Digital Technology
Jul 28, 2017

It takes an ecosystem:  Why open architecture is only viable strategy

July 28, 2017 - It used to be widely accepted that large companies had scale advantages which made it difficult for startups to compete effectively. Big companies would leverage their larger development teams to create new functionality and integrate it into their broader offerings to stay ahead of smaller companies. Those days are over.

Today, new technologies are developing and evolving so rapidly that a single company — no matter how large — cannot keep up. This post will explain why the only viable strategy today is one that leverages an ecosystem of best-in-class partners from across the industry.

Why a partner ecosystem is needed

Let’s look at the hottest space within the technology industry today — artificial intelligence (AI).  Andrew Ng, former leader for Google’s and Baidu’s AI development teams, has called AI the new electricity.  Andrew said, “Just as electricity transformed almost everything 100 years ago, today I actually have a hard time thinking of an industry that I don’t think AI will transform in the next several years.”

Many others — especially venture capital firms — agree. Research from CBInsights shows VC firms poured over $5 billion into 550 startups which use AI as the core part of their products in 2016. In addition, Venture Scanner tracks 1,886 AI startups across 70 countries, which together have received over $17 billion in funding. Yes, it is certainly the very early days, there is much hype, and many of these start-ups will fail; however, almost all industry observers agree that AI will have a profound impact on transforming multiple industries in the coming years. It is not a question of if, only when.

The key question then becomes how to best leverage this tidal wave of investments to benefit your enterprise. Some predict that today’s technology titans, such as Apple, Google, and Amazon, which have led the bidding for many of these AI startups (they purchased 34 AI start-ups in Q1 2017 alone), will become even bigger winners.

Enterprise strategies must include approaches that are able to leverage best-in-class solutions to meet their specific company’s requirements. Given today’s increasingly dynamic and unpredictable business environment, these approaches must be flexible. In addition, these approaches should be modular to enable your enterprise to invest in today’s technologies while protecting your investments as technologies evolve and new solutions become available.

It is questionable whether even the largest companies can internally develop competitive solutions. For example, IBM invested $15 billion in cognitive computing from 2010-15, but Tech Crunch recently reports Jefferies Equity Research provided a “scathing” view that IBM is not keeping up in terms of hiring enough AI talent to enable successful Watson deployments. Tech Crunch states: “Unfortunately, IBM is struggling to bridge the gap between client needs and its own technological capability.”

Increasingly, it comes down to leveraging best-in-class technology AND the talent your enterprise needs to increase its competitive advantage. It is increasingly unlikely that any single company will have both. 

Benefits of a partner ecosystem

Enterprises can substantially reduce operating expenses and generate competitive advantages by focusing investments on their core competency and toward technology platforms which leverage partner ecosystems. Technologies are changing too rapidly to bet on any single company marshalling internal resources to develop solutions which best meet your specific needs today and tomorrow.

Investing in a platform with an open architecture which leverages a partner ecosystem will help to overcome challenges for internal talent/resources while enabling your company to leverage investments made by others (e.g., VCs). Today’s rapid technology advances and accelerating end-customer adoption life cycle necessitate that your infrastructure to be modular, flexible, and adaptable — while also ensuring enterprise-class governance.

Best-in-class solutions typically do not come from within large organizations; your enterprise should demand an open architecture, which enables you to leverage these solutions in a modular manner.  An open architecture approach enables your company to start small and scale quickly while ensuring the talent exists for successful project implementation (which is often outside of your company’s walls).

Traditionally, enterprises have faced making a trade-off between best-in-class innovation OR the ability to minimize risk/scale in a proven manner. A best-in-class partner ecosystem — enabled by an open architecture platform infrastructure — avoids this trade-off and offers the best of both worlds:  leveraging leading innovation from across the industry AND lowering risk from proven enterprise-class governance, enabling greater ability to scale.

In today’s rapidly changing world, an open architecture approach with a best-in-class partner ecosystem is increasingly the only viable strategy. Don’t settle for less.

About the author

Dan Glessner

Dan Glessner

Vice President, Digital

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