Business Platforms – an Eco-system of trusted and orchestrated B2B eco-systems
Multi-sided Business Platforms are a powerful mechanism for bringing together two or more interdependent enterprises. There have been a number of recent high profile instances of organizations pursuing Business Platforms based approach, and as a result gaining the upper hand over more traditional companies in the same arena, e.g. Airbnb versus Accor hotels. The incredible rise in market valuations of many of these so-called “platform natives” reflect the rapidly widening gap between them and their incumbent competitors that are driven by traditional asset leveraged models.
The digital revolution is causing organizations to rethink their strategies and capitalize on the alignment of their products and services to a business platform. Their journey typically starts with some kind of API exposure which brings the potential to monetize elements of the data on the platform. However, the resulting Single-Sided market only has a linear value chain which may not easily achieve economic critical mass. More exponential growth requires a network driven model.
The success of a network driven platform ecosystem comes from a fine balance of platform technical excellence, the simplicity of use and how well the associated business models are geared to provide business benefits to participants on both the supply and demand side.
Journey 2020, Atos’ future vision document, describes how we can expect to see rapidly increasing levels of collaboration and cooperation through Business Platforms. I can relate to this very well, based on my experiences working on a digital transformation assignment for a financial institution. Adopting a business platform strategy was one of the innovation levers we used to create "Innovation Value Webs" for the overall ecosystem.
During this transformation assignment, I looked at how a diversified vertical- financial lending company and white goods business could complement each other through the creation of a synergistic multi-sided market scenario.
Based on interactions with business leaders & their teams during the assignment, many debates & queries had to be addressed e.g:
- How can “Business Platforms" act as a catalyst for wider business model reinvention?
- Can diverse partners be brought together to provide further customer insights?
- How can the abundant sources of value be mined to provide the competitive advantage that businesses perceive in the platform economy?
- Can the customer get an early mover advantage in the platform world through service differentiation compared to other similar platforms?
- Can the data captured during business transactions be legitimately exchanged with others to catalyze a network effect and provide mutual value to all participants?
For more clarity let’s look at a Real-World synergy between two seemingly disparate business platforms, as depicted in the diagram below.
Figure 1: Use Case highlighting Purchase and Lending Function
On one hand, we have a business platform serving the After-sales Service business requirements of a major whitegoods manufacturing firm. On the other hand, we have a Business Platform serving the business purpose of a Major BFSI whose line of business is that of financing consumers who are wishing to buy white goods at retail outlets.
By combining the forces of these individual platforms, additional value can be derived by every stakeholder of these platforms and the linked ecosystem, including the most obvious common consumer … the customer
The Lending platform can verify in real-time the authenticity of a white goods product being considered for financing, by simply looking up serial number details available on the OEM’s platform. This will enable the lending platform to speed up the loan approval process, creating an improved customer and retailer experience. The simplified approvals process would provide the means of exposing usually elusive end-consumer data directly to the OEM. This consumer sales data typically flows to the OEM much later - usually during the first after-sales service call which is triggered by a failing appliance.
I shall be looking deeper into the technical and business dimension of the scenario above over a series of follow-up blogs. These blogs will focus on how Multi-Sided Business Platforms can be harnessed for enhanced business outcomes e.g.
- Reducing Customer Acquisition costs.
- Setting up trust between two platform providers.
- Addressing the issue of Multi-Homing of Platform data.