Advice for buying or building a digital platform

As digital technologies mature and become applicable, they present a tremendous opportunity for companies to rethink and rearchitect their business to create better client experience, better quality results and lower costs. These opportunities are broad and extensive. At the core of all digital transformations is the assembling and perfection of a digital platform. But companies need to better understand what’s involved in digital platform. Whether the objective for the platform is as grandiose as transforming an industry or as mundane as improving a mailroom service, many companies make a big mistake when looking to build or buy a digital platform.

Let’s consider two examples of digital platforms aimed at transforming the companies’ operations and costs. A construction company built a digital platform to improve productivity and safety of several hundreds of subcontractors. The firm used geofencing technologies and implemented RFID technology and sensors into the workers’ helmets. The technology alerts supervisors if workers enter a zone they are not authorized to enter.

In another initiative, the company built a platform to improve utilization of its materials and equipment moved to different locations and even different countries. The objectives are to increase efficiencies and better monitor the life cycle of these items. RFID technology and sensors placed on the equipment and materials is, again, a key technology in the platform.

In a second example, a health care company built a digital platform to improve the customer experience, reducing the customer-onboarding process from three weeks to 20 minutes. DocuSign technology enabling e-signatures is a key component of this platform.

In both companies, the ultimate objective is to offer the capabilities of the digital platform to other companies in their respective industries, thereby changing the business model in both companies to create a new revenue stream.

For the companies potentially selling a digital platform, and for customers potentially buying the capabilities of a digital platform, it’s important to understand what digital platforms are and how they work.

Scalability and unique factors

At one level, companies find that digital transformations are often unique experiences to their company. For example, mailrooms are unique to a company. Therefore, there is no consistent, scalable digital platform for mailrooms that works well in all companies. This presents an economy-of-scale challenge in moving forward.

Although an experience is unique to a company and doesn’t scale, the components of a digital platform tend to be generic and do scale. Almost all digital platforms require a data-ingestion engine – the ability to find, cleanse and ingest the data to be able to provide the platform. The data-ingestion techniques and components are often identical across companies. What they are applied against is unique to a company, but the tools and modules to do the data ingestion are the same. That part of the platform can be consistent across platforms and across companies. Companies can consistently build standard tools, a standard platform component and achieve economies of scale on that standard.

The same is true with an API or a digital output vehicle. All digital platforms need to talk to other software; therefore, the tool set and modules to do that are consistent. They also scale across platforms and across companies.

Likewise, most digital platforms leverage some form of transactional rules-based engine or machine-learning transactional engine to do computational tasks or some rules-based activity. They take data, compare it against the rules and then process that data in a timely, consistent fashion. Those transactions modules also tend to scale across platforms and across companies.

Moreover, most digital platforms require some form of analytical capability or have the potential to leverage some form of analytical engine and, increasingly, an AI engine. This allows for oversight predictions that enrich that platform. Once again, these analytic engines and AI machine-learning engines can scale.

Another scalability example is compliance. In today’s business world driven by compliance regulations, processes must be secure and must deal with regulatory agencies and provide a compliant dashboard and reporting. Those modules of a digital platform are standard and can scale.

As I’ve described, unique digital platforms are comprised of generic or standard modules that have been assembled and include some additional work to create the end-to-end powerful vehicles that transform the work the platform handles.

Avoid this mistake

If your company is now looking to buy a digital platform, keep in mind that it’s a big mistake to look for the platform itself to scale across companies. If you’re being sold a platform that scales across companies, you should recognize that, for the most part, it’s unlikely to work. There are some examples (such as Salesforce.com) where the platform truly scales across companies. But most digital platforms are unique to their company and need to be assembled.

The world is abuzz about digital transformation, and companies are looking for ways to drive digital transformation that achieve the promised benefits. Here’s my advice on how to build an effective digital platform. Seek a unique platform assembled with standard and scalable modules. Whether you’re building an underwriting system, a customer service platform or a mailroom service platform, assemble your platform from standard modules that are much cheaper if scaled but provide a unique experience to your organization if configured for your organization.