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TECHNOLOGY VISION 2016 – MALAYSIAN PERSPECTIVE


Platform Economy

Technology-driven business model innovation from the outside in

Introduction

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Late last year, a group of patients with Type 1 Diabetes began tracking their blood sugar levels, insulin doses, food intake, physical activity, mood, and stress levels on a healthcare app on their mobile devices.

The prototype, the first to be built on the Philips Healthcare digital platform, collects, integrates and analyses electronic medical records, personal health data, and information from connected consumer and medical devices like wireless glucose meters and activity monitors, and presents it on smartphones and tablets. Diabetes patients use this information to make up to 180 decisions each day to manage their disease. By also connecting patients to their health care providers, the platform allows continuous, collaborative care at home, potentially reducing health deterioration, hospital readmissions, and mortality.

While patients enjoy higher quality healthcare at lower costs, for Philips and its three cloud partners, the app is the tip of a very large iceberg. The healthcare giant’s goal is to use the platform business model to grow its market share across the continuum of healthcare needs, from healthy living, prevention and diagnosis, to treatment, recovery and home care—a market whose combined value exceeds US$100 billion.

Once the premise of tech and born-digital organisations like Google and Amazon, platform strategies are increasingly being adopted by digital leaders across industries. The attraction of this new, agile mode of operation is clear—by combining the capacities of multiple players in an ecosystem, companies can tap into resources they don’t need to own to open up new paths of growth. And the rewards are rich. The top 15 companies within the platform space have a staggering market capitalisation of US$2.6 trillion.

As cities become smart, healthcare becomes digital, and cars and homes become connected, businesses will need to be able to operate within these ecosystems. By 2018, IDC predicts that more than 50 percent of large companies—and more than 80 percent of companies with advanced digital transformation strategies—will create and/or partner with industry platforms.

Indeed, 81 percent of the 3,200 business and IT executives we surveyed for TechVision 2016 said that platform-based business models will be core to their growth strategy within three years.

Whether they own a platform or plug into ecosystems driven by other companies, what is clear is that every company must have a platform strategy and the know-how to operate it.

The Platform Economy in Malaysia

There is a good grasp of the platform economy in Malaysia, and many examples of companies either becoming platform providers or plugging in to existing platforms, which is evening out the playing field for businesses, big and small. iFlix, the ASEAN version of Netflix, for example, used the Amazon Web Services (AWS) platform to shorten time to market. Access to Amazon’s platform lowered a significant barrier to entry for iFlix, removing the need for substantial CAPEX investment in infrastructure and connectivity.

In Malaysia, the shift is still being led by Business-to-Consumer platforms like services marketplace kaodim.com and transport-on-demand provider Grab, as well as food delivery providers like Food Panda. Business-to-Business platforms lag behind, perhaps reflecting the lower scale of current B2B interactions.

Malaysia understands that being part of the global digital economy is essential if it is to become a developed country and remain competitive. This includes removing barriers to entry to allow for the growth of platform economies, which it has most noticeably done in the transport (Uber, Grab) and banking industries.

Case Studies

Crowdo

Regional FinTech Crowdo is one of the largest and fastest growing equity crowdfunding platforms in Southeast Asia. This community-driven online platform was officially launched in Malaysia in January this year, after it became the first country in Asia Pacific to legislate equity crowdfunding, and connects up and coming start-ups with the global community of investors. In its first fundraising offer in Malaysia in early March, its issuer, The Parenthood, achieved the largest equity crowdfunding offer to date in the region, raising close to US$665,000, and surpassing its target by 250 percent. There are close to 650,000 SMEs in Malaysia—97 percent of all businesses in the country—and equity crowdfunding is widely seen as a powerful enabler that will help start-ups grow and further develop their innovations.

Grab

First launched in 2012 as MyTeksi, Grab was a response to the lack of adequate and reliable public transport during peak hours. The smartphone booking and dispatch platform assigns nearby available cabs to commuters using mapping and location-sharing technology. In the four years it has been in business, the platform has grown to encompass not just taxis (GrabTaxi), but also private car services (GrabCar), motorcycle taxis (GrabBike), social carpooling (GrabHitch), and last mile delivery (GrabExpress). For customers, the app provides automated retries which minimises repeat bookings, and live driver tracking for a better customer experience. Drivers who are active on GrabTaxi’s platform, meanwhile, have seen their income increase by between 30 and 300 percent. The Malaysian e-hailing app has since been successfully launched in Singapore, Thailand, Vietnam, Indonesia and the Philippines.

HappyFresh

Launched in Kuala Lumpur in 2015, HappyFresh is a one-hour online grocery delivery service marketed as a way to save customers in large cities from getting stuck in debilitating traffic on the way to and from grocery stores. Consumers select their preferred supermarket/s on their mobile or web platform, then shop from a range of more than 40,000 items available across the different stores before selecting their delivery slot and making payment. Personal shoppers based at the different supermarkets take over from there, picking out the selected groceries which are then delivered by drivers on motorbikes fitted with insulated boxes. Meanwhile, customers are updated through in-app notifications on the progress of their order. An early mover in the food marketplace industry in Southeast Asia, HappyFresh successfully raised US$12 million in a series A funding round last September to expand its footprint across the region. Besides Malaysia, HappyFresh also operates in Indonesia (where it is headquartered), Thailand and Taiwan.

Key Takeaways

  • Driven by the new rules of business, platform business models represent the most profound disruptive change in the global macroeconomic environment since the Industrial Revolution

  • While tech and born-digital organisations have been dominating the digital economy with record high market caps, non-tech digital leaders across all industries are now developing platform strategies

  • The strategic use of technologies to create platform business models is driving unprecedented growth opportunities in the rapidly expanding digital economy

Connections

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