Digital Banks – Providing Banking Platform as Service

During the course of last two weeks, I was involved with a series of workshops with the IT department of a bank that operates in more than 30 countries. The workshops objective was to define a digital banking transformation roadmap.

During many years, for those that are involved in BPM projects have discussed the meaning of what is the definition of end-to end processes. One of the classic examples in the banking industry is when the account opening process ends. It ends when the account number is created or it ends when all the channels which the customer can consume financial services and execute operations are available and operative?

Today, opening a bank account trough a friction-less process is not a common desire. The wish of any customer that belong to retail banking is how it can construct the Bank of Me, how it can incorporate using the bank mobile app making transactions with 3rd parties, like a youngster paying the school fees, do social banking (transfers, borrowing from Facebook friends). Corporate banking, oriented to trading operations, which to integrate supply chain operations between, customers, suppliers, road haulage companies, combining the flow of documents, status of merchandise movement and money transfers.

Five years ago, under the new e-CMR regulation, there was the possibility in road freight to eliminate the famous paper based system (that still exists) and exchange information digitally between all the involved stakeholders – buyer, seller, transport company and banks [1]. The CMR is a document that underpins the legal transport contract between a seller, a transport company and a buyer. It ensures the goods were shipped and received accordingly, on which banks rely to wire the money between the involved trading parties. Without such a document, financial transactions are halted, supply chain document reconciliation is blocked, as well as financial close activities. Now, that piece of document travels physically in the truck. Some long haul trucks return to logistics head quarters every 15 days – because they need to optimise cargo utilisation, a key KPI for business viability – this means only when the physical CMR arrives to the logistics back office, payment processes between buyer and seller can start (digital copies are ignored, due fraud and contractual implications between the parties involved). In such kind of transactions there is room for optimisation and automation, but unless companies do not embrace the concept of open systems architecture is very unlikely that operations will suffer from the tangled syndrome.

The era of Open Socio-technical Systems

Fred Emery defined and evolved the concept [2] and defined such kind of systems as:

“Is a purposeful system composed of an interrelated social component (people, culture, norms,) and technical component (technology, tools, materials) which is embedded in a greater context, an environment, which the system is influenced by and also influences.”

Later, Merrelyn Emery [3] evolved the concept to “Socioecological” means:

“people-in-environments,” which is expressed by the concept of the open system […] expresses the transaction of system and environment, all components of which are governed by laws which are able to be known. “

Gartner [4] defines in the Magic Quadrant for Enterprise Integration Platform as a Service:

“integration platform as a service (iPaaS) is a cloud service that provides a platform to support application, data and process integration projects, usually involving a combination of cloud-based applications and data sources, APIs [5] and on-premises systems”.

Gartner single focus in the technical platform enablement plays the de-stratification of the Open Socio-technical Systems that goes against experimentation, multiplicity and intense social human interaction and important component of Open systems. When designing IT strategy, the peril for the CIO and the IT teams is to overdose the enterprise with integration technology and superpower the enterprise service bus, over-dosing on too much de-stratification decoupled from the new business models and human relationship management of digital banking.

Providing Banking Platform as Service

Exposing the Banking Platform As a Service – BPAaS, allows banking services to talk to other services. In this sense, leveraging on API allows you to open up data and functionality to other developers, to other businesses or even between departments and locations within the bank. It is increasingly the way in which banks exchange data, services and complex resources, both internally, externally with partners, and openly with the public.

BPAaS, can provide a common root so that transactions can flow from wherever they originate: mobile apps, integrations with clients, the client’s website or physical devices. All mapped into a strong ecosystems of partners that repurpose, resell and re-bundle assets to reach new customer segments – like the millennials – that the bank could never have reached alone.

Imagine for example, you want to offer a mortgage service coming from a real estate website or you want to open the possibility to customers subscribe financial products from 3rd party, like Brokers or the case were the bank can outsource loan services to partners keeping costs low. Providing the banking platform allows customers and partners to integrate them as a self-service adapted to their particular needs or bringing the reality of the Bank of Me.

Regulation want banks to embrace open ecosystems
The UK regulator, issued a report [6] that sates in the remedies section:

“mobile banking tools have been rapidly adopted, and a growing financial technology (‘FinTech’) sector is developing and applying new tools. Application programming interfaces (APIs) will allow publicly available data and customers’ own data to be shared with trusted third parties, and ‘open standard’ APIs can be particularly powerful (with necessary safeguards for security and privacy) in opening up new customer information and advice services.”


CMA states clearly about the importance of:

“development and implementation of an open API banking standard has the greatest potential to transform competition in retail banking markets […] by making it much easier for both personal customers and SMEs to compare what is offered by different banks and by paving the way to the development of new business models offering innovative services to customers.[…] APIs may also be used, with the customer’s informed consent, to share securely their transaction history to enable access to tailored current account comparisons and other services.”

As I pointed before in this post, banks can offer for example, in the retail segment, custom services like automated financial management based on your spending patterns, risk appetite and the phase of your personal life – before entering into labour market, in labour market, retirement – this is just a matter how soon banks want to enter in this new kind of business models before they are expelled from the market.

From a strategic point of view, some banks consider the remedy with a very strong dose or as a threat to their outdated business models. In my experience dealing with CIO’s and CEO’s from different banks is clear that the younger generations are much more prepared or already sparked business model transformation and look to this more as an opportunity. The generational gap – a self-acquired soft skill – can play a key role how the organisation perceives the way forward.


[1] Unfortunately, due protective measures related with entry in force of the regulation, most countries in European Union delayed the application of the new regulation, meaning that a cargo travelling from Portugal to Germany will only benefit from the electronic act when enters in Germany, meaning that all way down the road the paper document should exist to present to customs and other government authorities. In other terms, the digitalisation of the process is impracticable, an outcome that is still a reality.

[2] Magic Quadrant for Enterprise Integration Platform as a Service, Worldwide, 2016. […] “Integration PaaS delivers some combination of the capabilities typically found in enterprise service buses, data integration tools, B2B gateways, managed file transfer products and API management platforms. IT departments, line-of-business developers, mobile application development teams, application teams and even business users (aka “citizen integrators”) leverage these capabilities to develop, execute and manage integration interfaces (or “integration flows”).”

[3] Emery, Fred E. “Characteristics of socio-technical systems”, in Design of Jobs: selected readings, Davis, L. E. And Taylor, J.C. (Eds.), Penguin Books, ASIN: B013KQY62S

[4] Merrelyn Emery “The current version of Emery’s Open System Theory” Systemic Practice and Action Research.

[5] Application Programming Interface

[6] CMA – Retail banking market investigation. Summary of final report. August 2016

A Thousand Plateaus

On June 2014, I was at Enterprise Architecture Conference Europe in London to present my work on the theme of cybernetics, called Viable System Model meets Enterprise Architecture. During the preparation of the presentation, I was exposed to the concept of the rhizome, created by two French philosophers, Deleuze and Guattari, designed to bring some random pointers about complexity theory, deeply related with the challenges a cybernetician like to reflect on. The rhizome was brought to life in a book called A Thousand Plateaus, that according to the authors, was written in random mode. Every day, they decide in which part of the book they will work on with no direction, rejecting ‘the law of narrative order’, like Robert Musil’s masterpiece Der Mann ohne Eigenschaften (the man without qualities), that by coincidence, was one of my inspirations for the talk at the conference. I bought the book when I was in London but once I buy more books I can read, I only started to read the book these days.

A thousand plateaus is broken down is many directions, that I would like to point only some, as follows:

  • Epistemological – how the models we create to understand the reality are fit in terms of meaning, completeness and de-territorialization (what Deleuze and Guattari refer to the true meaning of systems out of context of operation);
  • Ontological – how the meaning of concepts evolve in a way they are the result of constant change;
  • Anthropological – how human beings are able to interpret signs that will tell about the necessity of change. A theme I explored with Amy Santee in February 2015, when I was in Seattle;
  • Social – how individuals can self-organize in a knowledge oriented world, contrary to Kant’s ideas of following the natural order of laws, rules, regulations and procedures.

The emergent self-organization is a matter in focus which is materialized in the concept of chaosmos, that explain the functioning of the universe as a meta-system composed of abstract machines, very well aligned with cybernetic principles. Exciting days are coming.

Machines are taking over me – II – cybersecurity

During last week I’ve been working in Nigeria with an Oil & Gas Company on defining an IT Strategy program to move to the cloud. One of the key topics of designing the IT strategy is related with the countries societal impact, that needs to fight with terror, insurgency, wash away corruption and institutionalized informal economy. For those that are not familiar with the country environment, it is commonly accepted under such an inequality standard, you can take loot or steal other’s assets, because the others, cannot live so large and leave so little to the rest of population. Hence, I am helping the organization I am working with to either establish or reengineer security command centres to consolidate their security programs, detect insurgency, theft, improve their risk management and loss of primary containment. Accomplishing these goals requires that the security command centre perform these key IT functions: have access to massive information sources, ingesting and processing such data in real time making sense of it; summarizing and presenting key data in a meaningful way that supports quick and effective responses to events as they happen in real time. To implement these functions, the organization must not only have subject matter expertise in security and a deep partnership with security forces (local law does not allow a company to have private security), but it must also have a technology foundation to support decision management, workflow orchestration, communication and collaboration, and data management and protection―all anchored on a secured hybrid cloud architecture.

The field threat environment continues to grow more dangerous like for example attacking pipelines, stealing crude oil or refined products, creating a twofold challenge for Oil & Gas companies and the Nigerian government. Not only must these organizations continually strengthen their protection of the data and systems they manage, but they also do not face stricter requirements to demonstrate that they have done so in accordance with the appropriate laws, regulations because simply they do not exist or are not properly designed, once the new government that took power on May 2015 is “putting the house in order” dealing with more important matters for the population, like end the fuel scarcity – currently in Nigeria, you need to wait on average 2 to 3 hours to fill up your car’s tank in what is the biggest African oil producer.
Anyway, from an architecture design perspective you need to define the particulars and complements the about data protection and security, among others, setting-up specific rules concerning the processing of personal data in the electronic communication sector – in the context of spotting insurgency, one of the data sources is text messages that the population can send, informing the oil & gas company and the military that there are signals that indicate a possible or the perpetration of an attack, as other approaches like live video surveillance feed is not available. As a result, by default, listening, tapping, storage or other kinds of interception or surveillance of communications and the related traffic data by persons other than users without the consent of the citizen concerned, except when legally authorized, is prohibited. The requirement for prior consent is extended to cover the information stored in users’ terminal, given that users have very sensitive information in their computers, smartphones and similar devices. Nevertheless,

How do you deal with the trade-off of enforcing data privacy and putting the population to abdicate from it for the benefit of the Oil & Gas company?

And from a change management perspective,

How do you convince the population to help you fight asset attacks, in a country where everyone is desperate to make its cut on a non-structured economy?

This is because, contrary of designing an advanced IoT business model, in let’s assume, a supply chain, in which truck drivers are rewarded – with airlines miles or discounts in retail shops- by contributing to fuel consumption decrease and safe driving, such kind of gamification strategy must be adapted to social programs to eradicate poverty, providing social services like education and health car of building basic infrastructures. Such gamification strategy, should part of the illusionary, misguided and wrong doing social responsibility corporate programs, meaning that in the end, it is the Oil & Gas company that must share a part of the profits for the IT Strategy work and be effective.

Enter into cybersecurity

This leads to the development and implementation a new IT capability, context-awareness, by the realization of a Context Awareness System, a sophisticated surveillance technology solution that aggregates and analyses public safety data in real time, providing security investigators and analysts with a comprehensive view of potential threats and criminal activity. Such a system protects population sensitive information by designing a series of internal security recommended practices and proprietary and advanced security tooling and technologies for monitoring and detecting advanced asset attacks and related intelligence.
This leaves me as an architect with a challenge in my consciousness, and as such, I would like to invoke one of the most magnificent quote from William Shakespeare’s – Macbeth

“Oh, full of scorpions is my mind, dear wife!”

For that explanation I need to borrow this quote from Frances Stonor Saunders at a London Review of Books talk.

“On the evening of 3rd of October of 2013 a boat carrying more than 500 Eritreans and Somalis founded out the tiny island of Lampedusa, in the darkness, locals mistook the desperate cries for help from the sounds of seagulls, the boat sunk within minutes, survivors were in the water for five hours, some of them close the bodies of the dead companions at float. Many of 368 people who drowned never made off the capsizing boat and were drowned to the sea floor still on board. Among of the 108 people trapped inside the bow was an Eritrean woman thought to have 20 years old were, as she given birth as she drowned, her waters have been broken in the water, rescue drivers found the dead infant still attached by the umbilical cord.”

We are facing a dilemma on how cybersecurity should be used for. On one hand these systems are used to fight and eliminate terror, protecting innocent lives to be taken, to protect company assets from being atacked and looted by contemporary pirates, but one the other hand, like in play, when Macbeth is explaining to his wife about the need to taking life to Banquo, and his son, Fleance, we cannot make a so selfish decision about abandon and condemning thousands of refugees to death, because the same kind of Context Awareness System cannot be used in preventing people to die. The political discussion about where the refugees should be steered to Europe of send back to their failed state countries, it not an argument about the responsibility of protecting human life only in the case where terror is being perpetrated, except when people are escaping and running away from the same terror source.
This something worth thinking about.

Machines are taking over me – I

In the past weekend, I watched one of the last screenings of the Steve Jobs movie picture. The picture starts with footage of Arthur C. Clark, at a (probably) 60’s datacenter explaining to the reporter that in a near future, humans will have in their hands a miniaturised computer which they will have access to information. By the effect of the minicomputer intrusion, Arthur also points that future society will become dependent and blended with technology. This kind of assumptions are the ones that mark the character of a futurist, that can predict and envision years ahead what we are becoming to be, not the other way around, as we, part of a jittery, mouth-full instant communication global community, started to assume that futurists are the ones that can predict what it is going to happen in the next 6 months, or next year.

During the last couple of months I been in contact with at least two hands full of financial institutions. In most of them, the business initiatives around social business, ranked on top of their transformation programs, once they realised that letting customers blow to the horn when they are angry, damages the reputation of institution, as well as, social media should be used to serve the customer. With this in mind, banks wish to have an upgrade of the brand new 360 degree view of the customer. Hence, in the CRM system, apart of the account statements, the financial products the customer subscribed, it will integrate his social media feed, with social listening and sentiment analysis features. There is nothing new on this, the novelty is the customer profile built around the what we know about him, taking into consideration the spending partners, the investments done, the risk profile, combined how he expresses in social media, builds who the customer is. Or not.

Technological advances have open the door in the emergence of services that perform financial advisory services. Despite there are some regulation barriers to comply, the financial personal assistance is here to stay. The financial assistant, leveraged among others by machine learning, high performance computing and natural language processing are able determine the best investment needs, your tolerance to risk and what are your goals to be achieved. However there is some room for improvement on adjusting to investment portfolio or your debt stack taking into consideration portfolio diversification or futures in economy growth or income fluctuations. One of the biggest barriers to break is the fact that customers operate with multiple banks and such kind of intelligent advisory services stumble in the lack of open interoperability. Last, there is an emotional factor, which is, the human lifecycle phase that dictates our inherent needs and wants. Someone that is heading retirement have very different needs from the ones that are starting their professional life. And some humans do not want to retire at all, despite there are in a certain age.

Luciano Fiordi, in his book called the fourth revolution, quickly points one of the foundational philosophical well-know distinction between who we are – let us call this our personal identities – and who we think we are – call this our self-conception. The two selves-our personal identities and our self-conceptions – flourish only if they support each other in a mutually healthy relationship. Things get more complicated because our self-conceptions, in turn, are sufficiently flexible to be shaped by whom we are told to be, and how we wish to be perceived. Hence, the dream that bankers have about understanding who are you and how they can serve you better, it is still far for reality. This should not only be a reflection point in the banking industry, as well as across the mass market verticals. For those industry sectors like retail that are in the forefront of understanding customer behaviour it could be interesting for banks to carry a join design experience on who the customer really is. There is still a very long road ahead how to better serve bank’s customers.

BPM meets virtual reality

During the nineties, I was a fan of a TV series called Wild Palms. It had a sci-fi plot that among many other things, brought the rise of a new media concept, holographic television, leveraged on sitcoms that would bring true reality to our living rooms. A decade later, the movie picture Minority Report, which main character played by Tom Cruise, suffer from the disgust of a son loss, projected over and over in his messy apartment, holograms of small video clips when his son was playing with him when he was a little boy.

On the personal side, holographic input can be seen to combat human anxiety about the sadness of lack of physical touch when people are alone, something that is being amplified as the expansion of globalisation and communications technology that displace us from face to face interaction. On the business side, it opens new opportunities for innovation, particularly in an era where we are suffering from the Everything as Everything disorder.

Everything as Everything disorder can be characterised to try engineer in a single system the full multitude of agents and their behaviour that constitutes complex adaptive systems, full of communication flow, natural selection, adaptation and evolution that are part of origins of our existence. This disorder is blooming to a point that some that say the next enterprise architecture frameworks are going to be tailored by Internet of Things.  During a period of time, where options were scarce, frameworks like TOGAF could provide guidance to design enterprise architecture, but with the possibilities that are unfolding, the classic exercises of building the architecture blocks will prove to be impractical, because they cannot cope with the variety of constantly changing information systems requirements. Enterprise Architecture will step forward to a strategic level, helping companies to shape transformation initiatives, while on the operational side, self-organisation will emerge as a way of continuously deliver business change. This only possible if you as a manager inspire all the capacities of your employees. Creating goals that employees believe in and are passionate about it. Running organizations where everyone is a manager a leader and a servant.

Microsoft broke the boundaries when it introduced Hololens, bringing virtual reality as a new way to work and interact with information in a holographic platform. Google took the first steps a couple of years ago when brought Glass to the market and will probably pursue next advances as I understood the Glass project was a new way to perfect a product in a controlled closed market environment with their selected by invitation only customers.

An holographic platform abstracts what the humans always struggle against it: the rigidity of a computer interface and user experience that was designed based on the constraints of the technology used to support work. How many of you fight against non-sense clicks, user space we could not change or a sequence of steps that contradicts the way we want to work because the IT system did not allow it? A holographic platform, breaks all the rules how people access information, collaborate, design their own working environment that fits their needs. It becomes a fully personal working experience. It is possible to create the Process of Me, no more links and tights to process definitions to dependencies of application architecture and interfaces, It becomes a truly natural working experience where workers collate, manipulate, share embed information, augment knowledge where every single objected is linked and related to construct the workers storyboard, automatically.

Break the rules, create your blue ocean and seize of the innovation opportunity

Ross Brown took a huge step ahead when he introduced 3D design and simulation. If there is a drawback when a team is trying to improve operations is the inability to learn to see the results of changes that are being introduced in regards to space dimension. Design thinking techniques brought and advance on the possibilities to see and imagine operations on top of the cold simulation tools, but there is a difference between imagining a discrete set of role-play cards and watch and feel the reality.
We are towards the blend of personal and business interaction. In the near future, there will not be any more distinction between work flows and personal flows, because humans want to have the liberty of defining the way they want work independently of the IT platform system or methodology. It is curious how memory can play some tricks on us, as I stumbled in a short post written in 2011, called Nothing will be the same, where I pointed out:

The user does not need to know how it works. He is sure that will work because cause effect linkage in systems is build-in.

Ontologies providing meaning to the data manipulated thus no one needs anymore to learn the company domain and environment meaning and from it is connected stakeholders because is automatically translated into other business environment.

People will be over connected naturally without the need to request for connection.

Der Mann ohne Eigenschaften

The manager without qualities

During holidays, I refrain to read business related books, because this is what I read most during the year and sometimes I really feel tired, tired to read gossips, hype and complains. Before I leave to holidays, I make a selection of books that I bough trough the years. It may happen to buy a book and read it past 5 years (or more). In 2008, I bought Robert Musil’s masterpiece, The man without qualities (hence the title of the post in German) but happened to shelve it after reading 200 pages (the book has in the Portuguese edition around 2.000 pages) because I felt lost reading the plot. The first time I pick up the book I was finishing my vacation and I had no energy to read the remaining of it. I felt tat the book was very dense and disturbing because there was not a standard, or what is called the “law of narrative order”, or if you prefer in BPM language, structured procedures.

After all these years I returned to the book revisitation. The more I read the book, the more strange and lost I was. The book is a collection of stories, some of them related other not. Some are in temporal order and make sense, others are just there to reflect about facts of life (Musil was known to study philosophy). I was getting intrigued as I progress with my reading, because the book was considered to be a masterpiece, specially by writers like for example Milan Kundera. Anyway, I make some search around the the writer works and curiously I did not find many meaningful links. Still, London Review of Books, synthesizes quite well the spirit of the book:

None of the main characters in The Man without Qualities has a story. It is a novel that disdains stories, that rejects ‘the law of narrative order’ as an adequate way of construing the meaning of a life.

Other interesting fact is that the book was not finished. Musil died before it could put and end, despite according to scholars of the writer, it did not make sense to reach to an end because life is in “Perpetuum mobile”.

What work became to be

One of the things that catch my attention reading the book, was the concept of social interaction that was described when Ulrich’s father died (Ulrich is the protagonist, the one that according to other character’s and recognized by himself not to have a single quality). Ulrich’s father was a distinguished professor and respected person in the community. When the news spread that he died:

The university needed to know about the funeral, a used gods salesman quietly wondered if there were clothes to sell, a used bookstore shop manager became to announce himself, with many apologies, on behalf of a German firm, offering to acquire an essay that should be in the library of the deceased, a priest, a representative of the parish, asked to speak to Ulrich to clarify a detail, the life insurance company came with endless explanations, another person was looking for a cheap piano, a real estate agent left the card in case of any interest to sell the house. […] Everything objectively related to the death occurred.

If you forgot that this part of the book points to an era before the first world war, around 1910 – 1914 and therefore the type of interaction that occurred in the society is very different what we are used today, is really very interesting how each character is aware of the signs and interacts with information that it’s interested related with the work sphere. What beats me is that today most of C-executives still rely on next day, monthly business intelligence reports to have insights of what is happening inside (most of the times data is not pointed were operations occur and managers suffer from an inside out mentality ) of the enterprise. When we are living on real time principle, re-read the last paragraph from Musil’s novel and try to transform your operations without suffering from a process silo mentality (we can produce orders on real time but logistics only start to think about planning on Tuesdays and we don’t know we’re the trucks are when the customer is asking us “Where is my order?”).

Cybernetic management

Technology is enabling enterprise transformation to limits we have never realized before, specially when customers already took control of operations and they used their own technology and smart devices to design their processes to interact with enterprises.

But unless your company lives in a monopoly sea, technology is useless, unless you change your attitude as a manager. Yes, competitive advantage is not only a function of unlimited financial resources, intelligent technology, smart people, it’s also a function of management style that you must master.

Cybernetic attitude means to understand organizations under a system thinking approach. Business processes, are part of the organization ecosystem, these must also be discussed under the same approach.

System thinking approach is widely broadcast, but poorly understood. System thinking must at least have the following properties that reflect in the way the process operates that is itself a system. These properties are more process design principles that cannot be translated into process models (most of process model languages. like BPMN, were not conceived to handle these properties, thus please stop criticizing it):

  • Must have a purpose, results oriented. If the organization is a bank the customer wants to open a bank account quickly and have access to financial products to support operations or daily life (outside in). The bank wants to capture funds (inside out). having a purpose must be customer centric oriented, but depending on the organization culture, translating the outside perspective into a an inside perspective can be important (fast open account, equal funds increase).
  • Must have boundaries clearly defined. Boundaries must be more open as possible. Must be vertical and horizontal.
    • Horizontal borders means to include all stakeholders involved. Pure end to end processes execution. If your company have an e-commerce based business model, leaving out your logistics partner, responsible to deliver the merchandise is to condemn your enterprise to failure.
    • Vertical borders, means eliminating process silo thinking. In a insurance company environment, when creating a new insurance product not being able to abort it because the customer has bad reputation due fraudulent activities is not very wise when designing the process. In a government agency that is responsible to issue for example, declarations that states a company does not have any kind of debt regarding tax payment, should have channels open to exchange information with a different government agency that provides the same type of service regarding social security contribution and both declarations must be presented when private companies are making business with government.
  • What is the environment it operates. What are the markets, the customers segment you serve and how the organization get them served. Remember getting feedback from environment is crucial for adaptation, due to the fact competition emerges from nothing with new business models, capital less incorporation and disruptive technologies (ZIPcar just to name one example, considered a non-business, non competitor, no nothing), but also how the organization collect information about the attitude, the experience, the feedback from the customers that is flowing outside of the organization enterprise systems (that most of the times is the single source of information managers rely to make decisions).
  • Must have feedback and regulation:
    • Outcomes must be achieved taking into consideration strategic objectives and targets, otherwise there is no alignment between operations and strategy. If your customer self-service process, was designed in a way it pushes your customers to call to the contact center and the strategy of the company is to decrease call centers size and go for close 100% automation. Outcomes and key process steps must be monitored and KPI’s must be setup.
    • Responsibility for operation execution must be setup and process participants must be rewarded taking into consideration process performance instead of showing up on their daily job on time.
    • Beyond the monitoring and control, there must be channels to communicate directly to top management critical KPI’s that reached a threshold value, instead of filtering it across the organizational pyramid or reading the company reports in the next month when is too late. This is very important to top management being able to react when it’s still possible. A critical KPI is sales for example or churn rate after a disruption occurred and the company is not being able to proper handle the situation.
    • Must be independently audited to verify if controls exist, if controls are effective if feedback mechanism exists and regulation is accomplished.
  • Must have resources: Lynchpins, IT that can make the difference, capital, infrastructure, equipment.

Having the ability to think in this way is to be able to understand reality without predefined doctrinal references. Understating the functioning of the system, the information flux, the reasons of it’s dynamic, puts the manager in conditions to know how, why and for what the system, the process operates. In other words, to become a real manager. It will be able to make the right decisions in order the business process fits its purpose.

Cybernetic management think about the dynamic of the systems instead of muted process models. Cybernetic management socializes information and put individuals at the center of operation to make the best decisions, making out the most of human reasoning. IT can enable great organizational transformations, but without a shift in management style you will quickly loose your edge.

Social Network Analysis – part two

On part 1, I introduced the importance of social network understanding as the socialization of interactions is becoming a new working habit and as such classic control flow perspective analysis does not anymore provide information about how work is done.

On this post, I will explore important points to look for when performing Social Network Analysis (SNA).

On properties:

Social networks have typically the following properties:

  • Emergence: agents that belong to the network interact in an apparently random way. This feeling is amplified if there are many agents and / or there are too many interactions that make difficult to extract patterns. Emergence is all about separating the signal form the noise and make those patterns to emerge.
  • Adaptation: enterprises, communities, exist confined in a particular environment that when changes it makes agents to react. Environment can be external, interaction with customers, suppliers, government agencies; influence like the publication of a new law or regulation or competitor movements as they enter in new markets or create new products or services. Environment can also be internal and its related to the way agents interact that is ultimately associated with how business processes were designed, how IT solutions were deployed, culture, hierarchy configuration and formal recognition of authority, just to provide some examples.
  • Variety: Ashby, one of the father’s of cybernetics, defined the Law of Requisite Variety “variety absorbs variety, defines the minimum number of states necessary for a controller to control a system of a given number of states.” For an organisation, to be viable it must be capable of coping with the variety (complexity) of the environment in which it operates. Managing complexity is the essence of a manager’s activity. Controlling a situation means being able to deal with its complexity, that is, its variety [1].
  • Connectivity: The way agents are connected and how those connections are aligned with the process type that was designed / being executed and the type of knowledge that is necessary to support operations (more about this alignment here). The existing connections will unveil the emergent patterns that are necessary to identify and understand behaviour under a social point of view (high coupling or loosely coupling between agents or group of agents).

On network types:
Most of the times when people refer to social networks they are expressing their beliefs on community networks like Facebook, subject expert groups like enterprise wikis. Although those are important network types, they do not express the nature of organization operations, because they do not record communication acts expressed on social activity, hence I will only concentrate on Coordination Networks.

A Coordination Network is a network formed by agents related to each other by recorded coordination acts.

Coordination acts are for example, the interchange of emails, tasks as design on enterprise systems or activity streams just to provide some examples. The above definition is an adaptation of [2] because it does not include the importance of coordination act that is related with the nature of work, rather the connection itself. The former is the important dimension related with business process management and will guide the remaining content.

Coordination acts is meant to be as defined (adapted) [3] an act to be performed by one agent, directed to other agent that contains an intention (request, promise, question, assertion) and a proposition (something that is or could be the case in the social world). In the intention, the agent proclaims its social attitude with respect to the proposition. In the proposition, the agent proclaims the fact and the associated time the intention is all about, recorded by the system, supporting the definition Coordination networks, which configuration that can ultimately be discovered, patterns emerge, using discovering techniques like for example process mining.

Coordination Act V00

Coordination Act

On analysis dimensions:

Social network analysis is not new. Actually, the first studies were done around the 50’s of last century. Its refinement stumbled around:

  • Degree distribution: study connection number around a node of the network;
  • Clustering: groups with connection density larger than average;
  • Community discovery: measures alignment of connections regarding organization hierarchy.

There is an immense list of techniques to analyse each one of the above dimensions, that reflects the high maturity level of each method, but he drawback is that SNA analysed on each dimension alone can induce managers in the wrong direction. For example, studying community discovery can be important, because communities are a collection of individuals who are linked or related by some sort of relation. But carrying the analysis without taking into consideration the content of the conversation (coordination act) that drove the creation of the link is absolutely wrong, because the conversation is all about the way we humans work. I tend to disagree with other points of view from other practitioners that conversation does not matter (probably because they were influenced by Gordon Pask), only the network configuration. Conversation (the process) is the matter of study.

Social networks are self-organizing systems, but there are important patterns that emerge from the nature of the coordination acts that can be identified. Despite there are random factors and the type of patterns presented in most of scientific papers are based on graph theory and tend to be very simple compared with the reality (and hence maybe this is one of the reasons they are not taken seriously) it is the only way, as an abstraction, to understand agent behaviour. Pattern recognition is critical to align process type (from structured to unstructured), knowledge domain (simple to chaotic) and network type (central to loosely coupled). In order words, to infer trends and help humans to interact better regarding the role they play in the process ecosystem. Having said that, I would like to invoke Stafford Beer’s on models: “in general we use models in order to learn something about the thing modelled (unless they are just for fun)” [5].

Centrality is used to measure degree distribution. Centrality [2] is described as a process participant, business unit, group (a set of process participants or people) or an enterprise system (do not forget the machines) within the context of a social network. Centrality is also related with discovering the key players in social networks.

Some measures that can be used for Centrality are:

  • Degree centrality: calculate how many links a node has regarding the remaining network nodes (commonly called network stars). Higher degree centrality means higher probability of receiving information (but does not mean it drives information flow inside of the network).
  • Betweenness: measures the degree witch a process participant controls information flow. They act as brokers. The higher the value, higher is information flow traffic that moves from each node to every other node in the network. The importance of Betweenness in social network analysis is nodes with higher values stop processing coordination acts, will block information flow to run properly.
  • Closeness: measures how close a node is isolated in the network compared with other network mode. Nodes with low closeness are able to reach or be reached by most of all other nodes in the network, in other words low closeness means a node is well positioned to receive information early when it has more value. Closeness measure must be supported on time dimension (see reference about the timestamp attribute on the coordination act exemplification), without it, is useless.
  • Eigenvector centrality: used to calculate node influence in the network. Higher scores means a node can influence (touch) many other important nodes.

In order o put it all together its worth to consider the following self-explanatory picture [6]:

Diverse centrality measures V00

Diverse centrality measures

The challenge:

There is a lot of noise around what is the best measure to perform SNA, as I learned at the User Modelling, Adaptation and Personalization Conference 2011 it’s time to put the mathematical equations aside and practice it’s application.

At this moment of time, there are plenty of ways to measure network centrality, but somehow they neglect that those algorithms are not appropriate regarding the type of business process / information system interaction played. For example, Eigenvector centrality measure is important in unstructured processes, where the path is defined on instance mode and it is necessary to create a team and involve others as the process progress. Once SNA does not analyze the process type, only about agent relation, if applied analyzing a procure to pay process (highly structured process type) it’s useless and can damage results interpretation, because on this case, every agent, every process participant receives and process information basically the same way to achieve the same outcome every same day. Maybe this is the reason why is not yet taken more seriously, because these days the process is all about social  interaction and it cannot anymore be analyzed naively taking into consideration the dispersion, complexity and interdependence of relationships, something that can also be applied on IT requirements elicitation or IT system operation , which allows to understand communities interaction in order to support emerging and unique processes under a techno-social systems approach [7].

Social Network Analisys IT V00


[1] – Design and Diagnosis for Sustainable Organizations – Jose´ Pérez Ríos – Springer – ISBN 9783642223174
[2] – Large Scale Structure and Dynamics of Complex Networks – Guido Caldarelli; Alessandro Vespignani – World Scientific Publishing – ISBN-139789812706645
[3] – Enterprise Ontology – Jan Dietz – Springer – ISBN – 3540291695
[4] – Complex Adaptive Systems Modeling – A multidisciplinary Roadmap – Muaz A Niazi
[5] – The Brain of the firm – Stafford Beer – Jonh Wiley & Sons – ISBN – 047194839-X
[6] – Discovering Sets of Key Players in Social Networks – Daniel Ortiz-Arroyo – Springer 2010
[7] – José L.R. Sousa, Ricardo J. Machado, J.F.F. Mendes. Modeling Organizational Information Systems Using “Complex Networks” Concepts. IEEE Computer Society 2012, ISBN 978-0-7695-4777