Business Leaders Should Engage with APIs, Microservices and Application Architecture
To succeed at digital, line of business executives must understand and invest in their application architecture, even if these areas are outside their comfort zone. Earlier this year, I explored this topic in a joint webinar with Ted Schadler, Vice President and Principal Analyst at Forrester, who advises C-suite leaders on digital transformation – and how to succeed at bringing agility and innovation to their organizations.
After our presentation, I asked Ted a few more questions to clarify how sales, marketing, product, finance and operations executives should be aligning themselves with IT to accelerate digital transformation:
DC: In our webinar, we discussed how underlying infrastructure can be critical to the success of digital initiatives. Given that this area isn’t a core strength for business leaders, what are some of the most important things they should understand about modern application architectures?
Ted: We could probably write a book about this topic, or at least a lengthy article. Let’s start with a definition of what a modern application architecture is and why it’s a critical part of digital business and transformation. A modern application architecture is the infrastructure, the technology foundation, of digital business. A modern application architecture is built on microservices, cloud computing, artificial intelligence, security, and an Agile deployment capability. Having this foundation in place is critical to making technology a business asset that is vital to this digital business success.
Technology has become a business asset, just like people and facilities and partnerships are. Business leaders wrestling to become digital businesses have realized this, of course. So, the question is: Is their organization ready to move quickly to solve the new problems and meet the escalating demands of customers? To answer that question, business leaders must be smart about the technology that underpins their business success, including a modern application architecture.
Business leaders need to know enough about these technologies to be able to sanity check the claims of a supplier or partner that promises results. As we’ll explore below, this often requires a business leader to have the trust and confidence of a technology leader they can turn to. But suffice it to say that business leaders can no longer leave technology to IT — they must get involved to know when things feel like they are on solid ground and that the road map will support the future of the business.
DC: The 80/20 rule you talk about states that for every dollar spent on customer-facing digital experiences, it can take up to $4 in back-end architecture spending to deliver them properly. What kind of digital operations investment have you seen drive the most business impact, and what have you seen executives get really excited about?
Ted: Well, I have to start by saying that few business executives get excited about having to spend more money. But in this case, they very quickly realize that they can’t achieve the business goal without considering changes to the processes and systems and people that have to fulfill the experience. Mobile apps were the first time I saw business executives get excited about things like customer databases and APIs. The reason was quite simple: The app didn’t do anything valuable without those changes.
Once the business leader was involved in the project scoping and requirements road mapping, they quickly learned how to establish the business priorities and ask for feedback on what operational and systems changes were needed to deliver it. For example, to complete a mortgage application or open an account, they learned that they had to expose the back-end transaction systems in ways that simplified the process for customers. The payoff of those back-end investments was a lower cost of onboarding, a higher rate of onboarding success, and faster time-to-revenue. Win, win, and win.
DC: Building out a modern application architecture is the domain of technologists, but business leaders need to be involved in both decision making and investment here. This level of involvement is likely to be new and unfamiliar except to the most digital-native startups — so how deep should line-of-business executives go, and how should they align with IT to make things happen?
Ted: There’s an important balance here for a business leader: to be smart about business while being savvy about the things that go into making business successful, including technology. For generations, technology was only the responsibility of CIOs and the IT organization. Now, technology is the responsibility of the CEO, at least to the extent of knowing who the key suppliers are and how much to invest. Fortunately, a new generation of technology-savvy leaders is rising to the top of the leadership ranks, sometimes taking over the CEO role already.
For most business leaders, the best path forward is to find a technology partner that they trust to give them the straight scoop. We see the most savvy companies use “two in a box” leadership for important technology-led business initiatives. By pairing a business leader with an equivalent technology leader, they operate as a micro-team to guide the effort, build the road map, and fund the investments. So, the business leader needs relationships as much as they need the lingo. Both relationships and some technical acuity are best, of course.
DC: Business leaders are focused on the top line and bottom line, which means that projecting the business impact of technology is vital. When it comes to the return on a modern application architecture, what guidance can you give business leaders to help them secure the budget to make the needed investments?
Ted: This is perhaps the thorniest question we get, and we get it every day. How do you calculate the return on a technology investment when it is only one component of a transformation? The answer comes when you break the investment down into its major contributions to the business: direct revenue generated, consolidated cost structure, and business agility. Oftentimes, the direct revenue is hard to attribute. The consolidated cost savings — comparing the before and after cost — is sometimes extremely large, and sometimes the improvement in employee productivity is also large. But don’t overlook the direct financial benefit of higher agility — the ability to introduce new services and service improvements faster. This is not a soft benefit because it accelerates the pace of getting revenue from the new service.
There is another financial benefit that sometimes gets overlooked: the money that comes from extending the life of a capital investment by making an existing system available to solve new problems. A modern application architecture is often deployed to allow firms to move forward to build new capabilities by harnessing the latent power of their existing transaction systems. This can be a powerful contributor to revenue without incurring major cost in the form of a big capital investment.
Many thanks to Ted Schadler for helping us out on this topic. Here at CA, we believe that APIs and microservices are a fundamental part of the modern application architectures that business leaders need to embrace, and that CA API Management offers the industry’s most comprehensive, secure and scalable tools for building them. Visit ca.com/api to request a trial or to learn more.