From Products to Platforms: Building a Sustainable Business Model

 

Digital platforms are the foundation of some of the world's most valuable corporations, including Amazon, Facebook, and Google. According to 2017 MIT Sloan research, 60% to 70% of unicorns were platform businesses. What distinguishes platform-based enterprises and makes them successful in a competitive environment? They provide distinct value by establishing a comprehensive ecosystem through which businesses may serve their customers. The platform is transformed into a critical enabler of business objectives.

Amazon has evolved from an e-commerce site to a platform where third-party vendors can sell a variety of things. It has evolved into a critical enabler of digital commerce strategy for enterprises of all sizes.

Facebook has gone beyond its identity of a social networking platform. It provides APIs and tools to third-party developers, allowing them to create apps that connect with Facebook's fundamental marketing, advertising, and support services. It has evolved into an essential communication and discovery platform for businesses and their target audiences.

CRM solutions, ITSM solutions, and other platforms are playing significant enabling roles in the enterprise. Platform-based ISVs, as opposed to previous ISVs that concentrated on certain domains or functions, now build entire ecosystems that include marketplaces, integration points, and various capabilities. Platforms create a competitive advantage as well as additional revenue streams.

However, shifting from product-centric to platform-centric approaches is difficult. ISVs have implementation issues when selecting architectures to serve changing business needs, whereas corporations suffer adaption challenges due to operational and technical changes, as well as functional limits for cloud-based architecture or other infrastructure adoption. This also means moving from a linear business model to something new to enable interactions with the changing market.

Product owners and VPs of Engineering should prioritize the following components to guarantee effective platform service rollout through software development and smooth adaption to create a sustainable platform business model.

Important Factors to Consider When Converting Products to Platforms

1. Architecture: Engineers should use a microservices architecture while designing platforms. This method enables them to deconstruct apps into modular components that execute certain functions. It offers autonomous services that may be upgraded and scaled independently of the rest of the platform. Furthermore, because APIs are used as the cornerstone of platform interconnectivity, microservices architecture is an appropriate solution. For effective platform management, engineers choose cloud service capabilities in either public cloud, hybrid or private cloud over on-premise options.

2. Scalability: It is critical to scale a platform to offer the platform as a service (PaaS) to handle growing user numbers and new applications. Engineers can focus on growing individual applications without affecting the performance of others when using platform-based systems. A Service-Oriented Architecture (SOA) is advised to promote seamless scalability and manageability. This strategy enables the platform and its apps to efficiently address a wide range of user requests.

3. Delivery: The fundamental purpose of a platform is to provide end-users with great experiences and value. Engineers must prioritize smooth delivery because platforms are made up of distributed apps. Adopting DevOps methods can aid in the continual evolution of platforms. Engineers may promote innovation, enhance productivity, and minimize time-to-market by implementing continuous testing, integration, and deployment. DevOps provides faster delivery by allowing engineers to build and improve the platform.

4. API Integrations: When developing platforms, ISV engineers must consider APIs first. They must decide whether to keep APIs private or open them up to third-party developers. This decision is influenced by security and privacy concerns. One method is to introduce APIs as private, properly evaluate them, and then progressively release them to selected ecosystem partners to offer a secure software. Before making APIs publicly available, this process ensures that security safeguards are in place.

5. Security: Platform security is critical for building trust among end users, especially given the presence of other applications on the platform. It is critical to have implementation security through a centralized architecture for a stronger security control. It reduces the need for distinct security mechanisms across many layers and systems inside the environment, hence reducing complexity. To improve platform security, after consulting with a seasoned security architect, consider DevSecOps approaches, compliance-as-a-service solutions, and scalable threat response mechanisms. It is critical to take proactive actions to reduce security threats to sensitive data, maintain compliance, and establish long-term trust with users.

6. Design: In order to attract and maintain customers, ISVs must concentrate on creating user-friendly platforms. Platform thinking, which involves going beyond particular product features and considering the total user experience, should be adopted by designers. Interaction design concepts should be considered, especially for platforms with omnichannel capability. It is critical to maintain consistency in navigation patterns across devices and screen sizes. Designers should move their focus away from creating individual pages or screens and toward designing for the complete platform. This involves ensuring that the design of their applications and third-party apps is consistent with the requirements of the firm. Creating detailed design guidelines for all applications aids in the maintenance of a consistent user experience.

Conclusion: By adopting the platform model, ISVs can act as platform companies to fulfill the rising digital customer expectations, promote innovation, and broaden their offers beyond traditional products or services. Working with technology specialists can aid in the creation of exceptional platforms that contribute to the success of the business model and growth with paas offerings. ISVs may establish effective platforms that provide value to both end-users and enterprises by carefully considering architecture, scalability, delivery, API integrations, security, and design and break the boundaries of traditional business.