5 Models for Building a Platform Strategy

By Hannah Shain in API Industry Trends Posted Apr 23, 2018

Our report demonstrated that more than half of organizations today would consider
themselves to offer a platform or to be on the path to offering a platform. Of those that don’t, it’s
important to have a made a conscious decision in this regards.

Hope is not a strategy, and many product organizations are being disintermediated for moving too slowly in this regard.

In answering the ultimate question: are you a product company? Or are you a platform provider? We are really looking to address the theme that many product companies are migrating to a platform, meaning that they are creating an app that plays nicely in their respective ecosystem.

Are You a Platform Provider

That said, there are several ways by which your application can play nicely with other applications. Here are 5 different approaches you can take, as a platform provider, to deliver value to you customers.

 

5 MODELS OF BUILDING A PLATFORM STRATEGY 

 

[1] BASIC USAGE METERING

This is the most obvious method of generating revenue from your API—directly charging for it. This strategy works best if your organization provides access to data or services that people want to pay for. E.g. Dun & Bradstreet is a data provider, and expose data as a service via API. In this case, customers are willing to pay for programmatic access to D&B’s services to
enable new business processes and products around the D&B platform.

[2] UPSELLING API INTEGRATION


SaaS providers use this model often, as customers have become increasingly demanding of integration capabilities for any product they buy. Adding API integration to a subscription offers a strong motivator to upgrade to a higher package, and creates a stickier relationship with customers by allowing end users to customize their experience and workflow more easily.

E.g. Concur provides pre-built integration options with their product, so that
subscribers of the service can easily synchronize expense management data with
ecosystem of apps used in their back-office processes—such as accounting and ERP
systems.

[3] APIs AS A PRODUCT


APIs that are themselves the product can be the most complex monetization models, but they also often provide the highest value—collecting some revenue share or service-based fee for the product delivered via API. E.g. Paysimple—a leading payment gateway provider—offers API access to their payment services. Customers of this service will then be charged a percentage of the payment amount for each API transaction.

One Size Fits All

[4] Distribute Value through Partners


Organizations can scale the reach of their product by integrating their API with strategic partners. This has the potential to open your business to existing application ecosystems which you may not be able to reach alone.

E.g. Sage works with various ISVs to distribute their products and services as part of
a broader offering. This network effect has enabled them to achieve the scale and
growth that would be difficult in a direct sales model.

[5] IMPROVE OPERATIONAL EFFICIENCY

API integration can help you build end-to-end solutions more efficiently. They help you
innovate faster, engage customers and partners faster,and perhaps most importantly, they allow
you to iterate (and even fail) faster. The time taken to build or automate business processes can
easily improve from a couple months to a couple hours, solely because of the efficiency gained
from an API integration.

E.g. Microstrategy—a leading business intelligence platform— provides pre-built
integration to several leading enterprise SaaS applications, so their customers can
quickly access and integrate the data they care about without needing to build
anything from scratch.

While these are only examples, each describes a path towards revenue growth and a strategy for expanding your app’s ecosystem. We expect that leading platform providers will
leverage more than one (if not all) of these models as they grow.

Ultimately, a move toward “best-of-breed” is on the rise - meaning that every product,
in every vertical, is better served by enabling integration to the ecosystem of apps
around them rather than remaining a hermetically sealed environment. Over the
coming year, we anticipate to see more of the world’s successful software companies
continue to make the leap from selling products to selling a platform.

Join our State of API Integration Webinar, this week, to hear from the report’s contributors as they dig into even more results from our recent report.

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