Exploding the Enterprise

This article appeared as my column for Connect Magazine in August 2004.

I was at the Supernova conference in June and had the opportunity to moderate a panel discussion called “Exploding the Enterprise.” The description for the panel was sufficiently vague that I and the other panelists determined that it could refer to two different trends in business today. The first sense in which enterprises are exploding is internally; teams, groups and organizations are being dispersed geographically. The second sense in which enterprises are exploding is external; spinning off non-critical functions to outside partners.

I recently heard a statement that brought these two concepts together for me. Esther Dyson said that small organizations “have a higher surface to volume ratio than do large organizations.” What she means is that small organizations are generally much more focused on communicating with people outside the organization than they are on internal communications. Large organizations, of course, have developed extensive and sometimes ritualistic processes for internal communications because that was the grease that made the enterprise work.

An interesting subtext of this observation is that given the smaller organization's higher surface to volume rations, they stand to benefit disproportionately from Web services since a greater percentage of their communications is structured interactions with external partners.

Tom Malone, a professor at MIT, wrote a book called The Future of Work that describes some of the trends in organization size and its ramifications for business and workers alike. According to Malone, new technologies are making it possible for organizations to have the economic benefits of large organizations while maintaining the human benefits of small organizations. In today's organization, huge numbers of people can have all the information they need about the big picture to make their own decisions instead of waiting for someone above them in the hierarchy to tell them what to do. This makes internal communication more important than ever, but the nature of that communication changes. Rather than command and control messages, it starts to look more like the kinds of communications we have with external partners.

Communications with external partners tend to be more structured than the communications we have internally. Typically these communications are transactional and they are often governed by a contract. Malone argues that many organizations will turn to the organizing principals of the marketplace to structure their decision-making processes. I'd argue that as large organizations attempt to become smaller and outsource support functions, they're already well on their way to this organizational marketplace. The only difference is that they're using the real marketplace, not one they've created internally.

Any enterprise is no longer a single organization, but a federation of many organizations. Often, the organizations in the federation do not report to a common manager or even share a common long-term goal. They are federated by contracts and connected by networks.

Consequently, enterprise applications are no longer homogeneous. There is no common IT infrastructure and no hope to ever build one. The reality of modern organizations is that there is not and never will be a shared infrastructure for identity, computing, document management or anything else. Solutions have to be decentralized to work.

On top of this, you have a little ability to influence how your partners operate. As an example, you need to work closely with the company that does your payroll, but you're not big enough to force any kind of architectural decisions on them. You have to match their interface. This goes beyond the common IT infrastructure decisions-for example, you probably can't even get them to adhere to your corporate document naming standards.

A related idea is what the Jerico Foundation calls “deperimeterization.” Companies have traditionally been organized with an almost fortress mentality. This is certainly true off our security policies, but I think it speaks volumes about business models as well. The problem with the fortress mentality is that as more and more of our interaction turns outward, it's more and more difficult to “keep the bad guys out.” In fact, working closely with external partners requires an ability to share needed information and conduct necessary transactions without just turning them loose in your systems. For the most part, your partner organizations don't want to let you all the way inside their systems and you don't want to let them all the way inside yours. Interaction happen at well-defined interfaces. If Malone is right about trends in the workplace, the same will apply to your internal interactions as well.

Another consequence of this trend is shorter and shorter employee tenures. The organizational model for making movies, where hundreds, if not thousands, of independent contractors come together for a project and then disperse to the next project may be a model for how some projects happen in other businesses. This has some interesting consequences for IT.

As an example, consider that the ROI on provisioning contractors and part-time service providers is lower than with a direct employee. To make models with shorter employee tenures work, IT systems have to be architected to reduce the amount of effort required to provision and deprovision employees. Otherwise, it can eat the infrastructure budget alive.

This trend to exploded enterprises isn't for everyone and no one's claiming that all large organizations will disappear. I do believe, however, that the trends to more loosely coupled organizations are unmistakable and that they'll affect every organization in some way over the next few years. Seen this way, recent trends in outsourcing, computer security, and messaging begin to make sense.

Phil Windley teaches Computer Science at Brigham Young University. Windley is writing a book on digital identity, writes a weblog on enterprise computing at http://www.windley.com, and publishes UtahPolitics.org. Contact him at phil@windley.com

Last Modified: Friday, 31-Dec-2004 23:23:49 UTC