Platform economy and the role of the mainframeNovember 12, 2019
Our economy is going through a revolution, a digital revolution that goes beyond anything we have experienced before. New disruptive technologies are rapidly creating new opportunities to interact and do business. Digital platform business models are on the rise. We are entering the era of the platform economy. Experts say that every organization, without exception, will be influenced by this new platform development. Now’s the moment to jump on and profit from the unlimited possibilities of exponential growth in this platform economy. Platforms on which demand and supplies of products, knowledge, money and labor are brought together to make connections which lead to new innovative solutions and business transactions. The key word in this development is facilitation. Facilitate others to create value and make use of existing and unutilized knowledge and assets.
This environment is the ideal playground for tech startups and young innovation savvy organizations as they are not held back by a legacy burden.
However, at the same time, the legacy environment that existing companies have built up over the years contains a wealth of knowledge and insights that these startups don’t have. This has been the basis of quite some partnerships between the old and new companies. A great example is the insurance world, where many new Insurtech companies have been formed.
This way existing organizations are able to keep up with the pace of innovation. However, they still need to make sure their legacy IT environments will not become a bottleneck. Facilitation requires connectivity. Connectivity requires integration.
A great example of an Insurance company that has turned a threat into an opportunity is VIVAT.
After decades of developing its core insurance systems on Unisys Libra 690 mainframes VIVAT found that this environment burdened them with high cost and limited flexibility. Therefore, a few years ago, they decided to look for an alternative solution and successfully moved off the mainframe. What initially started off as a project to save cost quickly turned into a project that powers innovation!
VIVAT started VINCE, the VIVAT Innovation Center, that consists of an innovation council, an innovation pipeline and a collaboration with 250> start-ups.
At the same time, VIVAT completely automated their Systems Development Life Cycle, using Azure, DevOps, ServiceNow, etc., embracing an agile approach.
This way VIVAT combines the best of both worlds, turning IT from a cost center into an innovation center and as such creating significant business value.
On the other hand, there are still organizations that struggle with innovation.
Especially governments are facing problems with legacy systems. For example, at the Dutch Tax authorities, more than half of the systems are outdated, which makes them difficult to adjust and expensive to maintain. The sales tax system, which dates from 1982, is cited as an example in an article on Tweakers.net: https://tweakers.net/nieuws/152820/meer-dan-de-helft-van-ict-systemen-van-de-belastingdienst-is-verouderd.html
Although this ICT system runs without major disruptions, due to the age it is not possible to adjust the tax rates in this system. New sales tax legislation requires a new system and according to the Court of Audit, it takes five years to build such a system. This means that sales tax rates cannot change in the coming years. Which has major consequences for the Dutch national treasury.
This is just an example but there are many more organizations, both commercial and governmental, that face these same problems. The question is, will they be able to pull off the required platform modernization in time to jump on the platform economy train or will they continue to fall behind?
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