What is a digital platform?
Powered by artificial intelligence, digital platforms network processes, devices, data, services, and users to form a value-creation network, i.e. a digital ecosystem. They give consumers, businesses, suppliers, and buyers access to a range of digital products and services within a (decentralised) market or across several markets. The networking itself often stems from a centralised infrastructure.
There are three types of digital platforms:
1. Transactional platforms: balance supply and demand
2. Data-centric platforms: manage and analyse data to derive insights
3. Integration platforms: combine the capabilities of the above two platforms.
Well-known examples include online marketplaces (Amazon and eBay), social networks (Facebook and Instagram), and trading platforms. B2B platforms have also become established in many sectors and bring together corporate providers and service users.
Industries that rely on a high degree of connectivity (e.g. trade and logistics) benefit most from the move to digital platforms within digital transformation.
How does a digital platform work?
In summary, a digital platform serves as a foundational infrastructure that enables a wide range of digital activities and interactions, providing users with the tools, services, and environment they need to succeed in the digital realm. Digitalisation helps avoid complex bilateral connections in favour of a network of multiple partners.
Digital platforms follow similar architectural principles of software development. When building a digital layered model, for example, the level of abstraction increases with each layer, enabling external flexibility without impacting maintenance.
Digital platforms require robust hardware infrastructure in a modern data centre to operate reliably. They also need one powerful software system to process numerous transactions in parallel and another system to establish synchronous and asynchronous interfaces efficiently. Last but not least, they need a secure, high-performance, clustered database.
The benefits of digital integration platforms are immediately apparent when looking at logistics platforms: if logistics service providers and shippers connect to the same platform, then, in principle, any logistics company can place an order with any connected shipping agent via the platform. They then use the digital platform to receive status updates from the shipping agent. Ideally, the information is transferred directly from one partner’s IT system to the other’s IT system.
The more manual input is needed on the digital platform, the more user-friendly and scalable the interface should be. The interface is usually designed as a web application with a graphical user interface (GUI).
Pain Points of not having a digital platform.
Limited networking
If the aim is to digitally transform a business and enable Industry 4.0, then having numerous bilateral connections is a massive problem. Every change must first be clarified and customised with the respective partners. This costs time and money. If all participants are connected to a central digital platform, then it is much easier to scale and network, which streamlines and drives business relationships.
Inconsistent customer communication
Automated processes can prevent customers from spending unnecessary time in call queues, even though they just wanted to quickly check the status of their enquiry or order, for example.
Cost disadvantages due to insufficient scalability
If a business model is successful, the number of business partners, suppliers and end customers will increase. That’s all well and good, but in a digital communication context, it means setting up numerous new interfaces, which all have to be paid for and maintained. If a solution is scalable, setting up and operating bilateral systems generates revenue rather than being a money drain.
No daily tracking of market developments
Markets sometimes act erratically, and no business model is protected from unpleasant surprises. Declining sales figures due to technological innovations by competitors? Increased competition from disruptive players? Consumer behaviour impacted by external events? Digital platforms help companies stay one step ahead by giving users access to crucial market statistics for market-orientated decision-making.
Lack of transparency in business processes
Whether you’re working with a digital ecosystem or have taken a more traditional collaborative approach with a company: business relationships involve many different partners. Suppose a vehicle manufacturer doesn’t know whether its supplier has enough A-parts available or whether the haulage company has enough drivers at short notice. In that case, processes can come to a standstill. This lack of data transparency across companies can severely impact sales.
What are the economic benefits of a digital platform?
- Easily scalable and cost-effective through the option to reuse digital interfaces
- Networking multiple players enables greater reach and unlocks new sales opportunities
- The digital ecosystem adds significant value through bundled processes and accelerated processing to increase customer satisfaction
- Greater transparency through real-time information and coordinated process management
- Faster responsiveness to changing markets through statistical insights via the digital platform.
