How to Create a Platform Company

Building a platform business using SDN, APIs and interconnected ecosystems

When we think of “platform companies,” it’s typically Airbnb, Alibaba or Amazon that come to mind. According to the book by authors Parker, Van Alstyne and Choudary, “Platform Revolution: How Networked Markets are Transforming the Economy – and How to Make Them Work for You,” platform companies follow a “business model that uses technology to connect people, organizations and resources in an interactive ecosystem in which amazing amounts of value can be created or exchanged.”

The macro trends that are driving platform companies are the same ones that are moving companies to transform into digital businesses, as noted in the “Global Interconnection Index,” a market study recently published by Equinix:

  • Digital technology use, which according to Accenture could create $1.36 trillion in additional economic output in the world’s top 10 economies in 2020.
  • Data sovereignty compliance regulations that require businesses to maintain data locally while being used globally.
  • Cybersecurity risk that permeates across the physical and digital platforms of any business.
  • Global trade of digitally deliverable services, which according to McKinsey, has more than doubled over the past decade, comprising approximately 50% of total services exports.

It also takes a special breed of platform company to help create other platform businesses into one that allows the dynamic interaction and data exchange between enterprises and their service providers, partners and customers on a global scale. Accomplishing this requires a globally integrated, dynamic interconnection platform to make the critical on-demand connections across multiple business ecosystems that are the hallmark of a platform company.

The evolution of the platform company

Platform companies have been the topic of industry analysts and the darling of investors for years, so the concept is not new. But you can see the platform company revolution really taking shape by tracking the findings of Accenture’s Technology Vision report’s business survey results over the last three years:

  • In 2015, 81% of companies believed that “industry boundaries will dramatically blur as platforms reshape industries into interconnected ecosystems.”
  • In the 2016 survey, 40% of the respondents said that “adopting a platform-based business model and engaging in ecosystems of digital partners are very critical to their business success,” and 82% believed “platforms will be the ‘glue’ that brings organizations together in the digital economy.”
  • The 2017 report saw platform companies rapidly becoming the “new normal,” creating “central hubs for the rich and complex digital ecosystems that companies want to access.”

Platform companies as catalysts for digital transformation

The secret sauce behind platform companies acting as catalysts for digital transformation lies in the easy access to and the integration of open application programming interfaces (APIs) and business ecosystems. According to the “IDC FutureScape: Worldwide IT Industry 2018 Predictions,” a digital transformation platform is primarily an “externally facing, API-enabled platform — with the key objective to create a network or ecosystem of connected customers, partners, and suppliers that use (and pay for) the information and services available to them.”

APIs are so critical to digital transformation and the growth of the global digital economy that the TMForum has created an “Open API Manifesto,” which to date, has been signed by 28 of the world’s leading service providers and technology ecosystem participants. The manifesto calls for members to contribute to the development of open APIs that will drive the business and operational agility required to execute digital at the speed of the digital economy, and seize the opportunities of a hyper-connected world.

This is why an interconnection platform that directly and securely provides that critical access to and integration of open APIs and business ecosystems is such a vital ingredient to creating other platform businesses, whether you are an enterprise or a service provider.

How interconnection enables platform companies

Most platform companies create more innovative products and services for their customers and greater revenue opportunities for their partners. There is also a class of platform company that helps accelerate other companies’ platform evolution and digital transformation. Our own evolution as an interconnection and data center platform company started out by enabling global network, internet and content service providers to create the worldwide web. Today, we’re offering platform-enabling interconnection capabilities through a global, dynamic interconnection fabric.

We are connecting our global platform through the direct physical and virtual connection of our Equinix International Business Exchange™ (IBX®) data centers around the world. This will create one globally interconnected platform that provides worldwide reach and access to the largest interconnected ecosystem of businesses. We have expanded our Equinix Cloud Exchange (ECX) to be a native SDN fabric manager for directly interconnecting (locally or remotely) any location or participant on the platform.

Renamed the Equinix Cloud Exchange™ (ECX) Fabric, the interconnection platform provides direct and secure access to APIs and those global enterprise, service provider (e.g., internet, networks, clouds, SaaS, content) and industry (e.g., financial services, online advertising, media and entertainment) ecosystems that are vital to the creation of platform-based businesses. We fit the true definition of a platform company, because we have spent the last 15 years bringing producers and consumers together to create greater value for their companies, partners and customers on Platform Equinix™.

Take, for example, how we bring together network and cloud/SaaS providers and seamlessly integrate the physical and virtual components required for enterprises to consume compute, data and application resources on demand via a dynamic platform that is API-driven and uses software-defined networking (SDN) capabilities. The ECX Fabric provides the platform that powers today’s leading enterprise, cloud and SaaS platforms, such as Alibaba Cloud, Amazon Web Services, Google Cloud Platform, IBM Cloud, Microsoft Azure, Oracle Cloud, Salesforce, SAP and ServiceNow, among others.

Why enterprises and service providers can’t do it alone

A platform company by nature, needs to interact and exchange information with others. It also needs to find partners that will enable it to do that as effectively and efficiently as possible. This is why at Equinix, we work with more than 9,500 companies in 48 metros worldwide, including 1,600+ network providers and 2,750+ cloud and IT service providers.

Our interconnected platform is based on an Interconnection Oriented Architecture™ (IOA®) strategy, a proven and repeatable engagement model that provides a blueprint for enterprises and service providers to directly and securely connect people, locations, clouds, data and things. An IOA framework shifts the fundamental IT delivery architecture from siloed and centralized to interconnected and distributed, which is critical for enabling platform companies to reach everywhere they need to go, interconnect everyone they need to access, and integrate everything required to run and grow their business.

Let’s look at some examples of how some of our enterprise customers and service provider partners build platform businesses on Platform Equinix by leveraging the ECX Fabric:

  • Enterprises can scale their businesses by providing users with fast and reliable access to distributed applications and data. That happens through direct and secure interconnection to a greater set of networks, clouds, business partners and destinations.
  • Network service providers can more cost-effectively increase their market reach in regions around the world, including where they may not yet have a physical presence. In addition, they can scale their capabilities via a greater number of peering partners to reach a new set of customers. They can also deliver a larger portfolio of integrated network and cloud services to provide dynamic access between enterprises and a variety of cloud platforms.
  • Cloud service providers can more quickly collaborate to provide access to global compute, storage and application resources, redundant business continuity and disaster recovery environments, and security services to any business around the world on a more robust and reliable interconnected cloud platform.
  • Content providers can harness fast, API-based, virtualized connection provisioning and integration with vital business value chain partners (i.e., networks, clouds, SaaS, industry-specific services). This helps them deliver a consistent, end-to-end solution to a greater number of consumers across new regional or global markets.

For example, a U.S. medical supplies conglomerate was able to rapidly deploy inter-state connectivity between Chicago and Dallas Equinix International Business Exchange™ (IBX®) data centers over the ECX Fabric to meet a business continuity requirement for redundant connections to its Microsoft Azure tenancy in different regions, via different network service providers. The ECX Fabric provides them with the direct and secure interconnection to make this happen.

In Europe, several of our German manufacturing customers needed to access Microsoft Azure in the Western Europe region, however, the “on-ramps” were not available to them in Germany. To get the cloud access they required, they needed to go through our Amsterdam IBX data centers. The ECX Fabric gives them a fast, easy-to-use route to do this from their existing deployments in Frankfurt.

Equinix is a platform company that plays a critical role in creating other platform companies and accelerating their digital transformation and growth. We are committed to expanding our open API capabilities and business ecosystems across a dynamic, integrated global interconnection platform within our 190 Equinix International Business Exchange™ (IBX®) data centers.

Read more by downloading our Platform Equinix Vision Paper to learn about our ECX Fabric roadmap.

You may also be interested in reading:

The Global Interconnection Index to see how you can benchmark your requirements for interconnection based on firmographics that show a direct correlation of interconnection bandwidth adoption by enterprises based on three categories—size, geographical presence and use of distributed IT services.

The IOA Knowledge Base, our open source knowledge base of best practices that will help you architect interconnection-first platforms to accelerate your digital business platform strategy.

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