To support its members in understanding the use of platform economics, the VDMA founded a group of platform economics experts last year and published a study together with Deutsche Messe and Roland Berger. The participants of this group of experts are companies that have already gained profound experience and have established platform solutions within their own companies.
Study Platform Economy in Mechanical Engineering
The VDMA, Deutsche Messe and Roland Berger conducted a study on the platform economy in German mechanical engineering and plant construction and published the study entitled "Platform economy in mechanical engineering: Opportunities - challenges - options for action".
The Group, made up of 15 VDMA members, included companies of all sizes and stages from medium-sized to classic machine and plant manufacturers as well as suppliers from the factory automation and software sectors. All of the companies had already gathered relevant experience with platforms. Some are in the development phase, in the early phase of operation or as users - and were therefore able to introduce different perspectives.
The study is the first comprehensive analysis of the structures of platform-based business models in the B2B segment and especially in mechanical and plant engineering. The study Platform Economics is available in German
The working group has exchanged experiences and best practices with each other and shared their expertise, and knowledge which have been collected and the findings published.This is to enable other companies within the industry to take their first steps towards their own platform solution.
This year, the VDMA will publish a whitepaper which should serve as guide for making entrepreneurial decisions and provide a clear orientation based on the example of successful projects. Dr Julia Duwe from TRUMPF Werkzeugmaschinen GmbH & Co KG and Ernst Esslinger from HOMAG are among others working on the paper.
The aim is to pick up potential users as practically as possible. There are two essential content points in the whitepaper: The necessary change in the corporate culture, as well as strategies and experiences for monetization. Relevant method modules are explained in practical terms and illustrated vividly by the experiences of company representatives who have already taken the first steps towards platform economy. "In order to successfully shape the platform economy, the focus must always be on the customer's point of view,” says Ernst Esslinger. In particular, care should be taken to ensure that
- the offer is comprehensive and transparent for the user
- added value for the customer is created.
- easy, low-threshold access to the platform is possible
"Platform companies place more emphasis on ecosystem governance than product optimization," Dr. Julia Duwe quotes scientist Geoffrey G. Parker.
In addition to the publication of the white paper, central information events and exchanges of experience in companies from the VDMA's circle of experts are planned. The next event
is offered by the Kompetenznetz ProduktionNRW and will take place on 23rd of May 2019 in Essen, North Rhine-Westphalia. So far, the findings of the study are that digitalisation not only changes production, it also leads to entirely new business models. The platform economy is also anchored in traditional industries such as mechanical engineering. However, success is only possible if this change is not seen as a pure IT project in the company. The platform economy needs real team spirit, the lonely fighter has had its day.
Good business can only be done if the customer receives real benefits. This guiding principle applies to the "old economy" as well as to the new connection between manufacturer and buyer, which is increasingly controlled by algorithms. Operators of B2B platforms must also focus on the needs of their users as comprehensively and individually as possible. Only if the platform user finds an offer that contains a large part of the products and services he needs daily does a platform bring the additional benefit that creates customer loyalty. This applies to Amazon and Alibaba as well as to industrial platforms such as Siemens Mindsphere, AXOOM or adamos.
Companies who are prepared to engage with the platform economy must develop further: from a classic product provider to part of a value-added network. Beyond their traditional product portfolio, they have to offer products and services in partnership with others, while at the same time consciously and openly facing market competition. "If we want to offer value-added services, we can not only offer our customers our machines, but also have to offer machines and services from other market participants, so that the customer does not have to go to different platforms," says Ernst Esslinger of HOMAG.
In this context, leadership roles in the company are also changing. The classic head of department and division becomes a kind of conductor who must orchestrate an entire ecosystem around platforms, collaboratively and across company boundaries. The goal here is to design data- and service-oriented business models that generate additional benefits for all partners involved. In this way, the entire ecosystem is strengthened, and the company is positioned sustainably.
Companies often have concerns about the security of platforms offered through the internet. There are holistic solutions for this which secure everything from the system over the platform to the cloud. For this reason, software vendors can analyse everything, including threat scenarios. These are passed back to the machine builder in the form of analysis and optimization models. "That's why the Internet is safe on the platform," explains Sebastian Seutter of Microsoft Germany.
This paradigm shift requires a high level of attention and conscious team management, especially internally. The classic division - production and sales - has had its day in the platform economy. Throughout its entire cycle, the product becomes a team effort in which many areas must be integrated that until now have only provided support services within the actual added value. For example, the digital possibilities for the regulation of claims offer completely new possibilities for shaping a business relationship. This can become a unique selling point in the daily exchange with customers. In such process’s employees must be taken along and integrated, a collaborative leadership style in this context is indispensable.
Connectivity and interoperability are fundamental to the success of collaborative, networked business models. However, this does not only affect the technical characteristics of the networks. Rather, networking begins with the people, with the employees involved.
Employees are picked up, knowledge is shared, many more people in the company need to know what is happening with the company and beyond its borders in the value-added network because of digitisation. Participants need to understand how the processes of a platform economy work to optimally coordinate their own actions and provide input for possible improvements. Lonely fighters have no chance, the functioning team is decisive for success.
Therefore, a good project team is crucial for the development of a platform economy in the company and for the success of the project. The joint solution is developed by a team that works together on a task-oriented basis and can adapt changes in technology or market volatility quickly. Open communication, clear objectives, transparent working methods and a strong team spirit promote the success of the project. The platform economy must follow the proven rules of change management to be quickly and sustainably successful.
Download a copy of the study or to discuss platform economics contact the team at VDMA or visit the VDMA stand at Hannover Messe,
Hall 8, Stand D16 from 1 – 5 April 2019.