Technology As The Basis ofSuccessful (e-)Commerce Models

Florian Heinemanncode.talks commerce special, Berlin

April 20, 2016

Retail companies with „Tech-/IT-/Data-DNA“ have a

significantly higher likelyhood to survive and thrive…

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…because they are likely to generate more money per user, visitor, customer

etc. and they move along a steeper trajectory of improvement.

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Retailers with a strong IT-DNA are driven

by a simple, technology-centric, andvery ambitious vision…

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Robert Gentz (2015):

“Today, we begin the transformation of Zalando. From a retail company enabled by technology to a technology company that will enable fashion platforms, connect multiple partners, markets, and business models.

Today, we are saying goodbye to closed and controlled systems. Now, we embrace open platform thinking.

In five years from now, we will no longer only be a retail company with a retail margin. Instead, we will become a multi-product tech company.

All of this we will enable through superior technology and proprietary data.“

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Retailers with a strong IT-DNA areoften guided by simple architectural principles that come from the top…

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Steve Yegge interpreting Jeff Bezos (2002):

So one day Jeff Bezos… issued a big mandate that… went something along these lines:

1) All teams will henceforth expose their data and functionality through service interfaces.

2) Teams must communicate with each other through these interfaces.

3) There will be no other form of interprocess communication allowed: no direct linking, no direct reads of another team's data store, no shared-memory model, no back-doors whatsoever. The only communication allowed is via service interface calls over the network.

4) It doesn't matter what technology they use. HTTP, Corba, Pubsub, custom protocols -- doesn't matter. Bezos doesn't care.

5) All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions.

6) Anyone who doesn't do this will be fired.

7) Thank you; have a nice day!

Ha, ha! You 150-odd ex-Amazon folks here will of course realize immediately that #7 was a little joke I threw in, because Bezos most definitely does not give a shit about your day.

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Strategic hypotheses:The likely commerce winners are

striving to become a platform that enables an ecosystem.

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IT-driven companies take a very conscious decision with regards to their tech

stack:(a) proprietary vs. (b) standard vs. (c) hybrid

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…with a natural tendency towardsbeing “fullstack proprietary”

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Organizational hypothesis (1):IT/tech is not an isolated function

anymore, it’s omnipresent in every function

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Organizational hypothesis (2): IT architects have to be present in

every area of the organization /every part of the value chain

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Organizational hypothesis (3): A shift in power is required, i.e. the “winning companies” of the future

are– at least partly – run by IT and data

people, not business people or similar

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Organizational hypothesis (4): You will have very few skilled architects in your organization. So,

maximize theimpact of those you have and retain them in their position for as long as

possible.

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Organizational hypothesis (5): Successful IT-DNA companies

configure everything to always attract the best

IT talent (choice of tech stack, architects etc.). It’s a young people’s

game...

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Cultural hypothesis: IT-DNA companies should welcome

experiments (“less wrong is the new right”) and ensure decision processes that are solely based on facts/data.

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Process hypothesis: IT architects should play a key role

already in the concept phase of projects.

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Decision process hypothesis:Initial/setup cost is one the least relevant

factors in IT/architecture/infrastructure decision. Focus on “total cost of

ownership” which is mainly driven by “cost of change/adaptation”.

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The (a) collection, (b) aggregation/(re)presention, and (c)

actionability of proprietary (customer) data is one of the key competences in the future.

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Contact details

Dr. Florian HeinemannFounding Partner & Managing Director

Project A Ventures GmbH & Co. KGJulie-Wolfthorn-Straße 110115 Berlin / Germany

eMail: florian.heinemann@project-a.comTwitter: @fheinemann