The new enterprise operating model

1. Summary

The reconciliation of IT and business has been a persistent theme over the past 10 years, and for good reasons. At a certain point in time, the IT department constrained enterprise behavior, and senior-level management widely regarded it as a cost, and even as a hindrance.

But what happens to the enterprise when the IT-to-business reconnect is complete? This report argues that modern IT — that is, one that is cloud-based, platform-centric, and often making use of extensive partner ecosystems — allows companies to free themselves from old enterprise constraints. However, business management and IT organizations must address ensuing conceptual and business model issues:

• What we have come to define as a “technology platform” is changing. The classic API-and-services concept needs to be extended. IT is developing a far better understanding of the unique contribution of the strategic role of connector technologies (APIs, RSS, identity and billing systems) that create a platform for business connections.
• That business platform, often described as an ecosystem with the API supplier as “dominant species,” is morphing into something better described as a “federated organization” that gives us access to many new ideas about rapid business formation.
• Businesses that embrace modern IT create a new enterprise operating model (NeoM) that supports emerging business models and revenue options. They can also apply NeoM principals internally: In the case of pioneer companies like Netflix, for example, this means getting rid of departmental barriers by focusing team activity on internal platforms and teams.