A platform-based business model is fundamental to any digital business strategy, as it drives the innovation model, creates an environment for collaboration, and enables ecosystem-value creation. It is incumbent on CIOs to lead delivery of the right platform business model and tools to support enterprise-wide transformation. This transformation includes rethinking the business model, technology infrastructure, and ecosystem.
CIOs play such a critical role in delivering the platform for their organization, in many cases they could be called the chief platform officer. This is particularly true because:
- The platform is based on technology infrastructure, is cross-organizational, and extends beyond enterprise boundaries. Usually, no one but the CIO understands the enterprise-wide technical systems and partnerships critical to successful platform leadership.
- Platform strategy requires close collaboration between the CIO, the IT team who will design and maintain the technology platform, and the LoB leads who will drive new revenue and cost savings using the platform.
- New revenues will be created out of IT-related elements like applications and micro-services, data as a service, and the digital tools that enable partners to create offerings leveraging the resources provided. These new revenues give the CIO fresh opportunities to claim a more strategic role in the C-suite as well.
Platform-based business models have existed for years, but today they are increasingly complex, fluid, and digital. Today platform-based businesses represent three out of the top five companies based on market cap and seven of the top 10 unicorns. These models are now beginning to move out of the startup realm and begin to penetrate industrial companies, such as Siemens, GE, Rockwell, and others, as a fundamental part of their business model.
There are two primary elements to the modern digital version: the actual underlying technology, which traditionally includes the core Platform-as-a-Service element, and then the overall multi-sided economic model, which includes platform, apps, marketplace, and even micro-services. The complexity for companies pursuing platform business models often resides more in the business elements than in the technology. Key considerations of a platform business are illustrated below.
Consider the following when starting to plan your platform strategy:
- Do you need to develop a platform model to address the requirements of your business ecosystem? How could it help create value for customers, partners, and your organization?
- How would the network value of your platform change in your digitally driven business model?
- How would the digitally driven business model benefit customers, suppliers, alliances, partners, and channels?
- What elements of the value network would you need to control so you can extract value for your organization?
- Which elements should various players in the ecosystem take? What do they each gain by doing so?
- How do you ensure that value for all participants can be easily created, exchanged, and scaled so the ecosystem becomes self-sustaining?
Because the platform ecosystem will include a wide range of players in a company ecosystem – customers, influencers, suppliers, and developers – the CIO must collaborate with LoB and other stakeholders to gain a strong understanding of what is required for the platform model to work. Armed with a clear vision and framework and a collaborative approach, the CIO can co-develop an innovative, winning platform business model.
To learn more about how leading organizations are leveraging platform business models to achieve success, please visit us at Digital Bridge Partners.