Platforms Are the New Foundation of Corporate IT
Reinventing corporate IT requires recognizing deep differences between what we have today and what we need in the future. These differences go to the foundation of the modern corporate IT department — the infrastructure — which includes the software, hardware, communications, facilities, data centers, operations, and other technical resources a corporation operates. This infrastructure sits on top of a publicly available substructure of assets and resources — telecommunications and the Internet, for example. Infrastructure and substructure support the information, processes, applications, rules, and channels that are the face of corporate IT.
Infrastructure largely determines the IT organization's structure, its budgeting, how the corporation goes to market, its legacy, and its capacity to change. It embodies the long tail realities of major business and technology decisions, resulting in an IT department struggling to manage multiple costly and incompatible infrastructures.
The days of seeking a single, one-size-fits-all, one-price-feeds-all IT department are numbered. Infrastructures are under assault technically, functionally, and financially. New digital technologies like mobile, big data, analytics, cloud, social, and sensors represent fundamentally different types of solutions than the proprietary transaction technologies such as Enterprise Resource Planning. Consider:
- Standards-based (rather than proprietary) technologies in mobility, Internet protocols and open API's demand shorter application and infrastructure development cycle times. Standards reduce not only the amount of technology but also the risk associated with bringing new and legacy technologies together.
- Functionally, digital technologies are front-office, customer-facing, and demand-generating. They're the business's brand. Digital demands move at the pace of the market, competition, and customer expectations rather than the upgrade cycles of IT vendors.
- Financially, infrastructure is simply too expensive and consumes too much in its present form. CIOs need to provide infrastructure at a lower cost and with more agile capability. Even current cloud and virtualization technologies, which often lower unit costs, don't change the drivers and structures of those costs. It is only a matter of time before growing digital transaction volumes overwhelm these technologies in their current form.
Increasing needs for speed, creativity, low cost, and flexibility demand that we move beyond infrastructure to platforms. A platform is the collection and integration of common resources that support multiple business operations. Financial services companies have platforms that allow them to release new products without having to replace their infrastructures. Facebook, Google, and other digital companies invest in similar capabilities giving them a seemingly endless stream of innovations and experiments from a single platform.
"Plures ex uno" — or many out of one — is the goal of a digital platform. Note this is the opposite of the motto of the United States — "e pluribus unum" or one out of many. The comparison is apt as corporate infrastructure is federated in nature with limited viability in the digital future.
A platform is more than service-oriented architecture on steroids. Platforms look at technology with a business view organizing around specific business actions like one-click sales, search, description presentation, and pricing. These common actions treat information rather than business logic or code as the source of specialization. This enables platform companies to add new features and functions once that are available to all or just a part of their customers giving them the flexibility and adaptability required in modern business.
Platforms reflect the heterogeneity of digital technology, allowing each part to change without disturbing the peace across all components. Platforms are critical for a world of consumer-driven technology, multi-vendor competition, and standards wars fought in the marketplace rather than the lab.
Platforms fit the economics of digital business. They provide a means to gain scale efficiencies from across the enterprise rather than trying to drive them across individual infrastructures. This is essential in a world where IT transaction volumes grow faster than business purchases. Consider online banking where many transactions are free of charge but have a real cost to the bank. Platforms provide a way to drive down transaction costs and preserve company margins.
Platforms require more than stitching together existing infrastructures. More interfaces, more integration and more condition-specific logic may be an interim step, but it only adds cost, complexity and core rigidity in the corporation.
Achieving the functional and financial benefits of a platform involve going back to basics of business — not transactions. Yes, the devil is in the details. And yes, we have tried service-oriented architecture and virtualization before with mixed results. Reinventing corporate IT requires more than changing the role of CIOs and IT in a digital age. Reinvention at scale must extend down into the fundamental drivers of IT cost, quality of service, and future flexibility. That starts with reinventing the foundation of IT and abandoning the infrastructure model.
An HBR Insight Center