The digital economy is the economy, and apps are the new business platform

In 1995, Don Tapscott coined the term “digital economy” in his book of the same name, to describe a new category of business enabled by the Internet. Fast-forward 20 years and a lot has changed.

We used to think the digital economy was primarily about “Internet companies” like Amazon, eBay, LinkedIn, and Google. But over the years, the digital economy has affected virtually every company in every industry, and many have been completely disrupted by it.

Every company needs to build a digital economy business

The music industry was disrupted by the iPod and online music purchases and then disrupted again by music streaming. The retail banking industry is closing local branches and investing heavily in web and mobile banking, online payments, and a myriad of other online services.

The travel industry was disrupted by online travel planning, reservations, and check-in and is now being disrupted in a completely different way by sharing services like Airbnb.

I could go on and on, but you get the point. The digital economy increasingly is the economy, period. And every company needs to build a digital economy business – or face the possibility of being disrupted by others that do.

Web, mobile, and IoT apps are the new business platform

At the heart of every digital economy business are its web, mobile and IoT applications. These applications are the primary way you interface with your customers and are crucial to your success.

These apps are, in effect, your new business platform. And the experience you deliver via those apps will largely determine how satisfied – and how loyal – your customers will be.

Changing requirements of web, mobile, IoT applications

Successfully building and operating a digital economy business is a difficult task. Markets are evolving quickly and the competition from both existing and new competitors is usually intense.

I’d like to highlight three mega trends that are causing many companies to rethink the software stacks they use to implement their web, mobile, and IoT applications:

1. Virtually every company needs to operate at “Internet scale”

We used to think that the only companies that needed to operate at Internet scale were the Googles, Amazons, and Facebooks of the world. But now every company with even a medium-sized digital economy business needs to operate at Internet scale.

Over the last 20 years, the number of people online has grown from less than 1 billion in the early 2000’s to over 3 billion in 2015 and growing. And, as a result of mobile, we’ve also seen an equally dramatic increase in the amount of time people spend online. In the U.S., the average adult now spends almost 6 hours per day on the Internet.

The massive shift online means there are incredible opportunities to build big digital economy businesses, but it also means that companies will need to operate them at a completely different scale. Even if you have a relatively small business, you likely need to serve 10’s or 100’s of thousands of customers simultaneously.

2. Personalised, contextualised, location-aware experiences are the new normal

Just 10 years ago, consumers had little or no expectations of a personalised experience online. That has radically changed. Today’s online consumers expect an experience that is highly personalised, contextualised, and location-aware.

When they visit your site or use your app, they expect a tailored experience based on their identity, preferences, past interactions, etc. If they’re looking for your closest store, for example, they expect your app to know their location and show them the website of the nearest store.

This new normal in consumer expectations requires that you collect and process growing amounts of information to fuel your increasingly data-centric features and applications. Every company needs to be a big data company or risk falling behind. And the bar is only getting higher.

3. Agile development requires unprecedented flexibility

Not so long ago, companies built software applications using multi-stage “waterfall” methodologies that resulted in lengthy production release cycles – many months or even longer.

But in the digital economy – as companies compete to deliver better web, mobile, and IoT apps and the pace of innovation accelerates – waterfall methodologies are giving way to “agile” development. Today, software applications are built, released and modified in much shorter intervals – weeks or days, even hours.

As a result, the technologies companies use to build those apps must provide new levels of flexibility. The underlying operational database, for example, needs to enable frequent changes to the data model – such as new data types – without slowing down development or application performance.

Bottom Line: Enterprise Technology Needs to Adapt

As web, mobile and IoT apps are increasingly critical to success in today’s digital economy, enterprises need to adapt their technology to deliver those apps. This will require a major shift to an IT architecture that is far more agile than ever before, and an approach to real time data management that can accommodate unprecedented levels of scale, speed, and data flexibility.

Just as there was no way client/server technology could survive the shift to the Internet 20 years ago, today’s first-generation Internet architectures will not survive the new requirements for web, mobile and IoT apps.

At the operational database level, the shift to a new IT architecture is now underway. The rising popularity and adoption of NoSQL database technology is being driven by the need to support the web, mobile, and IoT applications that are at the heart of today’s digital economy businesses.

For those applications and their fast-changing requirements, companies are finding the performance, scalability, and data flexibility of NoSQL a better alternative to relational databases. As a result, NoSQL along with other big data technologies like Hadoop are becoming fundamental components of the new digital economy technology stack.

Bob Wiederhold is CEO of Couchbase.