Being able to plug partners, products and services together – fast – is how all kinds of companies are and will compete in the digital economy. This is already disrupting many industries massively, including telecommunications (Amazon Web Services, Microsoft, streaming video), transport (Uber, Didi Chuxing), hotels (Booking.com, Airbnb), banking (blockchain technology, peer-to-peer lending) and insurance (O2 Drive in the UK), and retail (Alibaba, Amazon), to name a few.
The key to this is the platform model. In their book, Platform Revolution, Geoffrey G. Parker, Marshall W. Van Alstyne and Sangeet Paul Choudary, define a platform as:
“a business based on enabling value-creating interactions between external producers and consumers. The platform provides an open, participative infrastructure for these interactions and sets governance conditions for them. The platform’s overarching purpose is to consummate matches among users and facilitate the exchange of goods, services or social currency, thereby enabling value creation for all participants.”
Platform companies like Airbnb, Amazon, Booking.com, Google, Netflix and Uber have achieved billion-dollar valuations seemingly overnight simply by providing an interface between customers and sellers. They don’t own anything, sometimes not even the infrastructure – they build their businesses by curating ecosystems that link together end customers or users with producers of goods and/or services.
Platform-based companies have also given rise to an ever increasing number of unicorns – startups valued at more than $1 billion. Collectively, according to a recent study, unicorns account for $4.3 trillion in market capitalization across fewer than 120 companies – and the most valuable of all are platform-based.
The multi-billion-dollar question so far has been how to possibly compete with these levels of speed and scale.
The power of APIs
Last month, Twilio was listed on the New York Stock Exchange (TWLO) in its initial public offering. As a private company it was valued at $1 billion. By the end of the day’s trading as a public company, it was worth $2.4 billion.
This is why, as described in The Guardian newspaper:
“Twilio provides a[n API-based]messaging platform for developers, which means that companies can use its tools and services to create their own messaging apps and features. It has stayed focused on helping software developers do things that were previously considered really hard. Huge barriers prevented developers from working with the different telecoms providers and their complicated SMS gateways, their many standards and protocols, and their unmanageable pricing structures. Twilio successfully broke down all the things that stopped developers from creating messaging features into a few simple pieces that made a whole new market possible.”
Twilio made a whole new market possible by enabling things to work together that previously were discrete and incompatible through APIs. Had the communications industry used open APIs way, way back when for SMS systems, network operators could have created that multi-billion-dollar market for themselves.
How to compete in the digital economy
Until now, communications service providers could not match their digital native counterparts when it came to delivering what customers want, when and where they want it. Now there is a real opportunity to close that gap through a number of interrelated, big trends that are happening in parallel.
This includes transforming their infrastructure through network functions virtualization (NFV), software-defined networking (SDN) and cloud technologies, and transforming their business processes and back-office operations.
The next step is making those internal support system platforms available to partners and customers in a dynamic, on-demand way capable of supporting almost instant mashed-up services.
APIs are key to enabling this, which operators made clear in May when nine of the world’s largest service providers – Axiata, Bharti Airtel, BT, China Mobile, China Unicom, NTT Group, Orange, Telefónica and Vodafone – officially adopted TM Forum’s suite of Open APIs for digital service management. These service providers have committed to adopt TM Forum Open APIs as a foundational component of their IT architectures; to promote global adoption of the API suite by their partners; and to expect technology vendors and systems integrators to support these APIs in their products and cloud-based services.
As Dr. Lester Thomas, Chief Systems Architect, Vodafone Group, commented, “One lesson from hyper-scale Internet companies is that APIs and platforms allow the creation of a standards-based ecosystem, while enabling innovation in the implementation. A critical advantage of platforms and APIs is that they provide an evolutionary path from the current telco operating model to the future Network-as-a-Service model. The collaborative work that TM Forum and my fellow members have been undertaking is shining a bright light on this important path.”
Recent hackathons held in Lisbon, Nice and Vancouver demonstrate clearly how APIs make things happen fast. In just two days, small teams develop useable solutions to real problems, from preventing forest fires to creating new ways to grow food and collectively care for plants. If that’s what you can achieve in 48 hours, the opportunities beyond that are seriously exciting.
Change from within
At TM Forum we now have a clear focus on helping our members capitalize on the unique opportunity offered by the platform economy.
The Forum’s digital platform work will include developing a platform framework and APIs for service providers and other enterprises to use. It will draw on many existing assets such as the Frameworx suite of standards-based tools and best practices.
And just as our members have a portfolio of existing systems to transform, TM Forum has to go through exactly that too. We’ll be looking at our existing assets and how they can be easily exposed and quickly repackaged as needed.