Transformation Realized

Transforming businesses through the power of people, technology and innovation.

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The COVID-19 pandemic has intensified the pace of global change ⁠— and the pressure on companies to respond. Businesses are expected to not only keep pace with the evolving external environment but actually change the way they change, from business models to customer interaction and employee engagement.

This pressure is compounded by the shifting demands of stakeholders, who are deprioritizing sustainable, predictable earnings growth to instead look for companies with a demonstrated ability to navigate disruption. In short, the post-pandemic world requires companies to accelerate the pace of organizational change. And, at the same time, investors are increasingly looking for more than market leaders ⁠— they’re seeking market makers. 

Reframing the future with three new value drivers

The imperative to get to the future and prosper has never been more critical. Yet some companies — market makers — do more than merely prosper, they create exponential value. In our experience, exponential value creators are differentiated by their ability to leverage three critical value drivers: placing humans at the center of their organization, leveraging technology at speed and enabling innovation at scale. Through these, market makers accelerate the value they create in the long term, reframing their future to thrive as they seize opportunities through disruption.

Transform the way you transform

These new drivers of value creation demand a fundamental shift not only in how companies reorient to create value, but in what they value — agility versus predictability; innovation versus strategic planning; operating model versus systems thinking.

It’s a transformation mindset requiring the parallel processing of multiple, interdependent time horizons: now, next and beyond. Companies should break this into a 70:20:10 approach. 

  • Now (today): 70% of effort and investment
    • Build a foundation that can support future growth
    • Protect the value of core markets and operations
  • Next (12 months out): 20% of effort and investment
    • Enable new value propositions
    • Take existing capabilities into new markets and optimize performance in existing markets with new technology
  • Beyond (the future): 10% of effort and investment
    • Explore entirely new businesses
    • Reinvent the industry by creating new markets and new capabilities

Taking the first step with future-back innovation

In times of change, including, and perhaps most importantly, in past economic downturns, companies experiencing exponential growth in value took what we call a “future-back” approach. Leaders start this process by asking, “Will my business still be relevant in 2, 5 or 10 years’ time from now? And how can I grow our competitive advantage with bold risk-taking when others are less likely to have the stomach and stamina for it?”

They then, with their purpose as a central guide, explore the future and their vision, working through future-back scenarios that can flex and adapt to ensure they’re following a path to maintain relevance today — and 15 years from now.

Organizations need to get into the habit of embedding adaptability into their approach to business. Future-back thinking gives companies the tools for building the muscle necessary to adapt to whatever the future may hold.

The foundation of future value creation

Transformation Realized is EY’s approach to helping companies enhance their ability to adapt, and creating more agility in their operating model to deliver and sustain engines of long-term value creation.

It helps companies understand and connect with customers through richer experiences. It enables them to leverage and deploy new technology faster. It can inspire and engage employees and can build the next generation of transformation leaders with a clear and powerful purpose, enabled by productive and engaging cultures. It can help companies mitigate constant threats and remain relevant while developing the capacity for continuous business reinvention and innovation.

All of this yields closer alignment with, and belief in, the new value expectations of investors, culminating in a greater ability to deliver on the organization’s potential for value creation.

At EY, we have evolved the services, our organization and our wider ecosystem around the three new drivers of value. This includes our innovation alliances and ecosystems, our EY wavespace™ network, our NextWave industry scenarios and our suite of digital tools, including TechWatch (tech trends and applications), Embryonic (ecosystem scanning and mapping), CogniStreamer (crowdsourcing and innovation management), Storybook (user personas and journey mapping), and VentureBuilder (innovation road mapping).

Above all, we’re delivering Transformation Realized through our culture of co-creation with clients and by bringing the whole of EY to address challenges and opportunities – something that’s demonstrated by every team member and driven by our purpose to transform businesses through the power of people, innovation and technology.

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How blockchain helped a gaming platform become a game changer

Microsoft Xbox and EY implemented a transparent blockchain network so game publishers, creators and asset owners can focus on the future.

The better the question. The better the answer. The better the world works.

How can blockchain transform a gaming platform into a game changer?

A blockchain solution gives Microsoft Xbox an infrastructure that helps them manage and provide a better partner experience.

The $120b video game industry employs some of the brightest creative and technological minds. While this marriage of creativity and technology was bringing enjoyment to the masses, Microsoft Xbox’s royalty process meant that game publishers faced some unique challenges due to legacy technologies limitations.

Global gaming industry

$120b

of forecasted revenue, serving over 2.7 billion consumers worldwide.

The gaming industry serves over 2.7 billion consumers worldwide. This is enabled through partnerships between gaming platforms such as Xbox and thousands of publishers, developers, authors, designers, production houses and distributors. These relationships are all key in maintaining a high-quality product and attracting the best talent and creators to the platform.

Microsoft Xbox’s legacy system for securing and managing royalty processing was cumbersome, taking 45 days to access validated financial information about royalties earned.  Along with paperwork, this was not giving the best experience to many game publishers, especially the ones with small businesses and limited resources.

EY and Microsoft wanted to help the gaming industry play fair, so the team asked themselves: could blockchain be a game-changer for the gaming industry?

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The better the question. The better the answer. The better the world works.

A blockchain solution that integrates with publishers and creators

Together, EY and Microsoft Xbox are implementing smart digital solutions to help game publishers and creators do their best work.

Microsoft Xbox and EY worked together as one team to help deliver a transformation. Microsoft and EY teams’ joint capabilities and suite of digital solutions became a game-changer, helping Microsoft Xbox reduce the manual effort and the operational hours associated with processing royalties for publishers through automation of the royalties processing, starting to transition off the legacy system. 

Smart contracts encode game creators’ IP rights

The first step in refreshing Microsoft’s legacy systems was to onboard royalty contracts onto blockchain in the form of digital contracts. The legal terms were then encoded in the blockchain network in the form of smart contracts. By opting in, industry participants can review and validate that onboarded digital contracts are the same as the royalty contracts in a confidential manner.

An automated solution that brings down operational costs

Building on the foundation of contractual transparency, the team focused on providing improved transparency to the game publisher for the royalty processing — a major pain point for Microsoft Xbox. The existing system of processing and distributing royalties was plagued by loads of reviews and tedious manual processes.  Automation of the system sped up the process, reduced the effort and provided more transparency to participants, while at the same time maintaining a high degree of privacy and confidentiality between Microsoft and the game publisher.  A user-centric interface adds a simple, well-designed interaction layer to the royalty distribution system for game developers.

Near real-time purchase records show game creators what they have earned

While smart contracts were used to accurately and transparently process the royalties for Microsoft Xbox’s partners, the next step was to securely and transparently share the information with them in near real-time, cutting access to royalties from 45 days to 4 minutes.

Providing near real-time access to data greatly improves the process’s effectiveness, and insights that lead to a more enriching experience for the partners,” Tim Stuart, Xbox Chief Financial Officer at Microsoft.

As consumers purchase Xbox games, other merchandise and digital content, the smart contracts apply the encoded contractual logic and instantly calculate the royalty. This information, when ready, is then sent to each participant who has a node, creating an immutable record of transactions and royalty obligations in a secure and confidential manner. Not only does this provide creators peace of mind, it allows them to record financial transactions daily, it can also vastly improve their forecasting and reporting capabilities.

Providing near real-time access to data greatly improves the process’s effectiveness, and insights that lead to a more enriching experience for the partners.
Tim Stuart
Xbox Chief Financial Officer at Microsoft.
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The better the question. The better the answer. The better the world works.

A transparent blockchain ecosystem that empowers creators

Microsoft Xbox’s new blockchain network is better for business and better for game creators.

The technology solutions implemented in this project — including instant transactional details — led to profound benefits for Microsoft Xbox and its partners. It seamlessly connected these parties and enhanced their experience.

The blockchain solution integrates closely with game creators to give Microsoft Xbox an infrastructure that helps them manage and reward game publishers and creators. Creators now have more trust in the process and can focus on creating new games.

“By implementing a blockchain-based network and streamlined royalty processing, game publishers and Xbox benefit from a more trusted, transparent and connected system from contract creation through to royalty settlements,” Luke Fewel, General Manager, Global Finance Operations at Microsoft. The new solution enables a 99% improvement in processing time and is fully integrated with ERP for automated invoicing and recording accounting entries. It enables near-100% real-time royalty statements for game publishers, 40% plus operational effort reduction and eliminates reconciliation needs.

This technology will help transform the future of entertainment.

By implementing a blockchain-based network and streamlined royalty processing, game publishers and Xbox benefit from a more trusted, transparent and connected system from contract creation through to royalty settlements.
Luke Fewel
General Manager, Global Finance Operations at Microsoft.

Transformation Realized

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EY wavespace™

At EY wavespace, we reimagine what’s possible for business. We help teams to reframe their thinking and find answers – faster.

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