No walled gardens in B2B platforms

Paul Hobcraft and I have noted throughout our writings on platforms and ecosystems the key differences between companies that interact primarily with consumers (B2C) and companies that interact primarily with other corporations (B2B). This difference is especially important when we begin to think about platform dominance.

You see, Facebook interacts primarily, almost exclusively, with customers (B2C) as such it’s platform serves to provide almost the entire interaction between Facebook and its customers. We could almost return to the days of old, when AOL was your conduit to the internet, when we talked about “walled gardens”, because that’s what many of the pure play B2C platforms are – walled gardens, meant to provide as much of the platform as possible. Their goal is “stickiness”, attracting you and keeping you plugged into their platform, consuming their content.

On the other hand, industrial companies are definitely as engaged in platform development, but their solutions require more than one platform.For example, most large corporations have an Enterprise Resource Planning (ERP) platform, SAP or some other selection, that operates a lot of the financials and back office. While customers and consumers don’t frequently interact with this platform, the company could not exist without it. Further, there are other platforms that industrial companies must use or integrate with to offer a complete solution.

There are customer-facing applications that become platforms, and shared solutions that many in an industry agree to use to facilitate exchange between companies. The banking systems and financial transactions create another platform, because it is far too cumbersome to submit paper orders and invoices and to settle up on a case by case basis.

Finally there are robust, technical platforms (GE’s Predix is an example) that manage the mundane but important integration and automation of machines and sensors. Industrial, B2B companies and industries may wish for the control of a “walled garden”, but none of them on their own can create the breadth and depth of platforms necessary to accomplish all of the important tasks and do so seamlessly.

The company that could…

The company to watch in this scenario is Amazon. While Google, Facebook, Apple and others are building platforms and ecosystems, these are primarily B2C focused and these companies hope to manage the lion’s share of the platform and dictate the ecosystems. This gives them a lot of power and means that they don’t have to integrate to other platforms – often the only other platform or capability is a financial transaction platform. However the vast majority of their customers are consumers in the B2C space.

Facebook, Apple and Google aren’t building robust integrations to other businesses, which simplifies their lives. Amazon is building skills to straddle the B2B and B2C gulf.

Amazon clearly has a powerful B2C platform, where many of us acquire goods online every day. However, Amazon through its AWS cloud capability offers platform capability to larger corporations, and as it becomes better at data analytics, it could become a player in the B2B platform world. Even so it will still need to be able to share and exchange data with other key industrial B2B platforms.

What does this mean for B2B platforms?

The stark truth of platforms and ecosystems for B2B companies is that there will never be one dominant platform that everyone accepts and leverages. In fact there will almost always be several segmented platforms in any company or industry. This means there is real value in being a platform bridge or connector.

When you see the advance of Mulesoft – a virtual API bank in the cloud, and think about how Cisco is trying to position itself you can see where real value lies – in connecting these segmented platforms and helping a company or industry bridge the 3 or 4 platforms they must use to create a total solution. Bridging between platforms means moving information between a financial platform and an ERP solution, or moving sensor data to a data analytics engine. These platforms weren’t built for the same purposes and don’t share the same data formats.

For a seamless experience for customers and business partners, data and information must flow effectively from one platform to another.

Three conclusions about B2B platforms

Thus one of the real opportunities in this world of platforms and ecosystems is the ability to connect these disparate and segmented platforms quickly and efficiently. Mulesoft has come from nowhere very quickly with an interesting solution to solve this problem. In the past firms like SAP preferred a “walled garden” making it difficult to integrate with the data that SAP managed, but increasingly SAP and other ERP vendors are recognizing that several platforms must be integrated to provide a total holistic capability for corporations to succeed.

This also means that competitors within an industry are relying on “off the shelf” software like ERP, standard banking and financial transactions, their own internal systems and platforms and other platforms to ensure efficient operations and provide seamless experiences for customers.Increasingly these platforms will no longer be locally optimized but must optimize for the entirety of the value chain or customer experience.

In other words, platforms must be governed holistically rather than by functions or siloes within the company. Increasingly this will mean business process level or even cross-industry standards for data exchange and data analytics.

The final analysis (for now)

In the final analysis it becomes clear that even firms and industries that haven’t exchanged information will be forced to work together in a highly efficient network. A good example is the autonomous car.

The autonomous car relies on a number of different platforms and engages an entire ecosystem, but many of these companies (all B2B) and governments rarely interacted with each other. Sensor companies, software companies, the automobile manufacturers, mapping companies, big data companies and local and federal agencies must all work together, combining their platforms and relying on a host of ecosystem partners in order to make the autonomous car work seamlessly.

There’s no possibility of a “walled garden” approach when people’s lives are at stake. Increasingly we’ll see a lot more interaction between industries and platforms that may not have recognized or even acknowledged each other previously.

image credit: youtube.com

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Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes, and capabilities. Jeffrey is the author of Relentless Innovation and the blog Innovate on Purpose. Follow him @ovoinnovation