Fifty-five percent of businesses are under threat from digital disruption. An MIT CISR Research Report that landed in my inbox this morning reports that out of a sample of 105 senior executives that attended a recent workshop on digital business models, 55% assess their business as being in the "red zone"—significant threat of digital disruption.
From the perspective of digital disruption, it is hard to find any examples more cogent than music and journalism. A couple of months ago I wrote about Tom Quinn's strategy for News Corp Australia and his reference to the "Composable Enterprise"— a term coined by Warner Music Group CTO, Jonathan Murray. The challenge for both Tom and Jonathan is how to turn an established enterprise into an agile, technology-fueled innovation factory.
Last year Jonathan described his solution in a seminal blog post called the "Composable Enterprise" which calls for a new way of running a business—the Component Operating Model. Composable enterprises take the building blocks of a business (functions, processes, suppliers, technology etc.) and compose them like "Lego Bricks." The Component Operating Model applies to the business as a whole and comprises:
- The Minimal Function: work with the minimal 'atomic' functions that your enterprise needs.
- Least Dependency: eliminate the dependencies between functions.
- Shared Knowledge: maximize safe access to data to the broadest audience.
- Predictable Contracts: every function defines its inputs, authorizations, output products and performance guarantees.
- Maximized Human Value: humans only do what can't be automated.
The problem is that the Component Operating Model can't be supported by traditional IT infrastructures and organizations because they are too silo'd and too static. "The speed at which business can adapt is limited by the speed with which we can deploy new capability with IT." So enterprises need a new architecture that encourages rapid, cheap experimentation and rapid time to value. Jonathan calls this new IT architecture the Component Architecture Model:
- Elastic Infrastructure: scale up and scale down based on demand.
- Component Service based Applications: build applications by composing finer grained 'atomic' services.
- Auto Everything: architect the technology fabric to minimize human intervention.
- Unified Master Data Model: data governance to provide a single source of truth across the business (but beware MDM products).
- Integrated Analytics: business decisions from an integrated data repository.
- People Services: core services to support rapid organizational reconfiguration.
- Process Services: core services to support rapid process reconfiguration.
- Data Services: all master and analytics data exposed through standard data access services in both human and machine formats.
- Any Time, Anywhere, Any Device Access: applications accessible from any device capable of running a modern web browser.
This might all sound like unicorns and rainbows, but Jonathan walks the talk. I encourage you to watch his presentation "From Zero to Factory" at the 2013 Cloud Foundry Conference where Jonathan describes the journey that Warner Music Group has taken and the agile software business culture they've built.
These concepts are not born in isolation. They resonate with our Deloitte Platform Engineering philosophy and have been taken up by a number of other innovators. Over the next few weeks I'll be looking at a few other perspectives on this emerging confluence of business and technology.