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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

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FROM PIPE TO PLATFORM