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FROM PIPE TO PLATFORMHOW TO DEVELOP A BUSINESS STRATEGY FOR CLOUD
DISRUPTION HAS SHAKEN UP THE MARKET PLACE
Disruptors haven’t just hit the industry;
the UK Government has actually
shown support towards the FinTech
businesses that are making it happen.
Harriett Baldwin, Economic Secretary
to the Treasury, stated that “The sector has
now grown from its disruptive roots into an
industry in its own right – generating £6.6b
in revenue in 2015. The UK Government is
committed to supporting the development
of the UK’s FinTech sector.”1
However, disruption doesn’t limit itself
to finance. IDC suggests that by 2018,
competitors using third-platform business
models will have intruded into and disrupted
50% of all industries.2
Even in disruption, there’s nothing new
under the sun. In her book “Technological
Revolutions and Financial Capital”, Carlota
Pérez explains that massive disruption has
kept happening over the last 250 years.
“When a transformational technology
appears, an explosion of energy can occur…
new businesses prosper…
[If companies can] refocus…,
enduring prosperity can occur.”3
Raise the topic of disruption, and there’s a fair chance that you’ll immediately start talking about the financial sector.
50%
50% of all industries will introduce disruptive tactics
The term disruption is often used without an exact definition.
Typically, it means a situation where a small company is able to take
on a market which comprises a number of established businesses.
The small company will typically have far fewer resources. But
that makes them more agile and flexible. It allows them to identify
and service market segments that incumbents are ignoring. Even
more appealingly, because of their size, they’re able to do so at an
attractive price. Once they’ve captured sufficient customers, the
newcomers will then typically expand. In these new areas, they’ll
deliver the same benefits – but this time to mainstream customers.
Typical examples of disruption
Stories from Instagram capitalised on a market already opened up by Snapchat
(who, too, have an offering named Stories). This recognised that people sometimes
want photos and news to be ephemeral. So they created a business platform that
for many people acts as a replacement for newspapers; it covers updates and
images that are immediately relevant to the user and their friends.4
Purple designed a new high-tech mattress. Instead of licensing it to manufacturers
or using retailers as a go-between, Purple decided to sell online, direct to the
consumer, with a 100 night trial offer. This removes most of the usual costs5 ;
meanwhile, competitors are now promoting a similar trial.6
Netflix founder Reed Hastings created the brand in direct response to being
charged a late fee for borrowing Apollo 13. It now dominates the film-by-mail model,
it also dominates the entertainment-streaming market as well.7
You need to be able to tackle the challenge – and do it rapidly.
WHAT DO WE MEAN BY DISRUPTION?
1 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/502995/UK_FinTech_-_On_the_cutting_edge_-_Full_Report.pdf 2 Worldwide Software Licensing and Pricing: Top Predictions 3 Referenced at http://www.forbes.com/sites/stevedenning/2014/06/24/understanding-disruption-insights-from-the-history-of-business/#76aa542b30e0 4 http://blog.instagram.com/post/148348940287/160802-stories 5 https://www.entrepreneur.com/article/273650 6 e.g. http://uk.tempur.com/shopping-with-us/100-night-trial.html 7 http://www.howtogeek.com/trivia/netflix-was-created-in-response-to-late-fees-incurred-from-the-rental-of-which-movie/
EVERY CHALLENGE MEANS THERE’S AN OPPORTUNITY.
Look around, and you will see platform
businesses such as Turo, Redbus and Lyft
moving people from A to B; Mahala offering
mobile payment; Upwork and WorkFusion
helping companies to collaborate in a virtual
online workplace. You’ll find online retail such as
Amazon, and online auctions via Compalcomics,
rubbing shoulders with social networking
companies such as LinkedIn.
In times of disruption, the best approach is to
fight fire with fire. A business platform could
be the most effective way for you to develop
and launch a new idea that will open up fresh
revenue streams. It could also help to improve
efficiency, reduce costs or maximise customers’
lifetime value.
What are the options?
For many years, business has run on pipe
strategies, where companies produce value and
issue it to customers. It’s a one-way process.
Traditional products come via a pipe model.
Manufacturing runs on pipe. So do TV and radio
(and cinema, for that matter). Education comes
from teachers to students. Platforms, however,
at a business level allow users and producers
to create and consume value. Meanwhile, at a
technological level, external developers extend
functionality using APIs.
Opportunity comes when you think differently
It’s not technology that makes business platform
models successful. It’s the radical new thinking
behind them. In the early days, there’s little
evidence to users that they’ll find anything of
long-term value. That’s when enterprises have to
be patient. Once the number of users reaches a
critical mass, they start to create value for each
other. Suddenly, everything changes and word
of mouth, postings, sharing and other elements
kick in to make the business flavour of
the month.
This, then, is where the relevance of prior
planning comes in. A platform needs building
with both producers and consumers in mind.
Take YouTube, for instance. There, tools for
content producers enable them to upload videos
to their heart’s content; tools for consumers help
them to find the videos they want to watch.
Without this foresight, the platform business
model will never achieve its objectives.8 But get
it right, and you’ll get more than you’ve ever got.
The small and the new have grown, and with the help of business
platforms and fresh ideas, they’re taking on the sector 100-pound gorillas.
8 http://platformed.info/why-business-models-fail-pipes-vs-platforms/
Think platform, not pipe
TV relies on a pipe model. For YouTube,
it’s platform.
Sothebys uses pipe. eBay relies on platform.
Encyclopaedia Britannica uses pipe.
Wikipedia is platform.
The future is clear. The future is platform
Mankind is one of the few creatures that recognises the importance of
exchange. We see it every time that we pay for an item in a shop. But we see
it in countless other ways: children sharing toys; people giving each other a
hug; people round a campfire telling stories; or even sharing experiences to
give guidance to each other.
A business platform isn’t a piece of technology. It’s a business model that
creates value. And it does so by using this natural human love of exchange
to enable interaction between two or more groups. At the same time, it
creates an ecosystem of people with a common goal or interest.
WHAT IS A BUSINESS PLATFORM?
In general terms, there are three types of platform.
Business platform. Enables companies to perform business level processes such as CRM or ERP.
Product innovation platform. Customers may not realise it, but they need new products.
A product innovation platform is where the creative juices pulse, improving existing
products and developing new ones.
Innovation platform. A basis for organisations to innovate. Yes, it could include new
products. It could just as easily include new business models, new service offerings,
and new ways of manufacturing, especially with an eye on IoT.
How technologies enable exchange
Previous models may have allowed WANs
or LANs. Nowadays, however, a platform
business model means using cloud. In the
new, hyperconnected world, exchange and
interaction for mutual benefit is easier than ever
before, with three transformative technologies –
social networking, mobile and cloud – driving it.
Cloud An infrastructure in which anyone, anywhere
can create content that anyone, anywhere
(governmental policies permitting) can access.
Social networks
Likeminded people can share interests,
views and news.
Mobile All of this can take place anywhere, any time.
Together, they’ve created a whole new
community of people ready and willing to
add and consume content, purchase goods
and services, and develop platform/disruptive
businesses. It’s reflected in the growth of the
“gig economy” and its characteristics:
• New markets
• More transparency and control for workers
• An increased number of commodity jobs
• New services for workers
9 cio_agenda_insights_2016.pdf 10 https://hbr.org/2013/01/three-elements-of-a-successful-platform 11 https://medium.com/switch-collective/the-platformization-of-work-is-a-boon-not-a-
bane-3c6d97dc1bc2#.6jmsm3abk 12 https://hbr.org/2013/01/three-elements-of-a-successful-platform 13 http://crowdsourcingweek.com/blog/reinvent-business-model-platform-thinking
-interview-sangeet-paul-choudary/ 14 https://hbr.org/2013/01/three-elements-of-a-successful-platform
Four ways of looking at platform thinking
1. Pure digital play eLance thrives in the
gig economy, allowing companies to
get things done without having to take
people on
2. Digital accelerators The Nike+
Accelerator is there to help companies
build on the Nike+ platform
3. From personal to universal McCormick
Foods’ FlavorPrint builds a data profile
of the kind of food you like and connects
you to other people with similar taste
profiles
4. Off-line platform thinking JC Penney
stores now include “boutiques” managed
by others. The company equates the
boutiques to apps and the store to the
user interface
TURNING CLOUD INTO YOUR WINNING HAND
Innovate Faster A cloud-based business platform model
simplifies, automates, and often cuts out a
number of the steps involved in getting an
application up and running. This means that
you can deploy your application much more
quickly in the first place, and amend it and
update it more easily as time passes and
your needs change.
Focus on what you want to do
Get rid of, or minimise the overheads involved in,
managing and controlling data and applications
by moving them to outsourced cloud. It frees
you up to spend more time looking at how
you can set your business apart from the
competition. It can also give you more choice
in how you want to use your headcount –
generalist or specialist? Ops or developer/coder?
Cut costs
Thinking “platform” means benefiting from
economies of scale. Instead of setting up
and maintaining a core stack and thousands
of applications, an outsourced platform is
significantly more cost-efficient.
Obtaining the best technology
With the right ecosystem, you will be able to
take advantage of technology from a specialist
and their regular involvement in tuning,
optimising, reconfiguring, load-balancing and
so on. The best technology not only allows your
business to benefit from better performance, it
can deliver a better customer experience as well.
Keep up to date
As your needs change or the marketplace
shifts its expectations, maintaining a fully
inhouse platform operation can be costly and
time consuming. Outsource it, and the latest
technology will be there for you when you
need it.
Minimise downtime
Outsourcing allows you to take advantage
of tools, technologies, and experience
designed to meet demanding service-level
agreements (SLAs).
Improve scalability
You can never be certain when you will need
to scale up or down. An outsourced business
platform gives you access to compute power,
data storage, connectivity and workload
capabilities. You’ll be able to cope, no matter
what comes your way.
But that’s not all. In addition to helping you to achieve these benefits, it also allows you to take on four specific challenges – and win.15
Cloud has combined effectively with trends such as the increasing use
of mobile devices and better connectivity to provide a viable adjunct
to platformisation. It helps to disrupt a number of business models and
change the world we live in. But there is so much more that it could
help you achieve.
15 https://www.engineyard.com/whitepapers/top-10-advantages-of-platform-as-a-service/
Whether you’re tightening up your processes
or adding something entirely new, it takes time
to specify, purchase, blueprint, set up and run
new IT-based capabilities. Of course, you could
ignore safety checks, risk assessment and
all of the other sensible precautions,
just to get your ideas up, on the road and
increasing profitability. But that would
be madness.
Alternatively, you could build your applications
on cloud platforms. In this case, all you need to
do is to request then begin running it. You can
start benefiting right away.
Benefit 1: Platformisation and
cloud enable faster deployment
of new business capabilities.16
Companies are faced with more agile and flexible entrants disrupting the industry
16 http://www.storm.ie/PublishingImages/Documents/Azure%20for%20Business%20Leaders.pdf
Client Instant Access, a US-headquartered provider of conferencing, dialling, and
messaging services, found their existing technology wasn’t agile enough. They were
missing out on global market opportunities.
So Tata Communications helped it be more agile.New services arrive in days, not months; more efficient working frees up staff; and not
only are calls now of premium quality, complaints from customers in Asia Pacific have
virtually disappeared.
Imagine you want to compete
CHALLENGE 1
“Our capacity to expand what we
have and add more systems to
handle a far greater number of
calls is simply amazing. That level
of flexibility is wonderful.”
Jose Chavez, Network Administrator,
Client Instant Access
CHALLENGE 2
Innovation is the essence of business platforms.
But there are risks. If you combine in-house
IT with cloud – as compliance, security,
proprietary software and other factors may
require – you face managing and operating
a hybrid/bi-modal IT environment. And that
could have an effect on security, visibility, QoS,
data storage and the ability of applications
to run. A model that uses only cloud – or one
whose design allows it specifically to handle a
hybrid environment – can make sure that you
avoid these issues.
The first time you move to a business platform,
you’re testing it out to see whether your
idea is viable. With cloud, you can make any
adjustments without massive investment or “rip
and replace”. In addition, cloud cuts costs and
is attributable to Opex, so it’s easier to create
a business case at the outset. You can also get
approval more rapidly without bypassing your
own internal processes.
Cloud platform service providers are also
expert on creating secure environments. After
all, it’s a core capability of theirs – and if it isn’t,
it should be.
Benefit 2: Platformisation
and cloud minimise risk.17
There’s a risk in business innovation
An anonymous group targeted UTI Asset Management’s web servers, compromising its
web services. Its traditional firewall and IPS systems proved ineffective.
So Tata Communications helped protect its business.Within two hours, a DDoS mitigation strategy had been developed and its web traffic was
going via two Tata Communications scrubbing farms. There’s now 24x7 monitoring with
automated mitigation and an automated alert of DDoS activity.
Imagine you want to be secure
17 http://www.storm.ie/PublishingImages/Documents/Azure%20for%20Business%20Leaders.pdf
All the world is a stage nowadays. Cloud’s
global reach allows you to reach your entire
potential audience with ease. If you are
running an application from your own data
centre, scaling up to meet a growing load can
be slow and painful. As we have already seen,
however, cloud can scale up – or down – easily
to meet changing circumstances.
Take, for example, a situation where a company
is selling tickets for a Kraftwerk concert.
The online ticket system at the Tate Modern
collapsed within minutes in 2013, due to the
overwhelming demand for tickets. However,
cloud can now easily cope with spikes in
demand by requesting additional resources
and then releasing them once the demand
has died down.
Benefit 3: Platformisation and cloud can quickly
give you global scale and global reach.18
Doing business globally is now essential. If you can’t achieve it, you will lose out.
18 http://www.storm.ie/PublishingImages/Documents/Azure%20for%20Business%20Leaders.pdf
Irish TV needed a connectivity partner to help launch its television offering in North
America and around the world.
So Tata Communications helped it do global business. 40 million Irish residents in the U.S., viewers from every county in Ireland and Irish
communities across the UK can now access exclusive local content.
Imagine you want to reach the world
CHALLENGE 3
Who has direct responsibility for IT spending?
IT decision makers, or the people that run the
business? In most businesses, it’s IT – yet it’s
business that makes the organisation profitable.
That’s why cloud offers a big benefit – a more
intelligent way of spending your budget.
Most of the time, IT budgets fall into one of
two categories:
1) the basic “lights-on” spending that keeps
the infrastructure running and keeps the
emails circulating
2) investment in new applications with
exciting new capabilities that the business
can tap into
But cloud platforms don’t require up-front
investments in servers and software. They base
their costs on a pay-as-you-go model. So IT
comes under Opex rather than Capex – and
you also receive a number of other benefits
which help you to be competitive without
significant investment.
1) You can see exactly what you’re being
charged for with your cloud platform.
2) You can adopt an “evergreen” approach to
your IT, rather than a costly big bang model.
3) The specialist IT experts are part of your
cloud service provider’s team, not yours
– your staff overheads instantly reduce.
Benefit 4: Platformisation and cloud help intelligent IT spending.19
It costs to be competitive.
19 http://www.storm.ie/PublishingImages/Documents/Azure%20for%20Business%20Leaders.pdf
Bearings manufacturer NRB wanted to keep control of costs and to retain management
of its services, even if they moved outside.
So Tata Communications helped it cut costs across the board. NRB used our fully managed hosting and storage solution to reduce costs and move
to an Opex model. It gave the bearings company real-time security monitoring and
management options – but at a fraction of the cost of alternatives – plus a dedicated
team at their disposal.
Imagine you want to get more from your budget
CHALLENGE 4
HOW TO BECOME A PLATFORM-BASED BUSINESS
At the risk of sounding removed, why reinvent the wheel when
you can make the most of components that others have built. The
services and the APIs you use to make them work, can be trusted
because they’ve been tried and tested – usually out there in the
field rather than in the safe confines of a laboratory. They should
also be scalable for vast numbers of concurrent users, and will
have been designed to allow continuous evolution.
Whatever you want to achieve, the chances are that someone,
somewhere has done the groundwork for you.
Twelve key things you should do
1. Avoid platform for platform’s sake
Work out why you need a business platform
in the first place.
2. Building up your CRM capabilities is your priority Platforms are where customers congregate,
and it’s this synergy that should be the focus of most
of your thinking.
3. Decide where the opportunities lie Sit down and talk it over with a cross-business
team of senior management colleagues. It’s the most
effective way to get a grip on business challenges and
see where you can take advantage of the gaps in the
business/market.
4. Strengthen your brand, don’t weaken it Work with key decision-makers to ensure that
new revenue opportunities or business models
fit in with your company’s core brand vision and
value proposition.
5. Decide on what good looks like Once you have assessed the gaps, work out how to
fill them and the measurable outcomes that you can
expect as a result.
6. Follow the KISS principle Keep It Simple, Stupid. Platform business models
create vast opportunities, but they shouldn’t
command vast budgets. Define a simple idea of how
an area/revenue of the business model will change,
put together a minimum viable product/solution
and test it amongst employees/customers. The old
concepts of agile and iterative should apply here more
than anywhere.
7. Feed it back into the board After you have come up with the idea and can
forecast the business benefit, share your findings
with the rest of the board and get early buy-in.
8. Put together an A-team Your idea won’t come to fruition on its own.
Pull a cross-departmental team together to create
a specific plan of action. Ensure that you’ve clearly
defined their roles and adjusted their KPIs accordingly,
with emphasis on the new platform’s success.
9. Be available Even with a following wind and the best will in the
world, the team will come up against obstacles.
That’s when they’ll need you there to steer them
safely home.
10. Be the champion The rest of the business needs to understand why
you’re doing this. Tell them. Along the way, make
sure that the relevant departments are helping you
with training materials, marketing the platform both
internally and externally, and measuring its success.
11. Build momentum Once you’ve launched the platform, you’ll see
opportunities for further changes in the business.
Build on your success so that you can speed up
your innovation when you need to.
20 Gartner CIO Agenda Insights 2016
Before you start on your enterprise business model, there are a few questions you should ask yourself. They could prevent you from unnecessary planning or exploration of the wrong areas. And even though cloud is an outstanding place for risk-free innovation, why take any chances?
How will the CIO’s role change – and are we ready for it? 21
As a platform begins to take shape, it will take on new IT components. Meanwhile, the CIO will take on new
roles and responsibilities as they move from IT services provider to business services enabler, resourcer and
champion. Is your business prepared for that shift – and are you?
Compete or partner? 22 In most sectors, there is only one real winner. So do you want to be that company – or would you rather
avoid the rat race and just be a partner in a platform approach?
Proprietary or open? 23 Most companies prefer to follow a roadmap based on their own proprietary approach so that they can
be certain of differentiation. But could an open approach and the use of Open APIs be where your real
differentiation lies?
Private or shared? 24 Many platforms consist of multiple participating companies. So who owns the data that suppliers capture? Is
it everyone, or just the capturing company and the platform owner?
Product service or outcome? 25 What do you plan to sell? Is it a product, a service – or an outcome?
21 http://searchcio.techtarget.com/feature/Platform-business-model-picks-up-steam-whats-the-CIO-role
22 http://searchcio.techtarget.com/news/4500250232/Five-platform-dichotomies-Challenges-of-a-platform-strategy
23 http://searchcio.techtarget.com/news/4500250232/Five-platform-dichotomies-Challenges-of-a-platform-strategy
24 http://searchcio.techtarget.com/news/4500250232/Five-platform-dichotomies-Challenges-of-a-platform-strategy
25 http://searchcio.techtarget.com/news/4500250232/Five-platform-dichotomies-Challenges-of-a-platform-strategy
THE FIVE QUESTIONS YOU NEED TO ASK
From network to cloud, IZO™ Platform offers proven performance plus true global reach. Together, we can help you take advantage of that.
We have a tried and tested approach to cloud, proven over numerous implementations. The whole of our process is based on commoditised IT and replicable and repeatable templates. As a result, you are able to adopt cloud faster and accelerate your enterprise cloud strategy.
HOW TATA COMMUNICATIONS CAN HELP TRANSFORM YOUR BUSINESS
Discover the Tata difference:
• 24% of the world’s internet routes
• 400 global network points of presence
• 710,000km of terrestrial and sub-sea fibre
(more than 17 times around the earth’s
equator)
• 7,600 petabytes of internet traffic travels
over Tata Communications’ internet
backbone each month
• The world’s largest public
Telepresence network
• The network annually carries 53 billion
minutes of international voice traffic
annually
• IZO™ Internet WAN reaches 70 countries,
700+ cities, over 1 million buildings, and
covers 85% of the world’s GDP
• Global agreements for faster on-boarding
and guaranteed performance to the
world’s leading cloud service providers
• Ethernet connectivity to Tata
Communications’ data centres and across
50 third party data centres globally
• Over 300 cloud storage professionals
provide 24/7/365 support to deliver
enterprise-grade SLAS, and up to 99.99%
platform availability
FIND OUT MORE ABOUT BUSINESS PLATFORMS IN THE CLOUD
Find out more
Tata Communications has developed the IZO Cloud Enablement Platform to help enterprises adopt clouds faster and accelerate digital transformation.
Read our brochure.
For more information, visit us at www.tatacommunications.com
© 2016 Tata Communications. All Rights Reserved. TATA COMMUNICATIONS and TATA are trademarks of Tata Sons Limited in certain countries.
FROM PIPE TO PLATFORM
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