Why the urgency?
Platform business models account for a big chunk of the digital economy, and the top public platform companies already represent several trillion dollars in market capitalization. Platforms also have become key to growth. Executives in our research said platforms can help them create new ways of engaging with customers and reimagine customer experiences; launch products as a service; and even develop entirely new business models that can open up significant new revenue streams.
And there’s much more to come.
Platforms’ scale and reach will only grow in the coming years, becoming even more fundamental to how companies and industries operate. Soon we’ll see architectures develop around key horizontal elements, with vertical specializations—for example, smart parking, connected insurance, or fleet management enhancements. Not long after that, semi-autonomous features will arrive on the scene, as machine-to-machine connectivity and analytics become more embedded in platform features and mixed reality capabilities will enable a new class of products that merge the physical and digital worlds. Eventually, the platform will become the core of all self-governing activities, as strong ecosystem integration driven by artificial intelligence and associated technologies will enable frictionless actions.
The fact is, virtually every industry has been, or will be, affected by platform economics. Companies that don’t get moving soon run the risk of being left behind those that have already defined a core digital platform strategy and have put critical tools in place to capitalize on it.
So where do they go from here?
First, they need to define their platform strategy—i.e., pick where and how they play—to determine how platforms best fit their business, whether that’s participating in or orchestrating the value exchanges in a market connected via a digital platform. As they do so, they need to think critically about what role they can most effectively play, now and in the future, and which ecosystems are worth participating in and which aren’t.
Next, they should define a handful of use cases that support that strategy and identify specific services and implementation patterns common across those use cases. These common services and patterns, in turn, are the starting point for determining the best approach to developing their digital platforms (buy it, build it, or partner with an external party).
Importantly, as all companies build out their platform, they need to keep in mind the four core tenets of a successful platform: extensibility, flexibility, scalability, and technology openness. These are critical to building digital solutions that can evolve and expand rapidly and accommodate unknown future requirements—something all companies will need to compete and grow in the future.
And, the good news is that all companies in our research are ready to ramp up what they spend on platforms.