This sponsored post is produced by Kentik.

The concept of a supply chain is well understood in manufacturing. It involves the movement, staging, and storage of raw materials, work-in-process inventory, and finished goods from the point of origin to point of consumption.

Supply chain concepts have exerted an outsized influence on the global economy in the past several decades. Global transport lanes over land, sea and air.  Modern intermodal shipping containers. Logistics management practice. The rise of ERP software empires. And it doesn’t stop there.

Lean supply chain concepts like Kanban have had an enormous impact on modern information technology practice, by serving as the philosophical forerunners of the DevOps movement. Organizations that either manufacture or distribute goods pay a lot of attention to their supply chain, for good reason.

But how many organizations understand their digital supply chain?  Today, digital business either constitutes or determines a significant proportion of the profits made in the global economy.  Even pirates get this, as evidenced by the Verizon RISK report on how pirates hacked a major shipping conglomerate to figure out which containers to break into when hijacking a ship and minimize on board time. The RISK report recounts:

“They’d board a vessel, locate by bar code specific sought-after crates containing valuables, steal the contents of that crate — and that crate only — and then depart the vessel without further incident.”

Digital business leaders thrive while digital business laggards don’t survive.  So, it behooves anyone that wants to be successful at digital business (and that includes pretty much everyone), to master digital supply chain management.

What is a Digital Supply Chain?

Think of all the applications and services you either run or consume across a network.  If you zoomed in on the network traffic traversing the various cables and radio carrier signals, you’d see tons of digital conversations between computers.  That mesh of communications is your digital supply chain.

All the network connectivity inside your enterprise and all the Internet inter-connectivity to the rest of the world constitute the roads, tracks, waterways, and airways.  Internet Protocol (IP) packets are the shipping containers.  The goods inside those containers are applications and services.  An application can be something that consumers use, like Yelp.  Or an application can be something that businesses use, like

Services are a little more subtle than applications.  Many digital companies like Yelp don’t charge for the information they provide.  Rather, they make money by serving up advertisements or offering coupons or reservations.  These are services, and often they are third party services provided from somewhere else on the Internet, then integrated into the web application’s user interface.

There are other services, such as mapping, and payment processing, that help make e-commerce sites run. In fact, there is a massive ecosystem of digital services that includes things like Content Delivery Networks (CDNs) from companies like Akamai, that cache and replicate websites, and online security services from companies like Neustar that protect websites from distributed denial of service (DDoS) attacks.  The list goes on and on.

Who’s afraid of the big bad Digital Supply Chain?

Businesses that were built from the ground up as digital enterprises tend to be very aware of their digital supply chain because they live and die on their user experience.  Streaming media and gaming companies often build proprietary, optimized versions of the Internet to ensure that their digital goods get to the ears, eyes, and trigger fingers of their globally-distributed audiences with the best possible user experience. If you draw the analogy to the physical world, it’d be like some crazy entrepreneur building a new canal in Nicaragua.  In the world of industrial-strength digital business though, that sort of canal building is commonplace.

Digital-native businesses structure their operations to ensure that all the internal and external components of their digital supply chain are performing well.  The reason is that for them, what’s flowing over their networks isn’t just packets, its revenue, brand loyalty, repeat business, viral growth, and profits.  Or it’s rapidly the opposite.

For nondigital native organizations, though, the concept of a digital supply chain isn’t yet reflected in IT practices, and that’s a shame.  The move of nearly all departmental applications to the cloud, including significant investments in marketing technology (martech) stacks; the rapid shift to distributed application development; testing and deployment on virtual machines and containers running on public cloud IaaS and PaaS; the growth of e-commerce, as well as internal and end-customer mobile apps.  These all point to the fact that nearly every businesses lives and breathes, ever more deeply enmeshed in a digital supply chain.

To not understand and operate with a high degree of awareness and expertise around this reality is, in a word, perilous.  And it’s not just about security, though let’s not forget that it wasn’t just Target’s CIO that got fired after their security breach, but also the CEO.

How now digital cow?

If I were a CIO, I would resource and task my teams to develop a digital supply-chain game plan.  It would require developing a map of all digital trading dependencies, from end-users to API calls.

It would involve developing the expertise to play the Internet connectivity game like owners, and not renters of digital destiny.  For example, instead of simply trusting a couple of major telco’s to carry all our traffic, actively exploring and executing direct Internet connectivity with major digital trading partners.

And it would certainly include investing in cloud-scale, big data tools to equip my teams to run a data-driven operation, rather than relying on educated guesswork.   Because if digital business is the game now, mastering your digital supply chain is how you play to win.

Avi Freedman is CEO of Kentik.

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