Platform Commoditization: How not to get sidelined by commoditization
The cutting edge platforms for today will be the commoditized platforms of tomorrow. As the technology matures and evolves, the previous generation of technology becomes easier to build and deploy enabling a rush of vendors to capitalize on it by making it accessible to the largest possible customer base.
This puts enterprises in the nontechnology sectors in an awkward position. Often not ready to consume the latest and greatest technology due to parts of their stack unable to leverage new technology and requiring upgrade to and deployment of the stepping stone technology, these enterprises have to choose between vendor lock-in in a multi-year software and service contract or risk building and implementing a version of the older technology in-house.
Business Drivers of Infrastructure-as-a-Service
The biggest risk in building technology platforms in-house is the risk of commoditization. The argument played out with the debate over internal vs. public clouds. Initially, enterprises were hesitant to leverage public clouds with several of them opting to build internal, private clouds. Building a cloud is hard. Operating and maintaining a cloud is even harder. Ensuring that the cloud is running on and leveraging the best in class technology requires dedication to the cause. This is often missing in non-technology enterprises by design given they are driven by different and separate business drivers and considerations. A cloud service provider is motivated to ensure the best in class service and technology because that drives revenue for them. An enterprise whose main business is not offering cloud or software services will not be motivated by the same drivers and thus there will be an inherent difference in their approach and success with building and delivering an internal cloud.
Business Drivers for Platform-as-a-Service
The same argument (public vs private clouds) applies to platforms. Building the best in class platforms that offer the ability to develop cutting edge applications is again most likely successful only if driven by KPIs that tie directly into revenue and cost for the platform service provider. If the connection to revenue or cost metrics has more than one degree of separation, the platform service quality and impact is bound to suffer. Enterprises need to be very careful in determining which platforms they build in-house and the platforms they leverage from outside. Ultimately business value is driven by applications that create value from their solutions to user problems and get the fastest time to market and improvement by leveraging platform services and deliver the best in class experience by leveraging the best infrastructure services.
The Risk of Building Platforms: Cost of Marketing & Support
If the infrastructure or the platform is not a core service for the enterprise, building the infrastructure or platform can be a daunting cost for the enterprise. However, the most significant cost that an enterprise will face is the maintenance, improvement and continuous upgrade of the platform service. The most under considered cost, though is that to provide the quality of service that rivals the service from platform service providers requires a fully orchestrated effort that focuses on marketing, support, operations in addition to engineering and development. Internal efforts often ignore the cost of marketing and support that comes along with building and “selling” platforms and making platform consumers successful.
The Risk of Building Platforms: Commoditization
Building and running platforms and platform services is not for the faint hearted. It is a multi year commitment where the platform needs to be staffed, resourced and grown even if there is only a single application consuming the platform. Over time, the cost of operating and maintaining the platform can eat up the resources required to keep the platform up-to-date and offer the latest and greatest technology. This quickly spirals into a platform that is not best in class, clearly inferior to what’s available outside by professional platform service providers causing internal consumers to ignore the internally offered platform and seek outside vendors. As the gap between the state of the art and the internal state of the platform increases, it increasingly can seem like the enterprise is trying to replicate commodity software. This is where internally developed platforms without direct relevance to key business drivers begin to look like failed endeavors and sunk costs.
Can Open Source Help?
Open-Source can mitigate the risk of platform commoditization. Open Source software is often accompanied by a community of experts, tooling that makes the software more accessible and keeps up-to-date with the latest and greatest improvements in technology. Internal platform initiatives, if determined to be critical to the enterprise long term strategy, should begin with open source software as that offers the cheapest and most cost efficient path to providing the high levels of capability and service to users. Open source can protect the enterprise from platform commoditization. However, the enterprise still needs to be determine why they need to build a platform internally and be confident in their ability to support the initiative in the long run.
The Focus Should be Applications
Platforms, by themselves, provide no business value. Applications that leverage platforms to have a shorter time to market generate value. Users and customers typically do not interact with the platform (only if the platform is the product/application). This is why, for any critical initiative, enterprises should think about the platforms (internal or external) that can be leveraged to get the fastest time to market. In addition, enterprises should analyze the demand from applications to understand which, if any, platform capabilities need to be built in house vs. leveraged from outside. For non-tech sectors, building software service platforms that are not differentiated from platform service providers is usually not a good idea given the long term required commitment and the disconnect from the enterprise business strategy. In such situations, enterprises should focus on one KPI: Time to market of value generating applications and focus on optimizing it.
Autolearn.ai’s LearnCloud platform is designed to enable enterprises to optimize their application time to market. Talk to us to see it in action.