforms, and its ecosystems.
4.
Sustainability and Impact
The evolution toward the Virtual Enterprise reinforces global trends toward more virtual work models, less travel, less urban activity, and less physical trade.
5.
Inclusive Human-technology Partnerships
The Virtual Enterprise can be a massive accelerator of inclusion as different divisions, organizations, geographies, and backgrounds get to engage in extended workflows.
6.
Open Secure Hybrid Cloud and Networks
Architectural choices and leverage of open secure solutions with fungible skillsets are fundamental to the success of the Virtual Enterprise.

The Deep Dive reports

Download our Deep Dive reports to explore the Virtual Enterprise’s six building blocks in more detail, including key insights, actions, and additional client success stories.
  1. The power of market-making platforms
    & ecosystems

    Enterprises battling disruption are extending partner platforms to promote agility and resilience —and opening new revenue streams as a result. Learn more

  2. The spark of science and data-led innovation

    Businesses use discovery tools to assimilate data from beyond the core—on politics, the environment, and other industries—to protect and extend continuity and resilience. Learn more

  3. The magic of extended intelligent workflows

    Agile organizations are transmitting experiences, information, and relationships across ecosystems to drive experimentation and decision-making, which can unlock exponential value. Learn more

  1. The urgency of sustainability and impact

    The Virtual Enterprise is reinforcing the extent of connectedness around the world and the impact humans have on each other and the planet. Learn more

  2. The creativity of inclusive human-technology partnerships

    The Virtual Enterprise makes the most of the accelerated reset of human-technology interfaces that became the norm during the pandemic. Learn more

  3. The imperative of open, secure hybrid cloud and networks

    Open, secure hybrid cloud technology forms the foundation of the Virtual Enterprise, generating unprecedented strategic and financial benefits for organizations. Learn more

Yara: Feeding a growing population

As part of its efforts to create a sustainable world without hunger, Norway-based Yara International ASA has built a digital farming platform, Atfarm/FarmX, supporting sustainable farming globally. One of the world’s largest mineral fertilizer producers and a global leader in digital farming solutions, mineral fertilizer producers and a global leader in digital farming solutions, Yara created the platform to connect and empower independent farmers across the globe.

By providing holistic digital services and instant agronomic advice, Yara ultimately helps avoid deforestation and increase food production on existing farmland. For example, the platform provides timely and accurate crop yield forecasts and nitrogen and water management recommendations, supported by hyperlocal minute weather data.

The cloud-agnostic platform follows a pay-as-you-go commercial model and delivers cutting-edge data services. It uses IoT sensors and AI to provide farmers with hyperlocal weather forecasting, crop damage predictions, and real-time fertilization suggestions.

Already accessed by more than 3 million farmers, the platform has enabled Yara to expand its business model and create a competitive differentiator—all while supporting sustainable operations. It has also paved the way for other advanced technologies that can empower farmers, such as blockchain for transparency and trust in trade transactions.

Results

The platform covers over 10 million hectares of arable farm land

Yara has attracted over 3 million farmers in the past two years

Irrigation on-demand solutions provide savings in water consumption up to 20%

See how Yara has embraced the Virtual Enterprise model

Learn more
  • Market-making Platforms and Ecosystems
    • Yara created an industry-wide business platform, Atfarm/FarmX, that connects and empowers independent farmers.
    • Yara has expanded its ecosystem on the platform to include banks and logistics service providers.
    Science and Data-led Innovation
    • Yara experiments with exponential technologies like drone-powered augmented reality to empower successful micro farming.
    • Data scientists prioritize modeling and innovation as the result of a DataOps approach that automates myriad functions.
    Extended Intelligent Workflows
    • AI-enabled workflows extend from supplier connections to farmers and processors in a collaborative relationship.
    • The workflows integrate IoT sensors, AI, and weather data for hyperlocal forecasting, crop damage predictions, and real-time activation.
    Sustainability and Impact
    • Yara and IBM Food Trust, a fork-to-farm value chain, drive carbon neutrality and product traceability.
    • Yara helps create a sustainable world without hunger as it fosters better farming practices and yield.
    Inclusive Human-technology Partnerships
    • Yara works with farmers and leading food value chain companies to collaborate on crop nutrition, science-based products, and digital tools.
    • Improved crop yield insights enable better calibration and communication to customers, reducing waste and ensuring transparency.
    Open Secure Hybrid Cloud and Networks
    • A first-of-a-kind in the industry and competitive differentiator, Yara’s platform operates in a cloud environment for instant information sharing and collaboration.
    • A cloud-agnostic strategy enables consistent data governance and data security.
1
Market-making Platforms and Ecosystems
Openness is the defining characteristic of the Virtual Enterprise. Most importantly, openness animates the stretching of the business platforms that are being envisioned to encompass wider ecosystems. We see organizations recognizing the power of combining platforms to seize new markets, as well as recognizing that the scale of the impact that is required demands this alignment with other substantive players. By optimizing platform economics, open connectivity, and frictionless engagement, the Virtual Enterprise enables all participants across market-making platforms and ecosystems.
Deep Dive:
Key Insights
Open platforms and ecosystems offer new avenues for growth, efficiency, and innovation.
Partnership has become an imperative for most organizations to find value, focusing on fewer, deeper ecosystem combinations to build out their growth agendas.
New and emerging technologies grounded in principles of openness and standards, like blockchain and hybrid cloud, underpin the acceleration of this opportunity.
  • Schlumberger:
    Boosting collaboration with an open cloud-based AI environment

    Schlumberger, which provides leading digital solutions and deploys innovative technologies to enable performance and sustainability for the global energy industry, is accelerating customers’ move to the cloud with its DELFI cognitive E&P environment, where customers’ teams can collaborate freely across boundaries—breaking down traditional data silos.

    By providing access to the company’s cutting-edge exploration and production (E&P) solutions and applications, the DELFI environment enables energy companies to create new data-driven workflows and adopt game-changing technologies like AI, analytics, and automation. Customers and partners worldwide can integrate their deployment of the DELFI environment with the OSDU™ Data Platform, the industry standard for energy data.

    Results

    Expected reduction in customers’ total cost of ownership to be 10 to 20%

    “Write once, deploy anywhere” ensures faster development of applications, workflows, and overall platform for customer-specific requests leading to improvement in volume and velocity of service introduction and deployment

    Will expand the global addressable market from under 50% today to potentially almost the entire world

2
Science and Data-led Innovation
The openness of the Virtual Enterprise accelerates access to new sources of product and service innovation. It takes a scientific discovery approach, constantly experimenting, relying on predictive and prospective analysis fueled by the massive amounts of data it can access from itself and its ecosystem partners. More and more industries are seeing the value that used to be the preserve of R&D-led industries (for example, pharmaceuticals) as they look forward rather than backward and mine the information in their value chains to spark creativity.
Deep Dive:
Key Insights
The Virtual Enterprise fundamentally looks outward and forward, leveraging new kinds of data and intelligence.
It applies scientific discovery principles to innovate its enterprise, platforms, and ecosystems along with its products, services, and business models.
New kinds of data and emerging technologies—such as process mining, neural networks, swarm intelligence, and quantum computing—open up entirely new opportunities to accelerate targeted and insight-led experimentation and innovation.
  • Cleveland Clinic:
    Accelerating scientific discovery with hybrid cloud, AI, and quantum computing

    Nonprofit multispecialty academic medical center Cleveland Clinic, ranked #1 in heart care, is partnering with IBM to establish the Discovery Accelerator, a center that will use hybrid cloud, AI, and quantum computing technologies to fundamentally increase the pace of discovery in healthcare and life sciences. Cleveland Clinic researchers will use advanced computational technology to generate and analyze massive amounts of data to enhance research in genomics, single cell transcriptomics, clinical applications, chemical and drug discovery, and population health—including new approaches to public health threats like COVID-19 pandemic. The center will rely on next-generation IBM technologies and innovations like deep search, AI and quantum-enriched simulation, generative models, and AI-driven autonomous chemical synthesis.

    Results

    10-year collaborative program brings accelerated methods of discovery to fuel advances in healthcare and life sciences

    Cloud access to more than 20 IBM quantum systems

    1,000+ qubits to be deployed in 2023

3
Extended Intelligent Workflows
The Intelligent Workflow is the Golden Thread that animates the Virtual Enterprise. It creates the backbone of the value chains that bind the ecosystem participants. As the reach of the workflows is extended, the power of applied technologies such as extreme automation, AI, IoT, and others is multiplied to unlock efficiency and differentiation and render the platforms ever more attractive. Virtualization adds new opportunities for networks, connectivity, and skills engagement to bring the workflows to life and drive agility.
Deep Dive:
Key Insights
Extended Intelligent Workflows are the Golden Thread of the Virtual Enterprise that integrate the end-user experience provided by the enterprise, its platforms, and ecosystems.
Value can be exponentially amplified if Intelligent Workflows extend their scope deeper into customers, suppliers, ecosystem partners, and other stakeholders.
Virtualization adds incremental opportunity to enhance the efficiency and effectiveness of Intelligent Workflows and the platforms that they support.
  • we.trade:
    Simplifying trade with Intelligent Workflows

    Founded by a consortium of major banks in Europe, we.trade uses blockchain technology to connect buyers, sellers, banks, insurers, and logistics organizations with greater data intelligence and traceability. This first-of-a-kind platform simplifies cross-border trading, fosters greater trust and transparency, and opens new markets for participants by reducing barriers to engage within the ecosystem.

    The we.trade platform streamlines the trade finance lending workflow, reducing friction and supporting companies as they expand into new markets. In addition to providing traders with trusted access to insurance, credit rating, and logistics services, the platform helps reduce counterparty risk, automate transactions, and integrate the end-to-end trade ecosystem.

    Results

    80% reduction in transaction processing costs

    Grown to include 17 banks across 15 countries since 2019

    Track and trace for 400+ couriers

4
Sustainability and Impact
The Virtual Enterprise reinforces the extent of connectedness around the world and the impact of humans on each other and on the planet. It aligns purpose and intent with wider societal impacts. With sustainability and stakeholder capitalism taking hold in the C-suite, new ecosystem business models are helping provide solutions to the biggest challenges of our time around climate, health, security, and equality. This plays an increasing part, too, in the way that customers, partners, and employees feel about engaging with the organization.
Deep Dive:
Key Insights
Sustainability and corporate purpose are an increasingly important ingredient of success with customers, employees, ecosystem partners, and the community as a whole.
Virtualization expands the ability of organizations to open up to new economic opportunities, while becoming more sustainable at the same time.
Ecosystems and their technology-enabled platforms will be at the heart of solving complex challenges and providing purpose to customers and employees.
  • Oren:
    Driving sustainability through digital transformation

    Shell, with its long-standing customer relationships across the mining ecosystem, joined forces with IBM to launch Oren, the sector’s first digital B2B marketplace. It was created to accelerate the adoption of digital services in mining by curating solutions and services—including those aimed at sustainability—and connecting buyers and sellers on an open platform.

    Designed with ease-of-use in mind, Oren makes the daunting task of digital transformation accessible by offering a one-stop-shop of solutions, services, and bespoke integrated solutions. Oren guides and supports mining companies along a strategic path to sustainability by delivering long-term digital roadmaps to digitizing their operations, increasing efficiency, reducing emissions, and enhancing their societal license to operate.

    Results

    1st B2B digital marketplace for the mining industry

    Over 60 ready-to-use solutions

    Ecosystem tools to assist in achieving net-zero and decarbonization targets

5
Inclusive Human-technology Partnerships
The Virtual Enterprise embraces the new tools and ways of working that have become the norm during the pandemic. It takes advantage of the accelerated reset of human-technology interfaces, including digital channels to customers and seamless virtual working across processes. It also, though, recognizes the need to build new forms of leadership, inspiration, engagement, and connection to deal with exacerbated challenges of human empathy, creativity, and sense of belonging.
Deep Dive:
Key Insights
The pandemic has accelerated the virtualization of customer and employee interactions and shaped durable new ways of working.
The virtualization of work has opened up new opportunities and challenges for organizations and employees alike, where global capabilities can be accessed with greater ease.
New hybrid ways of working are emerging and will require new tools and rules of engagement for people, teams, and organizations.
  • Orange France:
    Connecting talent and technology

    Leading national telecom company Orange France needed to develop new customer offerings on digital channels. The company developed a comprehensive Orange Campus program to enhance employees’ digital competencies.

    Using co-creation studios, Orange France formed a vision of how human talent and technology can work together seamlessly. In the process, 150 current roles were narrowed down to 30 top roles, and 80 digital competencies for tomorrow’s workforce were identified. Orange France reorganized training paths and boosted career mobility by helping employees acquire new—and critical—digital skills.

    Results

    50% of the workforce involved in transformation have achieved new digital skills through the Orange Campus

    150% increase in customer sales on digital channels with +10 NPS points

    30% increase in digital channel self service with full digital assistance

6
Open Secure Hybrid Cloud and Networks
The Virtual Enterprise takes full advantage of the flexibility and nimbleness promised by hybrid cloud architectures. It enables the openness of the enterprise to connect with business partners as well as access the full potential of leading open technologies to drive innovation. The Virtual Enterprise is therefore underpinned by robust networks and secure technology infrastructure, with the right workloads within the right overarching architecture and plug-compatible with the world around. The dual demands of adaptability and resilience are therefore prerequisites of the journey to become a Virtual Enterprise—a journey on which many organizations have now embarked.
Deep Dive:
Key Insights
The openness of the Virtual Enterprise needs to be enabled by open secure hybrid multicloud technology architectures.
The new ecosystems and Extended Intelligent Workflows require massive application modernization and technology renewal to leverage data access, flexibility, and TCO.
Architectural choices and leverage of open secure solutions with fungible skillsets are fundamental to the success of the Virtual Enterprise.
  • Delta Air Lines:
    Modernizing the technology platform

    Delta Air Lines understands the need to constantly evolve its digital presence and enhance its customer (and employee) experience. With demand down due to the pandemic, the company recognized a unique opportunity to modernize its digital foundations and operations.

    As part of its digital transformation, Delta is migrating most of its data and applications to the cloud for improved customer experience and greater efficiency across its business. Moving to an open hybrid cloud architecture enables a consistent standards-based approach to development, deployment, security, and operations across clouds. Delta’s new cloud architecture will help weave its networks together, increasing agility and unlocking data for use across applications.

    Results

    Delta expects 90%+ of its applications and databases to be in cloud environments by 2024

    Delta expects 30%+ improvement in development productivity as a result of this transformation

    1,000+ Delta IT experts will be trained in application development and delivery, data management, and security

1
The Garage as an execution vehicle for the Virtual Enterprise

The scale of change represented by the Virtual Enterprise is significant and wide-reaching across the organization and its ecosystem partners. There is a need to maintain focus on the overall intent of the strategy, align key stakeholders, and make meaningful accelerated progress while not swamping the enterprise with change or unleashing agile “chaos.”

The Garage approach is an effective way to bring the various components and players together in a change architecture that can pursue the Golden Threads of value; build concrete modules of enhanced performance; and tie people, processes, and systems together at scale. The Garage model of co-creation, co-execution, and co-operation has proven to be effective in the virtual world that has been forced by the pandemic.

The ability to bring skills, talent, and knowledge to bear from anywhere is very productive. It straddles functional boundaries in the organization and enables ecosystem partners to participate in innovation and digital transformation.

The approach also reinforces core focus areas and strategic intent, as well as lays down the architectural rules or train tracks for the agile cross-functional teams to operate within. In addition, the Garage has data as its raw material for opportunity identification and leverage for ideation and impact and can plug in pre-configured solutions from the ecosystem to accelerate progress.

Core action guide of the Virtual Enterprise

The six imperatives of the Virtual Enterprise can, therefore, be delivered and accelerated through a Garage approach, aligned with the Extended Intelligent Workflows that need to be constructed and nested within a clear overall Transformation Program. Through this approach, it is possible to:

Embrace

Embrace the ecosystem opportunity in strategic intent and business platform design as a driver of accelerated digital transformation

Innovate

Innovate with science and data-led approaches to drive progress across workflows, platforms, and ecosystems

Extend

Extend Intelligent Workflows to create differentiated Golden Threads of technology-enabled business transformation

Solve

Solve the biggest challenges of our time through alignment of strategy and executional impact to achieve sustainable development goals while building team purpose and engagement

Empower

Empower the virtual workforce to enrich core Intelligent Workflows and continually experiment to improve customer and employee experiences

Accelerate

Accelerate complex change programs that grow platforms, ecosystems, and extended workflows through hybrid cloud and networks