Why Digital Platform Infrastructures Matter

Or how they can help companies to keep up with Uber & Co

Most industries are going through change as various factors are increasing innovation rate and promoting competition. That’s no news. Companies such as Uber, Amazon or Postmates have been raising the standard of service delivery, increasing pressure on others. In their specific sectors they each make service easy and extremely convenient for the customer establishing a new perceived normal. Consequently customers are expecting this new normal with more transparency, quicker responses and a high level of quality ideally in every part of their live.

Many companies are anticipating the magnitude of change and do have the ability to adapt due to the availability of extensive resources. Leaders within the digitization process are opening up by turning towards platform structures and collaborate within their sectors and business processes in order to stay competitive. Intelligent platform structures are used by companies to actively participate in modelling the future of their industry. However, some companies are lacking capabilities or simply missing out on opportunities due to risk aversion or because of “waking up too late”.

These businesses are often experiencing technology development as a fundamental challenge. Having mastered core capabilities in their sector over the course of their existence has lead them to the point where they misperceive the change that is happening. They are either naively viewing it as a new way of customer interaction or as further development of communication channels. Instead change should be perceived as the emergence of organizational processes and structures. Platform can play a major role in this game resulting in digitization of an industry with the say of many instead of one despotic player. Technology platforms are offering a way of collaboratively creating efficiencies and values for all participating parties. Thus, they are enabling a resource light model to kickstart initiatives to innovate business models and to rethink organisational processes.

So how start? The aim of integrating platform infrastructures should be to save resources while likewise creating new business opportunities - or at least adding additional value. Efficiencies are key. It is all about improving communication, dissolving knowledge asymmetries, connecting multiple entities, taking care of matchmaking and supporting non-core aspects such as outsourcing or automation. And thus, making service delivery simpler and better.

The transfer onto digital platform infrastructures makes sense, if:

  • core elements of processes are simplified for service partners and involved organisations
  • secondary, supporting process steps, which in itself do not add value, are taken care of by the platform, resulting in increased efficiencies or cost cuttings
  • new opportunities for resource monetisation are created
  • experiences of customers and service partners are the main focus and competitive advantages (e.g. data-driven development) justify an investment

At all times one needs to keep in mind that neither technology nor digitization in itself can deliver any relevant benefits. Only rethinking value creating processes such as the core of a business, administrative work, resource allocation AND their meaningful transfer onto a platform, creating the ability to interconnect, can deliver value.

So, yes. Platform infrastructures can create immense benefits — but only if a transfer makes sense. At all times customer experience should be at the center of attention. Customers will choose a specific company over another based on the (perceived) experience and expected value. Accordingly Gartner and HBR have recently argued that customer experience is key for future success and should be central for all areas of a business.

This applies to each and every company but even more so to those delivering a service. A service that goes beyond the simple delivery of products is hard to evaluate prior to receiving it. Thus trust, quality and transparency play a central role and can be delivered with the help of platforms. The platform can be established as a seal of quality adding security, building the foundation of satisfied customers. And research has already shown that this trust and perceived quality not only increases customer satisfaction and recurring sales but impacts the whole business in terms of costs and profitability.

As in other areas of business or even life itself: When not thinking “black or white”, one approaches a state where connecting own and outside resources might lead to a new paradigm of platform approach that will allow to make a customer experience great, a business model future proof and in the end more successful… data and experience will lead us there. Platforms will play an important role for companies delivering best customer experience. Some of today’s multi-billion dollar companies are showing one possible option and they will most definitely continue doing so. Other businesses need to rise up to the challenge and find ways to stay competitive — platform infrastructure can be one way to go.