In a post about a month ago, I discussed the changing landscape of enterprise applications vendor ecosystems, as these move beyond the traditional megavendor-led model. Given the many ecosystem options, a key question is how these can help application leaders implement a digital platform strategy, bringing together Customers, IT systems, Things and Intelligence, to deliver business value. In a recent research note with colleague John Santoro, we are dealing with this exact question.
Traditionally, application leaders would fill in the missing pieces of their digital platform through custom development. However, they are likely to encounter numerous challenges along the way: long time to value, lack of time or resources, lack of skills and complex integration requirements. Vendor ecosystems of prebuilt applications/integrations is a powerful alternative to custom development in order to address these challenges and gaps.
It is true that custom development offers perceived benefits such as the potential for unique capabilities, the assurance of seamless work with the systems the enterprise uses and full control of the deployment of new features. These benefits might trigger a blanket rejection of the ecosystems option. Application leaders should consider the following trade-off criteria:
- Is the application related to a source of competitive advantage? If the application is prebuilt and not custom, then competitors can also buy it.
- How well does the application integrate with existing digital platform applications? If an application is part of an ecosystem that is already part of the platform, buying it will save IT resources for applications that will require integration not available off-the-shelf.
- Could the business build this application effectively? The application gaps may require skills that are not yet available in-house. Buying the application will provide more immediate benefits while IT resources get up to speed on the required technologies.
Application leaders should also expect technology providers to continually adjust their strategies around ecosystems. A continuous governance process, involving business and IT stakeholders, will leverage the opportunities and contain the risks of vendors’ continuous ecosystem adjustments.
Do you utilize vendor ecosystems in your digital platform strategy? What have been the key benefits and challenges you have seen so far?