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In this episode of “The Business of Product,” Patrick Carmitchel, VP Product Management, TSIA, caught up with Laura Fay, VP Research - XaaS Product Management, TSIA, Suraj Kumar, Chief Platform Officer, Axway, and Shaun Ryan, VP Vision and Strategy, Axway, at Technology & Services World 2019 in Las Vegas to discuss the topic “Disruption is Here.” So what does this ominous sounding proclamation mean? This episode will explore the concept in-depth, and address challenges and recommendations for accelerating growth and APIs through platform business models.

Listen to full interview here


The Speakers:

Patrick Carmitchel, VP Product Management | TSIA

Laura Fay, VP Research - XaaS Product Management | TSIA

Suraj Kumar, Chief Platform Officer | Axway

Shaun Ryan, VP Vision and Strategy | Axway

The Topics:

00:01 - Introducing the interviewees

01:11 - Introducing Axway

03: 24 - The Role of Platforms and APIs as a solution to digital disruption and transformation

08:38 - The role of culture in business transformation

09:20 - Why platforms will disrupt every business

11:31 - Industry investment in platforms

13:24 - Simplifying the development and rollout of platforms

18:24 - Industry examples of business model shifts to leverage platforms

23:02 - The role of value exchange

25:09 - Challenges and recommendations in developing a platform business.


Full Transcript
Patrick Carmitchel: (00:01)

You're listening to The Business of Product, where product leaders are empowered to transform technology and services. This is Patrick Carmitchel, VP of Product Management at TSIA. I'm sitting down today with Shawn Ryan (VP of Vision and Strategy) and Suraj Kumar (Chief Platform Officer at Axway), as well as Laura Fay (VP of XaaS Product Management Research and Advisory at TSIA). The topic today: disruption is here. We're going to dive into accelerating growth and APIs through platform business models. Thank you for your time today, Shawn, Suraj, and Laura.

Laura Fay: (00:35)
It's great to be here.

Shawn Ryan: (00:36)
Yeah, great to be here. Thank you.

Patrick Carmitchel: (00:38)
So you guys just came hot off the press; you were just in your session. How'd that go for you?

Suraj Kumar: (00:42)
It went great. We had a great audience that was very inquisitive and trying to understand how to align their business with the platform business models, how they get to APIs and relate it to each other. TSW has been going great and we had a great, very interactive session; a lot of interest in the platform, business models, and APIs.

P Carmitchel: (01:03)
Excellent. There was definitely good energy in the room. Let's talk just a little bit about Axway for the audience here so they understand what you guys are all about.

Shawn Ryan: (01:11)
Axway, as mentioned, is in the integration space. We connect ecosystems or companies together to exchange data. Whether it's for traditional transactions that support buy-side, sell-side transactions, or exchanging bulk data. We secure some of the most amazing trade secrets in the world through our technology. We also enable exchanges between healthcare organizations on sensitive data. Banks don't move truckloads of money - they move data, and that data is sensitive. It's under attack. We manage those exchanges for some of the largest banking organizations in the world. We also sit behind the innovation that occurs. When you look at APIs, they're the palette that developers leverage to build and create new experiences. When building an app, something that just comes to mind quickly is not just about where you see buttons lined up, though that's important, too. It's about access to information that makes the experience rich and meaningful for an organization.

Suraj Kumar: (02:22)
Great comments from Shawn about our journey on how we started off. We've been around for many, many years, and started out as a traditional software company. We are transforming even today and it's a continuous process of becoming a platform company. That's been great to see for us. As part of that, we see and work with a lot of our customers who are moving into platform businesses, API enabling, opening up their data and getting into new strategies. It's a great and amazing journey that Axway has gone through from where they were even three years ago to where we are today and where we're headed. There’s a lot of excitement in the company to work with our customers.

Patrick Carmitchel: (03:07)
Excellent. Thanks so much for giving us that background. Now, Laura, you thought this was a really important topic to address for the members here at Technology and Services World and other attendees. I just want to talk a little bit about why it was so important for you to make sure that you had Shawn and Suraj come and speak.

Laura Fay: (03:24)
This is a really great topic in terms of monetizing platforms and APIs. I've just come off of a round of research around portfolio investment and what we found is that platform and shared services strategies rank in the top three investment categories for technology companies today. A lot of people are trying to figure this out and asking: How do I evolve? I want to get stickier, right? How do I evolve to have a new platform strategy that I can effectively monetize? It was a great session with Suraj and Shawn from Axway, who are members of the product management community here at TSIA and brought their expertise to the community and shared their experiences.

Shawn Ryan: (04:16)
The journey to shared services started a lot earlier before it was a big topic. I remember years back working with a large bank that took our technology to serve different lines of business. We were in the early stages of talking about the cloud and it came up on the table and he said, “Quit talking about the cloud, about something out there. I am a cloud.” His service was serving lines of business within the organization, which were individual tenants with unique service-level requirements and each needed to be served with a level of self-service. It was a visionary statement at a time when there was a kind of nebulous notion of the cloud, and what it was and what it would be. Those attributes were key to how he operated. That carried into our journey as a company where we serve customers, whether they're on-premise or in the cloud proper, operating as a shared service. We work as a shared service as well, serving different organizations.

Patrick Carmitchel: (05:25)
Disruption isn't necessarily a new topic, right? But the reality is, you jump right into your presentation, and business leaders are lagging in their understanding of what it means to be a digital business amongst this disruption. Application leaders are failing to create new growth opportunities. Technology leaders are failing to develop open solutions and innovate. Why do you think it's such a challenge for leaders to be able to jump on board and start to move toward this platform model?

Suraj Kumar: (05:52)
I think one of the things is that companies don't see it. They're looking at traditional competition and they're looking at their traditional business and a lot of their thinking is around years or decades of being in a certain manner. But there's a huge shift that's happening and your competitor may be coming from a completely different space. One of the things we've talked about in our presentation is that the new competition for Mercedes may not be a BMW, but maybe somebody who offers transportation as a service. Mercedes is probably still thinking about “How do we beat BMW?”, whereas somebody else is coming in from a completely different angle. The other thing that I mentioned in the presentation was regarding the huge shift in payments. We talk about credit card payments and my kids, or other teenagers today, they're all growing up on things like Venmo. Are the folks at MasterCard and Visa thinking about more of the traditional competitors or the disruptors? There's a little bit of a business strategy and challenges to see and imagine. Shawn talked a little bit about how you really have to imagine what it can be and what it could be as opposed to the traditional way of thinking. That's a huge area that I think that business leaders and strategists should be thinking about when they think about platform and platform business models going into a nontraditional type of disruption that can happen. All of a sudden, you may find yourself saying, “Oh my God, I didn't see that coming.” It’s a completely different, disruptive business model which is somewhat challenging for everybody. We've been used to doing business in a certain way or thinking in a certain way, but we should be challenging ourselves.

Laura Fay: (07:52)
You mentioned at one point that it's a failure of imagination sometimes, right? It's really just addressing that.

Shawn Ryan: (08:01)
The focus so quickly becomes being digital but not digitally transformed, and we've started to use those terms. It’s very easy to provide a capability in an app, but the question is: are you transforming the experience of your buyers, your customers, to be something that's going to attract them at a much greater rate? Can you maintain longevity in the relationship because of the experience they're receiving?

Patrick Carmitchel: (08:29)
Even beyond the buyers, you have to consider the builders. When you have a platform, you're now enabling an ecosystem - a field to develop within that platform.

Suraj Kumar: (08:38)
The other thing we talked about in our session is also culture. We have to change the culture within the organizations, but it takes time, effort, and dedication to consider how to go about changing. Even at Axway, we're constantly looking at how we change the culture of the people that are working on everything from development to marketing, from pricing to building the products. It's an entire company that needs to change its culture to move towards these platform experiences and think about disruption and change that's taking place.

Patrick Carmitchel: (09:20)
Yeah, absolutely. To build off that - why is this so important? There's a very poignant slide within your presentation that says platform business will disrupt every industry in the next five years. Let's talk about that.

Suraj Kumar: (09:34)
Regardless of what industry you're in, regardless of what geography you're in, we see disruption taking place everywhere. We see the disruption of how services are provided to consumers in financial services, mining, and government. There are some fundamental shifts taking place, things like the cloud opening up through APIs. Regulations and other things are changing, and people are more open to sharing their information. There’s a new generation of people who are used to a different set of experiences - mobile experiences. Pretty soon, we’re going to see 5G come in and change the whole dynamic of IoT today. 

There's constantly a confluence of events that are really transforming and coming together that we're going to see really disrupt a lot of companies over the next five years. These businesses today seem very comfortable in what they're doing but are going to face a significant amount of change. In the restaurant industry, there’s now the concept of cloud kitchens, which doesn’t mean they're literally in the cloud but that they don't have a storefront. They just use GrubHub and Uber Eats or any other related service. You don't need to have a restaurant storefront, you just need to cook food that someone can get delivered to their home.

Patrick Carmitchel: (11:16)
It’s definitely an exciting time as the convergence of all these different types of technology come together to enable different experiences. Laura, you did mention something related to recent research on that topic.

Laura Fay: (11:31)
When you look at the investments that are going on across the industry, and recently the data spiked, this point that Suraj is making really stands out. What we see is that 63% of technology companies are reporting that they have a significant investment in platform and related technologies. That's in the top three categories of investment overall. You may be experiencing that as part of your company and then you also see that in the data that comes out from our membership across the board.

Shawn Ryan: (12:03)
You have a couple of drivers, we call them GAFA: Google, Amazon, Facebook, Apple. There’s recognition of their success but more importantly, if you look at the network effects that come from a platform that allows us to extend that reach of a business through ecosystems that then create a momentum within the business, allowing it to grow and extend its reach. There’s so much positive that comes from looking at this as a business model. Delivering a great experience is part of digital transformation. The transformation of the business model is even further than that.

Patrick Carmitchel: (12:48)
Thank you for taking the time to tune in. We will continue the interview in just a moment, but before we go ahead, I want to make sure that our listeners know how to access the presentations from today's session. If you are an attendee at TSW Las Vegas, for the next 30 days, you'll have access to all presentations at TSIA.com/conference. That's TSIA.com/conference. And if you're a TSIA member with a XaaS Product Management research subscription, you can go to TSIA.com anytime, sign in, and access the member resource center. There's a whole lot there for you, including all of the presentations from the conference. Let's get back to the interview.

Laura Fay: (13:24)
One of the things that you, Suraj, talked about today addressed the issue of complexity and tried to debunk that a little bit. We do still see this issue where people think, “Oh my God, there are platforms and APIs. How do I monetize that?” It seems like there's a lot of complexity with a myriad of ecosystem partners, but you actually tried to debunk the notion that it's actually very complex. Can you talk about that?


Suraj Kumar: (13:52)
Sometimes looking from the outside and saying, "Hey, I need to do all of that stuff," can be overwhelming. You don’t have to start with doing every single thing day one. The platform journey is a multi-year journey; it’s three or even five years of a continuous journey and you don't need to be fully there day one. That's the great advantage you have since a lot of these things take time and it's a transformation. 

What we’ve seen is that the important thing is making sure there's a clear business strategy first and aligning the business strategy with how you're going to enable that business strategy through APIs, opening that up, and building API products. It’s key to understand the value that’s being exchanged and balancing the value for producers and consumers. Trust me, nobody's going to get it right the first time. We ourselves keep balancing and rebalancing what we're trying to do, so it really is a continuous evolution. From there, you can look into monetization and evangelism or opening it up to additional users that can create or add value. You can start with just one set of APIs or one API as a trial and create a simple exchange of value that can grow over time. We've found that taking a stepwise approach of experimentation instead of saying"I need to have this complete platform," is crucial because nobody honestly knows what exactly is going to be the right business model, the right value exchange, or the right type of monetization model. My advice is: don’t wait. Set up a business strategy and proposition, start opening up what you can through APIs and continue working through the various steps without worrying about, "Oh, I need this complete platform on day one."

Patrick Carmitchel: (16:07)
It'd be really helpful to talk about your specific journey and taking that step into the API motion, what that did for you, the challenges you faced, and how you started to kind of read forward into what was going to be a good business model for Axway.

Shawn Ryan: (16:21)
Our own journey started with two things happening in parallel. One was that we were API-enabling our core technology set. We recognized that they were serving as a shared service within our customers and they were using APIs to tune how they served different lines of business across all of the integration patterns. The second piece was the dawn of API management as a discipline within an organization to manage and secure APIs, and publish those to different developer communities with appropriate security. That's laid a foundation for us. 

The culture shift we would require was a bit of a shock that occurred at the executive level, but that's not enough to change a culture. That kicked us in gear to start understanding that we need to change our behavior. Then there was the evangelism that occurs from those that see and recognize the patterns in the business and the patterns in the market that really helped us change internally and helped us work with our customers to, in turn, help them see how to change. The journey to a platform for us included an acquisition, but it also included us building on that extensively from a number of our other capabilities and then leveraging our existing ecosystems to see the platform business. In our existing ecosystem, we had and have a number of traditional software customers. We had to look at the balance of how we offer services to them from the platform that are natural extensions of what they do. That offer to them brings them into the platform experience and then we can grow and nurture them from within. This is our journey and we are still in the process of it. It's been exciting to see. It's interesting as mentioned in the session as we are a platform ourselves. We help our customers be a platform internally using our technologies to exchange artifacts between producers and consumers and then they leverage our technologies as part of building their business as a platform.

Laura Fay: (18:42)
That's a perfect segue to asking you to share a couple of customer examples from your session. I think one was PODS and you also talked about the mining industry. It's really fascinating to hear how some of these industries and companies have shifted their business models by leveraging platforms.

Shawn Ryan: (19:02)
One of the case studies on our website is PODS, as mentioned, and they're a great example of an organization that knew their core strength, which is delivering shipping containers to a customer-specified location. They don't do the packing; packing is left to the customer. The business picks up the container and move it to another customer-specified location, where the customer unpacks it themselves. That's the core strength of PODS. There’s some very innovative technology there such as the Podzilla, which is what moves the shipping container around, but they took their business to another level through a platform business model. PODS has opened their business through APIs, which allowed other organizations to leverage and access their core capabilities and core strengths to extend their business models. That ranges anywhere from companies doing home remodeling automatically provisioning a pod and the process to the home being remodeled, all the way up to a large shipping company during peak Christmas shopping and shipping season provisioning pods as temporary cross-docking locations to help expedite delivery of packages during that busy time. Their core strength didn't change, but other organizations built business capabilities on top of what they did. The backbone of that was APIs but it took a vision and an organization that was creative in how they thought about how their business could be applied in other use cases. They accepted the fact that they could open the door to others leveraging their core strength in ways they hadn't even thought of.

Laura Fay: (20:50)
It probably required them to be a little brave to consider, “Is this going to invite the wolf into the hen house here or are we going to be able to really grow and leverage our core strength if we invite these others in?” As you say, it takes a vision.

Suraj Kumar: (21:08)
Dunn and Bradstreet is a good example of an Axway customer as well. Dunn and Bradstreet has tons of data about companies such as their financial performance, creditworthiness, and all sorts of other information. They used to send out CDs years ago, then they started online databases where you can log into Dunn and Bradstreet and look up information. What they did is very similar to what Shawn mentioned before, where they started exposing their data and opening up their data through APIs as a technology with the vision of "We want to provide what information is needed when and where it’s needed." If you need to look it up now, the data from Dun and Bradstreet is automatically done in the background. You can think of a salesperson who may want to extend credit to a particular company for something. Everything they need is within Salesforce, where they can click a button and say, "Show me the creditworthiness of this company," and instantly that information is available. Little do they know that the information came from Dunn and Bradstreet in the background through an API-based integration and that Dunn and Bradstreet opened up their data as a platform for various ways of consumption. This really helped them grow tremendously and made it very easy for the person who needs access to that information. They no longer need to go in and log into yet another system, click to find some information that may or may not be visible. It improved Dunn and Bradstreet’s usage levels, their customer experience, and helped them drive tremendous growth in their business in terms of what they're doing. Again, another great example of a transformative platform-oriented business model.

Laura Fay: (23:02)
When we were talking about value exchange in the session, one of the challenges you mentioned was that sometimes vendors only think about, “What's the value I'm going to get out of this? I'm creating value but how am I going to monetize it? What am I going to do?” But the reality is, particularly in platforms, that it's really about that value exchange. It’s about what value the other party or the other member of the ecosystem is going to realize as well. I would imagine that requires a shift in thinking.

Suraj Kumar: (23:37)
Exactly, it requires a shift in thinking and requires trying to find the right balance. The platform provider’s not keeping all the value; there's value for the consumer, for the producer, for the person who has the platform as well. 

One of the examples I was talking about in the session was a peer to peer loan provider. All the platform is doing is providing a venue for somebody to come in to request a loan and for somebody else to provide a loan or a part of a loan. If the platform provider takes a lot of money, it’s no longer financially beneficial for the person looking to provide a loan. At the same time, somebody who's looking for a loan through that platform may wonder, "If I'm paying a very large amount of costs via interest rates, how does that benefit me?" There’s a lot involved in this value exchange and how it’s all balanced that needs to go into developing a platform that gets fine-tuned over time. Sometimes, companies are initially interested in attracting more consumers or producers and they need to actually first adjust how they're pricing that model and then tune over time.

Patrick Carmitchel: (25:09)
You guys have been on a journey yourselves with this. Let’s talk about one of the major challenges that you faced along the way that may help those that are going to be facing similar challenges.

Shawn Ryan: (25:21)
One of the challenges in the process is finding that balance to seed the platform business. There was a question towards the end of the session around monetization strategies and when to monetize versus when not to. A key element there as you're seeding the business is delivering value to members of the ecosystem, incrementally initially, in a way that they're attracted to use our additional capabilities. We have an existing, established customer base and it's key to offer the right level of service to them, the right level of capabilities to them that is a natural extension of what they do and bring them into using the platform. But then there also has to be a monetization plan long-term for additional value that they receive, lest we give away the farm and have nothing to feed our families on down the road. Finding that balance to deliver some value, monetize appropriately initially, and have a path that balances value for us as well in the process is the challenge.

Patrick Carmitchel: (26:32)
Honestly, even though the entirety of Axway isn’t directly impacted, it really looks a lot like what you'll see in JB Wood and Thomas's comments within the Technology and Services Playbook. There's the friction curve and right at that moment in time when you're starting down this path, you are the future value aggregator and there's limiting all of the friction as much as possible until you start to monetize and provide additional offers as it proves out the value exchange over time. It's interesting that you guys have lived through that and made it to that place where you're actually able to monetize effectively once value has been achieved. 

When you went into your session, you definitely wanted to make sure somebody that was attending as a product leader could have a takeaway. What do you hope that these product leaders are going to take away from the session?

Suraj Kumar: (27:31)
Great question. The answer is: don’t wait. Start thinking about what the disruption is, how you can change, and become a change agent. That's why we come to conferences like TSW where you want to learn about that. 

There are always takeaways like “open up your data” and “balance the value” or “change the culture”, but I'd like to say that if you're a product leader or really any other type of leader, the key takeaway is thinking about your business from a different perspective. 

As Shawn said in the presentation, “failure of imagination is one of the reasons for not being successful in the platform.” We all sometimes go back to our jobs on Monday morning, back to a bunch of emails and other pressing items, but there's a great opportunity out there for all of us in this new era and also great challenges that you'll face. My recommendation and what I urge people to do is really re-imagine your business. Consider, “What's the strategy going to be? Where are we going to go over the next few years?” That's how it came to us at Axway. We started re-imagining what Axway is and what Axway could be, and it's been a great journey for us since then. I would urge the same for others listening to this podcast and others who attended this conference as well.

Shawn Ryan: (29:05)
Very close to that is the concept of customer obsession and looking at the other organizations that you build relationships with and co-create with in the process. The customer's journey is more than just dealing with your product as it is today or just dealing with your organization around what they're doing. You have to get outside of your organization from a mindset around the customer's journey to optimize who you're working with to build the platform model. This way their experience is rich, it's full, and it's not limited to just the myopic view that you may have if you stay in your seat.

Patrick Carmitchel: (29:48)
Laura, you're the one that reached out and you knew this was an important topic for TSW. They came, they spoke, they had some great questions. What do you think - mission accomplished?

Laura Fay: (29:56)
Yeah, absolutely. I think the audience got a lot from it. We could see that from the engagement in the session and people standing in line to ask more and more questions. You can tell there's a hunger for understanding the topic of how to monetize platforms. I'd like to thank Suraj and Shawn for taking the time out of their really busy schedules to come and share their experience and lessons learned.

Patrick Carmitchel: (30:19)
Yeah, absolutely. Thank you all very much.

Suraj Kumar: (30:21)
Thank you very much for the opportunity and also for this chat. We really enjoyed it. Thank you.

Patrick Carmitchel: (30:27)
This is Patrick Carmitchel at TSIA, on the Business of Product. Thanks for listening. 

If you have not already attended Technology and Services World (TSW), I would certainly encourage you to do so. This is a chance to engage with product leaders from the best technology companies in the world like we are right now and gain new insights to accelerate the success of your products and services. TSIA hosts TSW annually in both the spring and the fall. You can go to TSIA.com/conference to register and learn more anytime.

 
 
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Laura Fay

About Author Laura Fay

Laura Fay is the vice president and managing director of offers research and advisory for TSIA. She also serves as TSIA’s vice president of XaaS product management research. Laura is a technology industry veteran with over 30 years' experience driving business growth in the enterprise technology industry via leadership roles in product management, general management, product development, and customer success.

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