Why are SoR and SoE separated? – Solving the operational challenges of "bimodal IT" through data integration.

The obsolescence of the bimodal concept and the risk of system fragmentation.

Introduced by Gartner in 2014, "Bimodal IT" is a framework that classifies a company's IT systems into "Mode 1 [Systems of Record (SoR)]," which emphasizes reliability and stability, and "Mode 2 [Systems of Engagement (SoE)]," which emphasizes agility and non-routine processes, and applies different management methods to each. This concept has been adopted by many companies as a practical solution that balances the protection of existing assets with adaptation to the digital realm.

However, more than 10 years after its initial proposal, this operational model is showing signs of systemic fatigue. In many organizations, the distinction between Mode 1 (SoR) and Mode 2 (SoE) has become a justification for "system disconnection," hindering company-wide digital transformation (DX).

In today's business environment, achieving a more sophisticated customer experience (CX) and faster decision-making requires an environment where applications classified as Mode 2 can utilize data held by mission-critical system, core system classified as Mode 1 in real time. Nevertheless, the closed nature of Mode 1 systems, driven by an emphasis on stability, and the diversification of Mode 2 systems, driven by an emphasis on agility, are leading to data silos (fragmentation).

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Challenges of Mode 1 (SoR): "Isolation" of core data and stagnation of modernization

Confusing "stable operation" with "rigidity"

Mode 1 mission-critical system, core system, such as ERP, mainframes, and accounting systems, are the foundations for managing core data like financial information, customer master data, and inventory information. In the early stages of bimodal IT implementation, these areas were defined as "areas where change risks should be avoided." As a result, many companies have frozen modifications, and operations continue without connectivity to external systems.

This "no changes" operational policy contributed to the stable operation of the system, but it also led to data isolation. For example, even when introducing the latest analytical tools or e-commerce platforms, extracting data from mission-critical system, core system often requires significant effort and lead time, resulting in lost business opportunities.

The difficulty of a complete overhaul and realistic solutions

The modernization (migration) of aging Mode 1 systems is a pressing concern for many companies. However, a complete replacement using a big-bang approach requires massive investment and takes several years, and carries a high risk of project failure due to bloated requirements. Therefore, the current trend is shifting towards "effective utilization of existing assets." Rather than rebuilding the system itself, there is a need for an approach that makes data usable by providing connectivity with external systems.

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Challenges of Mode 2 (SoE): Expanding SaaS usage and the weakening of governance.

Data scattering due to suboptimal optimization

In Mode 2, the adoption of SaaS (CRM, SFA, MA, chat tools, etc.) led by business units has become commonplace. While this has improved operational efficiency, the fact that implementation has progressed without the involvement of the IT department has resulted in decentralized data management becoming the norm.

When each department manages customer information using separate tools, inconsistencies in information (such as duplicate entries or missed updates) occur, making it difficult to grasp accurate business data. It cannot be denied that the "speed-first" policy ultimately increases the effort required for data integration and reduces the overall productivity of the organization.

▼I want to know more about SaaS
⇒ SaaS (Software as a Service) | Glossary

Shadow IT and Security Risks

Furthermore, the problem of "personalization," where collaborative scripts and RPA created independently by on-site personnel become unmanageable due to personnel transfers or resignations, is also serious. Compliance risks are also increasing, such as confidential data being sent to external cloud services through channels where appropriate security policies are not applied. The "agility" in Mode 2 can become a threat to companies if not exercised under appropriate controls.

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iPaaS-based solutions: Implementing an integrated architecture

To address the aforementioned challenges of "Mode 1 isolation" and "Mode 2 decentralization," the adoption of iPaaS (Integration Platform as a Service) is progressing. iPaaS is a platform that handles application integration between on-premises and cloud environments, or between clouds, and functions as a "hub" in modern system configurations.

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⇒ iPaaS | Glossary

Strategy 1: Data release through API implementation in Mode 1

The biggest advantage of using iPaaS is the "API transformation" of legacy systems. By using the connectors provided by iPaaS, it becomes possible to directly connect to mission-critical system, core system and databases and expose that data externally as an API. This allows for the establishment of a secure path to access data from Mode 2 business applications without making significant modifications to mission-critical system, core system itself. Mode 1 evolves into an "open mission-critical system, core system" that responds immediately to external data requests while maintaining robustness.

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⇒ API | Glossary

Strategy 2: Establishing Federated Governance

In Mode 2, iPaaS provides a foundation that balances governance with development flexibility. The IT department centrally manages security policies, access permissions, and log monitoring settings on iPaaS. Under this management, standardized connection templates and data utilization flows are made available to business units. This allows the field to autonomously collaborate and develop within the "guardrails" (safety standards) set by the IT department. This management method, which ensures centralized governance while allowing autonomous use by each business unit in a distributed manner, is called "federated governance." This is an operational model that eliminates the bottleneck structure where the IT department undertakes all development and eliminates the risk of shadow IT.

Strategy 3: Transition to a Composable Enterprise

A composable enterprise refers to a corporate structure where business functions and systems are subdivided into "components (modules)" that can be flexibly reconfigured in response to changes. To achieve this, maintaining loose coupling (a state of high independence) between systems via iPaaS enhances the ability to adapt to future system changes.

If each application is interconnected via APIs (composable architecture), replacing a specific SaaS with another tool can be done simply by changing the connection settings on the iPaaS. Ensuring the ability to flexibly rearrange system configurations in response to changes in the business environment (composability) is directly linked to a company's sustainable competitive advantage.

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Conclusion: Transition from binary opposition to "integrated management"

In the past, discussions about bimodal IT centered on a binary choice: "stability or speed?" However, with the evolution of technology, especially the spread of iPaaS, this trade-off is gradually being resolved. Only when a highly automated governance foundation (control) exists can the field team maximize development speed without fear of risk.

What companies should focus on is not managing Mode 1 and Mode 2 separately, but logically integrating them using iPaaS.

• Effectively utilize Mode 1 assets through APIs.
• Visualize and control Mode 2 activities on the platform.

This shift to an integrated approach is the concrete system strategy that will drive DX from stagnation to growth. It's time to re-evaluate existing frameworks and consider investing in an architecture that allows data to flow seamlessly throughout the organization.

To successfully implement the system integrations discussed in this column, it is essential not only to introduce tools but also to establish a design and operational structure that considers the entire organization. Our company goes beyond simply providing data integration platform products; we support our clients at every phase, from architecture formulation and standardization to actual construction, in-house development support, and even post-implementation operation and maintenance. We offer comprehensive support for implementing the optimal data integration platform tailored to your company's challenges, so please feel free to contact us.

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The person who wrote the article

Affiliation: Data Integration Consulting Department, Solution Architect

K. F

In his previous job, he worked in sales and in-house system engineering at a financial institution. After joining Saison Technology, he worked as a pre-sales representative, supporting proposals and planning services related to data integration platform, while also promoting data utilization methods in the financial field. His hobbies are watching baseball games, visiting hot springs, and watching movies.
(Affiliations are as of the time of publication)

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