Thanks to the rise of the digital platform, anyone with an internet connection can become a bookseller, a self-employed jewellery-maker or a chauffeur. And any small to medium-sized business can tap into online solutions to help run their business, including collecting and storing human resources data for free.
The digital platform model — whether business-to-business, business-to-consumer, or consumer-to-consumer — is changing how people and organisations make money, either on their own or in partnership with others. For instance, the free online service described above makes money when customers use the services to choose a benefits provider. The company makes enough money on the hub-and-spoke business model to give the hub away for free.
Digital platforms combine process, people and technology in a value network that provides access to an extensive selection of products and services across markets. Digital platforms also create a multiplier effect, as they quickly increase demand for products and services and generate additional value for various users along with the platform’s owner.
Owning a platform is one way to generate value from new sources, but not the only one. Many organisations, especially those that are large or complex, pursue a hybrid approach. They own and join platforms, depending on the function and options available to them.
The digital platform as a launching pad
If an organisation does not already have a technology strategy and a digital platform agenda, it is time to start. The reason is clear: platforms will continue to reshape industries with interconnected ecosystems. That is the vision held by 81% of executives who participated in the 2015 Accenture Technology Vision survey.
According to the study, 84% of executives say they are using or exploring how they can use industry platforms and 39% of executives are using industry platforms to collaborate and integrate data and applications with digital partners. Furthermore, another 35% of executives are experimenting with industry platforms.
Executives in all parts of the organisation are most likely envisioning how platforms can help generate new products and services, forge new collaborations and drive better customer experiences. Consequently, technology executives may find themselves trying to hold back the flood of requests just long enough to get the right strategy, architecture and operating model in place – all while trying to maintain day-to-day technology operations.
That is the tension of multi-speed IT, which CIOs are trying to master as they position themselves as strategic partners who are driving growth. (The one piece of good news here is that for many enterprises, the processing power of legacy systems can complement the agility of digital applications but it requires proper management.)
The three-legged stool of the digital platform
While the CIO typically sits at the hub of the digital ecosystem, getting all of the wheels turning together demands focused attention from all areas of the organisation. Stakeholders from every key business unit should participate in the discussions that establish the strategy, architecture and operating model for organising technology, people and processes.
Digital platforms have the power to create or transform an organisation. Therefore, a good platform strategy will likely overlap with — if not drive — an overall business strategy. An effective platform strategy needs differentiation and agility, addressing key questions such as, what will set an organisation apart? How will the CIO adjust and evolve quickly in a world where fast followers are often left far behind?
Standardising business processes and simplifying the technology landscape should be a top priority, as platforms need to operate with utmost efficiency to achieve a sustainable cost to serve. An organisation may have several business platforms – sourced internally or externally (as a service) -– to cover its business functions. A unified architecture will ensure maximum value while minimising the trauma of having to manage across a disconnected environment.
One of the risks that comes with operating on an interconnected digital platform is tunnel vision. A high-level executive -– maybe even a Chief Integration Officer –- can sync up value creation opportunities that target the same consumers or producers. IT operations can then focus on engaging with the organisation and suppliers, integrating and brokering technology services, increasing commercial and sourcing capabilities, and innovating and developing new technology services.
A solid digital platform strategy combines hosting and participating to achieve agility, control and pacing – three hallmarks of a successful multispeed organisation. As both consumer expectations and industries shift from one-to-one transactions to composite experiences, the companies best placed to provide and participate will see a distinct advantage.
Miguel Custodio is a managing director in Accenture Strategy, Technology, and the author of Value Unchained Linking into the Network effect of digital platforms.