The XPLUS Business Platform Team

Platform play

1. Introduction

The entrepreneurial mantra ‘Location, Location, Location’ still holds, yet nothing spells digital disruption like ‘Platform, Platform, Platform’. With the combination of data, mobile, cloud, and social digitalisation, a simple yet powerful concept emerged: the Platform Business Model. The essence is simple: open-air markets have existed since ancient times. Today digital capabilities allow anyone to buy and sell on digital platforms or even own the virtual market square. Business platforms typically link consumers and producers and bring value by reducing transaction costs and improving efficiency and effectiveness. Initially, big tech companies and large venture capital-driven organisations dominated the scene. Today we see that platform models are trickling down into all industries. Still, there remains a great deal of confusion and misunderstanding in the market, not the least because of the proliferation of the word platform: payment platforms, low-code platforms, analytical platforms … The list is nearly endless. Hence more and more organisations rely upon experienced architects to help untangle the knot.


This post offers initial guidelines for playing the two-sided business platform game. The three fundamental roles – consumer, producer, and platform – are considered.

Visual depiction of someone having to decide which role they want to take on.

2. Every Role Has its Challenges and Benefits

2.1 The Consumer Role

Everyone easily recognises the consumer role, continuously looking for the best possible product or service, conditions, price and quality before committing to a particular transaction. The consumer role typically counts many members influencing and stimulating each other on the platform, especially when bargains can be made. Note, however, that this variety is always constrained by the platform ecosystem and the connections it enables.


With new, innovative platforms on the rise, organisations frequently miss out on new opportunities because they need more visibility on the evolutions that concern them. It has become a challenge to stay on top of an ever-changing digital world, globally redefining roles at an accelerated rate. Market circumstances change, and business models are being reinvented.


And last but not least, internal IT platforms have to be open enough to enable connecting with a platform of choice.


Example: nShift is a platform that brings carriers and businesses shipping goods together. This platform offers comparison and handles tracking & tracing, and billing. This unburdening implies there is no longer a direct relationship between the business and the carrier. Consciousness about these changing dynamics is required.


So, actively monitor the market for opportunities and not be blinded by what a platform offers.

2.2 The Producer Role

The producer role comes into play as soon as transactions and interactions occur on the platform between distinct groups. A two-sided platform brings sellers and buyers together to transact. Once different types of providers fulfil the producer role, the term multi-sided platform is used. For example, a platform that intermediates advertisers, software developers, and business users. Here, the advertisers and developers assume the producer role.


Though it looks appealing to be a producer, many pitfalls are ahead! Some platform rules may claim commissions or exclusivity – no presence allowed on other competitive platforms – or affect an organisation’s pricing power. The presence of competitors on the same platform creates a higher level of transparency for elements like pricing and service levels. So, one needs to be prepared. A powerful platform management team covering diverse knowledge and skill sets is one of the key ingredients to success.


The producer role can be interpreted broadly. We consider platform contributors to be integrally part of it. When platform contributors become enablers, they may form a new group on the platform; a phenomenon referred to as ‘platform segmentation’. An overnight stay transacted on Airbnb’s platform can be enriched with a personalised photoshoot session. The professional photographer also takes on the producer role when enabled through the same platform.

2.3 The Platform Role

None of the above happens out of the blue. This is where the platform owner role comes in – it is fundamental for the platform’s existence. This role takes care of the platform foundations and acts as the ‘facilitator of exchange’; the owner does not interfere with every transaction or interaction on the platform but enables the capabilities whilst ‘protecting’ the predefined principles, policies, rules & guidelines of the platform. The platform owner only interferes when required.


Under the hood, there is a significant amount of hidden architectural complexity. The effort to build a robust and dynamic platform is often underestimated. It has been repeatedly proven that enabling a set of cloud services is far from sufficient to get off to a good start, let alone to operate it successfully and cope with internal and external changes.


Platforms can become very powerful, especially when the number of producers and consumers increases. Various techniques and platform design principles exist to accelerate ‘platform adoption. It is no coincidence that entrepreneurs, managers, and architects get excited about the ‘network effects’ platform ecosystems can bring, resulting in exponential value creation.


Sometimes platforms are so dominant in a particular market that it leads to a ‘winner-takes-all’ situation. Such platforms have started facing stronger regulations worldwide to curb their pow er. An example is Europe’s Digital Markets Act which will become applicable from May 2023 onwards.


To be successful in business, do you necessarily have to start your own platform? No! Participating in a platform ecosystem might be the better option.


Example: Payconiq is not a platform ecosystem but a strongly regulated single-sided platform. In the recent past, mobile payment enablement was a hot topic at various banks in the Benelux. Eventually, multiple banks decided to join forces and ‘subscribe’ to the ‘Payconiq platform’ rather than reinvent the wheel.

3. Moving Forward

Since the platform business model cannot be neglected, the pertinent question is how to play the platform game. The organisation’s digital strategy should provide the answer in combination with a thorough understanding of what is already available. The path to profitability, a core element of any business model, should not be an afterthought, and certainly not with platform ecosystems! A well-designed business model must balance the provision of value to consumers with the capture of value by the platform producers. Exponential value, perhaps, if the stars are in perfect alignment. But one should be well aware of the many potholes, pitfalls and landmines one might encounter along the way; it requires strong platform leadership, patience and expertise to succeed. Hundreds of platforms are being created without sufficient attention to the economics and the strategies that make them work.


Ultimately, any business model must rely on the basic foundation: value! The value of the platform is the value of the whole.


Authors: XPLUS Business Platform Team


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