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Co-evolution of platform architecture, platform services, and platform governance

Marin Jovanovic: May 20, 2021

Expanding the platform value of industrial digital platforms In an increasingly digitalized world, innovative manufacturers are moving away from selling products and services towards selling advanced platform services such as fleet management services or autonomous solutions. To develop advanced platform services, manufacturers are required to develop an industrial digital platform. However, many manufacturers are struggling to develop their digital platforms. Indeed, despite all the media hype, digital platforms did not experience wide adoption in the B2B context.

Together with my colleages, I recently explored four world-leading construction equipment manufacturers that developed highly advanced industrial digital platforms. The research shows the three-step model to develop an effective industrial digital platform, focusing on platform architecture, platform services, and platform governance. From IoT sensors to AI-driven analytics There is no one-size-fits-all approach to the industrial digital platform development. However, the study shows that a key part of the digital transformation journey was investing in the data collection technology of the platform core.

During the initial phase, manufacturers tended to invest in the platform architecture progressively and increase the capacity for product data collection. This included enabling data gathering for major installed bases ex-ante to the possible use cases. Next, manufacturers focused on analytics utilization as advanced sensors provided increased data quality and data variety. It enabled manufacturers to start aggregating data, correlating different data sets, and finding patterns. Finally, artificial intelligence enablement brought the power of AI and platform openness that could leverage external data sources and reveal hidden insights. From monitoring to autonomous platform service development, manufacturers progressively developed more advanced platform services building on the platform architecture functionalities.

The platform service development closely mirrored three phases of the platform architecture development. Therefore, we delineated three levels of platform services: monitoring service development, optimization service development, and autonomous service development. Manufacturers began with monitoring service development, which initially took a machine-centric view and focused on creating automated reports (e.g., fuel analysis). The second group of platform services refers to optimization service development where the scope was extended from an individual machine to an entire fleet. The third group of platform services refers to autonomous service development. In the case of autonomous services, advanced platform architecture allowed to further improve flexibility, precision, and productivity of unmanned equipment.

How to govern an industrial digital platform? The industrial business-to-business context characterizes a low appetite for risk and requires a high level of privacy. Therefore, manufacturers gradually induced partners on the supply-side, followed by platform adoption on the demand-side (e.g., customers). The first phase included value chain expansion, which implied training, testing, and promoting the platform among traditional intermediaries such as delivery partners. In the second step, platform governance aimed at value system expansion, which involved simulating platform use among various partners and customers. Finally, the ecosystem expansion was facilitated by opening up the platform interfaces, promoting interoperability between different platform services as well as creating an open marketplace for new partners to deploy their value-added services.

Reference to full article: Jovanovic, Sjödin, & Parida (2021) Co-evolution of platform architecture, platform services, and platform governance: Expanding the platform value of industrial digital platforms  Technovation

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