Circular Economy and Enterprise Architecture

Tullio Siragusa (00:12):

Welcome back everyone to Tech Leaders Unplugged. I'm your host, Tulio Siragusa. Today, I am joined by

Rameshwar Balanagu (00:22):

You

Tullio Siragusa (00:23):

With us today. Yeah, yeah. Thank you. We're talking about a very interesting topic today. We're talking about the circular economy and enterprise architecture, and we're looking to answer this question, the need of the hour for all generations. This is going to be a very educational show. I'm looking forward to it. I'm going to look forward to it mostly because I'm going to learn a lot myself. So hopefully those will be watching. We'll also get some insights from this. But before we get started, let's get to know our guest a little bit. Ramesh, if you could please introduce yourself tell us a little bit about you. Looking forward to speaking with you today.

Rameshwar Balanagu (01:02):

Hey, Tullio, good talking to you. And thanks for inviting me on this tech Leaders Unplugged. Hello, audience. Good morning, good afternoon, evening, depends on where you are on the geo of the earth. A little bit about me, not too much rambling. I have 20-plus years of experience in the IT field. I've run and managed several teams. I've recently left Avaya as the head of enterprise architecture. That is where I started developing a passion, or, you know, kind of inclination of sustainability. Actually, this is a buzzword that's been used, but the concept of lean has been there since the era of human civilization has begun. I left Avaya around two months back, and I joined this fabulous growing company called Intangles.ai. It's a digital twin and AI company. Simply put, it's improving the vehicle life and reducing carbon footprint. As we speak. We'll talk about the scope on [inaudible] three. This company helps reduce the carbon footprint significantly using AI, and that's what made me get interested in the company and join them as their Chief Digital Officer.

Tullio Siragusa (02:11):

Great. Thank you for being with us Ramesh. Today we're talking about understanding the pivotal role of enterprise architecture as in facilitating the circular economy. So before we get started down this path, I think it's fair. Maybe some people don't know what that means. What is the circular economy? What is the linear economy in comparison? And I found this is an interesting explanation and perhaps you can chime in on this. Says that “the circular economy is an economic model that aims to minimize waste and maximize resource efficiency by designing products and systems for longevity, reusability, and recycling, ultimately reducing environmental impact in fostering sustainability”. So in retrospect, what is the linear economy? The opposite?

Rameshwar Balanagu (03:11):

Yes. let's make it simplified. You know, what's the difference between circular, linear and then what's the relationship between sustainable? You know nature, Mother Nature has always created a circular economy. And when I mean by that, it has created a food chain where, you know the plants are consumed by the herbivores, herbivores, and they are consumed by carnivores, and the bigger ones. And then guess what happens? They all die and then they go back to the soil. The nutrients are ripples and refilled and the cycle continues. This is a very simple way where water is produced from nature on. Mother Earth gets back to Earth in a new form. So the energy is never lost. It's only transferred from one state to another. Somewhere down the line, Mother Nature had an apparition and created new species called Humankind <laugh>. Okay? So Humankind, what it did is, thanks to Industrial Revolution 1.2, we made our lives better.

Rameshwar Balanagu (04:11):

What we did is we took the raw materials, we consumed, we manufactured new products. Now, these products, what did they do after we kind of use them, where they've gone with their end of life, we've sent them to the landfill for dump and dump and dump. And then we also had greenhouse gases. You know, the greenhouse gases. You know, I haven't, I don't know if you've seen, you know, Earth is warming up than ever before. The Arctic Ocean and the Antarctica Ocean glaciers are melting. I think the South Asia, there's a heat coming, you know, people are saying in Canada or not in Canada, in California, it's extremely hot. And then suddenly, you know, you could see the skeletons near the dams and whatnot. 50 years back, cops was, boats were, were not formed. And then months later, you see a gush of rainfall, surge of snowfall. Earth is moving at the cataclysmic rhythm. This is what linear is. You are consuming in it and not recycling it. So recycling is just one part of it. So forget the technology of recycle-reuse. Basically, if we can follow Mother Earth, the food chain process, that is circular economy.

Tullio Siragusa (05:22):

Alright, so we basically, in one word, it's about sustainability, right?

Rameshwar Balanagu (05:26):

You hit the point.

Tullio Siragusa (05:27):

It's all about sustainability.

Rameshwar Balanagu (05:29):

Exactly.

Tullio Siragusa (05:30):

Let's see the connection between this and technology. That's really what we're wanting to talk about today. And there's, there are five key challenges. As I was researching this related to enabling the circular economy. We're probably not going to get to all five of them, but let's start with the first one and, and see what we can discover here. “The key challenge to sustainability is to actually design for a lifecycle management process”. You know, and so the first question I have for you, I'd love to get your input, is how can enterprise architecture promote sustainability in their design and also promote lifecycle management, enabling organizations to basically create products and services that minimize waste, promote reusability, and maximize resources. Efficiency. So what can companies do to make this possible?

Rameshwar Balanagu (06:26):

So enterprise architecture is all about optimizing, simplifying, and automating, you know, very simple. It's all, that's how you do that. And the way you do that is there is waste across the business. And in terms of what we call as a value chain, and there is waste through the systems because too many systems are, there is a waste through your business process. There's a waste through your data. You know, we are in the 21st century, and even still to date, we still struggle with data quality issues. You know, we don't get a timely report with our data. We don't even know how effective our systems are. We don't even know how effective our processes are. So this is where enterprise architecture comes long, long ago. Toyota, introduce the concept of lean TQM and kanban and kazizen. It's very simple. Understand your value chain, reduce, value, I mean, red reduce waste, identify bottlenecks, streamline the process.

Rameshwar Balanagu (07:32):

So we've always had this lean concept, but we are just putting a sustainable angle on it, making it more glamorous. But the goal of enterprise architect or the Nirvana is, you know, identify the bottlenecks both across the value stream, supporting your customer. You know, the journey that he's going through. if instead of going through hundred clicks, maybe you just make it 25 clicks or 50 clicks, what is happening is it's actually reducing the number of system interactions, thereby the carbon footprint is actually being reduced. So we never put a carbon angle or a sustainable angle if we can improve the journey and reduce the time to get to a point that actually accelerates your sustainable angle. And this is what every AE wants to do, our goal as an AE is guess what? We want to reduce the number of systems which reduces carbon footprint because you will have less cooling from your data centers, which is consuming more carbon.

Rameshwar Balanagu (08:32):

You know, people now are adopting solar, you know, data center the sea, so that they're cool, but I am not a hundred percent sure is that having a flora and a fauna effect in the ocean. I've been doing a lot of Google research on it. The thing is, if you put this massive data centers into the ocean, what kind of a heating impact it is causing? I, I don't know. But all it is is, the less, or if you, if you can understand the journey and put some design thinking across your customer, you definitely have a chance to become lean and improve, you know, improve your carbon production footprint as well.

Tullio Siragusa (09:12):

Very interesting. You're speaking my language, speaking about Design Thinking. So, you know, besides a context shift in how we think about sustainability, and I love the example you gave earlier in terms of how nature works. It's an interdependent model. It's not a codependent model. It's one that's serving itself constantly. There's a lot of lessons we could learn about leadership and how to be good humans from that too. But, but let's, you know, going back to the beginning, you know, I would say, I don't know if you would agree with this, probably the supply chain is contributing to continuous this, continuing this linear economy, right? This linear environment. So how can supply chain, for example, be optimized so that the enterprise architecture can support a circular, circular principles for example, by facilitating tracking, sharing analysis data throughout the entire value chain? So what can we do around the supply chain that often is contributing to the problem in creating a supply chain environment that supports this circular economy?

Rameshwar Balanagu (10:26):

You know, I talked about nature creating a bad gene called human, but also nature also made the human with a good gene called intelligence. Our level of intelligence and our pension to evolve with the technology has been at the forefront. This is what excites us as human beings to be better people. You know, in the past, logistics and supply chain versus nightmare. Yeah. But now thanks to the technology, there are concepts like digital twin and AI, which actually help you understand your system end to end. So, when you talk of supply chain, I will correlate it towards scope three emissions. And what I mean by scope three is it's an indirect way where you and your partner or you and your customer are interacting. In the past, we did not have technology where we did not have any visibility of what was happening.

Rameshwar Balanagu (11:22):

Let's say you wanted to buy an apple, very simple example. You know, all you had to do was go to the grocery store and buy that apple, you know, but you don't know from where it came, how much of carbon was it consumed? You know, there is, let's, let's not just talk of carbon, let's talk of sustainability. Was there any child labor used? You know, or it could be something like that or, but now what happens is with the help of technology, you know, we, we'll take this example of AI and just say, supply chain and E RP ystems. You know your system well when an order has been placed, but you don't know where the apple has been procured. Now, by integrating the technology with their, with their platforms, using open collaboration tools, you get this lineage.

Rameshwar Balanagu (12:09):

You can take this lineage and say, “you know what, this was a this orange or apple was occurred from Ghana or India or somewhere else”. You could stand that into the blockchain. And then you have the visibility that, you know, this, you know, everybody is talking of circular economy, sustainability. But guys, let's, let's understand. It is an evolution, not a revolution. Evolution takes time. We can't jump off where we are and say, you know what, from today now I've heard a buzzword called regenerative thinking, sustainable thinking, all new buzzwords. It, it takes time. The concept of Design Thinking itself, we are still evolving to it. So what we can get is step one, as we collaborate, we get more transparency using open technologies. You have all this. And then from there, remember this famous statement, “what cannot be measured, cannot be managed.” The first thing, what you do is when you have this open collaboration and have the lineage, you at least know where the apple is coming from. And if there's a carbon footprint, you can record it in the blockchain. So, technology is coming to the rescue of humans to improve and foster supply chain. Again, this is where your scope three falls in. So once we baseline, you know, where, where it is going, where the carbon footprint is coming, we can take a sustainable angle, you know, maybe we can see how the apple could be made better or how we could eliminate child labor. Sustainability is not about carbon footprint, it's about the overall wellness of planet Earth.

Tullio Siragusa (13:37):

You said a few things I want to dig into a little bit. Number one, obviously knowing what to measure is the first step, right? <Laugh>, and, and, and along those lines, you, you talked about an apple, right? When we go to a grocery store, we adopted this label that tells us what's in the product.

Rameshwar Balanagu (13:56):

Correct.

Tullio Siragusa (13:57):

Tells, right? And what it's made of. It sounds as though perhaps we need to adopt something similar that speaks to what processes were followed to develop a product. Doesn't necessarily have to be food in terms of its sustainability, how, much carbon footprint it took, et cetera, et cetera. Yeah. So what policies need to be in place? Because ultimately this is going to be, you know, just like the FDA controls certain policies and the food, you know, in terms of labels, for example. What policies and regulations need to be in place to support this kind of transparency? Because ultimately the more we know, the better choices we make, right? It's like we don't know what to measure because we don't have access to the information. What are your thoughts on that?

Rameshwar Balanagu (14:48):

So I think, you know the industry is moving on it. I think g r i 3 0 6, which if I'm not wrong, is a regulatory act that is coming up and saying to assess the waste and the materiality impact of, you know, if you had produced an apple, what is the amount of waste that's happening? Now today, if you see on an apple today, all you see is a barcode. The barcode is telling you the price of it, you know that's it. And you know, it, it gives you the skew number, and then based on the skew, when you scan it, you get the barcode, you know, the price of it. Perhaps there could be a little bit more like an additional barcode or something that can tell you the origins of it and what kind of controls were applied. Now, you know, this is an education.

Rameshwar Balanagu (15:34):

I'm, you know, since you asked me this question, and I'm just telling it I, I think, you know, not the apple, but the packaging could definitely tell. So for example, today in the pharma industries, what they do is they send the lot number and the batch number and the expression date because they need to know from which company it has come, which batch, let's say, you know, the drug, the medicine had a infection or a bacterial infection, whatnot. They same thing with an apple. They do a recall. When you do a recall, you know, from which company it has come in which batch and what experiment, perhaps the same technology, could it be expanded and saying, you know what, this we followed, its so much amount of carbon dioxide, and then this was the protocol, or these were the standards coming.

Rameshwar Balanagu (16:19):

Since you touch this standards protocol, you know, standards take time. I, I think both Europe and U.S. have today around 14 standards on greenhouse global gas emissions. You know, one of the biggest being the sustainability account stand and board. None of these are mandatory. So when you talk of finance, you have FASB, which is mandatory, where you do your 10 K and 10 q unless there's a mandate, you know, now companies are being forced and they're using this as a CSR. The sadly, even, you know, the big companies like Goldman Sachs and all use the carbon wash to offset their losses and actually show sustainable angle, but they were sued by the public attorneys and whatnot saying, you know, you're doing a carbon wash, the government should make it a mandate of what and how to report it. You know, there is a GRI, there is SASB.

Rameshwar Balanagu (17:15):

Europe is following its norms. The US is following its norms. I've been looking at India. India is trying to follow its norms. There's not one side. If you take that example, vehicles have a standard, like Europe has Euro six, India is also having its bar norms, which are very similar to Europe. So if you start enforcing this kind of standard where you say, what is the permissible limit for your vehicle? What kind of pollution, then the companies are forced to mandate. You know, the same thing should occur to the enterprises. And this is where enterprise architects can actually take leapfrog, because enterprise architects, you know, we've been dealing with privacy for a long time, you know, be it with the California law or the GDPR or whatnot. This is one more standard as a part of good governance, if the standards are made, enterprise architects will then take a holistic view, which is what they are and say, as a part of good governance, these are the practices we have to follow. It's a long answer Tullio.

Tullio Siragusa (18:11):

Yeah, you know, that we have a, we have someone watching this show on LinkedIn, David Gonzalez he says he's working on and co-authoring the draft for the IEEP seven, 800 guideline standards that contribute to sustainability for the enterprise. I think you guys should definitely connect after the show. Michelle, you know, you, you said something interesting and, and we've seen this across a number of areas in our lives where you either voluntarily move forward to do what's right or you're forced to do it because compliance and regulatory demands it. Hopefully, we're taking the right steps forward without the necessary requirements, but it sounds to me that those regulatory requirements are needed. Let's continue talking a little bit about speaking of being responsible as a business. You know, I, the business model, it has to be a much more innovative business model. I would, I think you would agree. Now, how can organizations leverage enterprise architecture, for example, to identify and implement new business models that align with the circular economy? What are some of the tips you would give in terms of things like products or service sharing economy and ways to resource models? What are some good best practices for those organizations? We're not waiting for regulatory compliance. We just want to take the right step forward and adopt the right models,

Rameshwar Balanagu (19:37):

Right? Again, again, this is technology has been driving our consumer behavior that there two things, which is the pre covid and the covid. We'll talk about that. You know let's talk about the Netflixes. You know, how did we get in the past? They came and they used to drop the, we used to go to the blockbuster. Blockbuster was ster because they couldn't offer like how Netflix offered center, CD to your share mail. You know, that was like an aha moment, right? So we had a change, and then Netflix then went into the cloud and said, listen, forget all the DVDs coming and shipping and whatnot, you know just go to the cloud. And then this ushered a new movement, basically a subscription movement. Same thing happened to enterprises. You know, you no longer need to buy this multimillion dollar ERPs or platforms if you have just 30, $40, buy it as a SaaS.

Rameshwar Balanagu (20:31):

So what SaaS did has brought a subscription economy, you know, so enterprise architecture then shifted its whole model of how we recognize our revenue, how we recognize our experiences in a different way that we were not used. So what I'm saying is the subscription economy actually accelerated how EA has to go from a traditional linear economy into subscription, because you only pay for what you use and then three years down the line, two years down the line, whatever, you just shove it off, either you move it. So enterprise architecture has two things. Adaptability, because they have to make sure the systems are ready to, you know, today we had X tool, tomorrow we have Y tool. They need to make sure, no matter what it is, the basic functionality is there. So what subscription economy gave is actually what you said as a product, as a service.

Rameshwar Balanagu (21:23):

So far, we have been an ownership economy. That means we bought a home, we bought a car, you know, we used it for a life or we rent it out. We don't have an option or an incentive to re recycle. All we are doing is a landfill. If the car goes for a trash, we just dump it out and then it gums into, into scrap or a garbage, or we don't know what happens post. The moment we move into the subscription economy or rental economy, what I call, where there is no concept. Again, this is a concept where there's no concept of ownership. The product that you purchase has a shelf life, and then the product goes back to the manufacturer because then the chances of that being recycled and being reused are far effective than we dumping into a landfill. So I, I think, you know, this is where the economy, my view is, it's, it should go into a, from an ownership economy to a rental economy.

Rameshwar Balanagu (22:17):

And part of this is product-as-a-service. You know this is between pre covid two post-Covid. Now post Covid, what has happened is Gen Z has been creating new segments. You would've seen, I'll, I'll put an irony off late, folks. 30, 30 is all kids, but unfortunately, many of these have turned out to be Ponzis and Zombies. Okay? We leave it over there. But, but, but what is happening is they are assured new experiences, new enterprises, the traditional mindset of how, you know, an experience has to be versus a new experience with Gen Z is defining, is very different. So they are creating ways or new business models, which we couldn't think. So enterprise architecture has to be at the edge of understanding what new business models are coming. And Gen Z particularly is looking at sustainability. Is this company diversified? Is this company supporting nature?

Rameshwar Balanagu (23:18):

How does it support from a remote or hybrid? You you'll be surprised that in the Scope three as part of downstream commuting is also contributing to the pollution, to the sustainability. You know, so when Covid came, we said, everybody work from home. And now we are saying, come back, come back, come back. So instead of doing a public commute, commute, we are now buying, of course there is Teslas and whatnot, not coming, but we, we are again, accelerating transportation on the road, which is actually increasing the Scope three. So when you start shifting between, you know, we didn't call them scope one, scope two, scope three, but as you start shifting, enterprise architecture is enough influx mode of how to adapt. We used to plan for three to five years. Now, when anybody asks me, Ramesh, how do you do road mapping? I say, we should not do more than one year, because the industry dynamics are so dynamic. You cannot think beyond one year. And if you're thinking of north sort of three years, this is how we will be. Forget that.

Tullio Siragusa (24:19):

Yeah. More like six months <laugh>. Exactly. So we're, we're at a time, but you know, you said something interesting about the lease versus ownership, and that's been highly politicized as well, right there, there's a big divide in terms of conversations around that. And maybe it's not about ownership versus leasing as it is shared ownership, you know, because there's still, you know, cause the argument is there's still someone who owns it, but I don't own and have to rent it. Well, what if we just share the ownership? Maybe that's the right model. Who knows?

Rameshwar Balanagu (24:51):

Airbnb, <laugh> Airbnb is a classic example, right?

Tullio Siragusa (24:55):

Ex Well, there's still someone who owns the unit, right? So maybe there's some model that we haven't talked about yet. A hybrid model, <laugh> some hybrid model. Exactly. But clearly, there needs to be a lot more collaboration on this. That's the thing that's come out, at least from talking with you, is that more collaboration needs to happen, more conversations need to happen. And more open dialogue to create a truly sustainable circular economy.

Rameshwar Balanagu (25:23):

There's a lot of background noise. I don't know from there.

Tullio Siragusa (25:25):

It's me. It's me there's noise in the back. We're, we're at the end. So I appreciate you joining me today. Ramash just stay with me as we go off there in a second. Thanks for being with us. We've got some great shows coming up shortly. Stay, keep stay tuned. Every, every day at 9:30 AM we will be filling up the roster on the show. We've just gotten started. We've got Rarvi Sarkar, coming up, who's Enterprise CTO at Microsoft, Gary Sorrentino, CIO at Zoom, Darrel Bracken, CEO Logitech, and Gil Rosen, who's the CMO at Amdocs. Those are some of our upcoming guests. We've got many more schedules, so stay tuned. 9:30 AM every day of the week. And thanks for being with us. Enjoy your weekend and stay with as we come to the end. Take care, everybody.