Becoming a platform is not a decision that a business should take lightly, but it is one that provides many benefits.
Ross Garrett, Chief Product Officer at Cloud Elements, discussed these benefits and more at SaaS Connect.
If your business is considering turning to a platform model, here is what you should know.
Why is becoming a platform important?
It’s no secret that software and APIs are becoming more prevalent. That said, integration still needs to be made easier.
This is where platforms come in. Becoming a platform allows other businesses to connect with you, building products and services on top of what you offer. This creates even more value for customers.
In this model, the platform:
- Offers greater utility.
- Empowers users.
- Makes your product more accessible.
Furthermore, platforms create a multi-sided business model. In addition to delivering service from the core product, other companies are allowed to provide services, as well. This connects the company with a wider audience via the network effect.
What are the superpowers of the network economy?
When a business’ platform creates a new network, it injects the entire business ecosystem with some key benefits, as outlined in Garrett’s presentation:
- Magnetism. Networked companies are able to detect, organize and expose very small units of value. Their competitive advantage is to deal efficiently with billions of small transactions and to capture value created outside their walls.
- Infinite scale. Networked companies use highly scalable software and services to achieve near-zero cost delivery. They can grow indefinitely in revenue with minimal impact on costs. Their competitive advantage is speed of scale and profitability.
- Real-time feedback. Networked companies use real-time data feedback to instantly optimize market fit and improve products’ value. Their competitive advantage is first mover time-to-market.
- Intimate connections. Networked companies use customer knowledge to fine-tune and personalize the experiences they deliver to each customer. Their competitive advantage is customer engagement and loyalty.
How does a business capture those network benefits?
Businesses looking to become a platform need to learn to be flexible. Platforms are made to adapt to user needs and enable new types of users. In other words, it becomes about more than technology.
Also, platforms need to be long-lived. They cannot be static. If you’re attempting to transition into a platform, try to deliver ongoing value, and make sure that integration is still possible as the technology changes.
Integration with a platform needs to be easy. If it’s difficult to do business with you, people will move on quickly.
Finally, make sure to reward growth in your platform. This will ensure your position in the marketplace will last.