Category Archives: Cloud Enablement

Study: What are Business Platforms and why they represent the future of outsourcing

HfS Research, an outsourcing industry research firm, recently published a new study that reports continued rising interest in “Business Platform” approaches to business process outsourcing (BPO).   The actual report in PDF format can be found via a link at the bottom of this article:  “What are Business Platforms and why they represent the future of outsourcing‘”

The article and the report contain some excellent insights into the development of this approach to business process outsourcing, a phenomenon HfS defines — for the outsourcing domain/empirical context — as follows:  “Business Platforms, enabled by the fusion of Cloud Computing, SaaS and BPO innovations in an integrated singular managed service, are emerging rapidly as the desired “one-to-many” utility service provision for providers and a new source of value for outsourcing buyers. ”  This HfS definition of the approach emphasizes a drive toward efficient process standardization through IT and other mechanisms, but does not emphasize properties of aggregation and network effects (which I think can often be present in such models).

In the past, these approaches have sometimes been referred to as “Platform BPO.”  In my recent working paper/taxonomy– posted at “Platform “Language Games” –  a working paper on how we understand platform“–I discussed “Platform BPO” as a kind of sub-category/special instance of “Enterprise Platforms” as follows:

Certainly, there is some overlap in what is encompassed by the definitions of “enterprise platforms,” “domain/function platforms,” and “technology platforms.” However, I would argue that there is little or no overlap of the categories “enterprise platforms” and “product platforms,” unless, as we shall see, the enterprise and its platform are geared toward providing (information or other) services, not products (and in this case, the “enterprise platform” does indeed become analogous to a “product platform” to the extent that the platform becomes the means for developing and supporting derivative and new service offerings, while maintaining high levels of standardization and efficiency). One good example of such a case is the phenomenon of “Platform BPO” (see: , ). However, many other examples, of different kinds, could be cited.

In other words, “Platform BPO” (or what HfS calls a “Business Platform” BPO), as a special kind of “enterprise platform” in the service sector domain, has properties that are similar to a traditional “product platform” (to the extent that the platform becomes the means for developing and supporting derivative and new service offerings, while maintaining high levels of standardization and efficiency).  At the same time, this kind of platform remains very much within the definition of an “enterprise platform” (albeit specialized).   But — at least as defined  by HfS as a “Business Platform” — it is significantly different from what I and others have referred to as “Platform Businesses” (see: Part 1: “Modern Platforms” and “Service Science:” New Ways of Understanding “Platform” Mechanisms, Interests, and Outcomes or The Age of the Platform: Phil Simon Serves An Epic Feast To Business Readers), a new kind of business model structure embodied in companies like Apple, Amazon, etc. and their customer and partner ecosystems.  However, I do believe a closer look at some of these emerging “Platform BPO” businesses will reveal additional properties of the more complex and extensive “Platform Business” model (especially in the areas of service aggregation, supply chain intermediation, network effects, and customer experience management).


“Platform ‘Language Games’ ” – A working paper on how we understand “platforms”

My focus on “platform” phenomena in business and other domains has led me to wonder about how we (as people trying to comprehend the world in late 2011) use and understand the term and concept “platform” .  That is how I came to work on this write-up, (link to PDF)  “Platform ‘Language Games:’ Is Clearly Defining and Classifying What We Are Studying A Serious Or Trivial Pursuit For The Research Community?

“Platform” is a term that has appeared — ever more frequently over the past 25 years or so — in literature and discourse within economics and management science research, business management, scientific, and government circles, technology marketing, and business, scientific, and popular press and media.  “Platforms” are much discussed, today, in errantly-released internal Google emails, in a recent informative business book of Phil Simon (proclaiming that we have entered The Age of the Platform).  “Platforms” are being discussed in conference rooms by managers, investors, and entrepreneurs as well as written about and talked about in the trade and popular press and social media. 

“Platforms” have been and continue to be analyzed and discussed by economic and management science researchers, who are responsible for our achieving a scientific understanding and knowledge of “platforms,” even as the term/concept “platform” proliferates and evolves and various “platforms” (communication, publishing, social media) lead to an intermingling of discourse in the research community, the professional community (e.g. business practitioners, et al), and the general public. 

So while my write-up is addressed to the research community, it may also be of interest to others in business and other disciplines (though I am doubtful that it will be looked at, to say nothing of read through, by many in even these communities).  While I realize few will find it of any interest, I am hopeful that it may be helpful to some in thinking about how we understand “platforms” in late 2011.

I start my write-up, tongue-in-cheek, with the paradoxical quote by Wittgenstein, “Wovon man nicht sprechen kann, darüber muss man schweigen” (“Of that which one cannot speak, one must remain silent”).  There seems to be no shortage of those who will speak about “platforms” within different contexts, and we are speaking about “platforms” in different ways. 

Has our speaking about this captivating phenomenon/idea outrun our clear understanding? If so,  I’m not sure if this gap is of interest or considered to have any importance to anyone besides me.  In any case, my write-up is available to be read and reviewed, and I welcome all comments and suggestions.

Link to PDF: Platform “Language Games”

In the Cloud: Wireless technology and behavioral change in birds

Almost Part 2: How Will Our Business Models Change–Now? And Why?

Since I wrote the post, Part 1:  How Will Our Business Models Change–Now?  And Why?, I have been intending to write Part 2.  Part 1 was basically an overview of business model change dynamics, based on IBM’s study “Seize the Advantage:  When and How to Innovate Your Business Model.”  This study showed “technological factors” as climbing in importance as a reason cited by all kinds of CEOs for changing business models.

My basic assertion in Part 2 is going to be that there are two major transformations affecting all or most business models at this time. These transformations, grounded primarily in information technology,  can be referred to as  “platformitization” and “servitization.”

The term “platformitization” refers to the emergence of new economic, business, industry models referred to–sometimes ambiguously– as  “platforms.”  As noted by Phil Simon in his new book, The Age of the Platform, “Beyond the debate of ‘What is a book in 2011?’ comes the discussion about which platform will win the book wars. Will it be Amazon’s Kindle? Apple’s iBooks? Barnes & Noble’s Nook? Kobo? A new platform we haven’t seen yet?  Sadly, the discourse has been largely misplaced. Far too many people are focusing on the hardware instead of the platform behind the hardware.”   The platform/ecosystem model is emerging across many markets and–often rapidly–radically transforming basic economic models (units and structures, like firms and industries) into wholly different patterns of production and consumption and creation and distribution of value.

The term “servitization” refers to a basic actual and conceptual/paradigmatic shift in economic activity toward “service.”  In once respect, we see a growing “service sector” (financial services, logistics services, et al) as well as the increasing importance of “services” in the business models of all kinds of product/ manufacturing firms (just one well-known example, Apple and iTunes/AppStore).  Beyond this, we are seeing the rise of technology-enabled “information services” as well as information technology itself being transformed into a service (long ago starting with telecommunications and now with things like IaaS, PaaS, SaaS, etc.).  Phenomena indicating a trend of servitization are many, but there is also a framework of thinking which is gaining in relevance.  That is the framework of “Service Science,” arising around 2005, when it was significantly shaped by Stephen Vargo and Robert Lusch with their marketing-based research and theorizing of “Service-Dominant Logic” and further catalyzed by Henry Chesbrough and Jim Spohrer in their  publication “A Research Manifesto For Services Science.”

More discussion to follow on business model transformation along the lines of “platformitization” and “servitization” as powered by information technology.

Google Doesn’t Get Platforms, According to Google’s Steve Yegge

Is Google an “un-platform”  by design or by default–and falling hopelessly behind in the “platform wars” by short-sightedly pursuing a “product one-off strategy?” An extremely interesting post by Danny Sullivan at Search Engine Land (The “Google Doesn’t Get Platforms” Family Intervention Memo) reports an accidental email disclosure, in which Google Staff Engineer Steve Yegge shares his spirited, critical views on Google’s pursuit of success as platform business.

Sullivan’s informative post, also treats, at some length, questions and characteristics of Google’s internal culture (+ and -), so I am filtering out that commentary and focusing here on  re-publishing the matters most directly related to platform models (not to say that far-ranging internal dynamics and culture, besides strategy and leadership are unimportant).  That said, I’d really like to read Yegge’s original email; he seems to have some penetrating insights into platform models, which he sees must be pursued purposely and early from a design and strategy standpoint.  Whether the strategy and approach to Google’s business will continue to prove enormously successful and whether it is or is becoming a platform business are questions which remain to be answered.

Sullivan introduces the subject: “Google now has its own version of the Yahoo “peanut butter” manifesto, where Google staff software engineer Steve Yegge wrote a “family intervention” memo about Google’s failure to build accessible platforms, leaving it vulnerable to the likes of Facebook. ”  Sullivan goes on to trace Yegge’s argument, which compares Google to Amazon (and also Microsoft), to this basic assertion: “Google is failing to be a platform, something he [Yegge] considers the ‘the most important thing in the computing world.'”    Sullivan further quotes Yegge as writing:

That one last thing that Google doesn’t do well is Platforms. We don’t understand platforms. We don’t “get” platforms. Some of you do, but you are the minority. This has become painfully clear to me over the past six years. I was kind of hoping that competitive pressure from Microsoft and Amazon and more recently Facebook would make us wake up collectively and start doing universal services. Not in some sort of ad-hoc, half-assed way, but in more or less the same way Amazon did it: all at once, for real, no cheating, and treating it as our top priority from now on.

But no. No, it’s like our tenth or eleventh priority. Or fifteenth, I don’t know. It’s pretty low. There are a few teams who treat the idea very seriously, but most teams either don’t think about it all, ever, or only a small percentage of them think about it in a very small way.

Yegge cites Google+, as a follow-on, reactive move, consistent with Google’s  “un-platform” business strategy:

Google+ is a prime example of our complete failure to understand platforms from the very highest levels of executive leadership (hi Larry, Sergey, Eric, Vic, howdy howdy) down to the very lowest leaf workers (hey yo). We all don’t get it. The Golden Rule of platforms is that you Eat Your Own Dogfood. The Google+ platform is a pathetic afterthought. We had no API at all at launch, and last I checked, we had one measly API call. One of the team members marched in and told me about it when they launched, and I asked: “So is it the Stalker API?” She got all glum and said “Yeah.” I mean, I was joking, but no… the only API call we offer is to get someone’s stream. So I guess the joke was on me.

Sullivan also summarizes Yegge’s critique further:  “Soon after, Yegge calls Google+ a “knee-jerk” response to Facebook, which seems to fit in with his larger theme that rather than let a developer community access Google+ and help it grow, Google seems to have taken a top-down it’ll control how Google+ grows attitude. That would be fine perhaps if Google had a Steve Jobs person who knew what consumers should be given.”

According to Sullivan, Yegge appears to see Jeff Bezo of Amazon (like Jobs) as a very authoritarian leader, but one who commanded a strategy and set of policies to design an open technical environment and cultivate an integrated, thriving developer ecosystem: Bezo’s core mandate went something along these lines:

1) All teams will henceforth expose their data and functionality through service interfaces.
2) Teams must communicate with each other through these interfaces.
3) There will be no other form of interprocess communication allowed: no direct linking, no direct reads of another team’s data store, no shared-memory model, no back-doors whatsoever. The only communication allowed is via service interface calls over the network.
4) It doesn’t matter what technology they use. HTTP, Corba, Pubsub, custom protocols — doesn’t matter. Bezos doesn’t care.
5) All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions

Yegge further faults Google in its reactionary and tops-down approach and not engaging in a process of co-creation with its customers and ecosystem partners:

Google+ is a knee-jerk reaction, a study in short-term thinking, predicated on the incorrect notion that Facebook is successful because they built a great product. But that’s not why they are successful. Facebook is successful because they built an entire constellation of products by allowing other people to do the work. So Facebook is different for everyone. Some people spend all their time on Mafia Wars. Some spend all their time on Farmville. There are hundreds or maybe thousands of different high-quality time sinks available, so there’s something there for everyone. Our Google+ team took a look at the aftermarket and said: “Gosh, it looks like we need some games. Let’s go contract someone to, um, write some games for us.” Do you begin to see how incredibly wrong that thinking is now? The problem is that we are trying to predict what people want and deliver it for them. You can’t do that. Not really. Not reliably. There have been precious few people in the world, over the entire history of computing, who have been able to do it reliably. Steve Jobs was one of them. We don’t have a Steve Jobs here. I’m sorry, but we don’t.

Yegge continues his critique, training his aim on the issue of platform and data accessibility:

I apologize to those (many) of you for whom all this stuff I’m saying is incredibly obvious, because yeah. It’s incredibly frigging obvious. Except we’re not doing it. We don’t get Platforms, and we don’t get Accessibility. The two are basically the same thing, because platforms solve accessibility. A platform is accessibility.

So yeah, Microsoft gets it. And you know as well as I do how surprising that is, because they don’t “get” much of anything, really. But they understand platforms as a purely accidental outgrowth of having started life in the business of providing platforms. So they have thirty-plus years of learning in this space. And if you go to, and spend some time browsing, and you’ve never seen it before, prepare to be amazed. Because it’s staggeringly huge. They have thousands, and thousands, and THOUSANDS of API calls. They have a HUGE platform. Too big in fact, because they can’t design for squat, but at least they’re doing it.

Amazon gets it. Amazon’s AWS ( is incredible. Just go look at it. Click around. It’s embarrassing. We don’t have any of that stuff.

Apple gets it, obviously. They’ve made some fundamentally non-open choices, particularly around their mobile platform. But they understand accessibility and they understand the power of third-party development and they eat their dogfood. And you know what? They make pretty good dogfood. Their APIs are a hell of a lot cleaner than Microsoft’s, and have been since time immemorial.

Facebook gets it. That’s what really worries me. That’s what got me off my lazy but to write this thing. I hate blogging. I hate… plussing, or whatever it’s called when you do a massive rant in Google+ even though it’s a terrible venue for it but you do it anyway because in the end you really do want Google to be successful. And I do! I mean, Facebook wants me there, and it’d be pretty easy to just go. But Google is home, so I’m insisting that we have this little family intervention, uncomfortable as it might be.

Oh, sorry, I allowed a little bit of the dirty laundry to drape over the wall into my blogger’s “clean room.”  In any case, clearly Yegge’s motivations for his observations and comments are honest and sincere, and he does a thorough job calling Google to task for not following the “platform strategies” of Microsoft, Amazon, and Facebook.

After you’ve marveled at the platform offerings of Microsoft and Amazon, and Facebook I guess (I didn’t look because I didn’t want to get too depressed), head over to and browse a little. Pretty big difference, eh? It’s like what your fifth-grade nephew might mock up if he were doing an assignment to demonstrate what a big powerful platform company might be building if all they had, resource-wise, was one fifth grader.

Please don’t get me wrong here — I know for a fact that the dev-rel team has had to FIGHT to get even this much available externally. They’re kicking ass as far as I’m concerned, because they DO get platforms, and they are struggling heroically to try to create one in an environment that is at best platform-apathetic, and at worst often openly hostile to the idea.

I’m just frankly describing what looks like to an outsider. It looks childish. Where’s the Maps APIs in there for Christ’s sake? Some of the things in there are labs projects. And the APIs for everything I clicked were… they were paltry. They were obviously dog food. Not even good organic stuff. Compared to our internal APIs it’s all snouts and horse hooves.

And also don’t get me wrong about Google+. They’re far from the only offenders. This is a cultural thing. What we have going on internally is basically a war, with the underdog minority Platformers fighting a more or less losing battle against the Mighty Funded Confident Producters.

And so, the essence of Yegge’s condemnation of Google as a business:

The problem is that we’re a Product Company through and through. We built a successful product with broad appeal — our search, that is — and that wild success has biased us.

Amazon was a product company too, so it took an out-of-band force to make Bezos understand the need for a platform. That force was their evaporating margins; he was cornered and had to think of a way out. But all he had was a bunch of engineers and all these computers… if only they could be monetized somehow… you can see how he arrived at AWS, in hindsight.

Microsoft started out as a platform, so they’ve just had lots of practice at it.

Facebook, though: they worry me. I’m no expert, but I’m pretty sure they started off as a Product and they rode that success pretty far. So I’m not sure exactly how they made the transition to a platform. It was a relatively long time ago, since they had to be a platform before (now very old) things like Mafia Wars could come along.

Maybe they just looked at us and asked: “How can we beat Google? What are they missing?”

The problem we face is pretty huge, because it will take a dramatic cultural change in order for us to start catching up. We don’t do internal service-oriented platforms, and we just as equally don’t do external ones. This means that the “not getting it” is endemic across the company: the PMs don’t get it, the engineers don’t get it, the product teams don’t get it, nobody gets it. Even if individuals do, even if YOU do, it doesn’t matter one bit unless we’re treating it as an all-hands-on-deck emergency. We can’t keep launching products and pretending we’ll turn them into magical beautiful extensible platforms later. We’ve tried that and it’s not working.

The Golden Rule of Platforms, “Eat Your Own Dogfood”, can be rephrased as “Start with a Platform, and Then Use it for Everything.” You can’t just bolt it on later. Certainly not easily at any rate — ask anyone who worked on platformizing MS Office. Or anyone who worked on platformizing Amazon. If you delay it, it’ll be ten times as much work as just doing it correctly up front. You can’t cheat. You can’t have secret back doors for internal apps to get special priority access, not for ANY reason. You need to solve the hard problems up front.

All the questions Yegge raises are good ones and, I think, pretty clear

  • The most fundamental one seems to be:  Is Google pursuing a product vs a platform strategy, and will this ultimately be a detriment to its business success?  After all, platforms are not the only business models that are successful, even today.
  • What are the essential characteristics that make a platform business a platform business?  Open design of technology and functionality for others to utilize/leverage, accessibility, cultivation of development and other ecosystem communities, evolutionary co-creation of valuable offerings with customers and partners….  Others?

Yegge clearly wants Google to be a platform business (similar in form to Amazon, Microsoft, Facebook) because he holds a strong conviction that this is best (only?) path to Google’s business success.  We are living in a time of rapidly evolving business models and emerging innovative platform businesses.  It will be extremely interesting to follow this–analyze, predict, and speculate–and, some years from now, see how this particular set of businesses has evolved and manifested.

Any predictions anyone?


New “Service Platform” Business Models Taking Shape In the Cloud

Saugatuck Technology released a new report (“The Cloud and Business Services – Key Trends and Directions Through 2015″) which (a) examines the significant converging  trends in Cloud technology and BPO and (b) forecasts developments in this domain.  A quick Google search of terms like “platform BPO” will show that these trends have been in evidence over the past few years (especially in India).  But what is new is the higher resolution of the roadmap leading to the horizon of real technical implementations and business models.

Saugatuck provides a salient summary of its report content as follows: 

 The IT and BPO services market is undergoing a period of deep structural change that is challenging the finely tuned market positions and business models of traditional services providers. Critical business change is occurring across supply chains, vendor / provider relationships, and customer relationships, due in part to the adoption of Cloud IT and Cloud Business models, but also the product of globalization and new sourcing innovations such as Business-Process-as-a-Service (BPaaS), Business Process Utilities (BPU) and Crowdsourcing.

While the traditional systems integration services market will decline in terms of overall market opportunity, in its place new services and channel opportunities are being born as a result of the Cloud. Cloud services providers will flourish as they embrace Cloud IT and Cloud Business, serving both ISVs migrating to the Cloud and enterprises reshaping themselves. In addition, new Cloud Business services from non-traditional technology services providers are driving innovation, increasing competition and providing user firms with more choice.

Representative findings from the report include:

•Through 2013, Indian providers will be some of the most aggressive innovators in PaaS. The Indian services providers will take advantage of Cloud delivery models and client trust to break their linear headcount-to-revenue business models.

•Through 2013, pure-play Cloud consulting companies will continue to enjoy superior market growth. As Cloud business solution providers offer integration APIs, Cloud consultants/integrators will produce a wide range of adapters, services and toolkits to provide added value for clients.

•By 2013, “non-traditional” service providers with specific vertical and business IP will aggressively enter the Cloud Business Services market. Saugatuck’s position is that “non-traditional” services providers may be the logical front-runners in the race for extending niche vertical services from the Cloud to clients.

•By 2015, 50 percent of new outsourcing deals will be significantly Cloud enabled. Technology platforms (enabled by Cloud IT) have emerged as the newest value lever for services leadership and adoption will continue in 2011 at a rapid pace.

•By 2015, Business Process Utilities will emerge as the preferred means of consuming horizontal / commoditized BPO offerings such as F&A, Procurement, and HR and select vertical opportunities (e.g., Navitaire in airline reservations).

•Through 2015, the primary users of PaaS will be system integrators because of their aggregation of demand, greater resources and expertise, and openness to risk-taking absent in most enterprises.

The Saugatuck report is available for purchase at:

Another article (early 2011) on technology and BPO co-evolution can be found at the OutsourcingCenter website at

Creating “network effects” in the Cloud with iPaaS?

Emergence of iPaaS-layer solutions in the Cloud, such as this one by MuleSoft, could be a start-up catalyst and “network effects” accelerator for multi-sided platform businesses.  “The platform, Mule iON, is designed to help cloud-based software providers expedite the onboarding of new customers through rapid integration of applications, services and data across the enterprise and clouds.”

Take-aways: “Cloud Business Summit” NYC 5/11/11

I attended Saugatuck Technology’s “Cloud Business Summit”  this week.   Post continued below with link to Saugatuck’s published slides and to Saugatuck technology website.

There were my key take-aways: (1) Cloud should not be taken as just slippery hype or as a pure technology phenomenon (Cloud entails a business shift of the highest order, comparable to the advent of the PC and the Internet);  (2) 2011 is a critical year of catalyzation and acceleration (businesses that do not want to be behind the curve should be starting to engage in Cloud — but to experiment, learn, and form a launch pad for the next few years.  See attached PDF for Saugatuck’s “Take-away Summary” of the event:  Slides published by SaugatuckSaugatuck Technology, Inc. research website.

Amazon: The Mother of All Platforms?

Excellent slide presentation on the development of Amazon as a platform business.

Part 1: How will our business models change — now? And why?

Analogous to living things, organizations and business models come in many different forms and develop in many different ways, all subject to:  internal operative structures and “intelligence,”  intermediating membranes and interfaces, and myriad conditions posed by the external environment.  Relying on some earlier analysis of a cross-section of businesses, IBM’s 2008 paper “Seize the Advantage:  When and How to Innovate Your Business Model” (pdf link: IBM Business Model Change ) provides some penetrating insights into how business models change in response to different conditions.

The paper succinctly identifies its purpose:  “Our follow-up research to the IBM Global CEO Study 2008 seeks to answer: When should organizations innovate their business models, and how?” 

There are a good number of insights drawn the data of the preceding surveys, including what may be the frequency of different types of  business model changes at different phases of the business cycle.  A more basic observation is that, over time, environmental stresses (changes in markets, competition, technology, etc) eventually will bring organizations to a point where incremental business model change will not suffice:

Or as the authors explain:  “Industry transformation drives the need for business model innovation.  During periods of relative stability in the industry landscape, companies can make incremental adjustments to their business model over extended periods of time. They can continue to realize the economic benefits of their existing business model. During periods of extensive industry change, however, companies must choose to either shake up their industries – harness disruptive technologies, go after new customer segments, dislodge competitors – or face their own demise” 

 The research also distinguishes three broad types of business model change or innovation (shown here): 

The paper reports that Revenue Model changes are relatively simple, while Industry and Enterprise Model changes are much more difficult, but tend to have more significant outcomes (and correspondingly are more postively associated with the “Outperformers” among firms making business model changes). 

In one of the source surveys (on which the referenced paper is partly based),  other interesting details are present:

By 2006 (and continuing through 2008), Technological Factors joined Market Factors and People Skills among the top 3 factors that surveyed CEOs cited as driving business model change or innovations.  This should be expected as businesses started to climb out of recessionary conditions and renewed investments in technology.

But what are the implications for today?  I can’t be  sure, because I have not seen a continuation of this data;   but I would suspect that Technological Factors, for many businesses,  continue as top drivers of business model change (more than even now in 2011 —  with the maturation of mobile device technologies,  the increasing maturation of cloud technologies, and the gradual re-opening of access to capital).  I would like to know whether current conditions, especially in Technological Factors, will be driving more Industry Innnovation and Enterprise Innovation in business models than was recorded in 2008.  My hypothesis is that, in many sectors,  this will be the case.   But where in what ways will this happen?   What will be the industries and types of businesses that will see the most change and innovation in business models?   What will these changes consist of, and what will they mean with respect to business  incumbents and new entrants?