How does the CIO Position the Organisation to Participate in Industry Ecosystems?
Guy Saville, Director - responsible for IT, Business Systems & Credit, SA Home Loans
Guy Saville, Director - responsible for IT, Business Systems & Credit, SA Home Loans
Changing business models require CIOs to reconfigure their IT estates “never an easy or quick-fix strategic pivot, especially when we are trying to skate to where the puck will be tomorrow. However, an inescapable requirement for CIOs is to expand our strategy beyond our internal enterprise to support emerging external business ecosystems that are rapidly transforming all competitive landscapes. Industry ecosystems move beyond single-company value propositions to create domain platforms, offering a complete, customer-centric value chain. These partnerships bridge the gaps across a client’s value chain journey to create easy-to-do-business-with convenience. Partnerships are built on capabilities that provide services in a collaborative manner. Participants cooperate to identify synergies and create better customer centricity. The CIO's task is to enable their service contributions to be highly scalable, flexible, and resilient and to be updated frequently to enable continuous ecosystem alignments.
Technically, this requires CIOs to rapidly and affordably provide the technology platforms for optimal integrations with multiple ecosystem partners. CIOs will need to break their IT infrastructure down into smaller, independent software components, where managed API services function as the interfaces between the components; core business elements need to be available as microservices.
CIOs will want to invest in an API governance solution to manage relationships between API providers and users, especially in the B2B model across enterprise boundaries. Platforms need to create re-usability but also secure configurability, e.g., to cater for partners wanting to customise and ring-fence their API interaction models such that other participants do not have visibility into their domain intellect.
APIs control and govern secure data exchanges and event-driven interactions between services. Businesses have shifted in how they implement industry ecosystems: in the microservices, API-driven, cloud-native world, bespoke and point-to-point integrations become a constraint, not an enabler. Moving away from monolithic legacy systems requires considerable resources and planning. This is where a CIO needs road mapping, not only for migration planning, but to visualise the interconnected layers and time horizons for continuous change to the IT landscape, the organisation and how their company can opportunistically find new sources of value in the market.
The roadmap needs to explain the pivots required to enable future innovation opportunities and cater for disruptions impacting your business model.
Inevitably, this is a lengthy and resource-expensive exercise. Consulting services in this space are seldom the silver bullet: they are too often oversold but under-delivered and fraught with expensive learning curve overheads and a domain knowledge gap for your current business. This is where new entrants have a real advantage: greenfield projects are much easier to implement. Where possible, look for opportunities to build these capabilities without tight integrations with legacy systems. CIOs need to ask which capabilities must be built internally versus those that can be developed externally in collaboration with ecosystem partners or accessed via industry cloud verticals. It's not only technology: equally, there will be requirements for digital transformation, for more automation, and for replacing traditional monolithic business processes built around legacy systems. Simply wrapping a monolithic system in APIs will not enable packaged and composable business capabilities to be provided across digital platforms. Modular architectures are integrator friendly, allowing ecosystem participants to offer their traditional value propositions as packaged services, functionalities, and value-added data, whilst also enabling the creation of new services across more distribution channels. The roadmap will leverage modern, cloud-native architectures that inherently support application and service development on cloud infrastructures and industry cloud platforms. These leverage the modular and scalable architectures of SaaS, PaaS, and IaaS to offer industry-relevant packaged business and technical capabilities to an identified vertical. This brings platform participation increasingly within the reach of a broader spectrum of SMEs, since the composability and modularity will reduce the costs and risks of platform complexity. CIOs know that APIs drive digital business and that they are the connective tissue of the microservices world, hence the need for investments in scalable, secure, and fast microservices, wrapped and exposed with managed APIs.
CIOs need to ask which capabilities must be built internally versus those that can be developed externally in collaboration with ecosystem partners or accessed via industry cloud verticals.
By offering products and services that SMEs cannot create cost-effectively on their own, ecosystems generate a network effect for more customer events across an expanded value chain, creating much more rich data. The value of client data increases exponentially the more it is shared across partnerships and ecosystems. This abundance of data, as well as distributed and orchestrated services, creates a need to learn how to manage big data, something SMEs have not needed previously. CIOs should invest in creating a centrally managed enterprise data abstraction layer. When you want to share and leverage data across partner ecosystems, meta data, cataloguing and clear data rules must all be in place. Participants with access to the best data and analytics to create new customer insights and targeted CRM personalisation will ultimately emerge as those who own the customer relationship. Successful participants will harness this data with AI and ML to monetise their capabilities, services, and insights, to deliver targeted products and services personalised at the partner level, or at the client or segment level, across omni-channels. In this digital-first environment, the threat faced by CIOs is that online players will encroach on every sector to disintermediate traditional businesses if they have better digital platforms that provide easier ways to reach and offer convenient value to customers.
