Want to Be a Tech Company? Try Platform Engineering!
Back in 2011 Marc Andreessen famously explained how software is eating the world. At the time, tech valuations were very low. That has very much changed — and for very good reasons. McKinsey research from June 2022 shows that nearly 70% of top economic performers are using their own software to differentiate themselves from their competitors.
Fully one-third of those top performers monetize software directly. Today, every company aspires to be a tech company. Each wants to create a strong employer brand that attracts top talent and drives the tech-like multiples that can push stock prices to dizzying heights. It is technology that propels a business like Tesla to valuations unheard of in the automotive industry. It’s these kinds of results that drive businesses to label themselves “technology” companies.
The reality, however, looks a lot different. Most companies don’t actually understand how to best embrace tech and are too afraid to invest and undertake the necessary technological and cultural transformation risks. This leads to customer-facing “tech” that’s hastily developed, under-resourced and focused on being presentable to customers, such as online shops and service apps. This creates the illusion and cost of tech without any of the major benefits. Rather than making multiyear investments and developing modernization plans (and following through on them), companies dump resources in the wrong places, throwing random shiny new tech on top of old systems. Look no further than all the latest generative AI (GenAI) chatbots on top of terribly optimized websites shipped by engineering teams with incredibly bad performance metrics.
These companies quickly fall into negative feedback loops of shipping tech with bad processes, which then creates tech stacks that are increasingly complex and difficult to manage. As the tech gets more complicated, they need to hire more engineers to manage it, creating a downward spiral of cost.
Over time, instead of seeing margins and valuation multiples grow, the opposite happens. Cloud costs and engineering headcount explode, and enterprises are left with tech plagued by stability, security and scalability problems.
Engineering organizations get to a dysfunctional place where the only answer seems to be increasing engineering headcount to build new systems on top of old ones and somehow manage this growing mess. And so the spiral continues.
But there might be another answer that offers an actual solution.
Is Platform Engineering the Way Out?
The software and cloud native industry is faced with an urgent question: How can we take back control of these inefficient disjointed toolchains and reduce the complexity engineers need to deal with to be productive? The answer is unsurprising. It’s platform engineering. It’s what top-performing tech companies such as Google, Airbnb and Spotify use to onboard hundreds and thousands of developers to increasingly complex setups while removing cognitive load.
Trickling down from top performers and tech-first businesses to the majority of companies across all industries (including more traditional and less tech-oriented enterprises), platform engineering promises organizations a real shot at becoming tech companies. There is a reason Gartner named platform engineering a Top Strategic Technology Trend for 2023 and 2024 and forecasts that “by 2026, 80% of large software engineering organizations will establish platform engineering teams.”
For companies that are already technologically oriented, platform engineering sets the top-performing organizations apart from the rest of the pack. The latest DevOps Benchmarking Report, which assessed 1,053 engineering teams across multiple best practices and metrics (e.g., DORA), shows that 93% of top performers built an internal developer platform (IDP). And 82% leverage their IDP to drive standardization across all app and infrastructure configurations and create a clear separation of concerns between application developers and operations teams.
Platform engineering isn’t just a winner for technologically advanced enterprises. For example, Convera, which spun off from Western Union (founded in 1851), executed a strategic transformation across the entire organization. It redesigned all its processes and workflows, modernizing its entire stack, removing legacy technologies and upskilling its workforce.
The core of this modernization was the rollout of an enterprise-grade internal developer platform, which Igor Cantor, director of software engineering, says is the “foundation for the next generation in modern cloud-native software engineering… Our developers can self-serve everything they need to be productive, allowing us to move at the pace of a true tech company.”
By adopting platform engineering and a platform orchestrator, Convera successfully repositioned itself as a next-gen fintech with strong employer branding and a very high-performing engineering organization.
This is a path that most organizations can take.
How Can You Get Started?
The best way to get started with platform engineering is to start small, focus on demonstrating value quickly, then expand throughout your organization. You shouldn’t spend multiple years planning and designing a platform that you can’t be sure your developers will even use.
Instead, start fast and nimble with a minimum viable platform that demonstrates value to all relevant stakeholders. Then use what you learn from this process to build a full-blown enterprise-grade internal developer platform and platform engineering initiative that delivers real value to your enterprise and delivers the results your organization needs.
Platform engineering is the competitive edge that increasingly acts as the separator between high-performing organizations and their competitors, whether they are a software engineering organization that wants to accelerate its business or a traditional enterprise that wants to deliver the value (and market valuation) of technology companies.
Get started on your MVP today and become a technology company.
