6-2: Digital Platforms
Introduction to IT and Management and the Operational Backbone
A recurring theme from previous lectures is the significance of the Operational Backbone (OB). The majority of companies currently do not possess a structured operational backbone, yet having one is essential for staying competitive in the modern market.
Building an operational backbone is not merely a technical task; it requires the organization to unlearn entrenched habits. These habits often manifest in silos across functions, rigid processes and practices, and fragmented architectures. Transitioning away from these obstacles is necessary to establish a coherent, standardized, and integrated system that supports core business operations.
Identifying Inefficiencies in the Operational Backbone
Inefficiencies in an operational backbone lead to visible operational failures across various sectors. Within functional silos, problems arise such as BankX facing difficulties when attempting to upgrade its website. In healthcare, users are often frustrated by the requirement to perform multiple logins across various systems or the repetitive registration of the same information. Systems and websites frequently fail to update in real-time due to these architectural fragments.
From a process and practice perspective, organizations suffer from habits rooted in "single-loop" thinking. There is often a widespread fear that automation will lead to job losses, which stifles progress. Additionally, a lack of process measurement and the absence of an innovation culture further hinder development. These issues are exacerbated by a tendency toward "introvert" thinking, characterized by protectionism, isolation, and internalization within departments.
Challenges to Establishing an Operational Backbone
Despite the clear benefits of an operational backbone, new difficulties and counter-tendencies have emerged in contemporary IT environments. The rise of microservices and Machine Learning databases (DB) can introduce new complexities that might conflict with traditional, centralized backbone structures. However, the Operational Backbone remains a critical conceptual tool and a necessary goal for organizations to aim for if they wish to achieve reliability and security.
The Five Building Blocks for Digital Transformation
According to Figure 1.1, there are five essential building blocks for a successful digital transformation. These are defined as follows:
Operational Backbone: A coherent set of standardized, integrated systems, processes, and data supporting a company's core operations.
Digital Platform (DP): A repository of business, data, and infrastructure components used to rapidly configure digital offerings.
Shared Customer Insights: Organizational learning about what customers will pay for and how digital technologies can deliver to their demands.
External Developer Platform: A repository of digital components open to external parties.
Accountability Framework: The distribution of responsibilities for digital offerings and components that balances the need for autonomy with the necessity of alignment.
Comparing the Operational Backbone and the Digital Platform
An Operational Backbone is necessary but not sufficient for digital success. The OB is a tightly integrated, bulletproof production environment designed to ensure the reliability and security of business processes. Its primary characteristics are being reliable and transparent. By contrast, a Digital Platform provides easy access to the components—data, business, and technology—that constitute digital offerings. The DP is designed for experimentation, rapid innovation, and the continuous enhancement of features.
Detailed Components of a Digital Platform
A digital platform is defined as a "repository of business, data, and infrastructure components used to rapidly configure digital offerings." It is comprised of reusable digital components, which are essentially slices of code that perform specific tasks. Examples of these components include:
Retrieving a customer's account balance.
Providing directions toward a location.
Accumulating customer orders in a shopping cart.
Tracking performance in a dashboard.
These components are made accessible through Application Programming Interfaces (APIs). The platform is further categorized into specific types of components:
Data components: Data sourced from various origins, accessed via APIs.
Infrastructure components: Core services such as user authentication, access control, and connectivity, facilitating communication across devices while avoiding vendor lock-in.
Business components: Tools like dashboards and customer alerts.
Cloud services: Services for hosting and the performance management of applications.
Digital offerings: The actual user functionality that is delivered to the customer.
Platform Architecture and the Concept of "Coring"
Platform architecture involves understanding the placement of the operational backbone and the process of "coring." Coring refers to the platformization of internal systems and the expansion of the core by embedding functionality from third parties. This allows digital offerings to be constructed more efficiently by leveraging both internal assets and external innovations.
Case Study: Ferry as a Platform
In the maritime context, a vessel like a Fjord1 ferry can be viewed as a platform. The operational backbone includes the technical systems required for the ship's function, such as:
Vribar Prop Thruster and Propeller Motor.
LNG Gen. Set and LNG Tank.
ORC Anlegg and Flettner Rotor.
Battery Pack and "Plug-In" land-based power.
Solar panels (Solcellepanel).
DC Distribution at and Hotel Load at .
The offerings enabled by this platform include the digital purchasing systems for BC Ferries. For example, a transaction for a foot area at Tsawwassen or Swartz Bay on dates such as or involves components for adult fares (), fuel rebates (), and total calculations () handled through digital processes.
Examples of Digital Platforms and Their Offerings
Various modern services illustrate the relationship between OB and DP components:
Zoom: The digital offerings include video, sound, chat, breakout rooms, file sharing, video sharing, and emoticons.
Educational Platforms / Digital Courtroom: These aim to develop the "digital lawyer" by integrating multiple stakeholders including students, teachers, law firms, court administration, judges, and university administration. Offerings include virtual litigation practice, mastery of digital sources like Lovdata, chat, and film.
Facebook: Facebook utilizes a complex operational backbone to support offerings such as messages, discussions, pictures, files, events, and intranet-like functions.
Healthcare IT Architectures (OUS and Regional Systems)
Healthcare architectures like those at Oslo University Hospital (OUS) demonstrate highly complex operational backbones involving numerous integrated systems. Components include Laboratory systems (Lab), Radiology (Rad), Patient Administration Systems (PASService), and Clinical systems like DIPS. Integration is achieved through standards and tools such as HL7 v3 (Health Level Seven), BizTalk, and IHE XDS. Data flows through a Message Broker and various connectors (HL7 Connector, IDM Connector, AR Connector).
According to Øvrelid (2023), platform architecture in healthcare consists of several layers:
Installed base: Clinical legacy systems and repositories containing crucial information (GAT, PACS, EPR, LAB, RIS).
Regional integration engine: A complex boundary resource that collects, standardizes, and distributes information from clinical systems.
Process layer: An aggregated vendor boundary resource that facilitates information flow from clinical and alarm systems (Patient Alarms) to modern IT equipment. This enables configurable user services using standardized information.
Theoretical Characteristics and Categories of Platforms
Nick Srnicek classifies platforms as digital infrastructures that enable two or more groups to interact. A key feature is the "network effect," where the platform becomes more valuable to every user as the total number of users increases. Platforms are designed to be attractive to various users and can represent a new type of firm structure (Platform Capitalism).
Srnicek categorizes platforms into five types:
Advertising platforms: Examples include Google and Facebook. Mechanisms include search engines and the collection of activity data for advertising.
Cloud platforms: Examples include AWS (Amazon Web Services) and Salesforce. Mechanisms include data centers and varied cloud-based services.
Industrial platforms: Examples include GE and Siemens. They focus on supply chain efficiency through sensors, the Internet of Things (IoT), and RFID.
Product platforms: Examples include Toyota and Choice. The platform owner typically owns the asset.
Lean platforms: Examples include Uber and Airbnb. These platforms attempt to outsource almost everything.
The Synergy Between Operational Backbone and Digital Platform
The Operational Backbone and Digital Platform must work together. The OB handles standard processes, shared data, shared applications, and corporate networks or infrastructure. The DP manages cloud services and digital offerings comprised of data, business, and infrastructure components. The two are linked through API linkages, which allow the digital platform to leverage the stability of the backbone to generate new services rapidly.
Summary: Getting the Platform Right
To successfully implement a platform strategy, organizations must focus on:
Componentization: Thinking of the business in terms of distinct digital components.
Architecture: Designing the platform with repositories of these reusable components.
Distinction: Understanding that the digital platform is distinct from the operational backbone, though they must operate in tandem to provide digital success.