More and more companies are trying to become platform companies. Even if you are sure what that means and why it is important; how you get there still isn’t easy.
WHAT
While the term "platform" can have a broad range of meanings in just the technology market, the focus of this article is API-centric cloud platforms. These provide software functionality that enable other developers to build complementary technologies, products, or services.
These developers can be internal to your company, can be working for your customers, or can be part of a partner organization. They can build capabilities that interface to and impact the UX (user experience), business processes or workflows, underlying data, or infrastructure (such as IaaS providers like AWS).
WHAT
While the term "platform" can have a broad range of meanings in just the technology market, the focus of this article is API-centric cloud platforms. These provide software functionality that enable other developers to build complementary technologies, products, or services.
These developers can be internal to your company, can be working for your customers, or can be part of a partner organization. They can build capabilities that interface to and impact the UX (user experience), business processes or workflows, underlying data, or infrastructure (such as IaaS providers like AWS).
WHY
Platforms enable companies to create more value and even new business models by digitizing their services and connecting with other similarly enabled entities. For example you can connect with other platforms and/or different channels where your customers are consuming digital services: AWS, Salesforce, Uber, Square, Microsoft (O365), SAP, WeChat, Slack, etc.
These business models can include direct revenue from customers and partners of these externalized services. They can be based on an up-charge to the cost of your core products (for customers) or the volume of API calls. However ideally, especially for partners, it should be based on the value of the specific use cases that are enabled by using your APIs.
Yet what is often overlooked or at least undervalued is the indirect revenue impact of extending the overall value of your offering, as can it now be made up of both your products and services and the complementary products and services of your partners. This can lead to benefits such as a higher competitive barrier and a higher base cost of your core products.
A platform can also enable a variety of partners that can help you build your company: integration partners, supplier partners, product partners, strategic / consultant partners, etc. This platform partners ecosystem enables viral growth: the more APIs being exposed and the more data that is accessible leads to more paying partners creating more applications, integrations, and value; which leads to more customers using (and paying for) your platform and generating more data (and you externalizing more APIs); which leads to more paying partners creating more applications, integrations, and value …
Platforms enable companies to create more value and even new business models by digitizing their services and connecting with other similarly enabled entities. For example you can connect with other platforms and/or different channels where your customers are consuming digital services: AWS, Salesforce, Uber, Square, Microsoft (O365), SAP, WeChat, Slack, etc.
These business models can include direct revenue from customers and partners of these externalized services. They can be based on an up-charge to the cost of your core products (for customers) or the volume of API calls. However ideally, especially for partners, it should be based on the value of the specific use cases that are enabled by using your APIs.
Yet what is often overlooked or at least undervalued is the indirect revenue impact of extending the overall value of your offering, as can it now be made up of both your products and services and the complementary products and services of your partners. This can lead to benefits such as a higher competitive barrier and a higher base cost of your core products.
A platform can also enable a variety of partners that can help you build your company: integration partners, supplier partners, product partners, strategic / consultant partners, etc. This platform partners ecosystem enables viral growth: the more APIs being exposed and the more data that is accessible leads to more paying partners creating more applications, integrations, and value; which leads to more customers using (and paying for) your platform and generating more data (and you externalizing more APIs); which leads to more paying partners creating more applications, integrations, and value …
Platform and APIs can also lead to happier or at least more easily retained customers (leaving you may also mean leaving or at least changing how they interact with vendors from your partner ecosystem) and a lower cost and higher win rate for big prospects. The customization afforded in an on-premise world can be more easily replicated for SaaS when there is a platform. Instead of saying "no, that is not on our roadmap" to a big prospect who needs some specific capability; your answer can more likely be "yes, you can do that via our APIs, let's show you how or introduce you to a third party integrator." (This is certainly one of the few times you'd say "wow, the cloud is finally catching up to on-prem.")
Later technologies such as blockchain could usher in new era of api-driven business models as Joe Liebkind contends. However much like the same way that 25 years ago we couldn’t imagine the value and capabilities the web delivers today; we have little ability to understand how the proliferation of blockchain’s distributed, trusted, transactional capabilities will impact our economy.
HOW
Whether building from scratch or undertaking the long, difficult journey to transform current (often on-premise often monolith) software to being services and API based; it's going to be tough.
In short, you need to consider your platform business offering like any other business offering: what are the objectives or strategy, how are you going to design, build, test and deliver it, how will your customer use it, and how will you manage and maintain it throughout its lifecycle. (Themes emphasized by Carol Russell and Forrester’s Randy Heffner)
Another way to consider the business plan for an API or platform is the API Model Canvas (created by Manfred Bortenschlager based on the Lean Canvas).
Later technologies such as blockchain could usher in new era of api-driven business models as Joe Liebkind contends. However much like the same way that 25 years ago we couldn’t imagine the value and capabilities the web delivers today; we have little ability to understand how the proliferation of blockchain’s distributed, trusted, transactional capabilities will impact our economy.
HOW
Whether building from scratch or undertaking the long, difficult journey to transform current (often on-premise often monolith) software to being services and API based; it's going to be tough.
In short, you need to consider your platform business offering like any other business offering: what are the objectives or strategy, how are you going to design, build, test and deliver it, how will your customer use it, and how will you manage and maintain it throughout its lifecycle. (Themes emphasized by Carol Russell and Forrester’s Randy Heffner)
Another way to consider the business plan for an API or platform is the API Model Canvas (created by Manfred Bortenschlager based on the Lean Canvas).
The biggest mistake I have seen across a variety of companies is not to come to an agreement internally on what value the company wants to create from the platform. Is it direct revenue (often emphasized too much too soon), is it indirect revenue (expanding the offerings a customer can build or get from a platform-based ecosystem increases the possibility a customer will buy and not attrite) or is it the PR/marketing around becoming a platform company?
STRATEGY
Overall us product owners and GMs need to have an opinion on what the market wants; and consider how to build, buy, or partner our way towards that vision. However unfortunately many of us just think about what we can build next and even worse what is the next incremental improvement to what we have already built (10% faster, 10% less bugs).
Platform strategy can also be considered through the lens of developer experience. In an often quoted 2012 speech by John Musser at the O’Reilly Open Source Convention, he said that the
5 Keys to a Great API are
· Provide a valuable service
· Have a plan and a business model
· Make it simple and flexible
· It should be managed and measured
· Provide great developer support
STRATEGY
Overall us product owners and GMs need to have an opinion on what the market wants; and consider how to build, buy, or partner our way towards that vision. However unfortunately many of us just think about what we can build next and even worse what is the next incremental improvement to what we have already built (10% faster, 10% less bugs).
Platform strategy can also be considered through the lens of developer experience. In an often quoted 2012 speech by John Musser at the O’Reilly Open Source Convention, he said that the
5 Keys to a Great API are
· Provide a valuable service
· Have a plan and a business model
· Make it simple and flexible
· It should be managed and measured
· Provide great developer support
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