A few weeks ago, Walmart, the largest US retailer and owner of Asda here in the UK, “advised” those suppliers using Amazon Web Services (AWS) that they should consider moving away from that service. Walmart hadn’t seen some technical problem with AWS. Rather, the Amazon acquisition of the Whole Foods supermarket chain had finally woken Walmart up to the existential threat to them posed by Amazon. This snippet from an excellent interview with Geoffrey Moore, of Crossing the Chasm fame, highlights the nature of the danger traditional B2C retailers face. “Amazon is simply a terrifying force here, and the more data they get, the better their algorithms will be, and the more dominant they will become. Traditional retail selling will have to refocus on shoppers and try to win them over with experiences that mix digital with physical presence.”
You may not face the same existential threat to your business, but the risk of digital disruption remains great. What should your response be? According to McKinsey, established companies can’t move as quickly as their Internet-born competitors? In part, this is because they are limited by their enterprise architecture, which is the underlying design and management of the technology platforms and capabilities that support a company’s business strategies. In other words, the maintenance of your old legacy systems makes it very hard to be agile in response to new digital business trends.
This is hardly a new revelation.
People have been trying to work out for some time how to keep the lights on while transforming their business at pace. The answer from McKinsey is perpetual evolution. OK, forget the name. The point is that, in the past we have designed business models, and the IT architecture that supports them, to be highly integrated. This creates hundreds, if not thousands, of interdependencies. So a change, in let’s say, how a customer places and order will have a ripple on effect on a myriad of other systems in the supporting supply chain.
This inevitably slows down the implementation of the new order feature as IT work through all the potential implications for these closely integrated systems.
The McKinsey view is that the IT architecture needs to be loosely coupled. This means having smaller, modular applications that can work independently that are then managed by a central platform that provides a series of lightweight connections. Effectively they are describing a DevOps approach built on an IT environment of micro-services, that makes significant use of containers, standard APIs and the new and growing capabilities of management and orchestration platforms like Kubernetes and Mesos.
Up to now, this approach had still not tackled the issue of what to do with the legacy applications. New developments in container technology and, perhaps, a new boldness in enterprise thinking, is beginning to show that legacy systems can be modernised faster and more radically than perhaps people have realised. It has certainly moved beyond the old paradigm of feeding and watering the old systems while making many of their functions redundant. It is worth considering.
Technical hurdles remain.
APIs are critically important in this loosely couple architecture. Having agreed standards that cover all the functions and applications is far from a given and could slow down the process of decoupling architectures. Backing-up and recovering systems is not straightforward and critical points of failure move from the applications themselves to the inter-services messaging.
This is not a reason to delay, but it is a reason to ensure you have a clear roadmap that allows you to map your IT architecture to changing business models and technologies and compete in a fast-changing world.
Have you started the journey towards perpetual evolution? What challenges have you had to face? What has worked well for you? We’d love to hear your stories to see how they chime with our experiences to date.