The Illusion of Control: Why In-House Platforms Can Undermine Your Business Strategy
- Asanka Abeysinghe
- CTO - WSO2
First published on TechCrunch.
In the rapidly evolving tech landscape, the promise of control reigns supreme. And, it’s why founders, CEOs, and technical decision-makers are increasingly drawn to the idea of building in-house platforms. The appeal is understandable: complete sovereignty over every layer of the tech stack, from the user interface down to the most granular data interactions. It's an intoxicating vision that promises a bespoke solution tailored precisely to a company's unique needs. Yet, as alluring as this complete control might seem, it's often more a mirage than reality.
As the CTO of WSO2 with 20-plus years of industry experience, my hands-on involvement in productizing development platforms has given me an in-depth understanding of the challenges and opportunities in this space and shaped my perspective on the intricate balance between control and agility in tech strategy. I’ve also brought this perspective to my efforts in driving the digital transformation programs for numerous enterprises, combining strategy with practical execution to help architect and implement digital platforms that directly contribute to the success of these organizations.
This article builds on the experience and insights I have gained to pierce through the illusion of control an in-house platform brings and reveal how it can hamper your broader business objectives, such as agility, focus, and scalability.
The Lure of Control
Control is a tantalizing promise that captures the imagination of even the most seasoned technical leaders. In an ecosystem where data breaches are commonplace and customer demands for personalized experiences are soaring, the idea of owning every single layer of your technology is the business equivalent of a Swiss Army knife—customization, security, adaptability, all within the palm of your hand. In a competitive market, this illusion of ultimate control can feel like a game-changer, a unique edge that places you miles ahead of competitors who are dependent on third-party solutions.
But here's where things get tricky. This notion of absolute control is often a siren song, leading organizations down a path filled with unforeseen challenges and constraints. What initially seems like an all-encompassing solution can quickly turn into a quagmire of escalating costs, dwindling focus, and stifling complexity. Moreover, the dream of control often overlooks the inherent trade-offs. What you gain in customization, you often lose in agility. What you acquire in data security, you sacrifice in resources that could be otherwise allocated to innovation or customer acquisition.
The Reality: Costly Trade-offs
Let’s look closer at the all-too-real trade-offs that come when you build a customized, in-house platform.
In the quest for greater control through in-house platform development, agility often becomes a collateral casualty. When you lock yourself into a proprietary platform, the rigidity of the architecture and the time invested in custom solutions can hinder the ability to pivot swiftly in response to market changes. This results in missed opportunities and can leave the organization vulnerable to more agile competitors. The lack of agility is not just a theoretical risk but a tangible challenge that could inhibit responsiveness and long-term growth.
Embarking on an in-house platform development journey is not just resource-intensive; it can also significantly divert attention from your core business objectives. This phenomenon is far from isolated. Most CIOs and CTOs I’ve spoken with at a San Francisco Bay Area executive connect program share a similar concern. Their technical teams are increasingly consumed by the intricacies of building and maintaining platforms, leaving less bandwidth for creating applications that deliver valuable experiences both internally and externally.
This allocation of focus has tangible repercussions. When substantial resources are spent on platform work, it creates a vacuum in areas that are vital for business growth, customer satisfaction, and market leadership. The ensuing focus dilution could lead to declines in key performance metrics, such as customer retention, time-to-market for new features or products, and overall profitability. In essence, this dilution risks strategic misalignment, potentially undermining the very objectives the platform was meant to facilitate.
Scalability and Governance
As you scale, the governance of an in-house platform becomes a nightmare. Each added feature or capability introduces new layers of complexity, making the system harder to manage. In two years, 70% of companies had to revisit their governance protocols due to in-house solutions, increasing operational costs.
The inclination to over-engineer is a common pitfall when developing in-house platforms. This leads to unnecessarily complex solutions that become increasingly difficult to manage and evolve. Over-engineering doesn't just complicate the current state of the platform; it creates a ripple effect that impacts future adaptability. Compounding this issue is the rapid pace of technological change. With an over-engineered, complex system, adapting to new technologies or integrating with evolving standards becomes cumbersome and time-consuming. Because this complexity can limit agility and stifle innovation, it is a vital consideration when contemplating the development of an in-house platform.
Achieving a positive return on investment (ROI) from in-house platforms is often more complex than anticipated. The initial costs of development are just the beginning; ongoing maintenance, security, and updates can quickly escalate, eroding the projected benefits. The financial burden isn't just upfront but accumulates over time, making it challenging to demonstrate a clear ROI. This financial complexity necessitates a thorough evaluation before committing to an in-house platform. It's not just about the money spent but also about the value generated. Often, the costs outweigh the benefits, creating a mismatch that can put long-term financial health and strategic goals at risk.
The Pitfalls of In-House Platforms: Two Case Studies
We’ve conceptually examined the challenges of implementing an in-house platform. Now, let’s review two real-world examples.
Case Study #1
A company in the aerospace industry allocated 60% of its digital transformation budget to develop an in-house platform. Over a span of three years, a 100-member technical team was devoted to the project. Despite these substantial investments, the company faced numerous setbacks.
The platform's development consumed so much focus and resources that it actually limited the company's ability to swiftly adapt to market changes. In fact, over the three-year period, technology advanced so rapidly that certain aspects of the platform became outdated. Additionally, as the business evolved, the platform's features became misaligned with the company’s shifting objectives, rendering some functions obsolete. Finally, despite heavy investment, the platform did not deliver financial returns, instead becoming a financial burden.
Ultimately, the company scrapped the in-house platform. The years and resources invested turned out to be sunk costs with no tangible benefits. This prompted an internal reassessment of how the organization would approach future digital transformation strategies and budget allocation.
Case Study #2
A financial services firm with 3,000 developers has been on a quest to build the perfect platform for over a decade. Now on the fourth iteration, the company has yet to find a sustainable solution despite substantial resource allocation.
Despite multiple attempts, none of the previous platforms met organizational expectations, leading to their eventual abandonment. Instead of providing a foundation for innovation, the platform-building initiative has become a never-ending cycle, draining ongoing resources and focus. And for the significant base of developers, the repercussions of each failure are widespread, affecting productivity and morale.
Despite a large, unspecified team engaged in development for over a decade, a sustainable, effective platform remains elusive. Rather, the ongoing struggle to build a functional platform has led to a cycle of development, failure, and internal questioning about the viability of the company’s in-house platform initiative.
As we’ve seen in the two case studies, building an in-house platform may offer an illusion of control, but it often comes at the cost of flexibility and focus. An alternative is to leverage commercially available platforms, which can offer a balanced mix of control and agility. From my experience, organizations adopting this approach have reported up to a 50% cost saving and a noticeable productivity boost.
Opting for a commercially available platform doesn't mean compromising on core needs. These platforms are designed to be customizable, scalable, and align with a variety of enterprise requirements. By making this strategic shift, companies can maintain a strong focus on their core business activities while enjoying the benefits of reduced costs and enhanced productivity.
The narrative of complete control through in-house platforms is both captivating and deceptive.
Based on my experience as a change agent in large digital transformations—and as evidenced by the aerospace and financial services case studies—organizations all too often sacrifice more than they gain when choosing this platform-building path. They pay the price in terms of costs, lost agility, and diluted focus. Moreover, the illusion of control not only obscures these challenges but can result in strategic misalignment, impeding the very business goals the platform was designed to serve. On the other hand, commercially available platforms offer a balanced blend of control and flexibility, without sapping valuable resources or straying from core objectives.
In summary, while the allure of absolute control is compelling, technical leaders must critically reassess its long-term viability. Opting for more balanced solutions can lead to better alignment with organizational goals, offering a more sustainable and agile approach to technology management.
Building an internal platform comes with numerous challenges and pitfalls that can divert the focus from your core objectives. If you're considering an alternative to constructing and maintaining a platform in-house, we encourage you to take a look at Choreo by WSO2, a commercially available internal developer platform designed to address these issues and streamline your development and delivery operations.