I’ve followed several hundred B2B platforms and multi-sided marketplaces for the past three years. Initially, I segmented these platforms by vertical industry or by the portion of the source to settle process they automated (see here).
Over time, many of the vertical players moved across additional verticals (see here) and many of the more horizontal platforms covering one part of the source to settle process, grew to cover the entire source-to-settle process within an industry (see here). As a result, the old segmentation became less and less useful.
A better segmentation more finely categorizes B2B platforms by the value propositions offered to their participants-rather than by industry or process automated. In studying B2B platforms, regardless of industries served, I’ve found that they offer varying combinations of nine basic platform value propositions :
- Supply chain automation of three types:
- Indirects and services
- Physical supply chain
- Financial supply chain
- Matchmaking of buyers and sellers (products and services)
- Industry catalogs
- Leveraged contracts
- Transaction financing
- Industry big data
- Collaborative project management
- Managed services
Some platforms offer just one value proposition, some offer several, very few offer more than a handful.
In a series of upcoming posts (feel the suspense!), I’ll cover each platform value proposition, the challenges of providing each, and examples of companies pursuing each value proposition.
For now, here’s a summary diagram of the nine platform value propositions and a succinct description of the value provided:
It’s about time we moved beyond the outdated, overly simplistic segmentation of industry “vertical” and business process “horizontal”. I think what you’ve laid out in this post strikes the balance between meaningful differentiations that reflect market reality, and a workable number of categories. I might suggest one additional bucket (or perhaps something to call out in an existing bucket?), and that is Information Services. I find Industry Cloud Platforms are often in a position to efficiently standardize, aggregate and publish information that is important to commercial interactions among the value chain participants. Examples include Certifications and Representations (“Cert’s & Rep’s”), Small Business Qualifications, ISO9000 Certifications, Real Estate Licenses, Certificates of Insurance, etc. These documents represent information that must accompany many transactions but are currently enabled by highly inefficient, manual and fragmented processes at a huge aggregate cost to industry. Industry Cloud Platforms can provide potential value-adding services as a central repository and clearing house for this type of information. Do you see examples of this in the companies you follow?
One additional thought…don’t forget “cross-domain” or “inter-company” credentialing supported by Federated Identify Assurance and other industry level single sign-on technologies and techniques (see examples with SAFE, Covisnt and Exostar).
Look forward to additional posts.
I’m with you. I have the certification stuff in credentialing, and Industry Big Data covers some of the rest. There are lots of examples of clearinghouses of the type of information you site and it is one of the fastest growing areas in B2B. There are examples at the company, product, facility, and even personnel level! Thanks for the astute observation!
Three cheers for this thoughtful big picturing exercise from the guru! Forcing us to think out all out of the box as Peter Scott writes in above post – thanks Bob!
Can’t wait for the detailed posts… I sense a reality TV show or a Netflix-commissioned series in here somewhere… ‘House of P-Cards’? ‘Downstream Abbey’?
Lol. Thanks. Arrested Product Development?