I'm continually fascinated by the ongoing evolution of technology and its impact on the world. When business computing began its move to the cloud in the early years of this century, I started wondering what the ultimate impact would be on how we all work and do business. Those thoughts took shape as a concept that I called Frictionless Enterprise, and for the past decade I've been building it out as a framework for understanding how enterprises can best harness digital technology.
This year, I started drawing all the strands together in a series of articles that will form the chapters of a d·book when complete. There were some surprises along the way as the year unfurled and there are still several chapters to come, but many of the key pieces are now in place. This is the story so far ...
As early as 1999, I found it necessary to emphasize that cloud computing wasn't simply a relocation exercise. As I argued then, putting computing on the Internet moved it into a connected environment where it would be forced to adopt a more networked, atomic architecture. The transition was not from on-premise to cloud, but from disconnected to connected.
Why? The more I dig into Frictionless Enterprise, the more it reinforces this key point. The big change wrought by the Internet, cloud computing, mobile phones and all of the other paraphernalia of today's digital technology is that everything is connected. This in turn forces all participants to adapt their behavior to this new digitally networked environment — not just the computers, programs and data, but also the businesses and people who use them. The reality of today's enterprise is that most processes are still largely founded on practices and structures that were defined when all information had to be carried around on paper. Fully embracing digital connection means dismantling the barriers created by those now redundant structures and establishing new, more frictionless practices and processes.
The key element is the continuous digital connection to customers and their experience as they use the product or service. This transforms the previously disconnected relationship, in which there was little or no contact once a sale had been agreed and a product or service delivered. In its place, the XaaS Effect sets up a three-stage virtuous cycle, which iteratively adds new value to the relationship over time.
Why? One of the most significant consequences of pervasive digital connection is the transformation of the customer relationship. Remaining connected to customers as they use your product or service provides a wealth of data that allows you to improve its effectiveness over time and become more engaged in their success in achieving their goals. The software industry more or less stumbled upon this virtuous cycle of engage-monitor-improve when adopting the Software-as-a-Service (SaaS) model and therefore I've called this the XaaS Effect, where the X stands for Everything. But as I learned this year, this notion of digital engagement with customer product usage and success didn't start with SaaS — more on that below.
Customers are saying, 'Look, at the end of the day, I didn't want to buy your product, I wanted to buy an outcome. I don't want to buy a drill, I want to buy holes in the wall. I want the outcomes.'
Why? Here, Geoffrey Moore, author of Crossing the Chasm, succinctly sums up a core principle of XaaS — acquiring a supplier's product or service is not an end in itself for customers, it's a means to an end. In a presentation at Gainsight's annual conference, Moore put the rise of the Customer Success function into historical context, describing how a product-centric view of value has given way to a customer-centric view, where closer engagement with customers allows their needs to shape the design, delivery and ongoing evolution of the product.
Helping customers realize the value they're looking for thus becomes the core goal of the customer success function, rather than simply maximizing adoption and usage.
Why? I dug into the evolution of Customer Success during the year. Many of the early definitions of Customer Success were product-centric — how did the implementation go? How extensively is the product being used? Did we get the renewal? As time passed, vendors have become more sophisticated in how they measure success, creating playbooks and KPIs to map progress towards key goals. This article brings together those threads and describes how value engineering, which historically was used simply to justify a purchase, is morphing into an ongoing process to track whether the customer is achieving their desired outcomes, and make adjustments accordingly.
The largely ground-up adoption of digital teamwork tools has left most organizations with a disjointed patchwork of point solutions that were chosen to meet the collaboration needs of a given workgroup or team, but with no means of co-ordination across the enterprise. In part, that's a reflection of the fragmented nature of the digital teamwork market, where dozens of larger players aspire to leadership, while hundreds more nip at their heels. But it also reflects the failure of IT and business leaders to recognize the core role that these collaboration platforms play in the effective operation of a digitally connected enterprise.
Why? Within an organization, one of the most significant consequences of pervasive digital connection is the transformation of how people work together to get things done. This gives digital collaboration and work management applications as strategic a role today as any of the traditional enterprise applications, and a leading role for those that are able to connect multiple activities across an organization's Collaborative Canvas. No wonder some vendors have been expanding their footprint, such as Box adding its Canvas whiteboard, while others have introduced new ways to connect across the digital teamwork landscape, such as Atlassian's smart team directory Atlas, ClickUp's Slapdash acquisition, and the appropriately named (in my view) Slack canvas collaborative workspace.
As organizations become more sophisticated in their use of digital teamwork, it ceases to be simply an add-on to existing routines or a workaround when out of the office. At higher levels of maturity, it becomes the foundation for new ways of working:
Why? As many organizations recognized during the shift to remote working during the pandemic, successful digital teamwork depends not only on introducing new technology but also on changing workplace culture and habits, rather than simply carrying on as before. I feel that progress on these fronts has been slow this year. Many organizations have pushed back on the challenge digital working poses to traditional hierarchies and over-centralized operations. Few are using the digital signals collected about how teams are working to help them perform better. We're still a long way from realizing the full potential of Frictionless Enterprise to optimize connections for competitive advantage
This new architecture cuts across the old functional silos that defined traditional enterprise applications, replacing complex Enterprise Application Integration (EAI) between monolithic application stacks with a more flexible ecosystem of autonomous components that connect through standardized APIs and contracts. The implications are far-reaching.
Why? Composability has long been an aspiration of enterprise IT, but it is a prerequisite to enable Frictionless Enterprise. This chapter in the series pulls together various trends that are converging on this goal, which I've called tierless because it does away with the tiered, monolithic application stacks of old. A separate interview with former Gartner Distinguished Analyst Massimo Pezzini on the composable future of enterprise IT highlights how important it will be for enterprises to learn how to manage these building block components. There's more I want to dig into within this topic, particularly at the data layer, which took an interesting turn with the unveiling of Salesforce Genie at Dreamforce.
We were doing something that seemed crazy. Loads of people told us it was stupid. Why would the LEGO Group buy a platform that's not been used in that scale before? And I was doubtful, and I shouldn't have been. It was the right thing to do. So stick with your convictions.
Why? The above quote is from Niall Edwards, Vice-President of Marketing & Channels Technology at LEGO Group, talking about its switch in 2018 from a traditional monolithic commerce site to a composable replacement based on a MACH architecture. It's a classic quote from an early adopter of a disruptive technology, and MACH, which stands for Microservices based, API-first, Cloud-native SaaS and Headless, is now breaking through into the early majority (to use Geoffrey Moore's technology adoption model) in the consumer brand and retail sectors. It's part of the trend towards Tierless Architecture and its next frontier is to break out from B2C into B2B commerce.
Digital connection ... gives specialist functions such as IT the ability to remain continuously engaged with their business counterparts, acting as a constant guide and mentor, rather than the old model of a remote back-office function focused solely on completing job orders and projects with minimal or no engagement.
Why? Hand-in-hand with the adoption of a composable Tierless Architecture comes a more collaborative approach between IT and business teams. When these platforms support no-code and low-code tools for workflow automation, data analysis and integration, the tools can work with the same building blocks used in IT by pro coders, who can set guiderails and governance for their business colleagues. Here we see the various components of Frictionless Enterprise coming together, with IT delivering its skills in a continuously engaged model reminiscent of XaaS, via the digital teamwork platform of the Collaborative Canvas, and all built on a Tierless Architecture.
You can only manage uncertainty if you have the information and the ability to understand that information and plot your course to make your operations as efficient and as lean and as predictable as you can.
Data technology is absolutely core to doing that. We could not do it without that. And we've gone from first generations of digital capability, and as we go on, we're obviously talking cloud, AI and all of those things.
Why? It turns out that manufacturers adopted what I've called XaaS long before it occurred to the software industry to start instrumenting their products to monitor customer usage and outcomes. The speaker in the quote above is Nick Ward, VP Digital Systems at engine maker Rolls-Royce, which first introduced its 'Power-by-the-Hour' engine maintenance programs in 1962, and added data monitoring of its engines in flight in 2002. The IFS customer base of asset-centric businesses provides many other examples of collecting and analyzing usage data to provide pay-by-results contracts to customers. But even though these examples come from industries firmly rooted in the physical world, as Ward notes above, data is central to their success. This adds a revealing new dimension to the Frictionless Enterprise story of digitally connected business.