5 Ways to Win with Digital Platforms

9th September 2016Beijing

5 Ways to Win with Digital Platforms

2Copyright © 2016 Accenture All rights reserved.

A DIGITAL PLATFORM IS A TECHNOLOGY-ENABLED BUSINESS MODEL THAT CREATES VALUE BY FACILITATING EXCHANGES BETWEEN TWO OR MORE INTERDEPENDENT GROUPS, USUALLY END USERS AND PRODUCERS

““

2

…

ALWAYS CONNECTED

connected devices per person in 2020 ~4.5

3

NETWORK EFFECTS: More customers attract more suppliers and vice-versa, creating more value

DIGITAL PLATFORMS HAVE 3 SOURCES OF POWER:

CONCURRENCE OF TECHNOLOGIES : Digital technologies are a catalyst for the “as-a-service” economyDATA: Shared data between innovators and partners can add new services

Copyright © 2016 Accenture All rights reserved. 3

Copyright © 2016 Accenture All rights reserved.

1. Source: IDC2. Source: Accenture Research3. Source: The Center for Global Enterprise

By 2018, more than50%of large enterprises will create or partner with industry platforms1

US$20Bwas invested globally in 1,053 deals in digital platforms with pace intensifying in 20152

US$4.3TPlatforms’ total market value3

PLATFORMS OFFER GROWTH FOR ECONOMIES:

4


OWNERSFortune 500 companies took 20 years to reach a billion-dollar valuation; digital start-ups take four years

PARTNERSe.g. Providing complementary apps or fulfillment services to enrich the customer experience

SUPPLIERS & MERCHANTSBy 2020 45% of consumers will shop online overseas

PLATFORMS OFFER GROWTH FOR ENTREPRENEURS:

5

38% EXPECT TO GENERATE MORE THAN 30% OF REVENUES FROM PLATFORMS, AND…

42% EXPECT TO REDUCE COST BY 20% ON AVERAGE


CHINESE SMEs SEE THE TOP BENEFITS OF ENGAGING WITH THE PLATFORM MODEL… AND IN THE NEXT THREE YEARS…

6

Other benefits 6%

Faster speed to market 29%

Better customer retention 34%

Product or service innovation 40%

Lower transaction costs 69%

Additional revenues 73%

Source: Accenture Platform Survey, 2016

Benefits realized by 93% of SMEs who participate on existing platforms


Source: Accenture Platform Survey, 2016

Top 3 Challenges faced by Chinese SMEs for participation in digital platforms….

….and by Large Enterprises for transition to the platform model

Other challenges

8%

Impact on existing businesses

10%

3%

Lack of best practices

11%

Data security and privacy concerns

23%

Lack of talent

Unsure how to create value with platform

Difficulty in mindset & organizational shift

25%

20%Lack of talent

47%

Platform services do not meet needs

43%

64%

7%

Inadequate digital infrastructure

Unsure how platform generates value 26%

Other challenges

Data security and privacy concerns

49%

BOTH SMALL AND LARGE COMPANIES NEED TO PREPARE FOR PLATFORMS

INDUSTRY EXPERTS SAY LESS THAN 10% OF START-UP PLATFORMS WILL SUCCEED


Proliferation 1,500+ online lending platforms in China alone

8

From B2C to B2B and O2O (online to offline)Expansion

Platforms extend into new adjacent marketsDisruption


THE SHAPE OF THE PLATFORM ECONOMY

9

Accenture Platform Economics Model

Source: Accenture Research


5 FACTORS OF SUCCESS –PLATFORM ECOSYSTEMDynamic ecosystem enables businesses to achieve critical mass

10

PROPOSITION Create a compelling offer based on modular solutions to address the range of customers’ needs

PARTNERS Drive scale and agilitythrough support of app developers, specialist services, fulfilment houses

PROTECTION Build peer trust, going beyond the high levels of digital security and privacy

PRICEEngage participants through sophisticated, dynamic pricing

PERSONALIZATION Focus on the user journey by targeting individuals with tailored experiences going beyond any one transaction

Alibaba: cross-network effects between marketplaces and wide array of services for both buyers and sellers

Amazon: hyper-personalization of shopping experience to predict and fulfill customers’ need before they even realize it

Fidor Bank:Iincreasing the interest rates on deposits based on the number of Facebook “Likes” to its page

– Example –

DHGate: 2016 “Year of Trust and Safety” covering prevention and compensation measures

eBay: Developers Program to communicate directly with the eBay database through APIs

Copyright © 2016 Accenture. All rights reserved. Accenture Confidential Information. 11Copyright © 2016 Accenture. All rights reserved. Source: Accenture Research

PLATFORM ECOSYSTEMProducts or Pipeline 5Ps Digital Platform

Produce value at the company,sell to consumers

PropositionFacilitate user interactions to create a compelling proposition of shared valueIndividualistic value Shared value

11

Promote products and servicesPersonalization

Understand customer intent; focus on theuser journey

Promoting products Seeking intent

Recover charges from the customer depending on ability to pay

PriceEngage participants through dynamic pricing and willingness to pay

Static charges Dynamic engagement

Build trust in the company brand through reputable products and services

ProtectionEmbed peer-to-peer trust at the heart of the platform through prevention and compensation measuresInstitutional trust Individual trust

Seek support of service providers detached from business outcomes

PartnersCo-create with partners engaged through new revenue-sharing models

Detached vendors Joint stakeholders


US$20 billion invested globally in 1,053 deals in last five years

INVESTMENT IN DIGITAL PLATFORMS –LED BY AMERICA AND ASIA

Source: Accenture Research based on CB Insights, Tracxn and CrunchBase data

US$20 billion invested globally in 1,053 deals in last five years

DIGITAL USER SIZE AND SAVVINESS: Among consumers and businesses

POLICY AND REGULATION: Balancing producer interests with customers’ need for innovation

TECHNOLOGY & GOVERNANCE: Infrastructure and increasing adoption of technology

DIGITAL TALENT AND ENTREPRENEURSHIP: Hard (STEM) and soft skills

OPEN INNOVATION CULTURE: Collaboration with external partners and adjacent sectors

5 FACTORS OF SUCCESS –ENABLING ENVIRONMENTEnvironmental enabling factors determine national platform readiness

China: 670+m individuals using the internet and accessing digital content twice a day

India: large pool of STEM talent and tech startups, Global Entrepreneurship Monitor score 5 on 7

US: innovation clusters, tech-governance and ICT assets comprising 29% of all assets

UK: collaboration between university, industry and startups score of 5.7 on 7

Germany: scores high on cybersecurity (92/100) and ICT (5.2/7) rules


– Example –

Strong relationship between readiness and investments

MANY ECONOMIES WILL FAIL TO SUPPORT PLATFORMS

Index versus activity measured by investmentsG20 readiness ranking 2015

14

UKChina

US

South Africa

Canada

Brazil

Italy

Australia

Turkey

MexicoSouth Korea

Russia

Japan

France

GermanyIndia

Digital User size & savviness

Digital Enterpreneurship

Open Innovation Culture

Policy and Regulation

Technological preparedness

Source: Accenture Research



ACTIONS FOR POLICY MAKERS Address standards and rules on data protection Adapt regulations to encourage innovation Foster greater cross-border e-commerce Invest in digital infrastructure Help SMEs build capabilities and protect users

15


ACTIONS FOR ENTREPRENEURS Assess capabilities best suited to role: owner, partner, supplier Plan for scale and equilibrium of multi-sided markets Build critical mass by partnering early in the launch phase Embed trust in partnerships, including with large companies Embrace continuous anticipation and adaption of user needs

16


ACTIONS FOR INCUMBENT COMPANIES Identify areas prime for disruption and network effects Embrace new technology capabilities, specifically APIs Design open organization structures and processes Govern the open ecosystem and shared licensing models Embed a collaborative culture to co-create with start-ups

17


Madhu VaziraniThought Leadership Principal Director

Accenture [email protected]

Laurence MorvanManaging Director


Francis HintermannGlobal Managing Director


CONTACTS

For more visit www.accenture.com/g20-yea-digitalplatforms18

http://www.accenture.com/g20-yea-digitalplatforms

ABOUT THE RESEARCHIn collaboration with the G20 Young Entrepreneurs’ Alliance

50 leading expertsfrom eight priority G20 countries between January and June 2016

In-depth analysis across 16 countriesAustralia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Korea Republic, Mexico, Russia, South Africa, Turkey, United Kingdom and the United States

100 SMEsIn China

Extensive secondary data

Platform Readiness Index30 quantitative indicators5 factors


50 Large CompaniesIn China


Technology

5 Ways to Win with Digital Platforms