The platform play:

How to operate like a

tech company
For tech to be a real driver of innovation and growth, IT needs to
reorganize itself around flexible and independent platforms.

by Oliver Bossert and Driek Desmet

© Yongyuan Dai/Getty Images

February 2019
 “The question is not how fast tech companies will What a platform-based company looks
become car companies, but how fast we will become like in practice
a tech company.” This is how the board member of a One of the global leading banks created about
global car company recently articulated the central 30 platforms. One such platform was payments,
issue facing most incumbents today: how to operate which consisted of more than 60 applications
and innovate like a tech company. that previously had been managed independently
from each other. The top team decided to bring
The tech giants of today have been some of the the 300-plus IT people working on development
most innovative companies in the past generation. and maintenance of payments together with
A handful of industry leaders, such as Ping An and the corresponding people on the business side.
BMW, are fast joining their ranks by reinventing Under joint business/IT leadership, this entity was
their core business around data and digital. What empowered to move quickly on priority business
distinguishes these tech companies is that their initiatives, to modernize the IT structure, and to
technology allows them to move faster, more flexibly, allocate the resources to make that happen.
and at greater scale than their competitors. IT is
not a cumbersome estate “that gets in the way,” but The team shifted its working model and started
an enabler and driver of continuous innovation and running the payments platform as an internal
adaptation. business that served all the different parts of
the bank (think payments as a service). This
The reason this is a competitive advantage for tech approach made it clear where to focus specific
companies is because their IT is organized around tech interventions: removal of nonstrategic IT
a set of modular “platforms,” run by accountable applications; modernization and accelerated
platform (or product) teams. Each platform consists shift of the target applications into the cloud;
of a logical cluster of activities and associated connectivity to enable swapping solutions in or
technology that delivers on a specific business goal out easily; and, most important, a major step-up
and can therefore be run as a business, or “as a in feature/solution development for the internal
service,” as technologists say. These platforms are business clients. This platform-based way of
each managed individually, can be swapped in and running the business was then progressively rolled
out, and, when “assembled,” form the backbone of a out across the group. Prioritization is set by the
company’s technology capability. Just as important top team (because empowerment does not mean
is that the business and tech sides of the company anarchy), and all IT interventions are run the same
work closely together and have the decision-making way, to ensure consistency and replicability.
authority to move quickly.
This is in stark contrast to the way large
This modular, platform-based IT setup of tech organizations normally act. Just establishing a
companies is what enables them to accelerate business unit to manage a new offering or running
and innovate. They can experiment, fail, learn, and a typical large IT project generally becomes a
scale quickly: they can get products to market 100 multiyear endeavor.
times faster than their more lumbering peers (think
weeks instead of months). With this kind of speed A closer look at the platform-based
and flexibility, IT can and should become a focus for
company
innovation and growth at the executive committee
Think of a platform not just as technology but as a
and board level. With new technologies and ways of
service, or what Silicon Valley calls a “product.”
working coming online, tech should be a competitive
advantage, not a burden as it is in far too many
Platforms focus on business solutions to serve
companies today (see sidebar, “Why now?”).
clients (internal or external) and to supply

2 The platform play: How to operate like a tech company

 Sidebar

Why now?

The notion of flexible, modular IT has been in vogue for ten years or so. But it largely remained a concept on paper, at least for many
large incumbent companies. That has now completely changed because IT itself has changed, and important management practices
EXHIBIT such asModular IT is now technically
agile and cross-collaboration possible.
are increasingly mainstream.

Before Today

Connectivity • Lack of well-established connectivity • Application programming interfaces allow

protocols blocks of functionality to talk easily

Deployment • Slow and physical effort • Cloud enables instantaneous deployment

Software
• Static and hard to change • New languages that are clean, structured
language
for data usage, and easy to adjust

• Big monolithic solutions, which were hard • Discrete blocks of functionality (eg,
IT solutions to change even within explicit parameters microservices), enabling much faster build
and delivery

• Overly complex “spaghetti of systems” • Technology ecosystems (internal and

IT architecture (often managed by independent business external), making it easy to pick and
units) choose

other platforms. They operate as independent work in an agile manner, delivering the solution itself,
entities that bring together business, technology, enabling continuous business-led innovation, and
governance, processes, and people management developing and running all necessary IT.
and are empowered to move quickly. They are
run by a platform owner, who takes end-to-end A platform-based company will have 20 to 40
responsibility for providing the solution and platforms, each big enough to provide an important
operating it like a service. Platform teams are cross- and discrete service but small enough to be
functional, with business, IT, and anything else that manageable. To simplify platform management,
is needed, such as analytics, risk management, and it helps to group them into three broad areas:
so on. (Some companies call this a “tribe.”) They

The platform play: How to operate like a tech company 3

 Exhibit 1
HIBIT 1 Platforms are grouped into three broad areas.

Customer-journey platforms (“journeys as a service”) Customer proposition and

experience platforms built
on reusable code (internal

... ... and external)

Business-capability platforms (“company as a service”) Business-solution

platforms, designed to be
Mission modular and run as a

... ...
Control business (internal and
external)

Core IT platforms (“IT for IT”)

Core IT provisioning, eg,
cloud, data, automation
... ... (internal and external)

Provides oversight, coordi-

nates, allocates resources,
sets standards

customer journeys, business capabilities, and core Mission Control to manage across
IT capabilities (Exhibit 1). platforms
Platforms are distinct units, but their value is
For example, in personal banking, the customer- based on how effectively they work together. Most
journey platforms cover the customer experiences companies overlook the criticality of making all IT
of searching, opening an account, getting a components work together seamlessly because
mortgage, and so on. The business-capability their attention is focused on individual projects.
platforms deliver the banking solutions, such While most organizations understand the need to
as payments and credit analytics, and the coordinate, the best ones develop a Mission Control
support capabilities, such as employee- capability with the resources and authority to lead
pension management, visual dashboarding, and and manage across platforms in three ways:
management information systems (MIS). Finally, the
core IT platforms provide the shared technology 1. Make strategic and allocation decisions. The best
on which the journeys and business capabilities Mission Control teams take a “clean sheet” approach
run, such as the cloud platform, the data analytics to allocation decisions every year, prioritizing spend
environment, and the set of IT connectivity solutions and effort on those platforms that can best support
(Exhibit 2).

4 The platform play: How to operate like a tech company

 Exhibit 2
EXHIBIT 2 Retail and banking examples show the services offered on each platform.

Retail example Banking example

• In-store browsing and shopping • Searching

for weekend • Account opening
Customer- • Clicking and collecting • Transacting
journey • Same-day home delivery • Buying house (from valuing
platforms • Subscribing house to getting mortgage)
•… •…

“Retailer as a service” “Bank as a service”

Business- • Store- and warehouse-inventory • Payments
capability management • Real estate valuation
platforms • Merchandising • Credit underwriting
(to enable •… •…
journeys)
• Employee-pension management • Employee-pension management
•… …

• In-store live video data- • Omnichannel IT platform-

management platform development environment
•… •…
Core IT
platforms • In-store face recognition • In-branch face recognition
• Cloud platform • Cloud platform
• Access and identity management • Access and identity management
•… •…

business goals and/or are in most urgent technical offs, while diving deep enough into the IT to manage
need. This means much more radical reallocations critical path dependencies (cloud migration may
in budgeting and resourcing across platforms (and require application rationalization first). In one case,
business units) than the typical 5 to 10 percent the executive committee reduced the IT budget for
increase or decrease that dominates allocation one business unit by a third to prioritize platforms
decisions at many companies. Mission Control needs in the other two business units, based on the
to work directly with the executive committee to understanding that the following year’s allocation
secure resources and make these difficult trade- would be a clean sheet again.

The platform play: How to operate like a tech company 5

 2. Set and enforce standards for speed and 1. Assess the fitness of the platform portfolio.
interoperability. The team establishes business Business and IT should together quickly cluster
standards, such as how teams work together in the company’s activities and associated IT into
an agile way. It also sets technology standards, a set of 20 to 40 platforms that cover customer
such as platform and application interfaces for journeys, business capabilities, and core IT. This
seamless connectivity, the way code is written and does not have to be definitive, just a useful
logged in service libraries to ensure easy access, starting point. Then conduct a fitness check
and what IT tools should be used for agile team on each platform: “fit” platforms are in good
management. Clear standards empower teams shape and only need investment to innovate and
because they no longer have to worry about redoing capture more value; “healthy” platforms work
work, miscommunication, or wasted effort in now but need modernization to prepare for future
creating applications that won’t work well with other requirements; and “sick” platforms are no match
applications. Mission Control has the authority to for what competitors can do. They need a complete
enforce the use of standards by, for example, not overhaul. DBS, one of Asia’s leading banking groups,
releasing any budget for project elements that used a similar approach and communicated the
deviate from them. assessment to the whole market at the end of 2017.
Visualizing the fitness of all platforms is powerful
3. Manage and coordinate programs that cut because it enables an executive team to have the
across platforms. This function is more critical right debate on tough trade-offs and priorities and
than previously understood, because working in to then assertively reallocate resources (Exhibit 3).
a more agile and iterative way means that many
requirements and dependencies, such as data 2. Set up the initial platform teams and Mission
access for a given business platform, for example, Control. A successful transformation is about
become clear only as work progresses. This reality putting the right people in place at this stage.
is the blind spot of program managers and systems Establish teams for two to three priority platforms.
integrators because they understandably focus only Typically, a platform team will start with 20 to 30
on their own tightly defined mandate and project. people, which can then quickly ramp up to hundreds.
Mission Control acts as the design authority and It includes specific roles:
oversight team to drive consistency and critical path
delivery. Our research shows that not doing this • Platform leader—either a business or IT
severely slows down IT programs and wastes 30 to executive, or sometimes both as coleaders; a
40 percent of IT project spend. platform leader should be able to act like a real
“product owner,” a mini-business CEO with an
IT engineering mind
How to take a platform approach
Becoming a platform-based company goes a step • Business members, who share responsibility
further than what most think of as traditionally with the technical team for all the design and
transforming IT. It is a fundamental organizational the ongoing management as a business
and operational change to create an IT environment
that runs as a set of platforms. As with any major • Technical members, who manage all the
transformation, it requires strong CEO leadership, IT applications associated with the platform
quality teams, strong project management and and take full responsibility for modernization,
communication, as well as value assurance. We’ve renewal, ongoing feature development, and
found that the following four actions have an outsize day-to-day operations
importance to successful completion of the shift to
platform-based IT: • People with necessary functional skills,
from analytics to finance

6 The platform play: How to operate like a tech company

 Exhibit 3
EXHIBIT 3 Companies need to perform a fitness assessment of their platforms.

Fit: invest Healthy: modernize Sick: renew/replace

Fitness (from) Target 3 years out (to)

Journeys re-architected
Customer- for versality
journey
platforms New journeys added

New business-capability
Business- platforms added
capability
platforms
Work still under way in
some; some removed

Major shift to core IT

provisioning platforms and
Core IT third-party platforms
platforms

In parallel, start building out Mission Control with slow everything down and create unnecessary
eight to ten of your very best finance, IT architecture, complexity. Platform teams generally focus on a few
and program-management people. They need to core activities:
constitute the most influential team working directly
with the CIO, sometimes even reporting directly to • Converting platform capabilities to serve
the CEO. Mission Control needs to have decision customers and other platforms. Affecting
rights (or at least veto rights) on all IT spend and all this shift requires a complete focus on the
platform budget requests. user experience through design thinking
and digitization/automation, and on
3. Transform platform by platform. The interoperability by putting in place application
transformation approach should progress platform programming interfaces (APIs) based on
by platform, focusing on top priorities. Platform established standards and by creating service
teams take full responsibility for their work. They catalogs.
move quickly, using agile to carry out fast iterations
of discrete pieces of work. With guidance from • Evaluating and managing existing and
Mission Control and following prescribed standards, necessary applications. This means
they are spared traditional alignment meetings, decommissioning old and infrequently used
formal approvals, and other dependencies that applications; updating, renewing, or replacing

The platform play: How to operate like a tech company 7

 core applications; and building value-added platform transformations day to day, allocating
features outside of old applications. This is resources (the best people and the total IT budget)
often where most of the work is needed. In away from less productive platforms to those that
conjunction with this effort is an acceleration are more productive and critical, the executive
into the public/private cloud. committee enforces the big decisions, sets a
high business bar for transformation goals, and
• Injecting data analytics into all possible mediates all group-level issues. For example,
activities of the platform. This means during the transition, Mission Control may decide
piloting and scaling use cases and explicitly to deprioritize a platform but be overruled by
accessing the company’s analytics and data management on the business side. This is when the
platforms (or starting to build them). executive committee needs to intervene.

• Writing (or rewriting) code as self-contained Becoming a platform-based company is ultimately

blocks or modules that can be easily swapped a question of mind-set. It requires both the
out and replaced wherever possible. Extensive determination to stay the course and the flexibility
use of APIs can help to provide the necessary to change and adjust based on what platform teams
flexibility to existing code. learn. By committing to this approach, IT can stop
slowing down change and start accelerating it.
4. Manage through the executive committee.
While Mission Control plans and tackles the

Oliver Bossert is a senior expert in McKinsey’s Frankfurt office, and Driek Desmet is a senior partner in the London office.

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8 The platform play: How to operate like a tech company