Last October 25 senior business and IT executives gathered at the first CIONET UK discussion dinner in London to hear Dr Ben Eaton of the University of Surrey describe what is meant by ‘Company as a Platform’. Many around the table use the term ‘platform’ on a regular basis but few admit to a clear understanding of what the term means in today’s digital business environment. Of more importance is the fact that few at Board level fully comprehend what impact digital platforms may have on their own businesses.
Although the notion of a platform is decades old, as demonstrated by SWIFT in banking and SITA in travel, digital natives such as Amazon, Apple, Google and Facebook have used digital platforms to scale their products and services at record pace. Newer digital companies such as Salesforce, Workday, Uber and Airbnb have further exploited digital platforms to build entirely new business models.
Current developments such as the autonomous vehicle and smart city suggest that platforms and related eco-systems are helping to reshape our industrial and domestic landscapes. In this context incumbent organisations are questioning how they too might exploit platforms in their digital transformation journeys.
According to informed sources such as Gartner the definition of a digital platform is:
A platform is a product that serves or enables other products or services. Platforms (in the context of digital business) exist at many levels, from high level platforms that help define a business operating model to lower-level capabilities that businesses consume such as micro-services to deliver their own products and services.
To add more clarity and depth to this this much overused term, Dr Eaton presented two alternative views of what a platform might be in practice:
In many respects these digital platforms are becoming the core utilities of the emerging digital economy, enabling smaller, more agile organisations to scale and displace incumbents. The fact that WhatsApp, a three-year-old company with just 30 staff members, was sold to Facebook for $19B confirms this new reality.
Large incumbent organisations are facing growing disruption from digital giants and entrepreneurial newcomers. The focus of senior executives now is on agility and speed, whether this is in product innovation or customer fulfilment. Companies are seeking to emulate the digital giants by digitising supply chains and accelerating partner collaboration through open standards and APIs. The doomsday prospect of ‘winner takes all’ is creating shock waves as entire sectors begin to collapse – as we witness in the High Street and the Media sector.
Platforms are a necessary way of reducing friction within companies by facilitating processes that cross functional boundaries. Traditional ERP systems such as SAP and ORACLE have gone some way towards achieving this outcome but appear rigid and constrained within today’s constantly changing commercial context. Many organisations such Guardian Media Group have adopted an agile structure that is responding continuously to external forces.
In this context, digital platforms enable adaptive operating models based on small, agile product teams supported by micro-services. The platform provides the necessary resources and capabilities on which micro-services constantly evolve to suit external market conditions. This approach has underpinned the success of the digital natives such as Amazon and Google. It may well provide a blue print for large incumbent organisations.
Should your company make their own platform or buy? How will technology affect platform developments? And what should you tell your Board? These are some of the questions addressed in the full article available in our app exclusively for CIONET members. Join us there!