Ecosystem Approach to Business Technologies
To take full advantage of the benefits of new business technologies, technical directors need to adapt their traditional IT approaches to the capabilities and challenges of emerging technological ecosystems. Here is how it is done.
The role of IT in the traditional sense is the foundation for the company's activities. One of the main functions of the direction was to protect the company's operations using firewalls and encryption to limit access to technology from outside. However, with the development of technology, a large number of opportunities and sources of competitive advantages appear beyond the traditional business framework. These opportunities are combined in many new ecosystems.
Ecosystem archetypes: explosive growth
')
Such ecosystems often overlap. For example, an application for social payments can be part of an ecosystem of mobile, social, information and banking services. The Internet of Things (IOT) is an ecosystem in which several applications interact with each other like a network.
By connecting to a similar ecosystem, companies can access the entire network. Among other things, they can find new customers, connect to new data sources, and improve current business processes.
Technical directors and IT organizations should play a major role in using these capabilities. But they will not be able to do this if they continue to do business “in the old manner”. In an ecosystem environment, an over-emphasis on “self-defense” will restrict the company from taking advantage of new opportunities. To adapt their complex business architecture to the functioning of the ecosystem world, IT directors will have to figure out how to simultaneously use external technologies and solve security problems, managing the rapid flow of technological innovation.
IDC predicts that by 2018, more than 50 percent of large enterprises and more than 80 percent of enterprises with advanced digital transformation strategies will create industry-specific platforms or collaborate with existing ones. At the same time, according to Cisco, in 2020 more than 50 billion devices will be connected to the Web.
These figures are pushing for a radical rethinking of what is IT, and they say that technical directors should manage them differently: not as a set of internal information technologies (IT), but as a wide network of ecosystem technologies (ET). For the technical director, this shift also creates an excellent opportunity to build close cooperation with the CEO on business priorities and become a major strategic partner.
ET includes an expanded set of IT capabilities and functions (Appendix 2). The CTO still needs to manage “multi-speed” IT functions as well as current two-way programs. The next level - ET - represents a new set of features, as well as the expansion of existing ones.
Technical directors can define and shape their technology ecosystems in three ways:
Open internal IT to the outside world
This approach is to build an IT architecture for connecting internal systems and capabilities with external systems. One example of this approach in action is the Delta Air Lines mobile app, which interacts with Uber so that travelers can book a taxi immediately upon landing. Kraft made a shopping management tool out of his recipe application that creates a list and easily transfers it to the Peapod product delivery service. Think of it as extending user travel — and company-customer relationships — through integration with other service providers.
Many companies already provide opportunities for integration to higher and lower partners - technologies such as EDI (Electronic Data Interchange) have existed for several decades. However, these integration points often remain static. This is a two-way relationship with a small, pre-selected group of partners, such as distributors and suppliers. Such integration points are rarely used and, often, in integrated mode.
In the future, integration with external ecosystems will force companies to interact with many partners, covering a wide range of functions, from finding clients to social advertising and payment solutions. This will happen because the low cost of technology and the dynamic startup environment have led to a significant increase in the rate of introduction of new services. Thus, IT must follow the "Amazon principle", making system components available as services to ensure integration with the ecosystem. Interfaces must be open, dynamic and functional in real time so that they can integrate partners, technologies and applications as needed.
One obvious consequence of this process is the need to develop a lightweight technology architecture based on microservices and application programming interfaces (APIs) to allow third parties to easily connect to the new ecosystem. Technical directors need to think in terms of platforms and their architectures that automotive industry OEMs are using to upgrade in the future to the entire ecosystem. They may even need to provide users with an “app store” so that they can choose the right features. And, of course, the infrastructure must be reliable and secure.
An example of how this can be implemented can be found in telecommunications companies that expand their range of interconnected services, including e-commerce, music, insurance, health care, education, media, and smart homes. All these services are integrated into one ecosystem, offering the client several services through the telecommunications company's technological backbone. Salesforce AppExchange already embodies this model, creating a cloud environment in which developers can create and release their own applications.
Implement external technology
This approach aims to open internal IT systems so that business can incorporate external capabilities into the ecosystem to better serve its own customers, support its employees, or create new products and opportunities often offered through SaaS and API. A simple example of this approach is the integration of a third-party application for sales points (POS) in the company's internal payment systems in order to simplify the process of shopping in the store. Or the integration of third-party customer service in the company's website. Or even integration with Yammer (corporate social platform) to increase employee productivity.
This approach clearly changes the process of how IT designs and manages its systems. Now it’s not about purchasing software packages and creating customized solutions on site or working with several system integrators to provide business solutions. Now we are talking about mastering customer interaction throughout its length and how external and already available services can be used in conjunction with internal solutions to form a complete, unique offer. Companies will need to complement their internal skills with an external specialization that is deeply integrated into the current process of developing IT applications and infrastructure management. We are talking about creating around the clock operating environment that will allow to offer products to millions of customers around the world.
One leading international travel company, whose competitive advantages were undermined by the emergence of many startups in the tourism industry, decided that it needed to increase its potential in order to make the necessary changes. An important component of its strategy was cooperation with vendors from the external ecosystem to provide support for various services, such as mobile services, search and payment systems, CRM. This approach allowed them to accelerate the transformation, increase market reach and attract talented specialists as technology develops and demand grows.
Modernize IT to meet innovation
We often hear about how fast the pace of development of new technologies has become. But it is worth remembering that many of the new tools can drastically change the company's business model, although at first glance this nuance can be overlooked. To prepare for these changes and take a more aggressive competitive position, companies must test new technologies and be ready to use them as soon as the value of these technologies is proven and they become available for scaling. This can be done in the form of “playing with new technologies” (for example, with standards of the open source) in special “sandboxes” where you can test the connection between internal and external IT. In addition, IT leaders will have to actively build partnerships or alliances with vendors and service providers in order to truly understand and appreciate how technology can be used in their business environment.
In fact, many companies are already actively investing in new technologies. For example, a large number of financial companies have created domestic corporate venture capital funds to invest in technologies such as blockchain and IOT. However, companies have shown less progress and success in integrating these technologies into their existing IT infrastructure, as well as in the subsequent dissemination of value propositions among their customers. In startups offering innovative solutions, “immature” technologies are often used that cannot scale; they often use external cloud services that may be incompatible with the cloud infrastructure of the customer companies. Therefore, for such companies, it is important to think about how to ensure the smooth integration of new tools from the technical side and from the working culture in order to take full advantage of the products offered by start-ups. If mistakes are made at this stage, the company will create another unworked “spaghetti” infrastructure.
Given the scale of innovation, keeping up with competitors will be possible only if the technical director hires analysts or architects whose job is to evaluate and ensure the compatibility of external technologies. For example, DBS Innovation Group has established the position of vice president of financial technology, responsible for identifying, integrating and managing potential members of the ecosystem. This person leads fintech projects at the local and regional levels and reports to the head of the global partnership.
Regardless of which method or combination of ecosystem formation methods the CEO and CTO chooses, IT specialists come to the forefront not only in technology, but also in business model innovation.
Despite the fact that building an ecosystem is a complex task based on many interdependencies, we found that concentrating on the following six elements will allow the technical and general directors to get the most out of their return:
Rethinking business strategy
The choice of a method or a combination of ways to interact with different ecosystems (or to create your own ecosystem) depends on three things: the company's strategy, the market environment, and the company's overall risk appetite. This, in turn, requires that the technical director work closely with the CEO and leading specialists of the company in order to help form a business strategy by identifying new technologies and ecosystems that can dramatically change the market situation, determine where future sources of value, and develop the necessary strategic actions to succeed in their interception. The essence of this dialogue lies in the ongoing bilateral research, where technology and business strategy are inextricably linked. The role of the technical director is not only to assess feasibility, but also to help businesses identify the threats and opportunities that the prospect of participation in ecosystems carries (see the article “The Economic Basics of a Digital Strategy ”).
Infrastructure development
New bidirectional technology integration is dynamic; it happens in real time with thousands of business partners or end users. Such a process requires companies to create a next-generation integration architecture capable of supporting these processes and to introduce open standards that can be easily accepted by external parties. The company’s mainstream data management catalog also needs to be expanded to include third-party data and to take into account potential integration with external providers of basic data. For the systems to work, there must be a clear data architecture and control scheme to ensure their cleaning, rationalization and standardization.
Rethinking the customer management process and structure
When customers turn to technical support, it will be difficult to determine in the ecosystem conditions exactly where the fault points are: in the company's systems, third-party services, cloud storages, the network or in some combination of the above? Such a multilevel reality will require a fundamental rethinking of infrastructure support processes from the company.
The creation of such SLAs (Service Level Agreement), which clearly define protocols for escalation and resolution of problems and with which all parties agree, will be crucial. The creation of standard identifiers, or “triplets,” and their integration into the partner services and technologies used in the ecosystem, will be an important step to quickly identify and resolve emerging technical problems.
However, the establishment of such standards and agreements is not a pretext for transferring clients from one partner to the second, third, etc. A customer service company needs to solve problems behind the scenes without complicating the navigation through partner ecosystems for consumers.
Defining cybersecurity, legal, and partnership parameters
As a result of the expansion of infrastructure, domestic policies and processes relating to cybersecurity will have to include third-party partners and suppliers. A new set of security standards should be defined and agreed upon, which would clearly articulate how integration will take place and what types of data can be exchanged in which directions.
Working with a wide range of third parties also raises other legal issues: intellectual property, responsibility, confidentiality, distribution of profits, and resolution of difficulties can seriously limit the potential benefits of participating in an expanded ecosystem. Licensing problems have already arisen in the interaction between companies providing cloud services, and companies working with local hardware and software products, because of different and competing business models. In particular, data ownership and customer management will be critical, given the need for companies to have access to both of these areas.
This will require significant negotiation skills, as well as efforts to develop and implement a wide range of standards in order to avoid constantly building agreements from scratch with the advent of each new partner or supplier. The application market approach, which clearly specifies standards, provides tools, and agreements are made before starting work, can serve as a useful model.
Interaction with the network of suppliers also requires changes in certification skills and management of their performance. Companies will have to clearly define the standards and procedures under which suppliers must operate, and outline guidelines that will determine exactly how the supplier will be included in the delivery life cycle. Home Depot develops standards in conjunction with the manufacturers of its products to ensure compatibility with the Wink smart home system. Companies that interact with suppliers most effectively, consider relationships with vendors as a partnership with a high degree of transparency. To do this, it is necessary to restructure the internal supply and supplier management processes so that they are more similar to M & A, with the result that companies will be able to integrate new partners or create new alliances quickly and efficiently.
Openness to the outside world
Technical directors are usually focused on protecting systems and ensuring their efficient operation. But the new digital world requires more active interaction with the outside world to understand competitive threats and sources of value. Technical directors should develop a much more flexible IT infrastructure and think about creating new ways for the constructive integration of external systems. But it’s counterproductive to spend a long time on creating overly complex “bulletproof” systems; Testing an application or a new platform should take several days or weeks.
Investing in new opportunities
As companies increasingly use external ecosystem technologies, they need full stack architects and converged infrastructure engineers who can provide expertise in third-party software, be fluent in several best-in-class technologies, and share their expertise in integrating multiple technologies. The capabilities of the “translator” will also be crucial for bridging the gap between business objectives and technological requirements in an ecosystem. Any new feature in the enterprise architecture must work closely with the business to understand how external services can be integrated with products to expand customer value propositions.
With the development of cloud computing and programmable software infrastructure, the resources needed (for example, networks, servers, storage systems, applications and services) can now be provided faster, and can also be managed and used with minimal effort. This requires DevOps (integration of development and operation) and cloud engineers who have experience navigating a rapidly changing cloud computing ecosystem and software, as well as data experts, automation engineers, and corporate architects. In addition, companies will need to find several senior developers who will be able to set standards for development in the app store.
Many of these opportunities are often outsourced to companies. But due to the increased importance of design and automation skills, many rethink this approach as information technology moves from an auxiliary element to an influential one.
The integration of an IT company with third-party capabilities opens up new ways of obtaining significant sources of value. But until information technologies are transformed into ecosystem technologies, the vast majority of new opportunities will remain beyond reach.
The role of IT in the traditional sense is the foundation for the company's activities. One of the main functions of the direction was to protect the company's operations using firewalls and encryption to limit access to technology from outside. However, with the development of technology, a large number of opportunities and sources of competitive advantages appear beyond the traditional business framework. These opportunities are combined in many new ecosystems.
Ecosystem archetypes: explosive growth
')
Such ecosystems often overlap. For example, an application for social payments can be part of an ecosystem of mobile, social, information and banking services. The Internet of Things (IOT) is an ecosystem in which several applications interact with each other like a network.
By connecting to a similar ecosystem, companies can access the entire network. Among other things, they can find new customers, connect to new data sources, and improve current business processes.
Technical directors and IT organizations should play a major role in using these capabilities. But they will not be able to do this if they continue to do business “in the old manner”. In an ecosystem environment, an over-emphasis on “self-defense” will restrict the company from taking advantage of new opportunities. To adapt their complex business architecture to the functioning of the ecosystem world, IT directors will have to figure out how to simultaneously use external technologies and solve security problems, managing the rapid flow of technological innovation.
IDC predicts that by 2018, more than 50 percent of large enterprises and more than 80 percent of enterprises with advanced digital transformation strategies will create industry-specific platforms or collaborate with existing ones. At the same time, according to Cisco, in 2020 more than 50 billion devices will be connected to the Web.
These figures are pushing for a radical rethinking of what is IT, and they say that technical directors should manage them differently: not as a set of internal information technologies (IT), but as a wide network of ecosystem technologies (ET). For the technical director, this shift also creates an excellent opportunity to build close cooperation with the CEO on business priorities and become a major strategic partner.
What is ecosystem technology
ET includes an expanded set of IT capabilities and functions (Appendix 2). The CTO still needs to manage “multi-speed” IT functions as well as current two-way programs. The next level - ET - represents a new set of features, as well as the expansion of existing ones.
Technical directors can define and shape their technology ecosystems in three ways:
Open internal IT to the outside world
This approach is to build an IT architecture for connecting internal systems and capabilities with external systems. One example of this approach in action is the Delta Air Lines mobile app, which interacts with Uber so that travelers can book a taxi immediately upon landing. Kraft made a shopping management tool out of his recipe application that creates a list and easily transfers it to the Peapod product delivery service. Think of it as extending user travel — and company-customer relationships — through integration with other service providers.
Many companies already provide opportunities for integration to higher and lower partners - technologies such as EDI (Electronic Data Interchange) have existed for several decades. However, these integration points often remain static. This is a two-way relationship with a small, pre-selected group of partners, such as distributors and suppliers. Such integration points are rarely used and, often, in integrated mode.
In the future, integration with external ecosystems will force companies to interact with many partners, covering a wide range of functions, from finding clients to social advertising and payment solutions. This will happen because the low cost of technology and the dynamic startup environment have led to a significant increase in the rate of introduction of new services. Thus, IT must follow the "Amazon principle", making system components available as services to ensure integration with the ecosystem. Interfaces must be open, dynamic and functional in real time so that they can integrate partners, technologies and applications as needed.
One obvious consequence of this process is the need to develop a lightweight technology architecture based on microservices and application programming interfaces (APIs) to allow third parties to easily connect to the new ecosystem. Technical directors need to think in terms of platforms and their architectures that automotive industry OEMs are using to upgrade in the future to the entire ecosystem. They may even need to provide users with an “app store” so that they can choose the right features. And, of course, the infrastructure must be reliable and secure.
An example of how this can be implemented can be found in telecommunications companies that expand their range of interconnected services, including e-commerce, music, insurance, health care, education, media, and smart homes. All these services are integrated into one ecosystem, offering the client several services through the telecommunications company's technological backbone. Salesforce AppExchange already embodies this model, creating a cloud environment in which developers can create and release their own applications.
Implement external technology
This approach aims to open internal IT systems so that business can incorporate external capabilities into the ecosystem to better serve its own customers, support its employees, or create new products and opportunities often offered through SaaS and API. A simple example of this approach is the integration of a third-party application for sales points (POS) in the company's internal payment systems in order to simplify the process of shopping in the store. Or the integration of third-party customer service in the company's website. Or even integration with Yammer (corporate social platform) to increase employee productivity.
This approach clearly changes the process of how IT designs and manages its systems. Now it’s not about purchasing software packages and creating customized solutions on site or working with several system integrators to provide business solutions. Now we are talking about mastering customer interaction throughout its length and how external and already available services can be used in conjunction with internal solutions to form a complete, unique offer. Companies will need to complement their internal skills with an external specialization that is deeply integrated into the current process of developing IT applications and infrastructure management. We are talking about creating around the clock operating environment that will allow to offer products to millions of customers around the world.
One leading international travel company, whose competitive advantages were undermined by the emergence of many startups in the tourism industry, decided that it needed to increase its potential in order to make the necessary changes. An important component of its strategy was cooperation with vendors from the external ecosystem to provide support for various services, such as mobile services, search and payment systems, CRM. This approach allowed them to accelerate the transformation, increase market reach and attract talented specialists as technology develops and demand grows.
Modernize IT to meet innovation
We often hear about how fast the pace of development of new technologies has become. But it is worth remembering that many of the new tools can drastically change the company's business model, although at first glance this nuance can be overlooked. To prepare for these changes and take a more aggressive competitive position, companies must test new technologies and be ready to use them as soon as the value of these technologies is proven and they become available for scaling. This can be done in the form of “playing with new technologies” (for example, with standards of the open source) in special “sandboxes” where you can test the connection between internal and external IT. In addition, IT leaders will have to actively build partnerships or alliances with vendors and service providers in order to truly understand and appreciate how technology can be used in their business environment.
In fact, many companies are already actively investing in new technologies. For example, a large number of financial companies have created domestic corporate venture capital funds to invest in technologies such as blockchain and IOT. However, companies have shown less progress and success in integrating these technologies into their existing IT infrastructure, as well as in the subsequent dissemination of value propositions among their customers. In startups offering innovative solutions, “immature” technologies are often used that cannot scale; they often use external cloud services that may be incompatible with the cloud infrastructure of the customer companies. Therefore, for such companies, it is important to think about how to ensure the smooth integration of new tools from the technical side and from the working culture in order to take full advantage of the products offered by start-ups. If mistakes are made at this stage, the company will create another unworked “spaghetti” infrastructure.
Given the scale of innovation, keeping up with competitors will be possible only if the technical director hires analysts or architects whose job is to evaluate and ensure the compatibility of external technologies. For example, DBS Innovation Group has established the position of vice president of financial technology, responsible for identifying, integrating and managing potential members of the ecosystem. This person leads fintech projects at the local and regional levels and reports to the head of the global partnership.
Regardless of which method or combination of ecosystem formation methods the CEO and CTO chooses, IT specialists come to the forefront not only in technology, but also in business model innovation.
Getting started with the ecosystem
Despite the fact that building an ecosystem is a complex task based on many interdependencies, we found that concentrating on the following six elements will allow the technical and general directors to get the most out of their return:
Rethinking business strategy
The choice of a method or a combination of ways to interact with different ecosystems (or to create your own ecosystem) depends on three things: the company's strategy, the market environment, and the company's overall risk appetite. This, in turn, requires that the technical director work closely with the CEO and leading specialists of the company in order to help form a business strategy by identifying new technologies and ecosystems that can dramatically change the market situation, determine where future sources of value, and develop the necessary strategic actions to succeed in their interception. The essence of this dialogue lies in the ongoing bilateral research, where technology and business strategy are inextricably linked. The role of the technical director is not only to assess feasibility, but also to help businesses identify the threats and opportunities that the prospect of participation in ecosystems carries (see the article “The Economic Basics of a Digital Strategy ”).
Infrastructure development
New bidirectional technology integration is dynamic; it happens in real time with thousands of business partners or end users. Such a process requires companies to create a next-generation integration architecture capable of supporting these processes and to introduce open standards that can be easily accepted by external parties. The company’s mainstream data management catalog also needs to be expanded to include third-party data and to take into account potential integration with external providers of basic data. For the systems to work, there must be a clear data architecture and control scheme to ensure their cleaning, rationalization and standardization.
Rethinking the customer management process and structure
When customers turn to technical support, it will be difficult to determine in the ecosystem conditions exactly where the fault points are: in the company's systems, third-party services, cloud storages, the network or in some combination of the above? Such a multilevel reality will require a fundamental rethinking of infrastructure support processes from the company.
The creation of such SLAs (Service Level Agreement), which clearly define protocols for escalation and resolution of problems and with which all parties agree, will be crucial. The creation of standard identifiers, or “triplets,” and their integration into the partner services and technologies used in the ecosystem, will be an important step to quickly identify and resolve emerging technical problems.
However, the establishment of such standards and agreements is not a pretext for transferring clients from one partner to the second, third, etc. A customer service company needs to solve problems behind the scenes without complicating the navigation through partner ecosystems for consumers.
Defining cybersecurity, legal, and partnership parameters
As a result of the expansion of infrastructure, domestic policies and processes relating to cybersecurity will have to include third-party partners and suppliers. A new set of security standards should be defined and agreed upon, which would clearly articulate how integration will take place and what types of data can be exchanged in which directions.
Working with a wide range of third parties also raises other legal issues: intellectual property, responsibility, confidentiality, distribution of profits, and resolution of difficulties can seriously limit the potential benefits of participating in an expanded ecosystem. Licensing problems have already arisen in the interaction between companies providing cloud services, and companies working with local hardware and software products, because of different and competing business models. In particular, data ownership and customer management will be critical, given the need for companies to have access to both of these areas.
This will require significant negotiation skills, as well as efforts to develop and implement a wide range of standards in order to avoid constantly building agreements from scratch with the advent of each new partner or supplier. The application market approach, which clearly specifies standards, provides tools, and agreements are made before starting work, can serve as a useful model.
Interaction with the network of suppliers also requires changes in certification skills and management of their performance. Companies will have to clearly define the standards and procedures under which suppliers must operate, and outline guidelines that will determine exactly how the supplier will be included in the delivery life cycle. Home Depot develops standards in conjunction with the manufacturers of its products to ensure compatibility with the Wink smart home system. Companies that interact with suppliers most effectively, consider relationships with vendors as a partnership with a high degree of transparency. To do this, it is necessary to restructure the internal supply and supplier management processes so that they are more similar to M & A, with the result that companies will be able to integrate new partners or create new alliances quickly and efficiently.
Openness to the outside world
Technical directors are usually focused on protecting systems and ensuring their efficient operation. But the new digital world requires more active interaction with the outside world to understand competitive threats and sources of value. Technical directors should develop a much more flexible IT infrastructure and think about creating new ways for the constructive integration of external systems. But it’s counterproductive to spend a long time on creating overly complex “bulletproof” systems; Testing an application or a new platform should take several days or weeks.
Investing in new opportunities
As companies increasingly use external ecosystem technologies, they need full stack architects and converged infrastructure engineers who can provide expertise in third-party software, be fluent in several best-in-class technologies, and share their expertise in integrating multiple technologies. The capabilities of the “translator” will also be crucial for bridging the gap between business objectives and technological requirements in an ecosystem. Any new feature in the enterprise architecture must work closely with the business to understand how external services can be integrated with products to expand customer value propositions.
With the development of cloud computing and programmable software infrastructure, the resources needed (for example, networks, servers, storage systems, applications and services) can now be provided faster, and can also be managed and used with minimal effort. This requires DevOps (integration of development and operation) and cloud engineers who have experience navigating a rapidly changing cloud computing ecosystem and software, as well as data experts, automation engineers, and corporate architects. In addition, companies will need to find several senior developers who will be able to set standards for development in the app store.
Many of these opportunities are often outsourced to companies. But due to the increased importance of design and automation skills, many rethink this approach as information technology moves from an auxiliary element to an influential one.
The integration of an IT company with third-party capabilities opens up new ways of obtaining significant sources of value. But until information technologies are transformed into ecosystem technologies, the vast majority of new opportunities will remain beyond reach.
Source: https://habr.com/ru/post/455218/
All Articles