This article outlines the main benefits of adopting a service-oriented IT development strategy. More specifically, it explores the benefits of an ecosystem approach, this implies acquiring different software solutions tailored to perform specific functions. A service-oriented IT structure built on flexible cloud-based solutions will ensure seamless system integration, which in turn, will lay the foundation for continuous innovation and product development.
From monolith to the ecosystem
Monolithic systems are prevalent in established IT departments. This is primarily because it is easier to manage processes through one deployment unit in the early stages of digitalization. A fundamental weakness of monolithic systems is that core functions are harder to separate and therefore vulnerable to systemic updates or alterations. Recent technological advancement and increased competition from agile startups are challenging companies to think differently. Organizations with large monoliths often consider technology as a constraining factor. Organizations that embrace a modern service-oriented approach view technology as an integral part of the core business.
What a service-oriented approach entails
A service-oriented approach implies building an IT platform that consists of multiple systems each optimized to perform select functions. With a tech stack consisting of individual components, you can alter one part of a system’s functionality without affecting the rest of the system. This fragmentation of functions enables more rapid digitalization of select components and creates a distribution model where functions can be independently deployed. Separate systems where each software tool is tailored to perform an individual task also enables communication with external applications through a well-defined interface.
The service-oriented paradigm has matured and gained additional momentum over the past years, thanks to the advancements in development and operations (DevOps), continuous integration technology, and API standardization. This has in turn made it possible to split services into even smaller units (microservices). Recent technology and process advancements have also narrowed the gap between business and IT development and operations.
How to modernize IT architecture using a service-based approach
In the future, the biggest divide will be between companies that adapt their IT architecture and those that do not. The challenge established industries often face is that they have not yet reached a sufficient level of technological maturity. Innovation teams in larger corporations generally struggle to move past the concept level when presenting new ideas for software applications to the management board. In order to implement a service-oriented approach companies need to either allocate the resources internally to establish a capable tech team or engage with startups that can provide the necessary infrastructure. There are many viable ways to use insurtech to outperform.
If the answer is to look for external help, the first step should be to look for external software providers that offer a tech stack that delivers flexible integration between different software solutions. This also means committing to components that are easily decoupled and isolated as separate services. The benefit of decoupling is that you reduce the risk of damaging the IT structure as a whole. This is often achieved through developing on top of well-documented and standardized REST APIs which makes system integration easier and more seamless. Some software providers even take it a step further, by offering one-click integrations that take advantage of the underlying APIs of the two services that are integrating.
In monolithic systems technology has been considered a constraining factor, in modern cloud-based solutions it is an integral part of the core business.
Low-risk innovation – a gradual transition rather than a big-bang approach
The risks related to changing a company’s IT architecture can be daunting and as a result, many companies choose to hold off on innovation initiatives. In order to reduce risk, the focus should be on gradually digitalizing internal processes rather than doing one radical overhaul of all core systems. The first step could be as simple as running a test project on one internal process where automation would be beneficial. The crucial point is to focus on tangible innovation projects where you can realize concrete business value. The results of the test project will give a better idea of which process or product vertical to focus on in the next step of digitalization. Low-risk innovation ensures that additional functions can be developed incrementally to fit business requirements. For more tips – check this article>>
A service-oriented perspective will enable a seamless integration of additional products and services. This is achieved through a modern standardization of data exchange in the ecosystem which ensures efficiency and provides long- term flexibility.
A flexible IT architecture provides companies with the agility and speed required to keep up with tech trends. A service-oriented approach will pave the way for new partnerships between incumbents and startups, which will increase the speed in product development, and ensure long-term business value.