The Platform Economy Is Inevitable in Machine Construction

What is the platform economy all about?

The platform economy is an area of the economy that focuses on digital services. Be it in tourism or e-commerce, digital platforms have become an integral part of everyday life.

B2B businesses can use platforms to sell products or use them as a portal for data exchange with partners and customers to

• create added value for customers, for example by making interactions easier and enabling product optimizations,
• accelerate their processes, and
• increase their sales.

What types of platforms are there?

There are various applications for platforms in the field of machine construction. The Federation of German Industries (BDI) handbook for B2B platforms makes a distinction between data-centric platforms and transaction-centric platforms:

• Data platforms network processes and data and enable data-based business models, for example to make it easier for technicians and customers to access aftersales and service information.
• Transaction platforms focus on services and trade. They serve as marketplaces in order to boost stagnating sales through digitalization of the spare parts business, for example.

You can find all questions and answers relating to aftersales platforms in our Service portal FAQs. 

The VDMA defines a third type in its platform whitepaper with IoT runtime environments as a bridge between IoT and the automation level.

What significance does the platform economy have in machine construction?

Digitalization and Industry 4.0 create the prerequisites for networking data, and a platform forms the technical basis for generating added value and sales.

The platform economy facilitates the monetization of networked data and promotes exchange between machine manufacturers, suppliers, technology partners, and customers. Customer expectations are also changing, as operators are increasingly appreciative when machine manufacturers make their service as digital and convenient as Amazon and co.

The platform economy offers machine manufacturers the following opportunities

According to a Roland Berger study, the platform economy opens up three types of added value in machine construction:

• Reduction in transaction costs
• Utilization of networking effects
• Creation of specific customer benefits

Machine manufacturers are achieving greater efficiency and are establishing closer relationships with their customers so that they can work with their products in a better way. This improves customer loyalty over the long term.

From a finance perspective, platforms are also worthwhile in the long run: IDW and vbw found that 71 percent of B2B companies that already use digital platforms generate additional sales via the platform—through additional digital business or greater process efficiency. Forty-six percent of those surveyed reported that use of the platform also had a positive impact on the overall profitability of their business.

Challenges in implementing platforms

Ninety-six percent of businesses are impressed by the opportunities offered by platforms. However, machine manufacturers are often unsure of what specific benefits platform-based business models offer them.

Compliance issues, a lack of expertise, and a high level of data complexity present further hurdles. What's more, many providers do not know how to price digital value-added services or whether customers are prepared to pay for them.

The following dos and don'ts serve as a guide to overcoming these challenges.

Avoid the following pitfalls

• ROI expectations that are too high: The platform economy is not about rapid return on investment, but rather about creating a differentiating feature for long-term competitiveness.
• B2C focus: Different rules apply in machine construction than in e-commerce, for example. Success depends on the added value of the platform, not on the number of users or the growth rate.
• Digitalizing on the side: Entry into the platform economy represents a profound change for machine manufacturers and must be carefully planned and implemented.

Tips for success with platforms

• Digital ecosystems are not an end in themselves, but instead need a specific purpose such as generating additional business models.
• Successful monetization requires recognizable added value that users are willing to pay for. As a machine manufacturer, your in-depth understanding of your machines is what gives you the edge here.
• Customer needs as the guiding force—use them to continuously develop your platform.
• Ideally, start on platform projects sooner rather than later, as trying things out is more important than missing the boat.

Our free whitepaper provides ideas for marketing your digital services: