Features and Analysis

Is it time to retire the value chain?

I can’t say enough about how disappointed I was when I read an article on Fox News that listed 11 items that are disappearing from restaurant menus around the United States.

Two of my favorites, Crab Louie and Salisbury Steak (illustrated above), were on the list. Well, maybe I can find them somewhere else as I continue my food quest around the world. Although perhaps it is time for them to retire since they have been around for so long.

And maybe that is the case for the beloved value chain that has been a ‘standard’ around the world since the mid 1980s. 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. Porter even envisioned linked value chains and referred to them as value systems.

But in today’s digital world do enterprises employ chains, even linked chains to deliver value to their customers? A recent post, Unleashing service innovation to a new value fabric, posted to TM Inform referencing the TM Forum Quick Insights report Digital Services: Assembling the building blocks of success doesn’t think so, and nor do I. Here is an excerpt from the post and the report…

“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.”

I introduced the value fabric concept as a successor to the value chain and value networks a little over a year ago. A value fabric is a mesh of interwoven, cooperating organizations and individuals or parties. The value fabric is an ideal concept for showing interaction among collaborating organizations and individuals, collectively called parties. Some parties engaged in the fabric deliver value directly to their customers and assure that the value continues to meet their customer expectations. Other parties deliver and assure value indirectly. Customers also play a role in the value fabric.

Like the value chain the value fabric can be used by any industry. Here is an example…

value chain

One key concept that was not in the original fabric is the digital bridge.  After introducing the fabric I was made aware of the bridge via a presentation prepared by one of our members, Laurent Leboucher of Orange who is the chair of our Strategy and Adoption sub-committee. The digital bridge is a pathway that simplifies partnering, integration and end-to-end management of products and services, providing a common language, business processes, information, KPIs and APIs that assists in assuring successful partnerships among parties.  The bridge is enabled by TM Forum deliverables, such as Frameworx, Open Digital Program interfaces, and best practices.  This is one of the distinctions between the fabric and value chains/networks.

You will be hearing more about the value fabric and digital bridge as time goes by.  It is already being used by a number of TM Forum projects in their work, including the Digital Service Reference Architecture, B2B2X, SLA Management, and Catalog Management.

Until next time…hope to seeya in Nice…


    About The Author

    Frameworx Subject Matter Expert

    John P. Reilly is member of the TM Forum’s technical staff and a master trainer for the TM Forum. His technical staff responsibilities include providing Information Framework (SID) model subject matter expertise in support of TM Forum projects. In November 2005 John was named a Distinguished Fellow of the TM Forum in recognition of his contribution to the development of TM Forum Frameworx and the SID.

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