Skip to main content

Digital Platforms and Business Strategy

By April 16, 2015Article

Inside enterprises, digital Infrastructure and the supporting system are typically seen as a homogeneous mass of well-assembled business processes that weave together like a hot mix of data, channels and applications, morphing from one thing into another. This is baloney. While it is indisputable that the rapid strides made by digital technologies – cloud, social, mobile and analytics – have re-ordained what it means to do business in this age, what’s now emerging is more interesting. The front office itself is also drastically changing – so much so that the technology that changed business is now being changed by business. 

Let’s drill this some more. The most pronounced change is in how the applications get architected, how they come together and interact. 

From the well-established transaction model, it was seen that systems primarily existed to capture and record transaction data. The system versatility was so stretched to make the most of the business processes dealing with stakeholders such as customers being treated as transactions, even as this might not be the most obvious choice. Look at the difference in perspective here on this count. Vendors and vendor system designers look at interaction with customers as transactions. But the customers think very differently; they think in terms of process. The irony is that thousands and thousands of business applications built around the world have been designed on this paradigm, and both these worlds co-existed in a seemingly happy unison for a long time. Ignorance and a shocking mismatch masquerading as harmony! 

With the rapid spread of the social phenomenon, users’ expectations of the front office have substantially changed. The flexibility, support and ease of interaction in the front office have gone up by order of magnitude, changes mostly forced by customer expectations. The more we tend to stretch the range and depth of support at the front office, we get to see more acceleration of the support extended, and this is growing across the industries. This is precisely where we can see the technology-influencing-business-influencing-technology phenomenon.   

In such an age, the cold reality is that the tools and techniques used for building transaction applications are proving to run short of capability to scale up to meet the needs of running true business processes. 

The way systems get designed in the transaction world forces processes to be mapped to technical capabilities and computation in a procedural branch and bound logic. They need workflow integration, collaboration, ability to read social signals and match them with profile data, heavy-duty real-time analytics. And many times, either supporting or overriding processes need to be put in place to provide efficient outcomes. Yes, that means some manual intervention along the way (Imagine loan origination, mortgage processing, etc.), with the consequence of long cycle times – not consistent with the current digital age expectations. 

That leads to a question: What about augmenting and stretching the systems to add these bolt-on capabilities? The answer is no; the resultant complexity will inhibit ability to deliver at digital scale and ease. As a matter of fact, the current age expectations are to have systems that abhor complexity in the eyes of the user; more importantly, such stretches will limit serving the future evolving needs of the customer. 

What we are seeing now is an age where business processes are expected to cater to the needs of business processes that can extend themselves along multiple axes crossing the barricades of technology, business and geographical boundaries – and all at digital speed. This is clearly out of bounds for transaction systems. 

As a customer, most of us can see which enterprise and which channels within the enterprise provide flawless service and which ones call for a number of interventions – a clear indicator of process quagmire or technology stretch. Most of the customer complaints in online forums relate to process issues, cycle time for turnaround and the amount of technology stretch and associated pain thereof. 

Using a transactional system to provide engagement services in the digital age is like an old manual typewriter aiding a writer in the age of word processors and voice recognition software. Innumerable examples of incongruous outcomes like this abound in the Internet. 

Any enterprise knows customer complaints shared publicly will directly result in loss of business. And in this age of “winner takes it all,” recurrence of such complaints could throw an enterprise completely out of business. 

This is where platform technology comes in. Platform is the most promising solution to the emerging challenges revolving around technology driving business, which, in turn, drives the technology scheme of things. Many times stakeholders, including employees, need to serve business differently; platforms are best suited to rise to such occasions. 

Every organization pursues business strategies that can potentially differentiate it from its competitors; digital platforms can play a critical and essential role in providing this differentiation. The ability of technology to provide direct support to pursuing unique business strategies is best enabled by platforms. 

Platform firms are networked ecosystems that connect multiple players and provide tools for them to interact in both structured and unstructured ways with robust governance in place. Typically, platforms not only provide scale benefits and handle complexity extremely well but also can make the management of the ecosystem much simpler by enabling management by exception, thus freeing costly resources to pursue new or more valuable initiatives. 

In most cases, business entities leveraging platforms report increase in operational efficiency in the short term, increased growth and margin in the medium term and gains in market share and competitive advantage in the longer term. 

Today three of the top five U.S. firms by market cap – Apple, Microsoft and Google – run business platforms.   

The rapid ability to support new business strategies and launch them quickly is at the heart of digital business/technology alignment. Technology executives too often are obsessed (rightfully so) with operational risks such as uptime, response time, etc., of digital and physical assets. But the current digital-age reality expects them to think in terms of strategic risks like “ability to support new business strategy and meet heightened customer expectations.” Not being geared for responding to such needs cuts at the roots of competitiveness of the enterprise in the digital age. A well-architected platform would be able to overcome such issues and continue to provide differentiated value to a digital business. 

Likewise, for fast follow based on industry/competitor moves, or in extending the range and depth of support to digital initiatives, platforms play a very critical role. Platforms are heavily dependent on current technologies but must have the ability to support and leverage older technologies as well. Typically, effective platforms that include integration and data services would be part of such core strategies. An effective data strategy in step with the needs of the digital business strategy would provide the much-needed differentiated value for the enterprise. 

Looking at digital platforms as the lynchpin to realizing business strategy and objectives for the digital business is a key decision that digital businesses should take early in their journey and live with that view – and along the way look for innovative ways to make the platform more powerful to reap success. 

Sadagopan (Sada) Singam is vice president (Global) and business leader at HCL Technologies.