How innovation in Information Infrastructures affects all our lives. Q&A with Dr Constantinides
November 13, 2017
Last week, LUISS University hosted the 5th Innovation in Information Infrastructures (III) workshop, focused on transformation in digital infrastructures. This is where LUISS Open had a chance to have a Q&A with Panos Constantinides, Associate Professor in Information Systems at the Warwick Business School.
From the “shipping information pipeline” to the iOS in our mobile phones. What do we talk about when we talk about “information infrastructures”?
Information infrastructures such as national health information networks and global online social networks have always been understood as integrators of widely dispersed information systems. So, for instance a national health information network is the underlying IT infrastructure that makes possible connections between independent systems such as electronic patients’ records, laboratory systems, ward management systems and so on. So the infrastructure provides the backbone – through a set of standardized interfaces – for these systems to connect, communicate and share data within them. And there are different types of infrastructures, including industry-wide infrastructures, organization-wide infrastructures, and national and regional infrastructures. As your question suggests these information infrastructures are usually developed in a linear value chain with emphasis on internal control of resources, both human and technological.
In this workshop hosted by LUISS, we have explored the move from infrastructures to platforms, this is why we talk of “platformization of infrastructures”. The iOS system would be an example of a platform, because it sits on a higher layer of the Apple infrastructure but it allows different kinds of interactions between different stakeholders. In this case the iOS allows for interactions between both internal stakeholders, such as the user and the owner (Apple itself), but also external stakeholders, such as third party developers that want to develop Apps for users to use. And through those Apps, new business models are opened up for more interactions to take place. So the Apps are both peripheral components to the iOS but could also become platforms in themselves. Think of GoogleMaps for instance: it’s an App, but also a platform because it allows other actors like Booking.com or TripAdvisor to use it to list a number of products on that.
At the same time, we are also beginning to see the opposite happening: the infrastructuring of platforms. Take for example Alibaba. Alibaba is what you would call a digital first company, since it was born with no physical assets. What Alibaba was able to offer is a platform that enables different actors, buyers, sellers and other third parties including advertisers, software developers, cloud providers, etc., to interact on its platform and create value for one another. It has grown so much, however, that is increasingly taking over a number of businesses with physical assets with the recent example being banking. And of course you have others like Facebook and Amazon doing the same, with Amazon even buying physical stores. So, the platforms are becoming infrastructures in the reverse fashion that we have seen platforms emerging out of infrastructures.
In Europe, traditionally, we tend to think to “infrastructures” as something related to State intervention. That changes a lot with information infrastructures…
Historically most infrastructures were State-owned. There is a reason behind that: there was an understanding that by allowing a monopoly provider to provide infrastructure services, such as electricity or water, you were avoiding duplication of services by multiple actors but also standardising the product or the service and therefore achieving economies of scale. But of course when you have a State infrastructure that is failing to meet the demands of the population then you end up with a process of privatization of the infrastructure, as it happened in the United Kingdom with Margaret Thatcher in the 1980s. Private actors in that case were able to enter previously closed markets, bring in their resources and expertise, and build new business models. They started profiting from that and developing new kinds of services on top of their allocated part of the underlying infrastructure, sometimes transforming that into platforms. Look at, for example, how Virgin Trains have evolved to offer a number of services for their customers from on-board entertainment, to banking, mobile services and others. It is exactly what we were talking about earlier, the platformization of infrastructures.
Platform capitalism, according to some of its critics, comes along with forms of monopoly leverage in the market, for example monopoly on personal data by social networks…
We need to remember that these are private platforms that have their own business models, and obviously their objective is to make profits. Yes, they are open to any user but at the same time they need to have some control points in order to govern the interaction to their benefit. So, they would allow third parties to develop Apps, games and all sorts of things, and they would even buy different Apps – as Facebook did with Instagram in 2012 – because they bring different networks of users and if they tap into those they can scale up much faster and build new business models gaining even more profitability. But they have to control that to sustain their business model. Platformization, breaking infrastructures into many different components, allows different actors to take advantage of new business models. There is a balance to achieve here though: these actors need to allow the network to grow, but at the same time not to grow too much in order to keep control of it.
The issue of the management of personal data on these platforms is a big one and I wouldn’t be able to do it justice here. However, I will say this. We are living in an increasingly digitized world. We can choose not to participate to protect our privacy, but in doing so, we risk becoming marginalised and excluded from the value creation interactions that are taking place on those platforms. My view is that we should not avoid platforms but rather become more careful in self-managing our data.
What are the main “innovation” trends that scholars like you are more closely watching when it comes to information infrastructures?
First, it is important to understand the ways in which innovation kicks in this digital world. Today innovation takes place from the demand-side, as opposed to the supply-side as was the case in the past with linear value chains. Citizens and users are demanding for new services and products that would allow them to improve their lifestyle, their access to relevant information and their communication with their peers. That demand is generating new digital innovations. This is in contrast to the closed innovation process that takes place in internal R&D departments. Innovation is now more open and diffused and as such more demanding but also more generative in nature. Digital innovation, then, is one of the key issues for theoretical developments in our field.
The second issue is governance. How do you govern these expanding interactions? How do you govern issues like “fake news” that are produced exactly on the demand for more news? Digitalization is a good thing because we are increasingly using tools and devices to enable a better and easier life. At the same time we need to govern these interactions so that they do not end up in a situation like fake news challenging governments and institutions. This governance needs to be established through both new policy developments, but also community-based agreements for managing shared resources. This again is a big shift from past research on governance, since what we are dealing with now is primarily community interactions based on changing technological and organizational structures. What works today may not work tomorrow depending on both the platformization of infrastructures and the infrastructuring of platforms.