I just went through the post from Spendmatters.com « Why Platforms are needed to accelerate Procurement agility« ; if I am sharing the author’s point of view, I would even go beyond: More than just bringing agility, Digital Platforms are going to revolution B2B interactions and Procurement, even more violently than in B2C. Now, what strikes me the most is why the « Platform concept » didn’t explode yet in B2B and Procurement while Marketplaces and e-hubs emerged already 15 years ago, in Y2K?
What are Digital Platforms
It is certainly important to start by getting on the same page about what Digital Platforms are. Platform and Digital are such buzz words, they are used by everyone for everything. Let’s talk about real ones, like Facebook, Blablacar, Airb&b or Uber just to mention well-known ones, and leverage Sangeet Paul Choudary perspective. He is the founder of « Platform thinking labs« , He is a guru on that field.
For any Platform, the end-game is the same : enable real time, repeatable and optimized interactions with a network of participants. All platforms have also have a similar set of characteristics, which implies a very specific operating model (not the purpose of this post):
- Users/participants are consumers and also producers – example: in Instagram publishing and viewing pictures
- Content/Data is the fuel, the black gold! – Example: Linkedin, collecting year on year more and more data, and expanding an ecosystem far beyond connecting resumes
- Content Producers are external users, it’s a ‘crowd production’ ; they don’t belong ONLY to the Platform – Amazon is offering products from other distributors to get an unbeatable offer,
- Value comes from the number of interactions between users; The bigger the network is, the bigger is the value – Example: Tripadvisor became a leader thanks to the network of users publishing comments and rating on their site,
- Bots (small Apps to exploit big data) are enabled to provide unique added value (real time reporting, process automation or data consolidation) – example: Skyscanner on Facebook enabling you to chat with a robot and ask for flights schedules,
- It’s a Plug and play infrastructure ; no need of heavy (or any) investment from users; no need of long IT implementation or complex integration – example: Salesforce
Key challenges for Digital Platforms in B2B
Most of the platforms mentioned here are from the B2C world which has always been on the forefront. However, due to their characteristics, platforms are not aligned with current B2B model beyond the traditional Marketplace Model like Alibaba which arise more than 10 years ago running a platform that doesn’t sell anything but connects B2B buyers and sellers.
Digital Platforms cannot easily integrate the current global B2B landscape because they imply a shift in the way we do day to day business and overcoming 3 big barriers:
- Sharing company data with your competitive whole ecosystem to enable commoditisation, efficiencies, cost reduction, better collaboration and predictive and highly valuable insights
- Successful example: Healthcare, on its way, probably because not to much competitive. In the last years, healthcare service providers, pharmaceutical companies and medical device manufacturers have started to embrace these new technologies by collecting large amounts of health but also routine enterprise data. The opportunities that big data offer to the healthcare industry are countless. Big data has the power to transform it into a performance and real evidence driven industry for for the benefit of the society as a whole.
- Giving the power to a third-party (or take it) to orchestrating your interactions between the industry stakeholders and partnersIllustration: orchestrating a whole Ecosystem and providing a central access point to all participants – can you do it alone?
- Innovating with the crowd to meet users’ expectation at right speed – Successful example: Meyercord from Salesforce doesn’t rely solely on his IT team to innovate and add value to clients. He’s encouraged the team to do side projects like hackathons; tapped into Salesforce’s AppExchange and the 3,000 independent software vendors and opened up the field for the 20,000 Salesforce employees to design apps using App Cloud! Since people spend 90 percent of their time on smartphones using apps rather than browsers, developing better mobile apps is the surest way to reach eyes and serve customers and employees. App Cloud, Meyercord says, streamlines the app process so that time to market “is just ridiculously short,” going from months to weeks or even days. App Cloud handles the platform so that users can spend the time innovating.
It’s clearly not easy to get there, but Platforms are generating such an unparalleled value for users, at such an unbeatable pace for such little money, they will arise everywhere and revolution B2B.
What about Procurement
With regards to Procurement, there are a couple of initiatives in the direction of Digital Platform but not so many actually and still in early stage. I would mention 2 I am or have been close to:
- Ariba/SAP with the promise of a Global Supplier Network. An excellent idea tap into the platform concept: The platform provides a user-friendly interface that will seem intuitive for anyone who shops online. Like eBay or Amazon, Ariba supports both sellers and buyers. The platform provides sellers with the ability to manage catalogs, bids, purchases and invoices and it provides buyers with the ability to search for suppliers, negotiate savings, procure goods and services and track spend. Unlike consumer marketplaces, however, Ariba has additional features to help processing RFQs, RFPs, RFOs, compliance and other business concerns.
- Accenture Procurement BPO. When a company is leveraging Accenture Procurement BPO services, its procurement data (assuming company agreement) are ‘aggregated’ with other participating customers but in a way no-one can identify where the information comes from. This capability enables participants to access unique inter-company insights: price/rates/hour/cycle times benchmarks (sourcing, contracting), supplier risk and performance analytics, cost modeling structure, standard RFP template per category, market analysis.
Problem is that in both cases above,we can’t talk about Digital Platforms. None of the 2 examples are managed, organised, operating and focused with the right objective: Ariba is still in the IT business and Accenture in selling services. Remember, being a Platform is about enabling interactions with an ecosystem, a totally different ball-game.That’s the point missing: Shifting from a linear-process driven mindset to collaborative & community led interactions.
You know what : It’s a only a matter of years.