If you’re a senior executive and someone asks you what makes organisations agile, could you confidently explain how digital architecture enables or inhibits business agility? Would you offer an opinion on ‘kappa’ architecture and the importance of having a data pipeline? If not, then you’re unlikely to be taking the necessary actions needed to make your business agile. These, and more, are the terminologies that form the foundation of today’s digital architecture. The architecture of any new business that was formed in the last five years.
If you’re not familiar with these concepts then remember what happened to companies such as Kodak, Xerox, Nokia and Blackberry. While these once great companies still exist, they are shadows of their former selves. They were simply not agile enough to respond to the changing conditions that they faced. To thrive in today’s digital economy all businesses have to be agile, and this involves not only understanding how an organisation’s digital architecture enables and inhibits business agility, but implementing these architectures in an effective way. This is particularly the case for businesses whose business model is digitally based. The alternative is to get stuck on a trajectory that leads to a future you don’t want. A future that in their book Beyond Default, David Trafford and Peter Boggis call your default future.
Digital business architecture is uniquely different
Digital business architecture inhabits a space which, on the surface of it, comes from a traditionally technical IT origin. However, it is uniquely different as it is a fusion of both technical and business architectures. The need to calibrate your business’ operating model with the way you manage and deliver technology is at the heart of a digital architecture and a digital business.
Being a digital business can mean many things to many people. To some it simply means having a mobile device channel with associated apps, to others it’s just-in-time, straight-through processing and for some it simply means eCommerce. It’s important to note that these are outcomes of being digital not the core behaviours of a digital organisation. In order to ensure that these outcomes are possible you need to think about how your business operates and, more importantly, address the key imperatives of a digital architecture, namely platform, data, innovation, customer and proposition.
The emergence of the enterprise platform
The big swing-shift in the last five to ten years has been the emergence and value placed on an enterprise’s platform. Previously, organisations would build siloed web or mobile applications with vertical technology architectures forming under each, which led to a cannibalisation of technology effect. New companies that start up today must begin with a common, scalable, reusable and open platform to power their overall proposition to customers. Customers in this regard will come in a couple of flavours: direct to consumer (DTC) and business to business (B2B). The latter one is more intriguing with the growing trend of enterprise clients wanting to consume platform capabilities at an API (Application Programming Interface) level and not just at an application level. The network effects that emerge from this model are fascinating and can be seen today within UK and European banking under the guise of Open Banking. The API economy is the latest trend that accentuates the power of a platform to a business. If you want to grow market share or expand to other verticals you’d better build your digital architecture with a reusable enterprise platform in mind.
Underpinning a digital platform includes microservice architectures deployed through containerisation in the cloud (for example Docker, Kubernetes and Mesosphere), often with an integration strategy that decouples your architecture giving you greater freedom to change key components over time. Feeding and watering your platform is vital for its health as nothing will stay static. Being agile means being comfortable with change on a regular basis, which is a prominent characteristic of successfully managing a digital platform.
Data is key
The peak of this digital bell curve is data. If your company thinks that having a data warehouse and producing business intelligence reports on a daily basis is enough, or that it indicates you understand the value of data to your enterprise, then you are in trouble. At a minimum it suggests that your business does not have a data strategy. The greater risk is that your digital competitors will understand your data better than you. Digital data strategies lead to absorption and thirst for a diversity of data sources, both internally and externally.
Data architectures such as ‘kappa’ encapsulate a variety of data capabilities and technologies that allow organisations to ingest, transform, store, compute and consume vast amounts of data through real-time and batch processing techniques. While this continues to support boiler plate needs such as BI (Business Intelligence), it is really a drop in the data ocean. Capabilities such as data lakes allow organisations to stream different rivers of data into a point of confluence where structured and unstructured raw data can be analysed and codified into eventual capabilities that could be surfaced to APIs or Apps. In this respect think about how Netflix presents recommended content to millions of its customers at once, where each experience is personalised to their profile.
It’s not just the likes of Netflix and Amazon that invest in this capability. Retailers such as Walmart and even governments now see this as a priority feature. You need to ensure that the capture and measurement of data is intrinsic to your decision-making in real-time – not daily, weekly or monthly – otherwise you are driving blind without a dashboard. Fortunately the days of needing your own private-cloud infrastructure to house these technologies has been hugely economised, with the likes of Google and AWS (Amazon Web Services) offering many of these components to a wide range of digital businesses today. Having a team of experts to harness and leverage these technologies is a key imperative.
Digitally enabled innovation
Organisations often chase the need to have a ‘skunk works’ (see Lockheed Martin), an R&D capability or simply to be more innovative. The outdated view of achieving innovation is to have an exclusive division or function that creates experimental designs or products. Today, driving innovation in your organisation, and in turn your industry, involves changing the way your product team functions. In a digital business this usually means a co-equal relationship between product and software engineering where the clichéd agile methodologies exist. However, agile is a powerful tool that enables and allows innovation to flourish. Organisations such as Google have perfected the 70/20/10 rule (see Google Innovation) of bleeding innovation into core work to generate a stimulus to their product teams where innovation naturally flows, but also has the means to deliver to the marketplace. Often, innovation teams have great ideas but are cut off from the process of delivering those ideas into features.
Key to unlocking this is the need to have capabilities such as DevOps pipelines, which has been around for the best part of 10 years, but has now reached a level of prominence in the digital age. Simply put, if you cannot drive optimisation through automation then you close off the ability to innovate, experiment and pivot when needed. Successful, agile, digital businesses are able to ship features fast and often. It is a hard discipline, but what used to be a differentiator is actually now a common feature. If your business does not understand and perform an agile methodology, at a profound level, then you will be lagging behind.
If you have the means to deliver in 1 – 2week windows, then innovation flows as you are able to drop small features out amongst core changes and perform what is called validated learning through techniques such as A/B testing. Books such as Lean Startup by Eric Ries are a great reference and testament to this.
Investing in your DevOps pipeline means that you will be able to develop a close partnership between product, software engineering and operations. The framework around this provides the ability to build nightly releases through continual and automated functional and non-functional testing, promoting code through multiple environments. The speed of change and confidence in doing so is what drives innovation into a digital business.
Designing customer experience with intent
Truly understanding your customers’ needs and how they are experiencing your product is imperative. Only then can compelling customer experiences be designed and your digital architecture configured accordingly. Instrumentation tools such as Countly, Elastic and Google Analytics can inform your customer experience (CX) teams, but critically important is having expertise that can holistically inspect your product’s CX from 1 to 10,000 users to 1m users. Loving the problem, not the solution, means that having a relentless and obsessive need to resolve customers’ problems is now a differentiator. Gone are the days when a product would be in the ‘R&D’ phase, never seeing the light of day for 18+ months. Delivering smaller features fast and gaining feedback through validated learning is now part of a digital architecture.
Evolving your digital proposition
While giving your customers a compelling experience is important, understanding and evolving your digital proposition is a key imperative. Success stories of how digital businesses have done this in the last few years include fintech darlings Monzo and Starling, whose digital propositions have been shaped in conjunction with their vibrant customer community base. Monzo, in particular, incrementally went from one or two postcodes in London with a pre-paid card to a fully-licenced bank, a current account product and over 1.5m customers who embrace the way Monzo penetrated the retail banking market. How many people love their bank? A large percentage of Monzo customers do.
What Monzo and others have managed to do is to create a community. One that is keen and willing to share their ideas and give feedback on how the proposition has evolved. While this is something many organisations would like to do, their lack of agility – and inhibiting legacy digital architecture – prevents them from doing so.
But it’s not only customers who can contribute to defining an evolving proposition. Many suppliers can also do this by becoming part of a vibrant ecosystem – all based upon the digital platform. In the 1990s and 2000s open-source communities formed to develop innovative software. Today digital businesses, suppliers and partners engage in digital communities to shape and evolve their respective digital propositions.
In this article we have explored five key imperatives for creating a digital architecture, one that enables, rather than inhibits, business agility. If these imperatives are not addressed then a business will never become a truly digital enterprise.
I welcome your thoughts.
Stuart is a digital architect who advises organisations on the digital strategies. He can be contacted at email@example.com.