Bruno Kurtic is the Vice President of Strategy and Solutions for Sumo Logic, a leader in continuous intelligence.
This is the first article in a four-part series on how digital business models are redefining the way business success is measured. As businesses become more reliant on software to drive revenue, this trend is giving rise to a new methodology: observability.
Digital transformation is one of the largest forces in today’s economy. Consumers now demand their products and services are connected, available 24/7 and accessible via web, mobile app or smart-assistant. Companies are using this shift in the consumer mindset to differentiate themselves from the competition, causing market dynamics and dominance to shift at a neck-breaking speed. For example:
• In hospitality, Airbnb, the most valued company comparatively speaking, is worth more than the top three hotel chains combined according to Business Insider.
• In media and entertainment, Netflix is second in market cap only to Disney and is well above the market cap of Sony. (Hence, the most likely reason why Disney recently launched its own video streaming service to compete with Netflix and Amazon Prime.)
• In retail, Amazon is valued more than the next nine largest U.S. public retailers.
• In transportation, Tesla is valued more than Toyota, VW, Daimler and GM combined according to the Chicago Tribune.
All of these industry valuation leaders are digital disruptors, but what do they all have in common?
At their core, they are fundamentally digital business models with not just technical prowess but digital innovation capabilities for offering highly engaging, revenue-generating services that are consumed differently than traditional goods and services.
When a business switches from a traditional business model to a digital one, it must translate that new business model into the technology being used. Doing this in a differentiated way relies on software, but not the kind that is bought off-the-shelf. Successful digital business models typically rely on in-house-built custom software, thus forcing enterprises to become software businesses.
In addition to technology changes, digital transformation has also redefined customer experience. Now you engage customers online, so customer experience matters a lot more. For example, a poor customer experience in one physical store because of a cash register failure is far less likely to derail your business than your digital shopping cart feature failing during peak online shopping time. In the world of digital services, customers are won and lost in seconds.
So, what does the business leader need to know?
To be best-in-class in digital, your products, services and online experience must be reliable. If they aren’t, your customers will, with a click of a button, go elsewhere. They don’t have to drive or wait — they can satisfy their needs by going somewhere else right then and there and may never come back.
Reliability is now the digital transformation imperative and can impact the customer experience in three significant ways:
• Availability: Can your customers access your products or services when they need them?
• Performance: Is the performance of your product or service in line with customer expectations?
• Security: Do your customers trust that you can securely handle their data or money?
Even short-lasting issues can have a significant effect because they can impact thousands of customers at once. Thus, reliability management is a real-time activity, and the name-of-the-game is fast identification and resolution of issues. Achieving reliability requires resilient architecture, real-time data, scalable analytics and an incident response process.
In addition, digital products, services and channels emit huge amounts of data from every interaction with the customer. This data is generated by infrastructure (servers, VMs, containers, cloud, etc.), applications (your code, databases, web servers, etc.), clients (web, mobile, etc.), security technologies (endpoint, SSO, etc.), and it comes in the form of logs (debugging statements developers put into the code), metrics (measurements that quantify latency, consumption, etc.) and traces (end-to-end view of distributed transaction execution).
Collected and analyzed effectively, this data can dramatically improve the way your DevSecOps teams manage your customers’ experience.
This driving need for more scale and adoption of new technologies (like cloud and Kubernetes) that require more powerful analytics has lead to the data-driven approach of observability.
Observability is not a tool or a technology; it is an approach that enables the observer to quickly detect and explain behaviors of applications and systems even if those behaviors have never been encountered before. Observability is an adaptive approach for multiple digital business challenges such as monitoring, diagnostics and troubleshooting of mission-critical applications running in the cloud or hybrid environments, refactoring applications from monolithic to microservices-based using technologies like Kubernetes or serverless, moving to the cloud, detecting and responding to security issues and performing real-time business analytics to name a few.
Future articles will cover the role of observability to ensure software quality and security and maintain continuous innovation loops required for digital transformation success.