Following the Money Beat: Cost-efficiency and ROI of a Monolithic vs Composable Architecture

"Money, money, money, must be funny, in the rich man’s world.”

Back in 1976, our favorite Swedes sang this iconic refrain that reminds us that money makes the world go around. The song’s lyric reflects the universal desire for financial security and encourages people to take control of their financial situations.

But money and financial decisions are not just a personal matter; they also play a vital role in the corporate world. Making the right financial moves for businesses can be the difference between doing well and just getting by. Nowadays, one of the most critical financial decisions a company must make is selecting its technology, particularly the kind of system it uses to create better customer experiences.

Businesses develop digital platforms to create, manage, and deliver consistent digital experiences for their customers, essential not just for making people happy, but for building customer loyalty, boosting brand recognition, and driving long-term success. The decision between using a monolithic or a composable architecture can significantly impact company's operations, expenses, and return on investment (ROI).

What is a monolithic system?

Monolithic systems represent the old-school way of making software, where all components function as a single, colossal piece of code. Once software giants, monolithic systems are like the dinosaurs of tech - big bosses in their time but now considered outdated because they struggle to adapt to change. But why?

In a monolithic setup, all software parts are tightly bound within one codebase. This means that all the features for creating and managing digital experiences are integrated into a single, all-in-one platform.

Let's take a closer look at the good and not-so-good aspects of the monolithic system, because, as the saying goes, everything has its upsides and downsides.

Pros:

User-friendly and easy to set up: Monolithic systems are very simple and easy to get up and running because they come as a single package. Customers can relax without the need to figure out how to integrate various components or how to deal with intricate setups.

A complete set of features: Monolithic systems provide a variety of functions all in one place. This can be a plus for customers who want an all-in-one solution, saving them from buying and combining many separate apps. However, it's worth noting that not everything you're offered is always something you need or will use; but it’s there if you need it.

Simplified integration: Because all the parts are closely connected in a the system, integrating them is less complicated. This can save time and effort when implementing and managing the software. However, it's important to note that in some cases, vendors may simply assemble existing tools, and their integration might not be very sophisticated at times.

Cons:

Limited flexibility: Monolithic systems are not very flexible and often fall short of accommodating a business's evolving needs. Customization options are also quite limited to what the platform provides and adding new features or components can be difficult, as it often requires significant changes to the entire system.

Exclusive vendor dependency: Monolithic systems are typically supplied by a single vendor, which makes businesses dependent on them for everything, from updates to support. This can limit their ability to switch to alternative solutions if the vendor's support becomes inefficient or if the vendor goes out of business.

Scalability and performance issues: Scaling is hard too. If one part of your application gets super popular, you need to scale up the whole thing, and that can get pretty expensive because your app is so large. Plus, the size of monolithic systems also poses challenges because when you combine multiple components into one large application, it tends to get too big. After all, you have only one place to stuff all the features and even the best-designed application can turn into a giant mess when it reaches a certain size.

What is a composable system?

We’d like to start with a well-known example that sheds light on how a small coding error in a monolithic system can have significant consequences for your company.

Imagine you're on the Netflix developer team, working on your code, and you accidentally forget a tiny semicolon. That tiny mistake caused a huge disaster, taking down Netflix for hours back in 2008 - we wouldn't want to be the ones who forgot that tiny semicolon. Anyway, guess what? At the time, Netflix relied on a monolithic architecture.

If a single missing semicolon had the power to bring down an entire backend system, it was clear that something had to change. And indeed, that's precisely what Netflix decided to do in 2012, shifting to composable systems.

Composable architecture refers to an approach in software and web development that involves creating systems, applications, or websites by using distinct and unconnected components or modules. These components are designed to operate independently but can be combined or "composed" to form more complex functionalities. Think of it as using LEGO blocks where each component is like a specific LEGO piece. Just as you can mix and match LEGO pieces, a composable architecture let you combine components to create customized applications or systems. Once again, let's examine the advantages and disadvantages of this scenario.

Pros:

Flexibility: Composable systems allow customers to easily mix and match components as necessary, creating a customized environment. With lots of customization options, companies can choose and fit together the components that work best for their content management needs.

Vendor Independence: With composable systems, customers have the freedom to pick and choose components from various vendors to create a customized digital platform. This flexibility means they aren't stuck with a single supplier and can select the components that suit their needs from different sources. This choice can lead to cost savings, better performance, and a more customized solution, making it a clear pro of composable systems.

Scalability: Composable digital platforms are also highly scalable and adaptable because you can add or change components as your needs evolve or grow. This means customers can easily adjust their resources to match changing requirements.

Cons:

Complexity: Setting up and running composable solutions can be quite challenging. Composable systems typically include a mix of components from various vendors, and this diversity can create compatibility issues. Customers may need specialized knowledge and skills to effectively manage these systems.

Challenging integration: Bringing together diverse components from different vendors, each with its own requirements, can be demanding. It requires careful planning and technical know-how to ensure these components work together smoothly.

Learning curve: Getting accustomed to a composable system can be time-consuming and resource-intensive, potentially leading to reduced productivity. Additionally, the company might have to allocate a budget for training, resulting in extra costs. It's essential to consider these factors when evaluating a composable system.

The analysis of cost efficiency and ROI between monolithic and composable architectures

Now, let's shift our focus to finances.

Monolithic architectures may seem cost-effective initially due to their simplicity, but long-term expenses for maintenance, upgrades, and scaling can add up. Their limited adaptability may result in a lower Return on Investment (ROI). I mean, if businesses can’t quickly adapt to shifting markets and changing customer expectations, how can they survive? So, companies locked with monolithic systems might struggle to reach customers promptly due to slower time to market. It’s much like running a race in slow motion.

On the other hand, composable architectures may require a higher initial investment due to their modular nature. However, their flexibility and scalability can lead to cost savings in the long run. With a modular approach, you invest only in the features you need, avoiding unnecessary expenses. They also allow cost-efficient scaling, where you invest in new capabilities as required, aligning costs with real business needs. Composable systems can react swiftly to customer demands, reducing time-to-market and saving money by jumping on opportunities in the market right away.

Let’s crunch some numbers in the real worlds

According to Salesforce's 2022 report, 77% of businesses using a composable architecture, found that it made them more agile. This agility allowed them to make quick changes and improve conversion rates.

A Gartner survey of CIOs found that high-composability companies expected bigger revenue growth, around 7.7% on average. On the other hand, companies with low composability expected smaller growth, only around 3.4%. Gartner's research also predicts that companies using a composable approach will be 80% faster at implementing new features by 2023, giving them a competitive edge. That’s why big names like Netflix, Amazon, Nike, Walmart, and Toyota have all embraced composable systems to meet their changing needs and serve diverse customer bases.

Monika Sinha, research vice president at Gartner, points out that “businesses run on technology and this technology itself must be composable to run composable businesses”. Composable systems bring different pieces together to effectively build and expand business capabilities and experiences. This is more efficient than scaling up an entire old-school application, which can be expensive and lead to unnecessary costs.

How does a headless CMS position itself in the composable architecture?

Headless CMS plays a key part in a composable architecture, and its role is becoming increasingly vital for companies. Organizations have already made substantial investments in headless CMS, and many are poised to continue doing so. According to the "State of Commerce" report from Salesforce, 80% of companies without headless architecture plan to adopt it within the next two years.

With these big investments, it's crucial for headless solutions to live up to their promise of providing faster, more powerful digital experiences and smoother workflows. After all, when you spend more, you expect to get more in return. Achieving this elevated ROI is only possible with a well-designed, efficient headless solution like Prepr. Prepr is a headless CMS that includes personalization features. It fits perfectly into your composable setup, helping you create unique customer experiences and boost your conversions like never before. The advantages of headless CMS extend beyond tech teams and benefit the entire business, from marketers to editors.

Therefore, despite the initial need for more integrations in a composable architecture, you need to keep in mind that the return on that investment will be higher. Plus, as the saying goes, "No risk, no reward!” In the spirit of our opening song, know that by investing in a composable system, you'll "win a fortune in a game, and your life will never be the same." Will be better.