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March 31, 2017updated 03 Apr 2017 4:50pm

The Platform Economy – Providing the Foundation for the Future Economy

Let the technology giants forge ahead with their platforms. For businesses, true genius lies in what they build upon these broad shoulders.

By James Nunns

Despite being arguably England’s greatest polymath, Sir Isaac Newton had a winning line in modesty. “If I have seen further,” he wrote to his friend and rival Robert Hooke, “it is by standing on the shoulders of Giants.”

This great scientist’s humility provides an important lesson for businesses today: that it is foolish, if not impossible, to strive for success without taking advantage of the platforms provided by previous technological advances – even those achieved by rival companies.

The Wright Brothers built their own engines, but they could not have made their first flight without the work of people such as Gottlieb Daimler and Karl Benz (among Mark Corley, Chief Technology Officer, Avanade UKothers). The first Industrial Revolution could never have happened without the pioneers of steam such as Thomas Newcomen and James Watt. And even today, Boeing and Airbus rely on Rolls-Royce and others to build their engines. The lesson is clear: to create something exciting and new, it usually makes more sense to build on an existing platform than it does to start from scratch.

As with most things, the platform economy is nothing new. Today’s platform economy is powered by a huge, borderless ecosystem of megascale datacentres, artificial intelligence and crazy amounts of automation. These technologies enable the insight, the agility, adaptability, the user experiences and more that is required for business success today. They are at a scale and complexity beyond the capability of any but a few companies to develop themselves.

Businesses must now prime themselves to become both providers and consumers on these emerging platforms. In many cases, this may require some counter-intuitive collaborations between rivals. One commonly cited example is Netflix, which hosts its streaming business on Amazon Web Services, even though its parent company has its own competing TV and film service. Another example is Salesforce using Microsoft Azure and integrating with Office 365 for collaboration, despite both competing in the SaaS CRM space.

To become digital leaders in the future (and as Accenture points out, every business today is a digital business), as well as increase market share and tap into new growth opportunities, businesses must embrace the platform economy and work out how they can harness platforms and collaborate with partners, and even competitors, to deliver innovative new services.

The technology standards that will power the platform economy of the future are being established right now, enshrined in services and digital marketplaces from the Apple App Store to Zylom. These ecosystems aren’t just making it easier for consumers to buy your goods: they are forcing businesses to change their operational and organisational models so that they can take advantage of this new co-operative framework.

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To do this effectively requires more than simply partnering with a technology provider. Businesses also need the agility and adaptability to take advantage of new platforms, and that often requires a transformation of the IT department.

But beyond partnerships and outsourcing, success in the platform economy depends on having the right skills to take advantage of these new ways of working, such as familiarity with APIs and API management, artificial intelligence, automation, and other relevant technologies; and then having the mindset and organisational model to take advantage of them.

We recently helped a utility company make this first step and create a platform that allowed their customers to consume and build on some of their data. We analysed an existing legacy system and found that over 90% of data being consumed was scraped from the website; this brittle way of consuming data and an unexpectedly large load (the data was more valuable than they expected) was causing issues for their customers and problems for the website’s availability.

We rebuilt the system, providing an improved API on dynamically scalable and highly-available platform, which enabled their customers to build their own applications on top of the platform.

The results were better than anyone expected. The system saw tenfold increase in volume – from 800,000 interactions per day (which was mostly webpages hits) to 8 million interactions per day, with not a second’s downtime during the whole period. This has encouraged the company to accelerate build-out of the platform and has led to their customers using the platform more strategically, strengthening their ties to the utility.

This is a great example of how businesses can marry their internal skills and strategy with a platform partner to deliver a raft of new digital services that will define them in the decade to come.

Let the technology giants forge ahead with their platforms. For businesses, true genius lies in what they build upon these broad shoulders.

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