Skip to content

How Start-ups Harness the Power of Re-platforming for Value

July 27th 2022

 

By Tom Hedley, Head of Fast Growth at Ciklum

 

Revolut is an example of the power of re-platforming. Since launching in 2015, the financial app grew quickly adding more and more features and customers. As it reached up to 50 applications on its platform, it became clear its initial infrastructure would be overwhelmed. 

Revolut’s response was to re-platform with more agile technology to cope with its growing scale. Today the firm has around 18 million customers and is worth around $33 billion.

At Ciklum, we see this happening with most successful start-ups. When and how to re-platform can be difficult decisions, but they are crucial to your growth journey. You cannot avoid the challenge. 

What re-platforming means for start-ups

As a start-up, your technological needs will shift rapidly as you scale. Your roadmap will likely become increasingly aggressive as investors push you to keep adding more features and polish to your product. The platforms you started with were right at the time, but as you grow, they can quickly become inadequate in meeting the growing needs of the business, creating multiple pain points. For example, it can take more and more time to release new versions, and force your technology team to spend unproductive time addressing technical debt and bug fixes.

Before you know it, you can fall behind your roadmap and your competition. 

Re-platforming upgrades your system architecture and allows you to regain development velocity as your team and competition grows, now and in the long term. 

Evolving and iterating through just in time re-platforming 

In recent years, re-platforming has become a lot easier due to improvements in the technology available but it still takes a lot of hard work and smart people.

We tend to see companies start with a monolithic architecture - the traditional unified model of software design - then re-platform to microservices, which is based on a collection of modular components. This enables much greater agility and more frequent, rapid, and reliable delivery of improvements. Most modern cloud-native systems use microservices, and technology firms from new and growing fintechs giants such as Netflix, Amazon and PayPal have evolved from monolithic to microservices architectures.

When starting out, it’s easy to manage a monolithic system because knowledge transfer is immediate in a small team - everyone knows what’s going on. But as you scale, more people join. They all need an in-depth knowledge of how to use a monolithic system, which creates a barrier to growth. A microservices structure enables you to build features, functionality or services without other teams needing to know the code base of other services, enabling rapid onboarding and iteration on different services. 

That underpins your long-term velocity - how quickly you can improve your product and monetise it. This velocity is a core feature of successful start-ups, and especially important for technology firms.

Evolve too slowly and anyone else can copy and overtake you. Stay fast and spot market demands before anybody else, and you can keep leading the pack. 

Know when the time is right

Usually you can tell the time is right to re-platform when you’re falling behind your roadmap. 

You may have to implement catch-up or holding mechanisms due to inadequacies in your architecture. In another case, you may expand your team but find it is not delivering more value; experience falling velocity and productivity; release fewer features; or take longer to onboard, up-skill, and make teams productive. 

Meeting the challenges

Re-platforming brings many challenges. The biggest for start-up founders is finding time for such a major infrastructure project while focussing on other critical activities. With many other tasks clamouring for attention, it may be tempting to de-prioritise such a large project. But you need to look ahead and remember that putting it off opens the door for others to catch up or overtake you. 

Be ready for a short-term trade-off. You may have to slow down or even stop work on your core product for a few months while the re-platform takes place. Be clear about this with your stakeholders and explain why you’re doing it. Without the change, it will take more time to release new features, so that balance will soon tip over into loss of competitive edge.

Some start-up founders try to grit their teeth and push through growth with their old monolithic technology. But this rarely works for them. For the long-term success of your business, it’s usually better to grasp the nettle and build re-platforming into your plans at an early stage. 

Your exit strategy will factor into the decision. If you are planning to sell, make sure you understand exactly when and how your targeted acquirers are likely to perceive the highest value in your business. 

If they want to buy a future-proofed business, re-platform well ahead of negotiations. If they want to put your business onto their platform soon, a large technology spend now might be wasted. But can you maintain competitive advantage until that happens, or would it risk denting your value by the time you exit?

Another factor is your ability to resource the talent necessary to set up and run the new platform. Such people are rare and expensive, so be sure your business can support that. If that could cause a problem, you might have to forego some of the more sophisticated re-platforming solutions and opt for technology that has a wider or cheaper pool of programmers available.

Sourcing talent has been a major stumbling block for some start-up technology firms who ended up with a hole in their teams and a massively delayed roadmap because they could not recruit around new technologies. So be sure to have a carefully joined-up plan for technology and recruitment.

Convincing stakeholders

Lack of stakeholder understanding about the impact of these issues is another challenge, especially when your business still appears to be operating well at the front end. Stakeholders may say, “you just want some fancy new technologies, but there are more pressing spending priorities.

Spend time constructing the arguments to convince your investors this is a core issue for long-term growth and competitive advantage. It can be a highly technical discussion, and may seem abstract to investors, so be sure to explain it in a way they can understand. If you lose the argument, your plans could be shelved even as your system starts creaking under the pressure. 

Once you have agreed to re-platform, get buy-in with any reluctant teams by showing them how much time they’re wasting on system fixes, and how much faster they can go once it’s replaced and into the future.

Companies like Revolut have proven that, to scale in a field such as digital banking, it’s essential to have an agile platform at your core.

You may need advice and support to get there. Expertise and experience often make the difference in helping to build the investment case; plan the re-platform in a way that works for your whole business; find the right solutions and providers; and resource talent.

Get these plans right now and you’ll be able to implement new technology in a way that embeds innovation whilst driving velocity and value well into the future.

Subscribe to receive our exclusive newsletter with the latest news and trends