APIs
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October 24, 2018

What is the Platformization? Learn how to Compete in the Age of Digital Platforms

Nicholas Gimenes
Leader of Growth & Product Marketing
Passionate about using technology and data to leverage digital strategies
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It is common to think of companies competing only through their own products and assets, following a linear sequence of activities. Nevertheless, platformization is the strategy used by the companies that grew the most over the last decade. Platform-based businesses have brought disruption and opportunities in almost every segment.

Every company exists within a business ecosystem, composed of known or unknown agents, such as customers, partners, suppliers, and regulators. Platform thinking focuses on the value of the ecosystem, seeking to facilitate and expand integration, orchestrate resources, compose services, and encourage co-creation among agents.

What is Platformization about?

Learn more about some of the concepts:

Business Ecosystem

It is the network of agents (people, companies, applications, and devices) where there is an exchange of information, products, services, and values.

Digital Platform

It is the basis of technologies that allow partners/customers to share data and processes, expand digital capabilities, and combine services and business models.

Platform-Based Business Model

It is a business model that promotes correspondence between suppliers and customers and/or facilitates the creation of goods/services in the ecosystem so that participants can capture value.

Platformization or Platform Thinking

It changes the focus of the business strategy:

  • To provide resources for the orchestration of resources.

  • From internal optimization to external interaction.

  • From the client’s value to the value of the ecosystem as a whole.

Platformization has gained momentum over the last decade following the expansion of broadband, which has enabled the connection between different business agents, and the IoT, which has promoted the construction of the most complex ecosystems that include people, things, and companies. The new analysis technologies also allow the processing of large amounts of data and obtaining of information from that complexity.

This technological base allows the monitoring of events and identification of patterns that present insights and orchestration of resources and trigger coordinated actions among the participants of the ecosystems.

By building a digital platform, companies can easily connect with partners and customers, share data, co-create products, abnd combine services. This sets the stage for innovation, opening opportunities for new business, increasing customer participation and profits with network effects.

“The new competition is no longer between independent companies, but rather between complex business ecosystems, which compete with one another to obtain the best customer service and lowest costs”

– Philip Kotler

Confirming this trend, platformization has been one of the main topics of the Gartner Symposium, one of the world’s leading technology and strategy events. At different times, analysts presented a technological model for platforms and platform-based business strategies.

According to Gartner, CIOs need to evolve their current IT environment to have a flexible, programmatic, event-driven digital platform with a service-based architecture (microservices), capable of supporting the integration of legacy systems with new technologies, dynamic offers, omnichannel experiences, and orchestrated actions in the ecosystem.

Technological Platform for Digital Business – Gartner image: Takeaways from Gartner Symposium: 5 Focus Areas for Your Digital Business Strategy

Among the possible arrangements of platform-based strategies, Gartner analysts identify 4 main types, not mutually exclusive and with different degrees of openness (internal, restricted and public APIs):

  • Collaboration platforms – which enable integrated and collaborative operation with ecosystem partners in new ways.
  • Orchestration platforms – which enable the orchestration of shared resources and processes among ecosystem partners.
  • Matching platforms – which facilitate the meeting of requesters and bidders.
  • Creation platforms – which partners to create their own apps, products/services, capabilities and business models on the platform.

Caterpillar is an interesting case from the industrial sector, usually associated with a more linear strategy instead of platforms. The company acts in more than one of these strategies, having participation in the following businesses:

  • CAT Connect: An IoT platform for dealers to manage their clients’ teams and be closer to them.
  • Uptake: A startup that uses algorithms to analyze mass data on IoT platforms and provide insights to avoid downtime in collaborators.
  • Yard Club: A startup that connects people who own equipment with those who wish to rent their idle equipment.

GE, in turn, has Predix, a platform that collects and analyzes industrial equipment data and PredixDeveloper Network, an open platform on which developers can offer their apps and algorithms for the analysis and optimization of processes in industries.In the book The Digital Platform Revolution, the authors identified the main examples of platforms and separated by industry, demonstrating that this strategy can be applied in different segments:

Technological Platform for Digital Business

The purpose of the technology platform is to allow a company to create value from business ecosystems. This requires the ability to provide resources such as data, algorithms, and processes to connect new partners and other ecosystems.

The most common approach to developing and offering platform services is to use APIs and service-oriented architectures. The modularity and standardization provided help reduce complexity, promote agility in the integration, and reuse of components.

Modules of Technological Platform for Digital Business – Gartner image: Takeaways from Gartner Symposium: 5 Focus Areas for Your Digital Business Strategy

APIs are enablers of Digital Platforms

APIs are more than just interfaces for the backend – they are key enablers of digital businesses. APIs make it possible to ensure the connection between internal services, client applications, analysis systems, cloud technologies, IoT devices, and external ecosystem partners in an agile and scalable way, in addition to applying control and security mechanisms.

Technology Platform for Digital Business – Gartner image : Takeaways from Gartner Symposium: 5 Focus Areas for Your Digital Business Strategy

In addition to the integration of internal systems and between partners of an ecosystem, APIs also make it possible to:

  • Distribute data/services through New Channels, by means of different interfaces and devices (IoT) or offer an omnichannel experience to users;
  • Conform data/services in New Products, expand existing offers or market APIs-as-Products with different forms of monetization, in addition to reducing the time to market;
  • Develop an event-driven New IT Architecture, based on microservices and mesh apps, to achieve greater agility, reuse, decoupling, flexibility, and responsiveness;
  • Explore New Business Models by combining resources and strategies, such as platformization;
  • Adopt New Technologies (e.g. AI) as services, integrating them with legacy systems;
  • Create Open Innovation initiatives, such as hackathons and co-creation projects with partners or startups

API Management Platform

A complete API platform has several tools to support the operation management and complexity of the APIs: API Gateway, Developers Portal, Analytics, Security, and Lifecycle.

The API Gateway Security module enables the processing of calls and application of security mechanisms. The Dev Portal facilitates the use of its APIs by the collaborating developers of your ecosystem, with easy access to documentation, test environment, and issue tracker. The Lifecycle module enables the processing of information such as the lifecycle of the APIs and versioning. In turn, the Analytics module presents aggregated metrics regarding the operation of the APIs.

Sensedia has a complete Full Lifecyle API Management solution in Latin America, as well as a consulting team to assist its clients in digital business strategies, IT architecture, Microservices, and API design.

The Sensedia API Platform facilitates the exposure, consumption and management of resources and data through APIs to enable integration with partners and customers, app creation for digital and IoT experiences, and open innovation strategies. It is the first Brazilian company to be featured in the Gartner Full Lifecycle API-Management Magic Quadrant and the Forrester Wave API Management Solutions.

How to explore the opportunities of Platformization?

You do not need to build everything at once. The digital business technology platform will be built over time as the digital business expands. To support business on the platform, it is necessary to seek to develop an agile IT scenario, based on services and with APIs for integration between legacy systems, new technologies, and ecosystem partners.

These APIs will need to be managed by an API Management Platform that provides governance mechanisms, security and support for the design of the APIs and for developer developers.

With an agile and scalable IT scenario that supports the platform, the success of this strategy encompasses three main factors:

  • Connection: how easily others can connect to the platform to share data and services. Apple provides developers with the underlying operating system and code libraries, YouTube provides hosting infrastructure for creators, and Wikipedia provides writers with the tools to collaborate on an article.
  • Gravity: how well the platform attracts participants, producers, and consumers. Platform builders should pay attention to the design of incentives, reputation systems, and pricing models.
  • Flow: how well the platform stimulates the flow of value and co-creation among the agents of the ecosystem.

Three Elements of a Successful Platform Strategy – HBR

Although the platform is not part of its strategy in the short term, it has an agile IT environment and is apt to be quickly integrated by ecosystem APIs, it is a key capacity for the competitiveness of your company in the era of digital platforms.

References about Plataformization


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