Building Technology Ecosystems: Delivering Value to All

Avanish Sahai, Global VP - ISV & Technology Alliances, ServiceNowwhy are so many cloud technology companies building ecosystems around their platform? The main reason is that a 'platform partner ecosystem' creates growth options for the vendor, opens opportunities for the partners, and delivers greater value for the end customer. As blogger Jonathan Clarks wrote: “Platforms are structures that allow multiple products to be built within the same technical framework. Companies invest in platforms in the hope that future products can be developed faster and cheaper, than if they built them stand-alone. Today it is much more important to think of a platform as a business framework. By this I mean a framework that allows multiple business models to be built and supported. For instance, Amazon is an online retail framework. Amazon started by selling books. Over time they have expanded to selling all sorts of other things. Apple iTunes started by selling tracks and now uses the same framework to sell videos’.

While the above business-to-consumer examples are well known, business-to-business cloud providers such as Salesforce, ServiceNow, and Slack are all building ecosystems to deepen the use cases they support, leverage underlying data assets and ultimately grow the footprint in their customers. These companies have leading positions in their respective core application areas (CRM, IT Service Management/HR/Customer Service, and Enterprise Collaboration respectively). However, in addition to using their respective platforms for their own development, each one of them is also investing in building a robust ecosystem around their respective platform. Through this ecosystem, customers can leverage deep integrations with other offerings and broaden their usage of the core platform - for example by combining Salesforce CRM with digital signatures from Docusign, or Service Now IT Service Management with Mobichord’s telecom management solutions, the customer is able to expand the business process being addressed by adding signatures to a proposal or by also managing telecom assets alongside traditional IT assets. This approach drives greater stickiness and ultimately creates a ‘network effect’: the platform becomes the repository of more and more connected data and thus increases its utility with every additional ecosystem application/ integration that is added.

Often, platforms are also exposed as full development environments to prospective
software partners so they can build their application while taking advantage the underlying infrastructure and services of the platform. This accelerates product development for the software company while generally reducing cost of development. Examples of this include companies such as Nuvolo, built on the Service Now platform, or Veeva, built on the Salesforce platform. In order to build such platform ecosystems, the vendors need to address various elements that often are new functional areas of their Business.

• A Platform: While somewhat obvious, it’s key to actually have a platform that exposes various different ways to develop with it. Well-documented API’s, a development environment, access to developer instances, a support model, and much more are required to allow partners to develop either integrations or full-blown applications.

• A Partner Program: A program is a structured approach for the engagement between the platform vendor and their partners. It includes specific definitions and expectations of requirements and benefits and typically requires a legal agreement between the two parties. The program also specifics the form of business relationship between the parties: levels of revenue share, joint marketing investments, access to product and documentation, and more.

In order to build platform ecosystems, the vendors need to address various elements that often are new functional areas of their business

• A Partner Management Team: This is a group that has as its responsibility the identification, recruitment, enablement and go-to-market alignment between the platform vendor and their ecosystem. These partner managers own the overall relationship and help the partners become successful within their ecosystem (access to more customers, deeper adoption, and ultimately revenues).

• A Marketplace: Generally, it’s key to expose the partner ecosystem to customers and prospects. This is achieved through marketplaces such as the Salesforce App exchange or the Service Now Store - customers can identify applications, review the vendors, look at demos/videos, and perhaps even try the application - and then buy it.

Once all the components above are in place, the platform vendor has to help their ecosystem grow and be successful. This involves various aspects of building a strong go-to-market machine to expose their partners to their customers. For examples, the platform company will host customer events where the partners can sponsor and have a booth: this facilitates direct customer engagement and lead generation. Other activities will usually involve joint online marketing, targeted high-touch events such as seminars across key locations, webinars, and more. And typically, there is also engagement with field sales people and solution consultants who can help identify hot prospects based on the joint value proposition of the platform vendor’s applications plus the partner apps. Success is measure through core metrics: marketing and sales pipeline development, joint sales pursuits and, obviously, sales bookings.

The value to the partner of working with a platform vendor is clear: they get to leverage the substantial investments that the platform vendor undertook to accelerate time to market, and they get access to the installed customer base. For the platform vendor, their partner ecosystem drives deeper penetration of the platform across use cases, thus increasing revenue and stickiness. But the ultimate winner is the customer: by adopting applications built around a common platform, they’re able to maximize the outcomes of their digital transformation.