Business transformation and micro services architecture.
I'll start this lesson by defining the terms, business transformation and digital transformation.
By the end of this lesson, you should be able to describe the reasons why businesses need to transform
and how Maiko services architecture enables a business to transform.
Business transformation is an umbrella term that is used for referring to fundamental changes in how
an organization conducts its business.
Here's an example.
Microsoft used to sell their software as a packaged product in the form of CDs and floppy disk long
time back.
But over a period of time with the evolution of Internet and cloud technologies, today they sell their
software by way of a subscription model instead of charging the customer a one time fee.
Microsoft charges its customer on a monthly or yearly basis.
Another example is Amazon.
Amazon started out as an online bookstore, but over a period of time they have all this bookstore into
a marketplace where other vendors could also sell their products.
So instead of depending on the core business of selling their own books, they started to make money
out of this marketplace they created for outside vendors as well.
Next example is Apple.
Apple used to sell computers, but over the last two decades it has gone from computers to iPods, iPhones,
iPads, music store and a number of other products as well.
They're no more dependent on their core product, which was computers.
Now, you may be wondering why do businesses need to transform?
There are many reasons for it.
I'll go some of the common ones.
First one is the environmental changes.
New regulations like GDP may force the organization to change how they conduct their business.
Next one is the competitive pressure tank of an organization that is dealing with a competitor that
is rolling out innovative products at a very rapid pace.
Now, what is the choice for this organization?
They have to transform.
They have to think of new products.
They have to think about speed at which they can roll out these new products.
In effect, the organization need to transform.
Next one is the new opportunities.
In early 90s, when Internet started to become popular, businesses had a new opportunity to use Internet
for selling their products and services.
Organizations had to transform themselves to integrate their businesses with this new technology, and
that required serious transformation initiatives.
Next reason is one of the biggest reasons why the organizations need to transform customer demands and
expectations are continuously changing in order to maintain and expand their customer base.
Organizations need to adjust their business to meet their customers demands and expectations.
Businesses that ignore their customers expectations tend to lose out to the competitors.
Now let's talk about digital transformation.
Digital transformation is the process of using digital technologies to meet the needs of transformed
business processes and to create innovative customer engagement mechanisms.
The relationship between digital transformation and business transformation is that the digital transformation
supports the business transformation initiatives.
Let's go over some examples.
Target is a retail store in US till 2011.
Their website and fulfillment was outsourced to Amazon.
In 2011, Target decided to transform their business.
They invested heavily in digital technologies to integrate their supply chain inventories across the
partner network stores and their warehouses, and that enabled them to create new customer experiences.
Customers could place orders online and pick up the merchandise at the stores within a few minutes of
placing the order.
At this time, Target is continuously able to create new customer experiences because of a strong foundation.
They created the new digital technologies.
Capital One used to be a traditional physical bank, but today it is truly a digital bank, which has
no data centers of their own.
They depend on AWG cloud for all of their technology needs.
They use different services in the cloud to support their ever changing operating model and for creating
innovative customer experiences.
Amazon.com uses multiple digital technologies to support their business transformation.
Technologies like Emelle API Analytics are commonly used, and this helps them in changing their business
model at a very rapid pace.
This helps them in creating new products in a very short period of time.
Overall, use of these digital technologies has enabled Amazon.com to become a leader in the retail
sector.
So what happens to businesses that do not transform the short answer to this question is that businesses
that do not transform fail to survive.
Let me give you an example.
In 1997, Netflix started offering an innovative DVD subscription model to its customers.
Customers could receive a DVD in mail, watch the movies and return it to Netflix in exchange for newer
DVD.
In 2007, Netflix started their streaming service using newer digital platforms and technologies.
Customers could watch movies on their mobile phones, game consoles and TVs.
On the other hand, Blockbuster ignored all of these newer digital technologies.
They failed to transform their business in time.
And guess what?
Early 2021, the last blockbuster store was closed down at this time.
Blockbuster is no more in business.
One important point to keep in mind is that transformation is not a one time initiative or task.
Businesses need to change on a continuous basis, and this requires rapid changes to their systems and
applications.
Organizations must keep up with the pace of new and evolving technologies.
A prime example of continuous transformation is Amazon.
Amazon is keeping pace with newer digital technologies and offering new products and services to their
customers as well as their partners.
A common challenge that businesses face in their transformation journey is that the old ways of building
software hinders or makes it difficult for organizations to transform.
It is slow to build software using the older technologies and architectural paradigms.
Older technologies and old ways of building applications made it difficult for these applications to
integrate with newer digital technologies.
And this is where micro services architecture can help.
Microsoft's architecture addresses these challenges and helps the organizations move at a faster pace
to achieve their transformational objectives.
An obvious question you may want to ask at this point is how does a micro services architecture help
with transformation while transformation is all about rapid changes?
And in the case of micro services, architecture changes are isolated to a set of micro services.
I'll explain it with an example of a bank.
Let's say a bank has adopted micro services architecture, and what that means is that they will create
multiple micro services.
Each micro servers will realize one business capability.
Here I'm showing three such micro services.
The retail accounts.
Micro service takes care of the business functionality needed for the retail banking product, such
as checking account and saving account.
The credit cards Microsoft.
This is for the realization of the credit card products offered by the bank.
Let's say the bank decides to transform their credit cards business strategy.
So what that means is that there will be a need to change only the credit cards, micro services.
And since there is no dependency between the credit cards, micro service and other micro services,
the pace at which these changes can be made and released is going to be much more faster compared to
a monolithic architecture where there are interdependencies between multiple modules realizing the different
business functionalities.
In the next lecture, you will learn the business benefits of micro services architecture.
Time to go over the key points from this lesson.
Organizations need to continuously transform.
This transformation requires the I.T. systems to change at a very rapid pace.
There is a need for rapid adoption of new digital technologies, and speed to market is the key.
Microsoft's architecture helps the organizations meet these requirements from I.T. perspective.