Published on the 31/10/2024 | Written by Heather Wright

Composing a customer-obsessed business…

Forget about build versus buy, your choice now is between customisation or composing.

That’s according to Leslie Joseph, principal analyst at Forrester, who outlined to attendees at this week’s Technology and Innovation APAC conference how the old build versus buy framework is based on outdated assumptions and wishful thinking about software and digital business.

“Don’t compose your tax software, but do compose the software that delivers the digital touchpoints and moments that your customers really care about.”

“Traditional build versus buy thinking underestimates the complexity and cost of packaged solutions as well as the value of platforms and their ecosystems and it also overestimates the cost and complexity of modern custom development as well as the similarities between firms in a truly adaptive digital environment,” Joseph says.

He says in the digital era, software must be an expression of the business, with every business requiring different degrees of differentiation across their tech stack, anchored in their strategy and the spectrum of the degrees of differentiation that are much wider than the simple solutions offered by the build versus buy extremes.

Instead, he urged attendees to think about when to compose – assembling specialty parts in a way that optimises it for your business – versus when to customise – the standard buy and then modify model.

“Your real question is shall we customise a packaged app or compose software components?”

Joseph says much of the decision around composing versus customising comes down to the differentiation aspect and process volatility. Generic capabilities can be configured, but differentiators should be composed.

“Something with low process volatility is something a software company from outside can build a business around. And so you can, or maybe you should, buy rather than build.

“We talk at Forrester a lot about digital operations platforms as the future of what used to be called ERP. Digital operating platforms can matter a great deal to an organisation’s differentiation in the market. You just have to look at recent supply chain disruptions or natural disasters that require certain industries to pivot their operations very, very fast. You might experience a high degree of process volatility in your operations and that might require for you to address your levels of customer obsession.”

Joseph says while organisations have more choice than ever when it comes to technology, they need to remain focused on strategic choices.

“Your software is an expression of the creativity of your business, so if you cannot see your strategy in your technology stack that implies that there is a lack of focus on your business needs and chances are you are either overpaying for generic capabilities or you are underinvesting in your differentiating capabilities.”

Composing the software that delivers your businesses’ distinct value proposition is how you balance digital investments he says.

He reiterated Forrester’s often repeated push for ‘customer-obsession’, saying customer obsessed companies grow faster – on average twice as fast as less customer oriented competitors, something he notes bears true even during a recession.

“Forresters’ customer obsessed model is how you orient your business around your customer, and when you combine that with the right technology strategy, which we call a future fit strategy, it results in you creating new ways of working and new ways in which customers can engage with you.”

Both must be done in tandem however, because the technology is in service of your customer obsessed enterprise and the technology strategy that is right for you has to be determined by your current stage of customer obsession.

Those in the customer naïve stage are likely to be well served by a traditional IT set up and not have not much demand for future fit technology strategies.

Those in the customer committed state are less likely to be well served by traditional It, while those who are customer obsessed will likely need to compose their own solutions.

“If you are customer obsessed, no one knows your customers as well as you know them, so how do you think any traditional IT packaged software company which provides cookie cutter packaged processes can apply their understanding of the generic business they try to serve to your needs? They can’t because they simply don’t know the needs of your customer and they don’t align with your specific value proposition.”

But the work of composability doesn’t stop when you buy a solution, Joseph stressed.

He says research shows organisations new to composing applications and technology need to spend a lot of effort adjusting their skills, organisational structure and culture.

“Let’s assume you are the architect for a digital experience platform. To really be successful with that mandate you need to shift towards a product-centric buying set. That means taking on the prospective of building a product rather than managing an application.”

The capacity to compose necessitates an organisational capability to architect the software platform that is right for your business and requires platform product management, platform product development and future fit procurement methods to support all of this.

“Even after you have started, a new mindset towards partners goes hand in hand with maintaining your platform. Any initiative should be anchored in desired customer outcomes. Blended, cross functional teams have decision making authority and funding autonomy to deliver against these outcomes in a fairly iterative manner compared to more siloed and monolithic teams.”

Rather than targeting big bang releases a lot of teams tend to use data driven insights and experimentation to figure out which options promise the best results and work forward from there, he says.

A constant focus on reusing components that are already part of the platform is also required, assessing what their ecosystem has to offer to fill any gaps and, if a customer extension is needed, building it within the standards of the chosen platform to ensure future reuse.

For companies looking at composing versus customising, Joseph says the key is to identify capabilities that enable strategic differentiation.

Using high level capability maps can engage business leadership to articulate the capabilities the business needs to stand out in the market and from there you can derive the software and data needed to drive the digital moments that matter most for customers.

“The beauty of such business capability maps is they can be used at the highest level for strategic discussions and link those discussions and decisions down to architectural decisions at the lowest level of granularity.

“As a result the company has a strategic focus to every technology decision it makes. They can start establishing the capabilities that really matter for things like advisory and CRM and start building the respective platform and at the same time they also have clarity on the data they need to drive these experiences,” he says.

For companies starting from scratch, he suggested rethinking the digital experience as a set of competencies and capabilities.

“Experience design is one of those capabilities, so engage customer experience colleagues and grasp their CX vision for what experience your platform needs to enable for the business.”

For those ‘rationalising the chaos’ who have duplicated systems sprawled across brands and regions and wanting to rationalise, he suggested employing a product mindset and delivering your platform like it is that product your business uses to create all its digital experiences – ‘because really it is’.

“As your platform’s usage patterns change, focus your centre of excellence on capabilities that get used and reused and shared across all experiences your platform delivers.”

For the final category – those scaling enterprise platforms – Joseph urged competing on merit, not muscle.

“Scaling for you means change to others so focus on how your platform empowers your colleagues, not in terms of standardisation for its own sake. Use potentially a strategist to work with your partners in the business units to build their priorities, strategies and road map.

“And the last bit will require some diplomacy on your part. Great diplomats listen first and talk later. The first and most important job is to gain an intimate knowledge of what value means to your most important stakeholders. In fact only once you have established that can you showcase how the tech investments you proposed can deliver that value for them.

“So instead of overwhelming business leaders with technical lingo, use the terminology they use to describe value creation. In this way your stakeholders start to be interested in what you offer rather than getting distracted by the complexity behind it,” he says.

“You only have to compose software that powers the aspects of your business that differentiate you. So basically don’t go compose your tax software, but do compose the software that delivers the digital touchpoints and moments that your customers really care about and value.”