In my last blog entry I shared a model to review which applications can be retired and by what they can be replaced. I shared this entry with colleagues and realized this model can be used to review and understand the importance of certain applications for your business. If you are on the journey to become a “digital enterprise”, you may want to use this model to identify how to move, migrate or transform your application portfolio.
The drive to digital is a powerful business transformation, forcing enterprises to reshape the fundamentals of their businesses to extend, defend, create, and disrupt the ecosystem where:
- The consumer is in charge and will define the next move
- Asymmetric competition from unexpected sources will be the norm
- Winners maintain control while they minimize their asset base.
A simple model to analyze your portfolio
Let me quickly describe the horizontal and vertical axis. You will find a more detailed discussion in the previous blog entry. Systems of record support the core transaction processing and manage the critical data of the enterprise. Systems of engagement enable the members of the organization and their partners to cooperate together around projects and engagements while systems of innovation support new business requirements and opportunities. Core applications make the enterprise be what it is, in other words they enable the differentiation of the company while context are all other applications required to do the job.
What is CORE to your company?
To analyze your application portfolio the first question you have to ask yourself, and probably gain consensus within your enterprise is “what is CORE to our business?”. In other words, what makes your enterprise be what it is. I can tell you I have asked this question to many clients around the globe and more often than not been looked at with no immediate answer. Frankly, this is not an easy question. As enterprises have grown and evolved over the years, habits were born and things are done in a particular way. Going back to the essence and asking ourselves, what truly differentiate myself from my competition is hard. It is often seen as a number of small things, rather than a single element. But remember that your competitors do not stand still. So, it is important to define a clear, sustainable, differentiator and focus on it. It will have to continuously be improved to remain ahead of the pack. Take time to define what is CORE for you. Become acutely aware of it and build it out. Once you have done that, the rest becomes much easier. You’re focused on what makes your enterprise unique.
Define your CORE applications
Now you know what is CORE for your business, it becomes much easier to define which applications support the CORE processes. These are the processes that directly support the way you differentiate yourself. For example, if one of the CORE elements of your enterprise is your supply chain, the processes directly related to running and managing that supply chain are your CORE processes. They are supported by specific applications and these are the CORE applications we are looking for. One hint, most often these application are home grown. If they happen to be based on a COTS package, the package will be extensively customized. That sounds obvious as these applications support your way of working which is different from your competition.
You better keep CORE applications under strict control
Put yourself in the shoes of one of your competitors and think about what you would like to know about your company? Isn’t it the specifics of how the CORE functionality is executed in the enterprise? You win business because you are executing these processes in a particular way. Be assured your competition is trying to understand how you do that. So, they would definitely be interested in the way the CORE supporting applications operate. In an environment where industrial espionage is increasingly focusing on digital means, make sure you keep the CORA applications under wraps, make sure you have them heavily secured and under tied control. This is the reason why I would like to suggest we keep them in a well secured private cloud. Some of you will argue that public cloud is more secure than private cloud. That may well be so, but public clouds are bull-eyes for hackers and despite all, we have seen many breaches over the years.
Migrate or transform your applications
Now, how do we make sure the applications run well in the chosen cloud environment? If your applications are systems of record, they will typically be used as back-end processes. Only a small and reasonably stable amount of people will have access to them. Typically they operate well to date. So, the first question to ask is whether they need to be migrated? One reason you may want to do move them to cloud is if they are only used at some moments in time. For example, if your application is only used a couple days in the month, moving them in the cloud rather than constantly occupying a server may save some money. But you will want the application to run in exactly the same way in the cloud as it did in the traditional environment.
So, the objective is to migrate the application as-is, we call that re-host.
On the other hand, if the application is a systems of engagement one, the situation is different. Remember, when moving to digital, the consumer is in charge. The consumer wants a first class digital experience. If we combine this with a widely varying demand pattern, it becomes quickly evident that the application needs to provide an excellent user experience regardless of the amount of concurrent users. Cloud environments enable such experience by scaling up and down application components when demand varies. Load balancers will ensure each application component is able to respond quickly enough to ensure the experience criteria are met. But most existing applications are not designed to behave in such manner. This is the reason why systems of record applications need to be “re-factored”. In other words, their architecture needs to be adapted so they can scale up and down some front-end modules to ensure a constant user interface and please the consumer. Those applications should definitely run in the cloud and as they are CORE, a private cloud would be the typical platform.
System of Innovation applications are changing very often as they are developed to test a new business opportunity or innovative approach. As their life is rather short, does it make sense to migrate or transform them to the cloud? Probably not. However, the next one on the list should be developed directly in the cloud. Take a look at microservices and container technologies to create applications that can survive huge success in case the experiment takes off.
And context applications in all that?
Context applications are necessary but do not provide any competitive advantage. The cost element is central to the decision process. If SaaS or COTS applications are the cheapest options, go for them. However you will have to think at how to integrate them with the CORE applications and data sources. This is why I suggest to start looking at the CORE applications first. If there are no limitations, go for SaaS, COTS and public cloud in order. Only migrate existing applications when required.
One element to think about is that systems of engagement applications, regardless of whether they are CORE or CONTEXT require a user experience that is second to none. So, context systems of engagement applications may have to be transformed in the same way as core ones. However, this should be achieved at the lowest cost and a public cloud could be a good hosting environment if the cheapest financially.
It’s ultimately all about the importance of the application
Ultimately, it is the importance of the application and its interaction with the consumer that leads how to migrate/transform it and where to host it. Take the time to position your portfolio on the model described above and identify the interactions between the applications prior to decide what to do next.