As a company enters new markets, acquires other companies, or adds products, its operational backbone facilitates reuse of existing capabilities. Thus, building and using an operational backbone is step one in facilitating responsiveness to new market opportunities. But an operational backbone is not enough.
A Digital Services Platform Enables Rapid Innovation
Precisely because the operational backbone is designed for reliability and efficiency, it does not offer the speed and flexibility companies need for constant, rapid digital innovations. As a result, a growing number of companies are defining a second set of capabilities. We refer to this new set as a digital services platform, which we define as the set of technology and business capabilities serving as a base for rapid development and implementation of digital innovations.
The architectural requirements for a digital services platform are concerned with facilitating continuous innovation without risking the reliability of the underlying operational backbone. Common elements of a digital services platform include:
- Digital components—often referred to as microservices—including both technical services like biometrics and business services like customer alerts
- A technology hosting environment, i.e., platform as a service, where the company can store and access large numbers of loosely connected microservices
- Repositories for collecting massive amounts of data from sources such as sensors or that are public (e.g., social media) or purchased
- Analytics engines for converting the above data into meaningful insights
- Connections to both data and processes residing in the operational backbone
As companies recognize the limitations of their operational backbone with regard to enabling rapid digital innovation, they architect and build their digital services platform:
- Kaiser Permanente built what it calls a Generation 2 platform to support a set of twenty-one (and growing) technology components for clinical and operational services that can be assembled on a cloud-based self-service portal. The platform, along with Kaiser’s IT services management model, has greatly reduced the barrier to entry for digital innovations at the department level.[foot]M. Kagan, I.M. Sebastian, and J.W Ross, “Kaiser Permanente: Executing a Consumer Digital Strategy,” MIT Sloan CISR Working Paper No. 408, March 2016, https://cisr-mit-edu.ezproxy.canberra.edu.au/publication/MIT_CISRwp408_KaiserPermanente_KaganSebastianRoss[/foot]
- Royal Philips describes its HealthSuite digital platform as “an open eco-system optimized for rapid innovation."[foot]“How does connected care Healthsuite work?” (Video), Philips, http://www.usa.philips.com/healthcare/innovation/about-health-suite[/foot] This cloud-based infrastructure currently collects, aggregates, and analyzes health, lifestyle, and clinical data from more than seven million connected devices, sensors, and mobile apps, as well as from electronic health record systems.[foot]"Philips strengthens collaboration with Amazon Web Services to expand digital health solutions in the cloud," Philips, October 9, 2015, https://www.usa.philips.com/a-w/about/news/archive/standard/news/press/2015/20151008-Philips-strengthens-collaboration-Amazon-Web-Services-expand-digital-health-solutions-in-cloud.html[/foot] The data and related algorithms are accessible as services through a public API.[foot]“AWS Case Study: Philips Healthcare,” Amazon Web Services, https://aws.amazon.com/solutions/ case-studies/philips/[/foot]
- The LEGO Group has cited a need for an engagement platform to allow for rapid introduction (and elimination) of functionality. This digital services platform will host loosely coupled microservices aimed primarily at personalizing customer experience.
The Two Sets of Capabilities Are Distinct but Complementary
The operational backbone and digital services platform address very different but complementary business requirements. Together these sets of capabilities enable a company’s digital strategy, targeting either customer engagement or digitized solutions, but eventually encompassing both.[foot]Companies must pursue one of two possible digital strategies. See J.W. Ross, I.M. Sebastian, and C.M. Beath, “How to Create a Great Digital Strategy,” MIT Sloan CISR Research Briefing, Vol. XVI, No. 3, March 2016[/foot]
As you might expect, the two sets of capabilities impose different organizational demands. Figure 1 represents the major differences and highlights the organizational transformation in implementing a digital services platform environment.
Companies carefully design [architect] their operational backbone to meet requirements for enterprise-wide integration and standardization. Building an operational backbone involves massive organizational changes and significant investments in large systems—or in vendors providing major enterprise services. Because enterprise systems wire in core processes and collect and manage the company’s crown jewels (i.e., master data), implementation is slow. Some teams have tried to adopt agile methodologies, but their efforts usually result in faster waterfall.
In contrast, the digital services platform typically does not require the massive investment that companies made in their operational backbone. The underlying technologies usually rely heavily on cloud-based vendor and partner solutions. They support rapid development and reuse of microservices targeting the needs of individual products, customers, or channels. Small cross-functional teams deploy iterative, agile methodologies to build and test new microservices through minimum viable products and user-centered design. As they learn what works, these teams incrementally grow the digital services platform.
It is important to note that the distinction between the two sets of capabilities is not technological. Admittedly, much of the digital services platform will rely on cloud technologies; these technologies enable the speed essential to digital services. The operational backbone, however, can be supported by mainframe, server, or cloud technologies. IT leaders must continue to assess what technologies are most practical.
It is the scope and duration of the business processes and capabilities—and consequently the governance processes, security requirements, and ownership responsibilities—that distinguish the operational backbone and digital services platform. As companies master the linkages between the two, they will feel less like they are managing two different environments and instead think in terms of the multiple capabilities of their enterprise backbone—just as the human backbone allows individuals to both dance gracefully and run fast, but demands different training and skills to deliver on those capabilities.
