Here are two companies that both make flying machines. The first one can develop and launch a new generation of products every six months. The second one takes more than ten years to design and build a new generation of products. So what?
- The startup operates in an industry that is very lightly regulated. They can "fail fast, fail often" and cater to a small group of early adopters and enthusiasts who are OK to live with variable service levels as they typically only expect to get a few months life out the product before they move on to the next upgrade.
- The enterprise operates in one of the most highly regulated industries in the world. Product failures lead to loss of life and massive legal liabilities. Their customers expect to get good return on the massive investment they make for decades and loss of service has a significant financial impact and destroys brand value.
You wouldn't expect the business model for the enterprise to look like the startup - so why would we expect their infrastructure and IT services to look the same? Why do we keep seeing opinion pieces that compare the needs of Digital Enterprises to those of Netflix / Uber / AirBnb?
Let's take a look at what makes a digital Enterprise fundamentally different to a Startup:
1. Market Opportunity: "Be First To Market" VS "Build on Brand"
- Being first to market is key for the digital startup - they need to define a new market segment and are often most successful while governments haven't quite worked out how to regulate them. They start with a small customer base of early adopters who are happy to experiment while they get the offering right and get ready for explosive growth.
- By contrast, the digital enterprise needs to look out for new market segments but they are also trying to unlock new value out of their existing customer base. They often have a lot of intellectual property and assets that they need to optimize in order to improve ROI. So a lot of the market opportunity will focus on Return on Data - how can they derive new business insights from their data assets? Enterprises recognize that data is their key asset and understand that they need to manage it appropriately in order to meet their regulatory requirements. And when a digital enterprise launches a new channel they will often have a very large number of loyal customers using it immediately - so they need to get the service right immediately in order to protect their brand.
2. Application Landscape: One Big App VS Multi-Channel
- The digital startup typically has just one or two big web-native apps that are built for 100% webscale IT. Their IT workforce has grown up around software design skills.
- By contrast, the digital enterprise needs to run thousands of diverse applications (scale up and scale out) and their IT platform needs to be able to support both traditional workloads and web-native apps. If they spend all their time modernizing those legacy apps to fit webscale IT then they will never be able to focus on launching additional channels and delivering new customer experiences. When they launch a new channel it will often have interfaces to existing systems and so they need to make sure that they can deliver legacy and new workloads effeciently in order to deliver a successful platform for innovation. The enterprise IT workforce often needs to undergo organizational change in order to support digital transformation as they were not built around strong software design and devops skills.
The net of all of this is that the CIO in the digital enterprise is right at the middle of this digital transformation and needs to put in place effective programs that deliver:
- Infrastructure Modernization - improve the efficiency of delivery for both traditional and cloud-ready workloads and build a platform for innovation that can rapidly launch new channels.
- Digital Workplace - enable new ways of working to empower the digital workforce to access any data set in a compliant way from any application and any device. Centralize discontinuous data (e.g. data that can only be accessed by one application, organizational unit or device) to eliminate siloes and enable business process change.
- Business Insights - empower the business to add new value to their existing customer data and get better end to end visibility over the business and their market in order to discover new opportunities.
In my next blog I will look at the first of these practices (Infrastructure Modernization) and focus on the platform building blocks that are required to support the diverse range of needs of the Digital Enterprise:
Some related content:
- I looked at some of these ideas in more detail in a recent Webcast here: Be Successful in the Digital Economy by getting the Right Services - Webcast - Tuesday 8th November at 10am (GMT)