[WSO2 Summit New York 2018] Earn Your Place In The Platform Economy

© 2018 FORRESTER. REPRODUCTION PROHIBITED.
Earn Your Place in the Platform
Economy – The Business Perspective
Ted Schadler, VP & Principal Analyst, co-author of The
Mobile Mind Shift
September 2018

2© 2018 FORRESTER. REPRODUCTION PROHIBITED.
Agenda
›How to build a platform business – the business perspective
›Integrate forward to solve your customers’ problem
›How to talk to your business stakeholders

A: Reach them everywhere on their preferred
devices and platforms with my services.
Q: How do we serve consumers when they spend
their waking hours on their devices and platforms?

Source: Amazon
Amazon didn’t start
out as a platform
business that
disrupted retail.

1995
Amazon started with a killer
app for booklovers.
Booklovers loved it.

2000
Amazon opened up manual
interfaces to let rare
booksellers sell their books
through its killer app.

2002
Amazon got API religion:
“Anybody who doesn’t
[make everything available
externally via an API] will be
fired.”

2002 to 2013
Many platform value steps
(and missteps) came next:
more retailers, categories,
Amazon Prime, and stuff.

2014
Retailers woke up and
found that Amazon had
reshaped the economics
and strategy of retail with a
platform business.

2018
Amazon now takes in $0.44 of
every US dollar spent online.
Retail is a platform economy.

These companies didn’t start out as platform
businesses, either

We interviewed 33 founders
and executives of platform
businesses.
We incorporated the ideas,
research, and feedback of
14 Forrester colleagues.
“Embed your
service.”
“Balance and rebalance
the value equation.”
“Get the commercial model
and pricing metric right.”
“ecosystem”
“Integrate
forward.”
“Start with a killer app,
not an API.”
“Data is a whitepaper first
and billable service second.”

Most of it is a myth, and
it’s a terrible recipe
for building one.
Forget everything you
know about platform
businesses.

Myth No. 1
Every platform business
is a marketplace.

Reality:
Every platform
business starts with
a killer app. Some
earn marketplace
status.
Number of
customers
and suppliers
Application One-sided
platform
Multisided
platform
Marketplace
1
5
2
4
3

Myth No. 2
There are only two or
three platform business
models.

Reality:
There are as many
platform business
models as there
are actual business
models.

Myth No. 3
Platform economies are
always winner-takes-all.

Reality:
In most industries,
platform businesses
will fight for share in
different parts of the
value chain.

Myth No. 4
If you build a platform,
developers and customers will
come.

Reality:
Every day you must earn the trust and
investment of customers and developers by
solving their immediate problems.

Alibaba Cloud, Amazon Web Services, Google
Cloud Platform, Microsoft Azure, and
eventually perhaps one or two others.
Infrastructure platforms provide core
technology capabilities at Internet scale
and capacity.
Industry and domain platforms provide
major distribution, production, or supply
chain capabilities.
Specialty platforms provide a niche
business capability.
Airbnb, Amazon Retail, Dropbox, Netflix,
Paypal, Uber, Salesforce, Stripe, SupplyOn,
Uber, and eventually 100s of others.
Cake, Coord, DoorDash, GE Predix, IBM
Watson, Labviva, Otonomo, Philips, Swift Shift,
and eventually 1,000s of others.

Agenda

A platform business makes money from services . . .

A platform business makes money from services
delivered via apps and APIs . . .

delivered via apps and APIs on a scalable technical
foundation . . .

foundation that customers and suppliers can integrate
into their operations . . .

into their operations, incorporate into their offerings . . .

into their operations, incorporate into their offerings, and
extend through their contributions.

Your platform business blueprint
1. Integrate forward to embed services into your customer’s world.
2. Maintain a clearheaded commitment to commercialize services
via APIs.
3. Embrace the stepwise approach pioneered by the software
industry.

1. Seek to embed your
service in your
customer’s
business or life via
a killer app, not an
API.
Number of
customers
and suppliers
Application
1

2. Stimulate growth
by bringing in
suppliers with
“relationship-base
d” APIs.
Number of
customers
and suppliers
platform
1 2

3. Strive for a
tipping point that
comes only with
standard APIs
that hit a sweet
spot for
suppliers or
customers.
Number of
customers
and suppliers
platform
3
1 2

4. Accelerate
growth by
helping suppliers
become partners
that extend the
value of your
platform with
their offerings.
Number of
customers
and suppliers
platform
Multisided
platform
1
4
2
3

5. If you are lucky,
you can earn the
right to be a
marketplace
platform for your
industry or
domain.
Number of
customers
and suppliers
platform
Multisided
platform
Marketplace
1
5
2
4
3

Which platform business should you build?

Start where you
already have a path
to reach and serve
customers.
How much does it
differentiate you?
Your co-
innovation
partnering
challenge
How much do existing customers value it?
Your
outsourcing
mandate
Your platform
business
sweet spot

Platform-enable your
differentiated
capability to reach
and serve new
markets and
segments.
Your
untapped
opportunity
to find new
customers
How much does it
differentiate you?
Your co-
innovation
partnering
challenge
How much do existing customers value it?
Your
outsourcing
mandate
Your platform
business
sweet spot

Agenda

When talking to your business . . .
›Engage product owners early and bring your business awareness
›Demonstrate how Agile works – they probably aren’t ready for that
›Ask how they plan to take the API to market. Pricing? Sales?
Service? Volume?
›Be willing to consider API extensions through customer
co-development
›Separate internal microservices development from customer-facing
API gateways

A business checklist
›Customer?
›Scalable technical foundation?
›Standard API definitions?
›Pricing model?
›Security model?
›Go-to-market strategy?

[WSO2 Summit New York 2018] Earn Your Place In The Platform Economy

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[WSO2 Summit New York 2018] Earn Your Place In The Platform Economy