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Platform Tech Strategy: The Three Layers

It feels like everyone is talking about platforms. Platform Thinking, Platform Strategies even the Platform Revolution. Platforms, it is argued, are the disruptive secret upon which a digital business is formed. Uber, Airbnb, Amazon, Google, Apple, Twitter—all digital businesses which owe their success to their Digital Platforms.

If you're a CIO, CTO, Head of Tech, Architect, Product Owner or Developer, what does this all mean? The rewards of transforming your business to a platform seem incredible. But what is different about how you work today and how you need to think tomorrow?

"Jazz is a Big Word"

Said Leonard Bernstein in 1956, "it covers a multitude of sounds". I'm a huge Jazz fan ("I don't like that word 'Jazz' -, Miles Davis), but I can guarantee that if all the people who loved Jazz put their hands up, very few of us would have tastes that agreed. The same applies to Platforms. While on the surface everyone's nodding and agreeing about their importance and how every business needs to build—or become—one, when you ask for detail, the approach and the result varies radically. Wait a couple of minutes and a myriad of terms will fly about: Continuous Delivery, DevOps, SaaS, AWS, Cloud, automation, Virtualization, web services, artificial intelligence, API economy, monetization, decentralization, ecosystems, scalability etc.

This isn't helped because the 'Platform' word, just like jazz, is so overloaded. Just a few years ago, the word 'Platform was synonymous with 'Platform as a Service' which described specific tech offerings in the Cloud Computing market such as Heroku or Engine Yard or SalesForce. While PaaS are a great example of Platform Thinking and are an important part of providing a Digital Platform, they are just a small part of what most people are talking about when they say 'Platform'.

The end result is not just that there are many interpretations of the term 'Platform', but that it means one thing to executives and another thing entirely to technologists. Yet the two are so intertwined it's hard to see where one begins and the other ends.

Standing on the Shoulders of Giants

What makes something a 'Platform'? One key differentiator is that platforms are a means of centralizing expertise, while decentralizing innovation to the customer or user. This essentially happens through commoditization of services, but in a way which relinquishes an amount of control and is open to extension rather than closed. This is a significant change to many organizations' core business models which tend to favor standards unification and centralization.

For example, Amazon learnt how to manage and optimize infrastructure at scale. By building a Platform, they moved the responsibility for infrastructure decisions away from their ops teams to their development teams. Dev teams could make decisions around how many servers they wanted, what speed, whether they were load balanced etc. without needing any infrastructural expertise or responsibility; if hardware failed, then the Dev team wouldn't have to rip servers out and reconfigure them. They then extended that Platform to the entire world so any Dev team could build data centers without requiring any low level understanding of infrastructure. They were standing on the shoulders of giants. And this allowed developers to innovate new ways of managing infrastructure beyond anything AWS could imagine—whether Infrastructure as Code, disposable environments, phoenix servers or entire PaaS solutions such as Heroku. Amazon's Platform enabled its customers to innovate far beyond the capability of Amazon itself.

Twitter introduced an API within six months of launch when it recognized that its predominantly technologist user base was beginning to do some interesting things with the product. From there, Twitter realized the business value of being a Platform by enabling others to expand and grow and innovate beyond the capabilities of the Twitter workforce alone, such as Twitter maps, social research and even the world's health. Thanks to the API, a host of other applications can interact with Twitter to the point that, within three years, less than half of tweets originated from the official Twitter web interface.

Likewise, Instagram provided a way for users to share pictures. They took on the burden of building a Platform for image storage, image processing and sharing algorithms enabling users to produce images and distribute them way beyond their technical capability. And, just with Twitter and Amazon, Instagram has enabled its customers to innovate beyond the Platform, whether that is the invention of the selfie, social movements or even selling illegal drugs.

Platform Layers

Whilst Amazon's infrastructure platform (AWS), Twitter's API and Instragram's social media service are all Platforms, their application is very different. It is important to understand those differences, and how they support each other, when talking about Platform strategies. While being a Platform to its users is core to Instagram's value offering as is Twitter's API to it's development community (but only if you're technical), AWS offers no value to Amazon's core business which is an e-commerce Platform to enable anyone to sell almost anything to anyone. This is because there are distinct types, or layers, of Platform which achieve very different goals.

To understand these three layers, we need to look no further than Amazon itself, as it is one of the rare companies that publicly exhibits all three layers as part of its business model.

1. Offering/Service Platform

This is the top of the Platform and what most non-technologists are referring to when they talk about Platform. Amazon's e-commerce offering is not simply an electronic version of a physical retail store. Amazon provides a Platform via Amazon Services, which is an eCommerce Platform for other businesses to sell their products, even when they compete directly with Amazon's own stock. Businesses are able to use the services Platform to take advantage of Amazon's experience and expertise in fulfillment, payment, user experience, search, recommendations, while maintaining control over those aspects core to their business: stock, product selection, shipping. They offer this capability for less than $40 a month. The result is businesses being able to innovate beyond their workforce capability, while Amazon benefits from innovation in new product offerings or wider stock.

2. Digital Business Platform

Back in 2002, Amazon launched Amazon Web Services and thus opened up it's Platform to web developers. This is not to be confused with the infrastructure services we now call AWS today. The original AWS meant that "Developers can now incorporate Amazon.com content and features directly onto their own websites". By 2008, over 40% of Amazon's sales came from affiliates who took advantage of this Platform.

Over the next decade and a half this evolved into Amazon Developer Services, a rich ecosystem of tools and services that enables developers to contribute to Amazon in a wide range.

The Digital Platform layer is what most commentators have been referring to as the API Economy. It is the Platform which provides the programmatic interface to the Service Platform.

An interesting attribute of Amazon's API Platform is that doesn't just exist to enable external participation, but also as a means of organizing internal development. According to the mythological Bezos' Mandate, Jeff Bezos told teams that all interactions had to be through service interfaces and that "all service interfaces, without exception, must be designed ... to be able to expose the interface to developers in the outside world. No exceptions". If you believe this legend, then Bezos' mandate transformed Amazon from a business powered by technology into a Digital Platform from the inside out. This meant that every Amazon business process was exposed through a programmatic interface for consumption both internally and externally. This enabled teams, inside Amazon, to innovate at an astonishing rate.

This Digital Platform of APIs, tools and development SDKs has again, enabled others, whether internal or external, to innovate beyond their capability by leveraging Amazon's business processes and expertise. It has also enabled Amazon to reach new markets and provide offerings that it could not have achieved on it's own.

3. Foundational Technology Platform

If we talk about Platforms to technologists, this is they layer they most think about. According to the myth, the Bezos' mandate led to the launch in March 2006 of what we now know as AWS. If every team had to expose all interactions via service interfaces, then didn't that apply to operations too?

There are a number of different stories around the birth of AWS, but what cannot be denied is that by treating infrastructure as a Platform, Amazon took a quantum leap forward. Everything from storage to virtualization to API management to Machine Learning became a set of services to enable teams in Amazon to build new features and business processes, without requiring the extensive expertise in infrastructure or other technology specialisms (such as databases). Amazon's genius was to find a means of externalizing and monetizing this Platform so others outside the company could gain the same advantages and innovate even further.

Forming a Platform Strategy

Any organization which is looking to form a Platform Strategy should be able to look at Amazon and map their layered approach to their own business. Each layer will require a different strategy and each layer supports and enabled the others. For example, you will struggle to create an effective Digital Platform if you haven't got a sufficient Foundational Technology Platform to enable effective API management, developer exploration, versioning, data governance etc. And a Service Platform will struggle if external parties cannot contribute through a sufficient Digital Platform.

There is, of course, a lot more detail to every layer, and many books have been written about each of them. But I hope this article sheds light on the different parts of a Platform and how each part needs to be considered as a distinct part of a whole in order to drive an effective strategy. The Thoughtworks’ Digital Platform Strategy is an offering which looks at how businesses can deliver on that strategy.

Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.

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