By Philip Lay, Senior Advisor, The Chasm Group LLC
Altogether now: Applications come first, platform comes second. Not the other way around!
In your marketing, on your website, or in front of customers, “platform” is practically a suicidal term until customers have shown that they care about what your product or service and the architecture behind it can do to help them solve at least one important, preferably urgent, business problem.
Once you’ve successfully deployed a solution to that problem, you can talk about how your platform enables them to solve another important problem or use case, and then another, and so on. As your customers see the versatility of your technology and services, it will dawn on them to ask about other problems that you may not yet have contemplated.
The more your technology can address multiple use cases, and the more widely adopted they are, the more permission you get to talk about the power and versatility of your platform.
What makes your company even more relevant to customers from then on is how your platform enables other companies to develop applications leveraging the benefits of your architecture. And if your platform an generate network effects, even better.
Salesforce and Amazon: Two Clear Cases in Point
I’m surely not the first person, nor will I be the last, to cite Salesforce and Amazon as exemplars of this application first, platform second mantra.
In B2B Salesforce blazed the trail for all other Saas companies because it began with sales force automation (SFA) as its first Saas offering. The problem it addressed was that companies were still unable to track and manage sales opportunities even after considerable investment in Siebel’s or Microsoft’s on-premise “solutions”. These client/server vendors, powerful as they became, had never cracked the code of truly securing the engagement of sales people and sales managers, and implementations were always painfully slow and kludgy.
Salesforce’s next application on top of its Force.com development platform was customer service. A little later marketing campaign management along. Both of these applications replaced client/server offerings that were costly and unwieldy to implement, and left much to be desired in terms of effective employee or customer engagement. Gradually Force.com emerged as a platform that enabled enterprise customers to develop their own customer business applications on top of their Salesforce-provided CRM systems. And in parallel, third-party software developers from Veevo and FinancialForce to hundreds of others who adapted their offerings to Force.com via APIs, all began to leverage the platform, which has now been re-branded as Lightning. All this time Salesforce continues to add applications to its suite running on Lightning.
In the B2C world, Amazon is the clearest exemplar that I know of having practiced the applications first, platform second strategy. What started out in 1995 as an e-commerce bookstore — single use case, solving the problem of browsing hundreds of books at a time, using reader reviews to choose what to buy, and then buying the book cheaply and quickly — over time turned into the Everything Store, as author Brad Stone referred to Amazon in his 2013 bestseller on Jeff Bezos’ business strategy. The online retail store was the application that solved the use case of allowing consumers to buy things online at lowest price and with rapid delivery.
Without much fanfare, Amazon had begun to market spare compute and storage capacity of its home-grown platform and infrastructure (data center) services in order to recoup costs in its massive ongoing operational investments. By this time, the platform and data center had been stress-tested by the enormous volumes of e-commerce transactions generated by the Everything Store. This enabled Amazon to sell its web infrastructure and platform services to companies of all sizes starting with tech startups. Because Amazon was the first large internet business to provide these services to third parties at hyperscale, it managed to charge the lowest price in the marketplace, and to continue to drive down prices relentlessly while fooling the market into believing that it was promoting a race to the bottom.
Little did most people (yours truly included) realize at the time — roughly between 2009–2015 — how profitable these services were. Now it is plain for everyone to see that AWS is the highly profitable cloud infrastructure gorilla powering Amazon’s newfound profit engine. In recent times Microsoft has been trying hard to challenge AWS mainly be converting its Office suite to run on Azure, but it is still far off from dislodging Amazon as the leader.
But I digress: once again the lesson here is applications first, platform second.
Critical Lesson for Platform Providers
My purpose here is not to imply that you should refrain from developing your own edge computing, e-commerce, content management, customer experience management, web analytics, cloud migration or machine learning platform as a key part of your offering. But it is imperative that you resist the temptation to emphasize the platform in your market development strategy and customer engagement activities until you have built market acceptance for your architecture and offering through one or more real-life iterations. This iteration should take the form of a problem-solving application tailored for a target set of customers.
So it’s no use staffing your organization merely with system architects and coders led by a technology-centric CEO and/or CTO; unless you have the good fortune of having ready-made application partners developing applications on your platform, or customers ready to do the same, you need to take on the responsibility of producing the first compelling iteration, if not the second and third. By all means, recruit early-market customers to partner with you and/or partner with third-party applications specialists, but it’s your responsibility to make sure the solution gets delivered successfully.
In strategic terms, your first job is to identify a compelling use case — preferably in the form of a broken business process that causes your target customers unacceptable levels of grief — and then to make sure the problem is fixed with as complete and repeatable a solution as possible. Do this for ten or fifteen customers, then find another critical use case to which your platform capabilities can be successfully applied, and keep going until you see customers and partners deferring to you as a potential platform on which they can base future investments.
Then you’ll know you’re on track to get the world to care about your platform.