We are in an unfolding era of business disruption. This new landscape is fast-changing and challenging, but it is also full of potential. New household names are arriving at an unprecedented pace, putting extreme pressure on the incumbent big players. And it is digitally driven, and customer focused.
So what does ‘digital disruption’ really mean? It means that huge opportunities for revenue appear and disappear at increasingly faster rates. It means that nimble, configurable systems are displacing legacy IT. It means that monolithic systems and vendor relationships are giving way to loosely-bound ecosystems.
The response to this disruption has been the hard work across many organizations to deliver solutions that reflect our new technology-immersed world.
These responses started locally, but the response is coalescing into a stable platform. The third platform.
The Third Platform
Let’s take a closer look at what is driving this business change. This is Gartner’s explanation of their term “the nexus of forces”:
“The Nexus of Forces is the convergence and mutual reinforcement of social, mobility, cloud and information patterns that drive new business scenarios.”
The analysts at IDC have a different term, “the third platform”. This puts the concept neatly into historical context, the first platform representing the age of the mainframe, while the second platform describes the client/server environment.
What everyone agrees upon, however, is that there is now a stark imperative for every organisation to leverage cloud, Big Data, social and mobile technologies to remain competitive. We are all in a new country.
It can be fast-changing and disruptive, but it is also full of potential. The competitive advantage found in leveraging the nexus of forces has been, and continue to be, profound. Think Uber. Think Airbnb. What competitive businesses are hoping to achieve is a successful “Digital Transformation”.
Digital transformation: The Transition from Digital Marketing to Digital Business
The third Platform has accelerated the move from Digital Marketing to Digital Business as consumers have shifted to mobile devices and integrated social interactions, creating information-driven relationships with global reach.
The transition from Digital Marketing to Digital Business occurs as ‘things’ become ‘actors’ in transactions. An example of this might be a customer choosing which online supermarket to use, not based on the quality of produce, but on the usability of the interface available for their particular mobile device.
This ‘thing’ (the interface) has become an ‘actor’, and it is now inseparable from the Supermarket’s offer and fundamental business.
To be effective in digital business, the CIO must aspire to know as much about the business as the CEO does.
Digital business is here already
In a 2014 survey of business and IT executives, 50% said that they expected to transform (at some level) into a digital business by the end of 2016.
In the same survey, 54% of board-level executives said that they were already proactively engaged in digital transformation.
In a similar survey published in March of the following year, 22% of organizational leaders said that they were now doing some sort of digital business, resulting in a higher investment in IT.
Furthermore, 50% of businesses surveyed said that they intended to be doing digital business within 24 months. 83% within 3 to 5 years.
Digital business is here, and is growing at a rapid rate through self-reinforcement.
A straightforward Strategic Planning Assumption would be that by 2020, 75% of businesses will become, or prepare to become, a digital business.
Digital Business Goals are changing the Nature of Solution Delivery
So if you haven’t worked it out yet, you probably now work, or will work, for a software company. The same as me, and everybody else. Whichever sector our organisation is engaged in, its ability to expand and compete will increasingly become reliant on the talent, discipline and capability of its software teams. In the API economy, our adaptability and deftness to sustain growth in a turbulent environment will come to depend a great deal on the quality and timeliness of the software our IT functions create.
“The business environment, at every Tier level, just keeps getting more complex,” says Chief Architect Alan Simmonds . “The IT function is business nowadays, in the sense that if you were to remove IT from any business, then you will be left with very little.”
There is now a common imperative for every organisation to leverage cloud, Big Data, social and mobile technologies today. This supports the notion that any business transformation is largely an IT transformation.
So are you ready?
So, are you ready? Or in other words, are you in a position to start re-inventing your business. Because the danger is, under the current business conditions, someone else probably will be.
Unfortunately, most IT organizations are not ready, and are headed for a crisis. More and more IT leaders realize that the current IT operating models are no longer viable and that the IT function needs to reinvent itself. A fundamentally different approach is needed than how we plan, build, deliver, and run IT today.
Digital Transformation, then, is the process of leveraging Big Data, mobile, cloud and social technologies to escalate operational efficiency and business competitiveness. Digital Transformation also attempts to give the business the agility to respond to (or even drive and take advantage of) the modern disruptiveness innate in 21st century business.
There are significant consequences for EA practitioners, and especially for IT governance. Digital Transformation is likely to consume the discussion in every boardroom over the next several years.
It is likely that, for the foreseeable future, every EA professional you meet will be grappling in their own way with Digital Transformation.
It is likely that, for the foreseeable future, every EA professional you meet will be grappling in their own way with the impact of the third platform on operations, processes, decision-making and customer interactions. By 2018, the analysts at IDC predict that organisations pursuing Digital Transformation will more than double the size of their developer resources, focusing those developers almost entirely on Digital Transformation initiatives.
Digital Transformation, the move to the third platform, and to software methodologies such as DevOps, Agile, Lean and Kanban have left a space that it is essential for IT governance to fill, and the Open Group’s IT4IT initiative is doing just that. The IT4IT reference architecture is very much part of the changing environment we’re all facing.