The platform enterprise brings a host of new opportunities for organizations ready to lean in. But success doesn't come easy in a platform-based enterprise, according to Sam Palmisano, former CEO at IBM and current chairman at The Center for Global Enterprise, a nonprofit research institution. Between nailing down the right investments, honing the marketing side of things and deciding which elements of your IT organization naturally lend themselves to a platform-based venture, CIOs have a lot to take into account when making the platform shift, says Palmisano. In this video interview with SearchCIO, he details a recipe for success in the platform enterprise and explains the CIO's central role in scaling platforms.
What does a company have to do to succeed in a platform enterprise?
Sam Palmisano: The first thing is it depends where you're positioned. If you're a startup, it's easy; it's a green field: You hire the right type of technical talents and build out the platform. The challenge is to start working with startups that are platform-based. The biggest challenge for them is capital. You need investors, obviously, because it takes time to build out the platform, so you have to have investors who understand it's a multiyear process to build the base technology that you require. The other piece, really, is the scaling of the marketing: to go to market, the sales, the marketing. If it's consumer-based, a lot of that's done on the internet, which is virally done today, but you still need to engage the consumer in some way to create your value proposition. So the challenges are one of time and patience of the investor, as well as the time it takes to build up their sales force and their marketing capabilities. The whole thing is product engineering; it's excellence. They're very, very biased to having the best technology that you could possibly have for the space in which they are focused upon, and then they want to scale it and grow it quickly to get a large, dominant position of its share.
What is the CIO's role in scaling this platform?
The key for the CIO is he has to figure out, first of all, what areas that they could architect for these kinds of technologies, because everything that he has today doesn't naturally transport itself to this new environment. So there are technical challenges associated with it. You just can't take what you have, which they've been running for a long time and these other system architectures, and just put it into this platform model, which is cloud-like -- it's a horizontal structure versus their traditional asymmetrical systems that they have. You need to move it into that environment. The first thing they have to analyze is technically what can be done? Not just how you build it out -- and you can always buy it if you'd like to buy it. There are lots of alternatives to building platforms -- IBM, Microsoft, Amazon, et cetera, but how do you then take advantage of that? What do you put on the platform? How do you start and learn? My advice to a CIO, assuming that his or her management agrees -- that's always a challenge -- is start with things that are safe: office automation, HR, payroll, those kinds of things, which are safe, before you get into things where you're touching the product side of the business which impacts revenue and your growth and all those associated areas.