Platform ecosystems will become a key differentiator as enterprises advance their digital strategies
As digitisation matures, organisations are increasingly finding themselves part of a digital ecosystem — which encompasses business partners, competitors, customers, regulators and other stakeholders that exchange information and engage digitally. In turn, CIOs are shifting their spending to digital business, with typical CIOs already investing 18 percent of their budget in favour of digitisation, a figure set to reach 28 percent by 2018, as reported by Gartner. Digital-savvy organisations that have deeply embedded digital into their planning processes and business model are already spending 34 percent of their IT budget on digital efforts. The share of wallet is predicted to increase to 44 percent by 2018 as organisations progress with their digital initiatives.
By 2018, half of EA initiatives will focus on digital platform strategies
Digital platforms underpin some of the most successful business models, from Amazon over Facebook, and Salesforce to Uber. All of them strategically leverage cutting-edge technologies such as artificial intelligence (AI), big data analytics, cloud computing, machine learning, and the Internet of Things (IoT) to advance their operating model, capture market share and keep their organisations competitive.
Enterprise Architects (EAs) will play a vital role in facilitating the corporate agenda. EA practitioners must, therefore, concentrate their business architecture efforts on defining their digital platform’s strategy and outlining their operating model. Moreover, EAs will increasingly focus on the business and technology opportunities and challenges of digital ecosystems. Among other items, this includes integration work, ensuring interoperability, and improving the user experience. Gartner predicts that by 2018, half of EA business architecture initiatives will focus on defining and enabling digital platform strategies.
Design-Centric architecture is essential to build and enhance a platform ecosystem
Going forward, enterprise architects will gradually devote more time and attention to design aspects of architecture — which is at the forefront of digital innovation. By 2018, 40 percent of EAs will focus on design-driven architecture, according to Gartner. This enables organisations to better understand the ecosystem and its players, gaining insight into them and their behaviour and enhancing their portfolio with complementing services they are searching for. However, beyond the question of “what” customers want, design-thinkers focus on the “why”. Utilizing design-driven approaches is common practice at many leading platform companies including Apple and Dropbox, for example.
However, the transition to design-centric architecture has a multitude of implications for people, processes and tools alike. Smart EA practitioners will enhance the design skills and build additional capabilities within the EA team. They also need to actively educate other parts of the organisation on design-driven architecture and identify an area where they can incorporate the methodology to not only spur innovation but also learn, as a group, how to do design.
Digital ecosystems are spreading like wildfire as the ‘cloudification’ accelerates
Digital ecosystems are evolving quickly. As part of the ‘cloudification’ trend, IT landscapes are becoming much more fragmented. With hybrid already being the norm, organisations increasingly move one step further toward a “cloud-first” or “cloud-only” approach and essentially operate in a multi-cloud environment spread across a variety of providers.
The results of Gartner’s annual global CIO survey support this development. In a poll of more than 800 CIOs, the average number of ecosystem partners grew from 22 in 2015 to 42 in 2017. The number is forecast to reach 86 in two years from now. In other words, CIOs in organisations leveraging a digital ecosystem is seeing and expecting to see; their digital ecosystem partners double every two years.
Nurturing the organisational capabilities for a striving digital ecosystem
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Enterprises are increasingly adopting bimodal IT, which is a core ingredient of the organisational skills needed to create a digital ecosystem. Nearly half (43 percent) of survey respondents report that they are embracing bimodal IT. However, the results suggest huge differences between the performance of the top percentile and the centre span. Leaders of the pack far outpace the average organisation in their use of bimodal, with 68 percent of all top performers having adopted bimodal compared with only 17 percent of the trailing performers.
The shortage of qualified labour remains a key challenge for CIOs to accomplish their goals. More than a third (34 percent) of survey participants reported that information-related skills represent the biggest bottleneck, particularly the capabilities needed to perform data modelling and utilize cutting-edge analytics to build data-centric business models. The capabilities that may have worked in a pre-digital era are no longer sufficient to cope with real-time data streams presented by the Internet of Things (IoT), analytics, operational technology and digital ecosystems. As a result, in-depth expertise in emerging technologies is rare and expensive.
Building leadership capabilities to develop and orchestrate a digital ecosystem
Executives should rethink their leadership priorities, engage stakeholders and involve them in the various digital initiatives. Those that are digital ecosystem-ready see the bigger picture and think outside the box. These leaders look for opportunities in every direction. They are prepared to orchestrate diverse partnerships, leave the comfort zone, and question the value propositions and business models of the past.
Having an in-depth understanding of the business objectives is crucial for building a digital ecosystem. Together with their CEOs, top-performing CIOs put the strong emphasis on growth and digitisation. In the digital era, in which data is the currency, CIOs have the unique opportunity to play a fundamental role in the creation of new revenue streams. The CIO survey revealed that growth is a recurring theme in the strategic business priorities for 2017 with 28 percent of the top performers, 21 percent of the typical performers, and 24 percent of trailing performers quoting it among their top three priorities. Digital business is a high strategic business priority for the top and typical performers (28 and 20 percent respectively) but was only cited by six percent of trailing performers.