Enterprises embarking on digital transformation need to ditch systems thinking and embrace the idea of running the business as a platform. The more the platform attracts users, the more valuable it is. The platform may be used on a project basis, or in a more long-term scenario. Some resources may be internal, permanently owned by the company; some will be shared; and some can come from outside. Platform thinkers such as Amazon and eBay lead the way in retail and now all the big brands have followed. Nike, for example, is moving across to platforms, recently launching Nike+Accelerator to help companies build on its Nike+platform.
"We are now knee-deep in the era of digital business, with many companies reimagining their business and operating models based on digital capabilities," explained David Aron, vice president and Gartner Fellow. "Businesses and government agencies are looking less like fixed 'systems' and more like platforms. A platform provides the business with a foundation where resources can come together — sometimes very quickly and temporarily, sometimes in a relatively fixed way — to create value."
Digital business has definitely captured the CIO’s imagination. According to a recent global survey by Gartner, the average CIO expects digital revenue in their business to grow from 16 percent to 37 percent of total revenue in the next five years. In contrast, public-sector CIOs are expecting a rise from 42 percent to 77 percent in digital processes. Although the meaning of digital revenue and processes is wide open to interpretation here, it underlines the fact that digital business is now very much a reality. Information and technology are now paramount to achieving both competitive advantage and differentiation in business.
Gone are traditional, rigid business models. The digital era is about having a nimble strategy that can swap resources based on shifting markets and priorities. Rather than centre on the ownership of individual resources, platform thinking creates value through connections and interactions. Take online supermarket Ocado, for example. It has confirmed it is looking to license its platform to foreign supermarkets, turning what could be viewed as competition into potential customers.
Bimodal IT equals digital performance
Back in 2014, Gartner coined the concept ‘bimodal IT’, which has become a bit of a buzz word. It basically outlines a strategy for two separate coherent modes of IT delivery operating side by side. The concept is nothing new, but there is logic to it. The legacy system is critical to the running of the business and is built around safety, accuracy and reliability. The second is a ‘start up’ style that can explore innovation as regards to next generation applications and services. In essence, it highlights different development requirements for different parts of IT’s lifecycle. Peter Sondergaard Senior Vice President and Global Head of Research, describes it as ‘one organization operating at two speeds’.
The 2016 CIO survey found that almost 40 percent of CIOs have adopted this model, with the remainder looking to take the strategy on board within the next three years. The evidence, Gartner said, is that building a mature bimodal platform results in far better digital performance. Organizations that have delayed the move to bimodal came far lower down in digital strategy performance.
Schindler Group, an elevator and escalator company based in Switzerland has adopted the bimodal IT concept. In a bid to innovate faster and maintain a competitive edge it set up Schindler Digital Business AG. The digital transformation has enabled the company to innovate in new areas such as IoT.
The upside to bimodal is that by adding an innovation layer, the enterprise avoids a major legacy IT transformation project. But there are downsides. If enterprises aren’t careful they can end up creating multiple applications such as customer databases, for example. It can also be a major task to transition the disruptive technology, once proven, into the core enterprise processes.
The idea of simply bolting on digital to a business strategy will not work anymore. Enterprises must think of themselves as part of an energized ecosystem that connects digital resources both inside and with outside partners. The platform approach has long been linked with technology, now it is time to show its prowess in other areas of digital business.
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Jan has been writing about technology for over 22 years for magazines and web sites including ComputerActive, IQ magazine and Signum. She has been a business correspondent on ComputerWorld in Sydney and covered the channel for Ziff-Davis in New York.