Business Software Must Get Out Of The Way Of Digital Transformation

The data contained in your business system has always been a precious asset. We’re now in a time when changes in the way business is conducted mean that this data must be combined with other sources to make it more useful — driving new insights, automating transactions and creating net new business models. In short, we have the buzzword that launched a thousand worries: digital transformation.

I work with many organizations leading the charge toward digital transformation and note that each of their business models relies heavily not just on their own proprietary data held in their system of record, but also data from third-party sources, connected devices and their vendors’ and customers’ systems.

For example, startup Understory is combining data from the internet of things (IoT) and artificial intelligence (AI) to create new intelligence offerings for critical sectors in sectors including insurance and government. Even further, household names like Uber depend on real-time geolocation information from IoT and AI engines to set pricing and predict demand.

Companies I have had the pleasure of working with, like Rolls Royce, are combining data from IoT with their own proprietary operational systems to enable them to charge for “power-by-hour” usage of aircraft engines instead of selling them outright. In fact, many companies open their enterprise software to external, cloud-based systems that apply proprietary algorithms that deliver real-time optimization of inventory, service schedules and other business processes.

Walls Are Out, Wheels Are In

Because digital transformation depends on the ability to extend your proprietary data with multiple other data streams and software systems, enterprise software vendors will need to facilitate this with open, agile products designed for sharing. Oftentimes though, vendors in our industry are better at putting up walls to digital transportation than they are at giving your business the wheels to get where you need to go. What do these barriers to progress look like?

Indirect Access Charges

In an effort to maximize revenue from each customer, software vendors may charge indirect access fees when customers open data held in their systems to software from other vendors. A business system of record like enterprise resource planning (ERP) will usually be the data master for most transactional information. While it is in the customer’s interest to have unfettered ability to share and interact with this data through a myriad of other systems, the software vendor’s business model may see that as a threat to their ability to sell that customer additional software functionality. But enabling their customers’ digital transformation should take precedence over the software vendor’s desire to participate in anti-competitive strategies.

Inconsistent Architecture

Many enterprise software suites are really collections of software products a vendor has acquired over the years, wrapped in a shared interface or simply marketed under the same name. What this means is that it can be complex, confusing and expensive to reliably open those systems to external data sources and systems. That is why standard metadata and self-documenting data structures are important to interoperability. To meet this need, software vendors should invest heavily to ensure a consistent architecture and data structure throughout their products.

Limited APIs

Portions of many enterprise applications can easily be opened up as application program interfaces (APIs) that can talk to other systems. But the way those APIs deliver data may not be consistent with how you need to consume that data. More software companies will use RESTful APIs, which are designed to be transparent and help other systems understand what services each API provides. Using these APIs will become easier once software vendors start using APIs as the default method for software to share data internally within the application. Then, it will be more straightforward to share that data with other systems as data will be packed in more intuitive, natural ways that align with business processes and natural integration points.

An Industry Paradigm Shift

When the idea of enterprise software originated in the 1970s, the goal was to contain the entirety of a materials-requirement value chain in a single application. At first, that application was a single block of code. This was unwieldy, particularly when you needed to make changes to the application, so in time, software vendors migrated over to an object-oriented architecture — small software components that interacted in predetermined ways to deliver the required software functional.

These software components are more agile and easier to open up to other systems in ways that make your wildest digital transformation vision a reality — software that works and plays well with other software systems and data sources. As executive teams plan their investments, they will want to research how their prospective vendor plays in the sandbox. And they must also be sure that their data is realizing its full potential — enhanced by other data sources.