Cutter Senior Consultant Balaji Prasad takes a broad look at the enterprise in 2018. He believes the enterprise is comprised of a core platform — the sum of multiple components. Some of the components that might play a role in the success of the enterprise include APIs, business architecture, agility, and “a return to the roots — to the people side.”
There are three things extremely hard: steel, a diamond, and to know one’s self.
— Benjamin Franklin
As chaos, complexity, and change swirl around enterprises, it is wise to take a step back, clamber a little higher up the abstraction tree, and take a broader view. Framing actions within a larger framework of what really matters can help us differentiate innovation and transformation opportunities from wild goose chases. The bottom line in this predictor piece is that we will see enterprises value “openness” more, move toward a “composed” state, and recognize the need to be a tad bit more “thoughtful.”
Openness via APIs
The year 2017 saw enterprises push the gas pedal on the new paradigm for enterprise integration: APIs. The goal was to make it possible to quickly and cheaply access software-enabled business capabilities in one part of the enterprise from another part of the enterprise.
As strength in integratability becomes obvious, so does demand, driven by competitors and regulators. This demand comes from outside the enterprise. For example, the UK’s Open Banking initiative intends to enable improved customer service and foster more competition in the banking industry. In Europe, regulations are driving APIs. While the US does not have similar regulations in banking, competitive pressures are influencing US banks to open up business capabilities and information to customers and authorized third parties.
Enterprises have already started this journey. In 2018, we will see greater investment in making APIs easier to publish, consume, and monetize. APIs are a core architectural capability needed to position enterprises in a shifting, unpredictable landscape of third parties and competitors playing together within a broader ecosystem.
Composing the New Enterprise
Some renewed ideas are driving a mindset that will eventually replace the “firm,” for which Nobel Laureate Ronald Coase explained the raison d’etre in his 1937 piece, “The Nature of the Firm.” One of these ideas is the notion of a “platform”; a number of books, articles, and papers have emerged on this subject over the last couple of years. There have also been highly visible implementations of platforms such as Facebook that have turned traditional business models upside down. This subtly repositions the enterprise and enables it to be cast in a different mold.
The trend toward an enterprise as the sum of multiple legal entities, composed together to produce a whole that is greater than the sum of its parts, is a real one. This trend arises from the many moving parts of an enterprise’s digital platform and the difficulty for a single entity to create and manage all these specialized components. Even the hoary automotive industry has not been immune to this, as recognition sets in that a vehicle has a digital heart beating inside it and that there are Silicon Valley entrepreneurs pioneering autonomous vehicles who have a better grasp on the digital skeleton of the vehicle.
Similarly, the financial industry has seen a surge of fintechs — startups focused on specific aspects of the business (e.g., payments) that are more tech-savvy and nimble in bringing the latest technologies to bear on business problems in new ways. Banks are especially under threat, as even big techs such as Google, Apple, and Amazon start encroaching onto the banking and payments space. The bank of tomorrow may bear faint resemblance to the bank of today, and it behooves incumbents to find a way to reposition for the potential disruption that will ensue. Fintechs offer a path. Coupling that with APIs and a better definition of the “core” platform will help financial institutions execute in-line with where things are likely to go.
In 2018, we will see enterprises work toward more partnerships with specialists that can help offload noncore capabilities (e.g., cloud-hosting services) and with others that can extend the core platform with value-added services (e.g., payment exchanges). In some cases, APIs will provide the fabric for connectability, while in other cases it may be necessary to cobble together data feeds that are necessary in collaborative efforts, at least in the initial stages.
The Thoughtful Enterprise: Who Am I?
The thing about the future is that while some things change, some components will carry forward more or less the same. If the past carries into the future, would it not help to get a deeper appreciation for those components — and to grow them into what they can be?
Many enterprises have already begun efforts directed at gaining a grasp on what the business is about and what it is not. The practice of business architecture is coming to the fore, driven by complexity at the lower levels of the business stack. Moreover, conversations about technology are no longer just the domain of technologists because most enterprises have crossed the “digital tipping point” — a state where a significant part of the enterprise is tech-based.
Thus, architecture itself will see the beginnings of a transformation in 2018, as technology-heavy architecture transforms itself and climbs higher up in the business stack, getting more in tune with what really matters. The business architect’s day has arrived. Business architecture will also help with making decisions on what to hold close, what to let go, and what to share in the emerging firm that will be a composite of multiple firms.
There will be more reflection as well on other methods such as Lean and Agile that have crept into enterprises over the last few years. Hype is giving way to a calmer view; Agile is less of the Agilism it has sometimes been. Many in the industry now talk of going back to the intent and spirit of Agile — things that have sometimes fallen through the cracks in the scrums that exploded along the way. People matter. Motivation matters. Learning matters.
2018 will see not only more emphasis on business architecture and roadmaps, but also a return to the roots — to the people side. A more pragmatic, people-oriented way of being Agile will go more mainstream in 2018 as the enterprise seeks to consolidate its core: the people who make the enterprise what it is.