Everyone wants to offer their customers new and advanced digital services. Offerings that stand out from the crowd, generate real value, upgrade operations, and produce significant insights that transform how customers interact with your company.

Unfortunately, great ideas can be hard to come by, and without the proper architecture in place, they are even harder to implement. Take, for example, a financial institution looking to provide:

• Mortgages in minutes, not weeks
• Hyper-personalized loans that deliver what customers really need
• Extensive transaction histories covering ten years, not just the last few months

These types of services require meaningful digital transformation projects that aren’t just a few minor tweaks and business as usual. They need true digital disruption.

Aim for digital disruption, don’t fear it

While almost all companies are undergoing some form of digital transformation, few commit to digital disruption and then develop something unique.

Digital disruption or disruptive innovation is the process of incorporating new technologies to completely transform the accepted norms of your business. This could be an entirely new business model, reshaping your capabilities, or finding ways to offer innovative services that others can’t. 

It is more than just a simple transformation project – moving some data to the cloud, incorporating a bit of analytics, or automating the odd process. It means throwing out the existing value proposition of your services and building something distinctly new.

When offering something completely different, you have to give people something they don’t know they want yet. Consumers operate within the boundaries of what they have already experienced. Digital disruption aims to push those boundaries and show how new peaks could be reached.

Henry Ford once said: 

“If I had asked people what they wanted, they would have said: Faster Horses…” 

Creating the first mass-produced personal automobile was a century-defining disruptive product, The internet and mobile devices produced a similar disruption. A more recent example would be a bank looking to launch hundreds or even thousands of new digital services. Innovation on this scale allows financial institutions to try different services and gauge the customer response to each, honing in on what works best for them.

While not every new service will succeed, companies can quickly and efficiently innovate at scale with the proper digital transformation tools. Even if only a small percentage of these services succeed, your company is on the path to disrupting the market, delivering the new services that consumers crave and leaving your competitors in the dust.

If you are providing similar services to your competitors, it is not disruptive. Disruptive needs to be something different, something that was not done before, or something that will have a massive impact on your business.

When you consider digital transformation and disruption in today’s business world, it is all about data. The companies most effectively disrupting the market are those that extract the most value from their data – managing data and making sure it is always available when needed, not buried deep inside a slow and cumbersome legacy System of Record (SoR).

Why are there so very few digital disruptors?

To disrupt the market, you must first go through the process of disrupting your own operations. Starting over and building something new is an intimidating task. It means moving away from long-standing IT infrastructure or business methods and entering the unknown.

Beyond business concerns (e.g., leadership buy-in, developing a digitally literate workforce, etc.), digital disruption requires organizations to deal with significant IT challenges:

• Keeping up with the number of new services you want to implement
• Ensuring high performance and ultra-low latency
• Overcoming bottlenecks introduced by slow systems of record
• Producing scalable services that translate from the lab to the real world
• Consolidating customer data, which is often scattered across multiple systems of record
• Breaking down silos into separate business units

Many organizations look at the business and IT challenges of digital disruption and choose a simpler approach with a lower bar. Aiming high requires reshaping your organization and changing the collective mindset of the workforce, so some organizations prefer a more gradual approach.

Bain & Company undertakes an annual survey of business leaders around the world, dividing organizations into four categories of digital maturity: late digital adopters, early-stage transformers, strong digital chasers, and digital disruptors.

By comparing each category, they found almost 80% of disruptors increased their market share over the last two years. This is partly due to the emphasis they give it. Nearly 60% of disruptors place digital at the top of their strategic agenda, compared to only 35% for strong digital chasers, 19% of early-stage transformers, and 10% for late digital adopters.

Ultimately digital disruption results in considerable changes. While that can be overwhelming, it is also exciting and provides organizations with a new purpose that can revitalize their business. There are many successful examples of companies choosing digital transformation that enables them to build new and compelling services.

Real-life examples of digital disruptors

Avanza Bank

Avanza Bank is an entirely digital financial institution specializing in savings and investments. With the continued introduction of new services, the bank began to see growing performance issues resulting from increased latency. They chose to overhaul their entire backend stack to improve operations, reduce the complexity of their IT architecture, and handle higher workloads.

Their platform can now handle up to 50,000 responses a second from apps, with 1-2 million calls per second during peaks, such as the market opening. By disrupting their infrastructure, they have significantly shortened their development cycles and runtime. When the number of transactions is high, runtime could take up to 18 hours. With their new architecture, this went down remarkedly, to about 10 minutes.

Bank Leumi

The competitive landscape of the Bank has been significantly challenged by two main drivers: new government regulations and advances in technology. Furthermore, new fully digital banks have sprouted, launching full services and adding another source of competition.  After strategic analysis, Bank Leumi t chose to transform how it handles customer data with the aim of accelerating digital innovation. This included removing their reliance on legacy data stores and moving to a smart new IT architecture. They decided that rather than taking the Do-It-Yourself approach, a unified solution was needed. Since their new system went live in early 2022, it now handles a thousand new digital services.

Source: Bank Lemui Case study

“If you think good architecture is expensive, try bad architecture”

Many businesses choose to stick with their existing legacy systems for far too long. They continue building on top of what they have, rather than taking a step back and considering whether it really helps them achieve their goals. 

Unable or unwilling to wipe the slate clean and create an ideal IT architecture for their needs, they build continue with their complicated mess of interdependent systems, which are just good enough to deliver services but hold them back from any meaningful innovation. These so-called spaghetti architectures represent a sunk-cost fallacy. Organizations are wedded to them based on past investment, not future value. 

Brian Foote said:

“If you think good architecture is expensive, try bad architecture”

You may think overhauling your IT systems and redesigning how your data is stored is an expensive endeavor. But legacy systems represent a far greater opportunity cost, with lost revenue due to existing services’ poor performance and all the services you couldn’t deliver while throttled by slow and overcomplicated data management.

Becoming disruptive by untangling your IT architecture

The best solution to becoming a digital disruptor and delivering new innovative digital services is to rethink data access. Rather than every application or digital service retrieving and processing data from specific systems of record, you can untangle your architecture and create a simple flow of information utilizing a Digital Integration Hub (DIH).

An event-based architecture, DIH effectively creates a copy of all your data in a new high-performance data store for all your services to access. This decouples data from systems of record, allowing microservices and APIs to be built as a layer above the DIH, significantly simplifying data access.

These new services are more resilient, no longer relying on any single system of record that may be experiencing high demand or is down for maintenance. With a dedicated high-performance store, you can free your data from siloed, slow systems of record to personalize every customer experience and rapidly launch and scale digital services.

The ability to launch new services efficiently and cost-effectively makes you agile and innovative in a competitive, diverse market. While not all will succeed, you’ll have invested much less in every launch, allowing for experimentation and the discovery of new valuable services. This brings real value to your customers, the kind unthinkable when developing in the high-cost, long development cycles of legacy systems.

Digital transformation resulting in a DIH offers a host of benefits:

• • Real-time services all the time
  • Dramatically shorter time to market
  • Cost reductions for each launch
  • The ability to run on any environment (cloud, on-premises, hybrid)
  • High performance and scalability
  • A single, holistic view of every customer

Organizations looking to innovate must remove the burden of legacy systems of record. Decoupling their applications and creating a high-performance copy of all their data prevents the need for constant interactions with slow and complicated traditional architecture.

Would you seriously consider building the architecture by yourself?

When looking to innovate and implement a DIH, you have two options: do it all on your own (requiring significant time and expertise) or implement an out-of-the-box solution. 

You can think of digital transformation and redesigning your company’s data management as redoing your home plumbing. While connecting all the pipes yourself might be relatively simple, ensuring a consistent flow from every tap is another story. This is analogous to your company’s data; it needs to be ready and available for every application whenever it is required. But it also needs to be accurate  and secure.

Building and maintaining this all by yourself is a significant undertaking. The complexity of the systems involved means you are committing to a two to three year project in the best-case scenario.

In comparison, implementing an out-of-the-box DIH can decouple applications from systems of record much faster, providing companies with a single platform integrating cloud-native and legacy systems to deliver a fast flow of data for next-generation high-performance digital services.

Summary 

Out-of-the-box DIH solutions, like GigaSpaces’ smart DiH, offer the disruptive technology you need to rapidly build and launch low-latency digital services regardless of your existing IT architecture. Implementing Smart DIH architecture reduces the time and costs associated with developing new services, giving you the power to innovate your services and offer a first-class experience to every customer.