A two-speed IT architecture for the digital enterprise  

17 December 2014:

Digital business models have become essential for companies across a range of industries. With social networks and e-commerce websites setting new benchmarks for speed, agility, and user-friendliness, consumers expect similar online performance from banks, retailers, and telecommunications companies. Attackers born in the digital age give consumers what they want, but many older companies struggle to meet customer expectations. For them, going digital is now a prerequisite for surviving and thriving. Success requires strong capabilities in four areas.

First, because the digital business model allows the creation—and shorter time to market—of digital products and services, companies need to become skilled at digital-product innovation that meets changing customer expectations. One such new offering for consumers is car-insurance policies enabled by geolocation-tracking technology, where the price of the policy depends on how much and how aggressively a person actually drives.

Second, companies need to provide a seamless multichannel (digital and physical) experience so consumers can move effortlessly from one channel to another. For example, many shoppers use smartphones to reserve a product online and pick it up in a store.

Third, companies should use big data and advanced analytics to better understand customer behavior. For example, gaining insight into customers’ buying habits—with their consent, of course—can lead to an improved customer experience and increased sales through more effective cross-selling.

Fourth, companies need to improve their capabilities in automating operations and digitizing business processes. This is important because it enables quicker response times to customers while cutting operating waste and costs.

A two-speed IT architecture will help companies develop their customer-facing capabilities at high speed while decoupling legacy systems for which release cycles of new functionality stay at a slower pace.

Implications for enterprise architecture

Each of the four levers poses a substantial challenge for IT. For example, many banking-product lines—among them credit cards, investments, and checking and savings accounts—are managed in silos. This makes it difficult to get a comprehensive view of customers quickly, for example, to assess their loan applications. What’s more, channels are often managed and tracked independently, complicating matters for customers who wish to use multiple channels as they pursue a transaction. For instance, customers starting a loan application on their smartphones may find that they have to reenter data when they switch to desktop computers to fill in the more detailed information required. Weak systems integration and slow database-access times can prevent customers from enjoying a real-time shopping and purchasing experience. Analytics capa­bilities are especially difficult to integrate with operational process flows. Manual steps in these processes, such as rekeying and trans­ferring information, present major obstacles to both analytics and automation of processes.

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Source: McKinsey & Company

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