Platform businesses are revolutionizing industries, from disruptive startups to established corporations transitioning from traditional linear models—driving value through connecting the business, technology, and customers across the value chain.
A platform business model is a type of business model in which a company designs a digital platform that connects two or more groups of users in a way that creates value for all of them. Unlike traditional linear models, where value is created through product or service ownership, platform models thrive on facilitating connections and interactions among participants.
The transition to a platform business or delivery model promises efficiency gains, enhanced scalability, and greater agility. However, achieving these benefits requires meticulous planning and execution, especially technology infrastructure, data management, and organizational change. In this blog, we’ll explore the primary challenges encountered in this journey and dive into ways to get around those challenges.
The Top 3 Challenges and How to Face Them
There are several challenges that any organization may face when transforming to a platform/delivery business model. These include organizing people, enabling financial traceability, and creating change management. Let’s explore these challenges a bit more.
1. Organizing People, Not Just an Org Chart
Shifting to a platform model means reorganizing resources around critical functions rather than specific projects or domains. This shift can be disruptive, often leading to resistance from employees accustomed to the traditional organizational structure.
Comprehensive planning, strong operational routines around this work, seamless implementation strategies, and outcome-focused Agile execution are crucial to navigate this transition smoothly. Organizations must hone in on key functions, restructure teams around the value chain, and ensure that employees understand their roles and responsibilities within the new framework. Effective communication and transparent leadership are essential to garner support, create shared accountability, and minimize disruptions during this organizational restructuring.
2. Enabling End-to-End Financial Traceability
A key aspect of a successful platform delivery model is achieving visibility into the total cost of ownership. However, organizations often encounter challenges with fragmented financial tracking systems, delays in providing actuals, and reliance on historical data for forecasting. These obstacles can hold back an organization’s ability to accurately assess the financial impact of its initiatives and make informed decisions.
Consider investing in enhanced data management, automation, and reporting capabilities. By centralizing financial data, automating processes, and leveraging advanced analytics, organizations can establish transparency and traceability throughout the platform lifecycle. This enables informed decision-making, optimization of resources, and alignment with business objectives. Data is a critical element to success throughout this transformation and in BAU, so early planning and investment pay dividends in future state.
3. Building Change Management at Every Step of the Journey
Adopting a platform delivery model necessitates comprehensive change management across the organization from planning through BAU. This involves engaging stakeholders, communicating effectively, assessing impacts, and providing relevant training and resources to employees. The transition to a platform model impacts every aspect of the organization, from processes and workflows to culture and mindset. Neglecting the human aspect of change can lead to resistance, skepticism, and possibly the failure of the transformation initiative.
When your business prioritizes change management efforts, make sure that employees understand the rationale behind the change, feel empowered to embrace it, and receive the support they need to adapt to the new way of working. Effective change management fosters a culture of openness, collaboration, and continuous improvement, laying the foundation for successful platform transformation.
Enabling Technology and Data to Support Platform Transformation
With organizations now utilizing large portfolios of in-house and vendor applications, it is important to make sure you’re evaluating the right things when looking across your technology environment to optimize for a platform model. Here are a few solutions that businesses should look for while reviewing their technology stack:
- Access Insights with Data Management and Analytics: A robust enterprise data strategy and effective data management practices are critical for promoting visibility, accountability, and effective decision-making. Setting up data mappings, real-time reporting mechanisms, and analytics capabilities will help organizations gain visibility and drive decision-making with strategic insights.
- Utilize Standardized Tools: Implementing standardized tools for resource planning, financial management, prioritization, and project execution is a great way to streamline your ecosystem. While consolidation of tools may not be immediately necessary, careful planning, data mapping, and process optimization are required to ensure seamless integration. Success in standardizing tools lies in a deep understanding of how they are leveraged across the organization’s environment, optimizing processes, and fostering accountability for timely and accurate data.
- Enable Centralized Availability: Creating a common portal that is a one-stop shop for your organization’s tools, resources, reporting, and data will not only enhance the user experience but also accelerate the adoption and widespread use of enterprise technology resources.
Success through Data-Driven Decisioning
Enterprise data strategy and robust data management practices are foundational elements not only for transitioning to a platform business/delivery model but also for ensuring long-term adoption and success.
As highlighted above, data serves as the invisible string that connects every aspect of the platform ecosystem. Establishing a hierarchy—from strategy to outcomes to cross-functional programs—relies on well-established data mappings and the continuous production of near-real-time reporting. While a platform model facilitates traceability, its effectiveness hinges on the organization’s ability to derive insights, conduct analysis, and make informed decisions from the data it generates.
Overall, overcoming the challenges of transforming to a platform business/delivery model requires a holistic approach encompassing technology solutions, data management practices, and organizational change management. By investing in the right capabilities and leveraging data effectively, businesses can unlock the full potential of the platform model and drive sustainable growth in the digital era.
Ready to Transform Your Business for a Platform Operating/Delivery Model?
At Q2 Strategies, we are experts in helping businesses transform their business for a platform operating/delivery model. Ensure that your structure and talent are aligned with your overall business strategy and improve performance and efficiency by connecting with us today.