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/

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. “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. 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. “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. 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. 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. 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. 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. 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. THIS MEANS
ENTERPRISES:
Cannot create a point of difference for their customers
Struggle to keep up with shifts in customer preferences and
behaviours

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. ENTERPRISES Solve their own problems
with IT
WHICH IS MORE POWERFUL?
TWO CONTRASTING APPROACHES
STARTUPS Solve customers’ problems
with software

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. How can someone
say they help their
client with “digital
transformation”
when all they do is
repackage an aging
ERP system?

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. 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. 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. Now, take that
Silicon Valley
startups!

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