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Jababeka Smart City Industry 4.0 Platform

Presented for Jababeka ICT Expo 2017

Budi WiyonoFintech Advisory Services & Techpreneur

Platform Adoption TrendIDC memprediksi, secara global, pada tahun 2018 akan tercapai lebih dari

50% Large Enterprise dan lebih dari 80% Enterprise menggunakan Strategi

Transformasi Digital yang akan membangun atau bekerjasama dengan

Platform-Platform Industri. Lebih lanjut akan terbentuk membentuk

Ekosistem-ekosistem Digital. 50%

LARGEENTERPRISE

80%ENTERPRISE

PLATFORM2018

Secara pertumbuhan akan tumbuh menjadi 500% dibandingkan pencapaian

saat ini. Pada tahun 2020 Ekonomi Digital akan mencapai 25% dari total

keseluruhan Ekonomi secara Global.

500%GROWTH

2020

25%MARKET SHARE

PLATFORM2020

Pergeseran Pasar (i)

Perubahan Ekonomi Makro Pasar

Skala Ekonomi "Demand Side Market" adalah berbasis

pada "Network Effects" dari "Two sided Market" dimana

Value Creation diciptakan secara komunal oleh semuaValue Creation diciptakan secara komunal oleh semua

stake holder yang secara teoritis menghasilkan

extraordinary impact.

Setelah era ”Software is Eating the World” sekarang

adalah era ”Platform Business Model eats the

Product/Pipeline Business Model”.

Sumber: Accenture

Pergeseran Pasar (ii)

Akunting Modern & Bobot Valuasi

Platform Network Effect

Akunting Modern telah mulai mempopulerkan tehnik

valuasi perusahaan/bisnis dengan bobot Network Effect

Network Orchestrator (Platform Businesses): paling effisien dengan

Deloite Value Creator Score

dalam Value Creation sangat besar. Deloitte

menggolongkan scoring Value Creator pada perusahaan

menjadi 4 jenis model bisnis:

-Asset Builder (Ford, Walmart): score = 2.0

-Provider (Accenture, UnitedHealthCare): score= 4.8

-Technology Creator (Microsoft, Amgen): score=4.8

-Network Orchestrator (Platform Businesses): score=8.2

paling effisien denganscore: 8.2

8.2Network Orchestrator

4.8Technology Creator

2.0Asset Builder

4.8Provider

“Pipeline” – the Old Business Model

“Platform” – the NEW Business Model“Platform” – the New Business Model

DeloiteValue Creator

Score

DeloiteValue Creator

Score

2.0Asset Builder

Business Model

8.2Network

OrchestratorBusiness Model

Network Orchestrator (Platform Businesses): paling efisien dengan score: 8.2

Platform Companies mengalahkanAsset Builder Companies

(Global Trend, 2001-2016)

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https://www.linkedin.com/pulse/ini-dia-biang-penyebab-valuasi-ojek-

online-14-kalinya-budi-wiyono

Business Model InnovationLesson Learned

Digital Disruption

Digital Disruption= =

Digilas Digital(*)

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Burning Platform – Global Study Case

NokiaKompas, 3 Agustus2017, Microsoft menjual Nokia keFoxconn rp. 4.6 Triliun

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Foxconn rp. 4.6 Triliun

Digital Platform Business Transformation

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Apple IncBeautiful BusinessTransformation

11

nThe Digital Platform PioneerGoogle Adwords Initial release: October 23, 2000; 17 years ago

Google Android 1.0, was released in September 2008

Apple IncBeautiful BusinessTransformation

12

Apple’s Evolution into a Platform Operator: The evolution of Apple’s product line from the iPod to the iPhone high-lights the company’s transition to a powerful platform business model pattern.

The iPod was initially a stand-alone device. The iPhone, on the contrary, evolved into a powerful multi-sided platform for which Apple controls third party applications through its App Store.

Local Business Facts: Gojek & Garuda

TechCrunch, 4 Mei 2017, Penggalangan

dana ditandatangani minggu lalu, dan

dapat mendorong valuasi (nilai

perusahaan) Gojek hingga US$3 miliar

(Rp39,98 triliun).

Kompas, 3 Agustus 2017, Microsoft

menjual Nokia ke Foxconn Rp. 4.6

Triliun

Fundrising Gojek belum setahun, per

Agustus 2017: +/- Rp. 23.2 T.

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Kompas TV, Akhir 2016

Essential Platform Expertise

"Almost all traditional business management

practices are in state of disruption, PLATFORM

expertise become ESSENTIAL attribute for expertise become ESSENTIAL attribute for

Business Leadership."

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Modern Market Modern Market Declining Trend

Native Platform Business

who do not adopt the (Digital) Platform

Declining Retail Chain Stores of Pennsylvania

Pennsylvania Retail Chain Store

closings

The trend is likely to continue as online

shopping increases, analysts said.

Sears - 17 stores, Kmart - 30 stores, CVS - 70 Sears - 17 stores, Kmart - 30 stores, CVS - 70

stores, Macy's - 100 stores, Aeropostale - 113

stores, Chico's - 120 stores, American Eagle -

150 stores, Finish Line - 150 stores, Walmart -

154 stores, The Children's Place - 200 stores,

Men's Wearhouse/Jos A. Bank - 250 stores,

Walgreens - 500 stores

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Dead & Dying Malls of Pennsylvania

Dead and dying malls of Pennsylvania

Changing retail in Pa., Carlisle Plaza Mall -

Carlisle, Century III Mall - West Mifflin, Clearfield

Mall - Clearfield, Columbia Mall - Bloomsburg,

Eastland Mall - North Versailles, Gallery at

Market East - Philadelphia, Granite Run Mall -

Media, Greengate Mall - Hempfield, Laurel Mall -

Connellsville, MacDade Mall – Holmes, North

Hills Village Mall – Pittsburgh, Parkway Center

Mall – Pittsburgh, Richland Mall – Johnstown,

Schuylkill Mall – Frackville, Station Mall -

Altoona

West Manchester Mall - York17

Lesson Learned

• Native Platform Business banyak yang tidak

mengadopsi Strategi Platform Business Model

• Digital Adoption tanpa Strategi Platform Business • Digital Adoption tanpa Strategi Platform Business

Model bukan merupakan solusi

• Rekomendasi Solusi: Platform Business Model +

Digital Platform Adoption

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Jababeka Smart CityIndustry 4.0

Jababeka Industry Sector Ecosystem

IT & Telecommunication8

Manufacturing

Warehouse & Logistics

Financial: Banking, Multifinance, Insurance, Securities, Coop

1109

Travel

Education

Construction & PropertyMedia &

Advertising

Distribution & Retail

Health

PLATFORM&

EKOSISTEM7

6

5

4

3

2

Industry 3.0 & 4.0

• While Industry 3.0 focused on the automation of single

machines and processes,

• Industry 4.0(*) focuses on the end-to-end digitization of all physical

integration into digital ecosystemsassets and integration into digital ecosystems with value chain

partners. Generating, analyzing and communicating data

seamlessly underpins the gains promised by Industry 4.0, which

networks a wide range of new technologies to create value.

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SmartCity & Industry 4.0

Any Govt / Authority eService: Market, Health, School/Campus,

Safety, ID

Digital Public Services Security

SmartCity: City as Platform

Transportation, free movement, Parking

Digital Mobillity

School/Campus, Infrastructure (Telco/Data, Energy, Local Air, Water) Childcare, Leisure

Digitalization & collaborative readiness

Fintech: B2C eCommerce, B2B eCommerce & M2M (IoT) eCommerce. P2P Lending, Crowdfunding

Production/Design eCommerce & Fintech

Industry 4.0(*)

Digital Ecosystem, Sharing Economy

Supply Chain Platform

Electric Car: ID, Energy, M2M (IoT) Commerce

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Business Enablers

• Digital Platform Model Business / Collaborative Economy Strategy,

• Customer Journey Management,

• Digital Marketing, incl. Social Business (utilize social media tools and social networking)

• Open APIs / API Economy,

• IoT for everything,

• Big Data / Analytics,

• Blockchain Distributed Ledger,

• AI (artificial intelligence).

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Digital Platform & Business Model Advice

• Not all the business needs to be "platformed" at once: Start by

identifying and prioritizing parts of the business that are prime

for platform business models.

• Good candidates for this would be "parts of the business

that are most vulnerable to attack” by disruption from new

platform based business models from incumbents and

startups inside and outside your industry.

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Integrated Smartcity Industry 4.0Supply Chain Ecosystem

Industrial Supply Chain Ecosystem PlatformIndustry 4.0 Platform Distribution Platform SmartCity Platform

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Supply Chain Ecosystem Platform

Warehousing /

Fulfillment Platform

Logistics/Transportation

Platform

Fintech: Store, eCommerce/M2M

Commerce PlatformCustomer

Principal Business Model Hacking (i)

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Principal Business Model Hacking (i)

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So where does the rest of the money disappear?

Last year, adidas made a paltry 4.1% in net income after taxes, and Nike made 10.7%. But remember that brand income statements are based on wholesale revenue and not retail price.

So if you had to calculate the brand margin as a percentage of the retail price, then adidas and Nike made a 2.05% and a 5.3% profit respectively. This is assuming that the wholesale revenue is half of the retail price. In other words, for a shoe priced at $100, adidas earned just $2.05 and Nike made $5.3.

But didn’t we just say that a $160 shoe is produced for $30? So where does the rest of the money disappear?

Principal Business Model Hacking (ii)

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Gross Margin

As you can see in the infographic above, a $100 shoe ends up being $22 in landed costs and the brand sells it to a third party retailer for $50. For a brand, the gross margin in dollar value is $50-$22= $28.

In percentage terms, it will be $28/$50 x 100 = 56%. This gross margin number is included in income statements made available to Wall Street. The gross margin of any respectable brand will be in its high 40’s. In 2015, Adidas had a gross margin (Net sales – landed product costs) of over 48%, while Nike made 46%.

Principal Business Model Hacking (iii)

Net Income

Marketing forms a big part of a brand’s expenses, no two ways about that. In 2015, Nike spent over 10% of its net sales on marketing, and Adidas spent even more, at 17% of net sales. For all other expenses other than marketing, Nike spent 22% last year and in Adidas’s case, the German brand spent 26%.

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26%.

The taxman also needs his cut, so in 2015 Nike and Adidas paid 22% and 34% respectively.

After spending all that cash, what’s left is the net income. As mentioned previously, that happens to be 4.1% of net sales for Adidas and 7.3% for Nike.

Principal Business Model Hacking (iv)

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Gross Margin

The discounted rate offered to retailers is known as the ‘revenues or net sales’ for the brands. The industry average for retailer margins is approximately 50%, which means a brand like adidas or Nike sells a $100 shoe to their partners for $50. The difference between the landed cost (cost of revenue) and price offered to retailers ( revenue or net sales) is known as the ‘gross margin’ in accounting lingo.

As you can see in the infographic above, a $100 shoe ends up being $22 in landed costs and the brand sells it to a third party retailer for $50. For a brand, the gross margin in dollar value is $50-$22= $28.

In percentage terms, it will be $28/$50 x 100 = 56%. This gross margin number is included in income statements made available to Wall Street.

Retailer Business Model Hacking (i)

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Lowering Cost

Firstly, factory store is located in an area with lower leasing costs & lower staffing. After all, you don’t need production education in a bargain store.

Combine this with healthy sales and lower retail costs, and you’ll likely achieve a better operational cost than full price stores. It must be noted though, that the square foot sales of a full price store like Footlocker is much higher than say, a T.J. Maxx. And do you know much net profit a company like T.J.Maxx makes after taxes? 7.5%, which is more than what adidas took home last year. What’s even more impressive is that they manage to do so at a gross margin which is exactly 20% lower than Adidas, and 5% lower than traditional retailers (see below). This simply means that their expenses are lower. And at a time when full price stores are shuttering down, discount chains are actually reporting sales growth and opening new stores, not closing them. In terms of size, T.J. Maxx sold $30 Billion of merchandise last year. That’s bigger than the Nike brand, we’d like to point out.

Retailer Business Recommendation

• Cost structure rationalization & budget conversion to digital

• Modernization online + offline model or O2O (online to offline)

using omni-channel strategy

• Considering eCommerce + Fulfillment Services

• Enterprise Platform – Ecosystem end to end integration

• Digital membership + Loyalty program

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Independent Factory Business Model Hacking (i)

The median factories profit margin is between 7% to 10% (on the factory cost) before taxes.

Recommendation:

• Demand Side: Explore weakness point of your key B2B customer • Demand Side: Explore weakness point of your key B2B customer (the principal)

• Demand Side: Online Factory Direct Channel for B2B acquisition

• Supply Side: Key Partner Management - Digital Sourcing optimization (increase service level, optimize cost)

• Supply Side: Key Partner Management - Logistics optimization (increase service level, optimize cost)

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Jababeka Smartcity Industry 4.0Ecosystem Forum

Jababeka Ecosystem Collaboration Forum

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