Platform companies have proved themselves some of the most dynamic and disruptive businesses to emerge in the digital era, and many of the world’s most forward-thinking corporate giants are learning from their example.
Global business leaders are increasingly integrating their core business functionalities with third parties and either creating new platforms or integrating with their partners’ platforms. This process is going far beyond an extension of traditional supply chains or old-school formalised partnerships. It is allowing progressive business technology leaders to transform these relationships into new digital ecosystems that can unlock future waves of strategic growth.
The new-style partnerships that organisations forge today herald a fundamental shift to new multidimensional ecosystems that are redefining industries. These partnership decisions will help determine future value chains that will transform their businesses, products and even the market itself.
This is a core argument of leading global professional services company Accenture in its Technology Vision 2017 report, Technology for People: The Era of the Intelligent Enterprise.
“The Platform Revolution is already here,” says Zahra Bahrololoumi, Accenture’s Managing Director, Accenture Technology UK and Ireland. “More than 70 percent of the most promising start-ups we see are platform companies and there will be more than 450 new industry platform operators created in the next few years. Platform companies such as Uber and Airbnb have completely broken the mould for how firms operate and compete by inventing business models that provide a single point to access multiple services.”
Bahrololoumi argues that having a platform strategy is now no longer enough. Organisations need to be developing a rich and robust portfolio of digital partners to form their business ecosystem, and they need to balance immediate business benefits with long-term potential in their calculations.
This requires bold thinking. General Motors, for example, invested $500 million in ride-share platform Lyft in 2016. The move opened a lucrative market for a Lyft driver to rent a car directly from GM. More significantly, it allowed GM to access Lyft’s platform and join a new digital transportation ecosystem, connecting a traditional car manufacturer with ride-sharing and autonomous vehicle market leaders.
Accenture’s report highlights other examples of new digital ecosystems, such as Pegasus, an East African mobile payments platform developed by mobile network operators, which gives citizens robust, secure purchasing power via mobile wallets.
It also uses network giant AT&T as an example of how ecosystems develop. Having seen a 150,000 percent increase in traffic on its mobile networks from 2007 to 2015, the company is anticipating an additional tenfold growth in network traffic by 2020, and is using OpenStack to cloud-enable and virtualize 75 percent of its network architecture.
“In the short term, this transition solves speed and agility issues and decreases cost. In the long term, AT&T now has a vested interest in the continued development and success of OpenStack’s open-source community. Today, AT&T is dedicating resources to make sure OpenStack’s technology keeps improving – building the product alongside an ecosystem of corporate partners like Intel, Hitachi and Comcast,” explains Bahrololoumi.
“These ecosystems of technology vendors are rapidly coalescing, and the entire C-Suite must understand that what may appear as an off-the-shelf or monthly subscription investment for a company is, in fact, a deep commitment to a network of current and future partners.”
Many in the C-Suite do get it. Accenture’s report found 27 percent of the 5,400 executives surveyed reported that digital ecosystems are already transforming the way their organisations deliver value. In addition, 75 percent agreed that competitive advantage will not be determined by their company alone, but by the strength of the partners and ecosystems they choose and build.
To help business technology leaders with their digital ecosystem initiatives Accenture suggests both a 100- and 365-day plans. The 100-day plan focuses on identifying how many internal and external platforms your company is using and eliminating unnecessary overlaps. It also recommends looking at your business through the lens of the biggest disruptions shaping your market, from inside and outside your industry.
The 365-day plan targets extending a significant portion of a core business function to a third-party platform or digital aggregator to help you build a bigger stake in an emerging ecosystem and bring its strengths into your organisation. It also advises using an existing partnership to pilot building your own ecosystem.
The potential benefits are enormous. “Those who begin to consciously and systematically develop these strategies will do far more collectively than they ever could alone, moving from improving their products to building themselves as leaders in a transforming market,” argues Bahrololoumi.