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Why Microservices Are The New Innovation Enablers For Enterprises

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Innovative leaders & startups are moving to the new software paradigm with microservices architecture, allowing them to innovate faster.
- Win with software, or be eaten by it
- The power of customers = speed & agility ever more crucial
- Contrasting Enterprises vs. Startups in viewing IT
- How did the divide happen?
- Gartner predicted "death of ERP"
- Monoliths vs. the new software architecture
- How top-performing businesses innovate with Microservices
Full blog post at http://blog.enabled.com.au/microservices-innovation/

Published in: Software
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Why Microservices Are The New Innovation Enablers For Enterprises

  1. 1. F u l l b l o g p o s t : b l o g . e n a b l e d . c o m . a u / m i c r o s e r v i c e s - i n n o v a t i o n / WHY MICROSERVICES ARE THE NEW ENTERPRISE INNOVATION ENABLERS
  2. 2. “If you went to bed last night as an industrial company, you’re going to wake up today as a software and analytics company.” G E ' s f o r m e r C E O
  3. 3. BEING EATEN BY SOFTWARE Software & IT are becoming the source of competitive advantage. Digital natives like Airbnb, Uber and Netflix are gaining an advantage by configuring and investing in their own software, & disrupting markets. But many existing companies are being eaten by software. Why? CHANGING LANDSCAPE
  4. 4. “If you make customers unhappy in the physical world, they might each tell 6 friends. If you make customers unhappy on the Internet, they can each tell 6,000 friends.” J e f f B e z o s
  5. 5. CUSTOMERS HOLD POWER Smart devices & the Internet give consumers more choices, more knowledge, making them quick to seek out the best/cheapest/most advanced etc. option. Employees should be considered ‘internal’ customers, who are no longer happy to use cumbersome and limiting software provided by the IT division. MORE THAN EVER BEFORE
  6. 6. It is no longer about being able to predict the future 12-18 months in advance, it is about being able to quickly adapt to the changing expectations of your customers.
  7. 7. SPEED & AGILITY IS KEY Those who can tweak and adapt their business models quickly have a better opportunity to grab market share and maintain a competitive edge. Those who fail to keep up risk having their business model challenged or disrupted. Think taxis and Uber, travel agents and comparison sites, DVD rentals and Netflix etc. FIRST MOVER ADVANTAGE
  8. 8. ENTERPRISES Existing incumbents in their industry, who are mostly non-tech companies HOW BUSINESSES RESPOND TWO CONTRASTING GROUPS STARTUPS Digital natives trying to displace the incumbents
  9. 9. ENTERPRISE IT SYSTEMS Most often purchased through ‘proven’ vendors, these systems are employed to solve internal problems and optimise according to industry standards and perceived best practice. But: ALL-ENCOMPASSING Using the industry standard makes you standard in the industry Following what is labled ‘best practices’ may only mean watering down your competitive advantage
  10. 10. THIS MEANS ENTERPRISES: Cannot create a point of difference for their customers Struggle to keep up with shifts in customer preferences and behaviours
  11. 11. STARTUPS Not using IT to support their business, startups focus on customer problems that can be tackled through any means they have, which is usually software. Unencumbered by the concept of industry best practice, Startups are equipped to invent business models that have never been seen before. DIFFERENT IT APPROACH
  12. 12. ENTERPRISES Solve their own problems with IT WHICH IS MORE POWERFUL? TWO CONTRASTING APPROACHES STARTUPS Solve customers’ problems with software
  13. 13. ENTERPRISE SOFTWARE Software started as ‘single purpose’ aligned with a single business function. Other software arrived to benefit more business functions but they were separate and poorly connected.  This motivated single software vendors to address multiple business functions. Functionally discrete software applications turned into monoliths intended to do everything for the enterprise. Enter ERP. HOW MONOLITHS CAME ABOUT
  14. 14. ERP MONOLITHS FAILING PROMISE ERPs have become the "ball & chain" of enterprises: They are expensive, consuming time and budgets They are too rigid to adapt Often no one person fully understands the system They are not created on open standards They can be complex so users are motivated to find other ways of getting business done  They still remain orientated to business functions, rather than being customer-oriented
  15. 15. IS ERP DEAD? GARTNER COINED ERP II With complex customisation and high failure risk, ERPs & monoliths were predicted to be "dead." Gartner proposed ERP II: a business strategy & software philosophy that focus on open & componentised architecture.  ERP vendors with the mantra “providing all things to all people,” make monoliths “ill-suited to a future that demands focus and external connectivity.”
  16. 16. NEW SOFTWARE The cloud allows the “on-demand delivery of compute power, database storage, applications, and other IT resources” via the internet rather than your on-premises hard drive. But simply shifting a monolith to the cloud only means same ball and chain on a different computer – all the shortfalls of a monolith can remain. THE SHIFT TO CLOUD
  17. 17. NEW PARADIGM INTRODUCING MICROSERVICES Innovative companies started abandoning massive teams building software monoliths, in favour of having smaller teams focused on building smaller, limited purpose software elements called Microservices. DEFINITION: architectural style whereby a specific, well- encapsulated domain area (or business capability) is developed as a suite of small services.
  18. 18. MICROSERVICES INDEPENDENT, LOOSELY COUPLED Example: Uber app’s architecture consists of these building blocks or microservices. Each is dedicated to that capability, & can become the best it could be. The blocks communicate to each other via well-defined interfaces called Application Programming Interfaces (APIs). APIs and their consistency is one of the crucial mechanisms to escape monoliths, as they essentially are the “contract” between microservices.
  19. 19. MICROSERVICES VS MONOLITHS The cloud allows the “on-demand delivery of compute power, database storage, applications, and other IT resources” via the internet rather than your on-premises hard drive. But simply shifting a monolith to the cloud only means same ball and chain on a different computer – all the shortfalls of a monolith can remain. FOOD METAPHOR
  20. 20. MICROSERVICES BENEFITS EFFICIENCY Microservices are reusable and interchangeable, which makes replacement with new pieces much easier than fixing the whole monolith. Microservices are also designed for risk mitigation / management: Less likely for an application to have a single point of failure because functionality is dispersed across multiple services Hence, applications can perform better and have less downtime
  21. 21. MICROSERVICES BENEFITS INCREMENTAL IMPROVEMENTS Microservices are independently replaceable, thus upgrades to the modular components can be done in a very agile manner Custom software projects are easier, shorter, faster to realise, and simpler to understand. Customer retention and engagement can also increase as you can rapidly adapt to their needs. A less obvious impact is you might attract and retain more talented engineers. 
  22. 22. MICROSERVICES BENEFITS EMPOWERING INNOVATION Enterprises can be more like Startups with high velocity deployment. They can launch a new service, a new business line or even a new startup to fend off other startups and incumbents. Example:  realestate.com.au released a world-first innovation in partnership with NAB. The idea was to “bring property search and finance together in a single platform This was done using microservices running on cloud infrastructure
  23. 23. HOW ERP VENDORS REACT Any ERP software vendor who started 10 years ago may still be trapped trying to transition in methods and technology. With customers locked in, they may not even be motivated or able to transition to the postmodern ERP world. Don’t be fooled by many who claim to provide so-called cloud ERP - these are often released by the same vendors and built by the same software architects of their legacy monoliths. POSTMODERN ERP
  24. 24. How can someone say they help their client with “digital transformation” when all they do is repackage an aging ERP system?
  25. 25. LESSONS FOR ENTERPRISE CHOOSE YOUR INVESTMENT WISELY Despite fear of disruption, most enterprise innovation budget goes to continuous improvements of existing processes and products, e.g. putting in a standard ERP. High-performing companies tend to invest more in empowering and disruptive innovation. Cloud and microservices architecture are enablers of this, as well as the efficiency innovations that most enterprises focus on.
  26. 26. LESSONS FOR ENTERPRISE BOTH SPEED & PERFORMANCE While companies are spending all their efforts, time, and money trying to roll out and customise their ERP, the competitors are focusing on new offerings that meet customer expectations. Example: China’s equivalent of Facebook - WeChat - is constantly innovating, with impressive growth and portfolio of services To have such scale without compromising on reliability and agility, their microservices architecture plays a crucial role - runs on 2K+ microservices. 
  27. 27. LESSONS FOR ENTERPRISE MAKE SOMETHING UNIQUE If companies are all using the industry standard ERP or any enterprise-grade system, they have a point of parity and rarely a point of difference. The ERP II world gives enterprises the chance to make something powerful by combining best of breed SaaS products with their own custom microservices, all configured to their own unique business model and process, while still remaining agile enough to adjust according to customers’ demands.
  28. 28. Now, take that Silicon Valley startups!
  29. 29. S H A R I N G I S C A R I N G THANK YOU C R E A T E D B Y w w w . e n a b l e d . c o m . a u Full post: blog.enabled.com.au/microservices-innovation

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