How business growth relates to business infrastructure

Originally published in Network World on Dec. 13, 2016

With the U.S. Presidential election over, there is now talk about infrastructure investment, and by that, most people mean roads and bridges.

But not so fast. The most important infrastructure of a modern economy or a modern business is the digital infrastructure. And it’s in worse shape than our roads and bridges. Most of today’s networks were put in place 20 years ago, well before the debilitating forces of cloud, big data, social, mobile computing, and most recently the Internet of Things (IoT) eroded their effectiveness and caused data traffic congestion.

Sure, these networks still work—they still chug along, even if they’re slower and more vulnerable than we’d like. And let’s face it; it’s human nature to take an "if it ain’t broke, don’t fix it" approach. But that approach didn’t work in the 1990s for the brick-and-mortar businesses as the internet era emerged, and it won’t work today for any company that needs to digitally transform and do business in the network age.

Today, we have to move faster, fail faster, react more quickly and automate to keep up with the pace of customers, competitors and market dynamics.

Here are five things every CEO, board member, CIO and organizational leader needs to understand about their business infrastructure and its direct relationship to business growth.

1. Don’t confuse cloud with transformation.

At the turn of the last decade, many of today’s most successful companies, such as Google, Facebook and Amazon, radically transformed their networks. They did this to drive top and bottom line growth. They recognized that the network touches every critical component of business growth, including products and services, data, business process, sales and marketing, and customer experience.

A lot of companies today wrongly assume they can transform their business simply by buying a few things from the cloud. I wish that were the case. While cloud is certainly an important part of a next-generation business model, most of what you’ll buy as a cloud service are applications that are important to running your business, but not the source of your competitive advantage.

In addition to these cloud services, you’ll also want to create an environment in which your company can quickly create new products, features, services and value for your customers—and in which your customers and partners can create that value for each other and for your business.

This network and business platform is what Amazon, Facebook, Airbnb and other digital businesses use to create competitive advantage and to disrupt traditional companies. You can build this platform in the public cloud, as a private cloud or as a hybrid. The point is this isn’t a service that you buy; it’s a digital infrastructure that you operate and on which you innovate.

2. Respect the role of software.

Just over two years ago, the telecom industry embarked on one of the most ambitious infrastructure projects of recent times to split networking hardware from networking software. They did this to virtualize their networks and to ease the burden and cost of managing them.

Unlike other industry movements such as LTE adoption, this initiative has largely gone unnoticed by the outside world most likely because the impact is perceived as benefiting service providers more than their end customers. But that is, in fact, not the case. This trend was sparked by the desire to emulate digital business leaders in the enterprise space whose networks were not only more cost effective, but also more agile and responsive to the requirements of end users.

Whether you’re an enterprise, government agency or service provider, if you’re not looking at the role of network virtualization (not just compute), then you’re already behind.

In some circles, this new digital infrastructure is called a New IP architecture, to differentiate it from the way we’ve traditionally built the underlying IP networks. New IP architectures build security in from the ground up, are software-centric, are automated, and use data analytics and intelligence to adapt in machine time to changing conditions.

It’s this move to software-centricity and automation that allows a company to more quickly and affordably roll out new and enhanced services for their customers and users. Speeds and feeds are only a small part of the equation. What tips the scales is software and architecting the digital foundation of the business in a whole new way.

3. Abandon slow, waterfall network upgrades.

You already did this a decade ago with your computer software. Now it’s time to do it with your network, which is largely software-defined now. Instead of rolling out a few big changes per year, consider deploying minor changes more often with componentized networking. Instead of buying a router, buy software that can act as a router, switch, firewall and everything in between. Start them up as needed. Tear them down with ease to save on what you don’t use. Think highly modular, agile, usage-based (i.e. less waste) and undeniably better.

Companies that have made the transition to digital have moved from thinking of change as bad and risky to thinking of change as part of the everyday process of business. Amazon does more than 20,000 production changes a day. The biggest risk to a digital business is standing still.

Companies that have made the transition to digital have moved from thinking of change as bad and risky to thinking of change as part of the everyday process of business.

4. Stop viewing your network as pipes and plumbing.

Modern networks can do so much more than passively transfer data. In fact, the network today is not only a critical element of business, but in many cases, it is transforming the business itself. Consider this: A decade ago, the taxi cab and hotel industries were resting comfortably in their business models. In walked Uber and Airbnb.

Yet even with so many examples of network-based business innovation, many still view the network as a cost center rather than a growth vehicle. That’s a mistake—and a potentially fatal one. I can’t imagine a business today that is immune to the winds of change and progress. Things are happening fast. This is not the time to cling to status quo thinking. Innovative companies are placing the network at the forefront of business planning, and in doing so, they are creating and reshaping entire industries. What will that mean for your business?

The network is becoming the center of many business models. It’s how you connect to your customers, suppliers and partners. But even more important in a digital business model, it’s how your customers and partners connect to one another, as well as create value for one another and for you.