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Can an old-school vertical business operate as a platform?

SearchCIO columnist and CTO Niel Nickolaisen talks about his journey to take a vertical business horizontal in a quest to transform employee and customer connections.

It came to me one day during one of our executive team meetings. We were talking about our competition and our customers and the current state of our technology and products. I was half-listening to the conversation and half-thinking about the past and future. As I pondered the technology trends I had experienced over the years, the light went on. I waited for a break in the conversation and then offered my insight.

"Perhaps we need to start thinking of ourselves and our products as a platform," I said. 

Instead of thinking of what we do as a vertical business -- a somewhat isolated set of products and services for employee recognition programs -- I suggested to my executive colleagues that we think about how to lay our vertical products and services on their side, in effect, turn them horizontal so that we can interoperate better. The horizontal orientation would not just allow us to interoperate better with ourselves but with the rest of the world.

Since my comments sort of came out of the blue and did not relate well to what the team had been discussing, I got some quizzical (but thankfully not shocked) stares. I can handle quizzical and so I plunged on in.

"If we look at the history of information technology, the trend is towards both internal and external connections. The Internet morphed our organizational systems from isolated to connected. Then came social and the ubiquity of mobile, which led to incredible levels of both internal and external connectivity. Today, our technology products and services do not share many common components. If we were to think horizontally about what we do, there are a lot of things our systems could do in a common way. We could do once what today we do multiple times and in multiple ways. Then we could extend this idea outside of the boundaries of our organization and connect our products and services to others that need them and also connect to services that we need."

From vertical business to platform-based model: Four lessons

We are two years into our platformhood. ... We measure our progress in improved IT agility, system performance and how much faster we can connect to alliance and training partners.

I won't bore you with the conversation that followed, but my epiphany that day started us on the road from an old-school vertical business towards platformhood (if that is even a word). As we have traveled down this road -- and the road has been bumpy and filled with twists and turns -- we have learned a lot. To save you from relearning those lessons, I consider the following to be the most important things to share:

  1. Define your internal and external platform. Everyone should define an internal platform and most of us should define an external platform. The basic idea behind platformhood is that we define and use common services and then expose some of those services to the rest of the world. The first step is to identify those common services. Internally, we inventoried all of the technology components we had in our portfolio and found a ton of duplication. We had several ways to manage deployments. We had multiple ways to manage and track projects. We had a number of ways to manage credentials. We had different ways to communicate with each other and the world. Our customers accessed each of our products in a way unique to each product. Order management was not a common experience. We had different UI designs across our product lines. Not only did this result in lots of duplicate effort, but it also created a not-so-great customer experience. If a customer was using two or more of our products we made, it seemed as if the products came from completely different companies.
  2. Use a platform for competitive advantage. As you define your platform, think about how you can use it to create competitive advantage. I have long believed that it is critical we focus our innovation and creativity on the one or two things that define what we do better than anyone else to win in the marketplace. In the pursuit of platformhood, this is essential. What defines our competitive advantage is what we will want to make available to others in our external ecosystem. We need those external partners to have only one choice when it comes to what we offer and that one choice is us. This also helps us filter our common internal services. I don't need to innovate user access and so can happily get by with the one common approach to user access that becomes my standard. This filtering might also lead me to connect to someone else's platform for user access services.
  3. Think in terms of building blocks. Since change is inevitable, you should ensure that your platform components -- whether internal or external -- are loosely coupled to each other so that you can change them out quickly. As we started thinking how to become a platform, we declared war on our large, monolithic applications and services. In practice, we started shedding ourselves of direct connections among technology components. We had to think in terms of building blocks and we wanted those building blocks to be small and replaceable.
  4. Exercise patience. Moving from a traditional vertical business to a platform model will take time and so be patiently urgent. In order for us to break up our vertical monoliths and convert them into loosely-coupled building blocks, we had to rigorously prioritize the work. We started with the application elements that were the most problematic and most brittle. We also agreed that any new work would be done as a loosely-coupled service. We applied this same thinking as we consolidated our internal services. We also had to be patiently urgent with our people. Everyone had a reason why we should standardize on the service they had designed or selected, but in this evolution, our quest was for global and not local optimization.

We are two years into our platformhood. We have made solid progress in spite of the technical and personal challenges. We measure our progress in improved IT agility, system performance and how much faster we can connect to alliance and training partners. As long as technology makes it simpler to connect, platformhood is here to stay.

About the author:
Niel Nickolaisen is CTO at O.C. Tanner Co., a human resources consulting company based in Salt Lake City that designs and implements employee recognition programs. A frequent writer and speaker on transforming IT and IT leadership, Nickolaisen holds an M.S. in engineering from MIT, as well as an MBA degree and a B.S. in physics from Utah State University. You can contact Nickolaisen at [email protected].

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