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Why businesses are moving from apps to digital ecosystems

Jun 19, 2019 | Digital Platform, Digital Transformation

The world of business IT has changed and surprisingly few people have noticed

When analysts talk about business IT, very often the conversation gravitates to ‘Enterprise IT’, i.e. technology for the enterprise. That was appropriate at the turn of the century. It might even have been true a couple of years ago. But it doesn’t work anymore. Companies like Amazon, Allibaba and LinkedIn are demonstrating a ‘new way’ – the power and influence of built-for-purpose digital platforms that extend so far beyond the enterprise and serve so many stakeholders that they become an ecosystem for trade.

Much of my life has been about developing and deploying business applications ranging from Customer Relationship Management systems to Document and Knowledge systems. These were really big chunks of software tech that, once implemented, drove big parts of a business. But they were still bits.

The psychology of applications design starts by picking out a problem in a particular area of the business – a community of users or a process perhaps – and then creating a data-centric software application to capture, process and output data. This entire life-cycle sounded like it could last forever, picking away at the bones of enterprise business challenges. At the last count there were more than 10,000 SaaS products on the market. Companies are drowning in SaaSy tech but still struggling to serve th long-tail of apps demands needed to support their business.

We’ve seen in the last few years that an applications oriented approach only results in fragmented systems and installs massive complexity for IT teams to support. IT leaders now talk of the need for ‘SaaS streamlining.’
There’s also the big issue of the price tag, with each vendor wanting to make broadly $40k for their offering to pay for their sales costs and a minimum of 7% annuity revenues (more if they can get away with it). The net result is an IT tax on enterprises they probably wouldn’t mind paying if it represented a competitive advantage, but generally it doesn’t as every organization is using the same tools for the same reasons. Even when all of these tools are deployed, they don’t offer any major opportunity to increase customer value. The psychology of digital platform design starts not with technology, but with customers and communities. Businesses like Amazon always consider first what their customers want and how they can best-serve those needs. Once they have this understanding, they think about their business model and how to turn those needs into shareholders returns – but they are prepared to forego short-term shareholder profits for long-term competitive advantage.

“If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people.” – Jeff Bezos

In the case of Amazon, its digital platforms exposes almost every aspect of its backoffice operations to customers. As an Amazon customer, you create your own customer record, manage your own payment details, populate your delivery details, manage delivery scheduling, manage returns – and so much more. The fact is, as an Amazon customer, I don’t mind because I also get rewarded for my time investment by knowing its done properly, having transparency over the payment and logistics process, know that my personal information is accurate and protected, know that it’s more than likely my package will turn up on time, know that if I don’t like the product I receive, then I will be able to send it back and get my money back. IT leaders need to start thinking less about APPLICATIONS and more about how they create or buy a DIGITAL PLATFORM for their business (at least one, if not several!).
We’re seeing a shift in the tectonic plate of software developments for business. Business IT is bigger than ENTERPRISE IT.

It’s not Enterprise IT anymore – because ecosystem oriented data systems are used by more than one stakeholder group if they’re any good, not just the enterprise (you don’t own LinkedIn, but you do use it!).

This latest advance in business computing is placing unprecedented demands for talent within IT teams. Embracing digital opportunities means that organizations need to access a rich portfolio of skills ranging from big data experts to artificial intelligence gurus. In truth, no single vendor organization can hope to offer such a broad gammut of skills for every customer they serve – there just aren’t enough good people to go around.

Like any market, the higher the demand, the higher the price. This is where on-demand IT workforce comes in. Modern digital platforms are also playing a key role in resourcing too. They are bringing the world’s talent within reach of organizations, one expert at a time. Organizations today can buy their resourcing by the task, person or project. It just takes a fresh way of looking at resourcing for a new kind of business IT world.

 

 

ABOUT THE AUTHOR

Ian C. Tomlin is an international business consultant, researcher and writer specializing in organization and business model design, growth and digital transformation. He serves on the management team of NDMC.  He is the author of the 60-Minute Expert series of short-format business books.

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