From IT to digital : disruption or continuity ?

It is now commonly accepted that we have entered a “new” world, referred to as “digital” or “numerical.” Chief Digital Officers, often coming from business functions, now coexist alongside CIOs. IT spending is increasingly driven directly by business departments. Websites are merging with, or even replacing, internal systems… IT is spreading throughout organizations, becoming less centralized and more decentralized…

But ultimately, what has really changed ? The Internet is not new, nor is IT itself. Smartphones ? Connected devices ? New development technologies ? The mass democratization of technology ? The openness and standardization of “IT” ? A cultural shift ? Probably a combination of all these factors.

The Web and community-driven information

Not so long ago, perhaps you experienced this era as I did, conducting documentary research or market studies required physically traveling to libraries, registering there, borrowing or purchasing books, and so on. Today, with an Internet connection, knowledge is instantly accessible.

Instantly accessible, and often free.

Free, thanks to UGC (User Generated Content), Web 2.0, and open source technologies. A new economy based on relatively low fixed costs and near-zero marginal costs.

Three models make it possible to absorb these fixed costs :

1. the primary usage model (I created this for my own use or personal enjoyment, out of a desire to help or belong to a community)
2. a limited number of paying customers (the freemium model)
3. a very large number of “customers” generating low individual revenues (reputation, advertising)

Near-zero marginal costs, enabled by automated and large-scale Internet distribution, allow information to become freely accessible to the greatest number of people.

This revolution in the creation and distribution of content for humans has also transformed “machine-to-machine” content.

The installed base of devices and ease of deployment

Hardware is (almost) no longer an issue today. Customers are equipped with mobile devices featuring web browsers and/or app stores, geolocation capabilities, multiple sensors, and more. Employees have at minimum a web browser, and often a mobile device with the same capabilities. As a result, deploying a service has become primarily a software matter, with very high or relatively high levels of standardization and ease of deployment depending on whether one chooses a pure web approach or a native application.

No more concerns about equipment, compatibility, distribution, deployment, updates, or even infrastructure thanks to the possibilities offered by the “cloud.” I am now able to design, develop, test, and deploy a service in a very short amount of time.

Automation and web architectures

The Web did not invent networks, nor interfaces. Private corporate networks have existed for a long time, and standards such as EDI[1] enabled the development of numerous interfaces between companies. However, implementing interfaces was often complex. Direct database access, file exchanges, firewalls, standards, transcoding, ETL[2], and other mechanisms have caused more than one CIO many sleepless nights.

The web enabled the emergence of more universal and simpler standards, notably through the concept of APIs[3], built upon the resilient and proven models of the web[4], accessible sustainably and through self-service.

But is this fundamentally a technical issue ? No, not primarily. If it were merely a technical skillset issue, then the best approach would consist of pooling these competencies within specialized companies to which others would outsource service development. Yet, we observe that innovative companies creating the most value on the market almost always develop internally. This therefore points to a deeper issue, more cultural than technical.

The “open” culture

Thanks to the ubiquity enabled by networks on the one hand, and by the mutualization of infrastructures on the other — Cloud, public APIs — which reduce the entry ticket to a global market to almost zero, the world of web “services” is experiencing the same revolution as UGC platforms such as Wikipedia.

The only remaining investment required to launch a service or an idea is software development itself.

The same underlying dynamics are at work, but they could only emerge through a complete cultural transformation :

1. Model of primary usage : I created a service for my own internal use, while designing it with universality in mind, and I make it available to everyone. This model notably emerged through the revolution in enterprise internal system architectures, made famous by Amazon, based on client-supplier interactions communicating internally through APIs and web services. Internet connectivity then enables the immediate interconnection of these systems between companies.
2. Freemium model : the model used by open-source distributions such as Linux RedHat, Cloudera, etc. The open-source model became possible through developer communities exchanging tips, information, and code snippets online, where the code itself is offered freely, much like the article you are currently reading, in the hope of generating value through reputation and visibility.
3. Mass-market model : mobile applications, the Google model. This model became possible thanks to the global reach of the Internet, enabling immediate access to massive audiences, and app stores, which allow software distribution with remarkable simplicity.

This culture is deeply embedded in the Silicon Valley mindset, where the network is considered more valuable than the individual, and where value emerges through exchange.

These transformations are disrupting everything : open-source innovation moves much faster, and above all, interconnectivity makes it extraordinarily easy to reuse and build upon third-party systems.

Previously, using a third-party system (mapping services, personal data, etc.) required contacting the company, establishing partnerships, negotiating agreements, evaluating connectivity possibilities, and so on. Today, one simply creates a user or developer account, and it works. No humans, no contracts, no friction : this is the OTT (Over The Top) culture.

This is how software development has played a key role in the digital revolution, not only by definition (digital refers to what has moved into the software world), but also because software development is the primary weapon used to challenge established orders — the revolution itself — enabling new entrants to establish themselves everywhere, extremely quickly, and bypass incumbent players.

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This ease can also be observed in innovations such as self-publishing (ebooks, blogs, or micro-series printing) and extends back into the physical world through 3D printing.

Agile development and the “Test & Learn” culture

Another dimension of the digital revolution is the “agile” culture, which also originated in the software development practices of digital pure players before spreading across the entire economy : marketing (A/B testing, etc.), communication, production itself (micro-series manufacturing), and even overall company development through lean startup methodologies.

Its origin lies in the rejection of Taylorism as an organizational model.

Indeed, contrary to popular belief, software development is a design activity, not a production activity. In IT, production is handled by computers, which are highly reliable and obedient. Humans are therefore left with the design work. Yet good design requires a global understanding, awareness of business challenges, and constant collaboration. This makes development inseparable from the product itself and explains why a strong developer must be versatile and why developers are not interchangeable.

Gone are the specifications documents, opportunity studies, and five-year plans, which often take longer to produce than to execute and are almost always wrong.

Incremental approaches, “Test & Learn,” decentralization, and agility have proven their effectiveness. When work is no longer divided among specialized workers supervised by centralized planning, but instead products are broken down into independent features handled by small multidisciplinary teams, organizations move much, much faster.

The Digital Enterprise : a true disruption

All of this is what defines a “digital” enterprise : responses to long-standing needs made easier through digital technologies, new offerings, evolving business models, but above all an open culture focused on innovation (high fixed costs followed by low or near-zero marginal costs), data collection, sharing, interconnectivity, data exchange, and agility (“test and learn”).

So why has this culture not been adopted more broadly ?

Undoubtedly because the separation between decision-making and execution roles lies at the core of traditional organizations. Relinquishing centralized control over products and accepting to place it, even partially, into the hands of the craftsmen who build them is anything but natural.

Yves Christol (VP Software Development – Orange)

Morand Studer (Partner – eleven)

[1] EDI : Electronic Data Interchange, standards and systems enabling, for example, the exchange of purchase orders.

[2] ETL : Extract, Transform & Load, systems designed to facilitate interfaces and data integration.

[3] API : Application Programming Interface, an interface within a system designed to enable data or command exchanges.

[4] Particularly based on the HTTP protocol and stateless interface models (REST).

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