A platform but not as we know it - the marketplace in a software ecosystem

Cameron Lackpour Profile picture for user Cameron Lackpour April 18, 2023
An effective ecosystem can vastly expand the value of a software platform. Cameron Lackpour of Black Diamond Advisory sets out the key elements that make an ecosystem work well.

Cloud architecture platform. Internet infrastructure concept. Abstract technology background. Digital saas solution. © Amgun - Shutterstock
(© amgun - Shutterstock)

Software ecosystems are the rage today and for good reason – they enhance, extend, and expand the value of a software product in ways the vendor cannot. This model of a core platform and an array of other actors – customer and evangelist communities, partners, and a marketplace to bring them all together – is writ large in the personal device market with players such as Apple and Google, and also in the enterprise software market in companies such as Google Cloud and Cisco and the extensive Salesforce ecosystem.

Ecosystems multiply the value of a platform beyond the core vendor’s proposition. Differing perspectives and needs drive new functionality, specialized markets and knowledge bring added value, and customers and platform advocates evangelize and promote good practices. The creative interaction and resulting products are beyond the capability of a single company (and beyond their interests) no matter how large and sophisticated. To realize this exciting prospect, software must be platform first – its marketplace is where these competing and complementary ecosystem participants realize their business needs.

Platform, not PaaS

There are many different definitions of a platform in the corporate software world. One that is widely used is Platform as a Service (PaaS) – a cloud architecture that incorporates infrastructure in conjunction with a development and deployment environment. But the crucial element for becoming the foundation of an ecosystem is that it must be easily extendable. This rules out many Software as a Service (SaaS) and older on-premises software products which operate as a walled garden and require direct IT involvement for any modifications.

In addition, software that enables extensibility is only the technical framework of an ecosystem. Its value is not achieved unless and until it incorporates a customer and evangelist community, partners, and a solution marketplace.

Community advocates – customers and evangelists alike

Solving the problems of customers is the purpose of a software ecosystem and indeed a software company itself, but a customer’s business needs are not merely a sales opportunity. Unique and novel functionality, whether because of commercial market pressures or regulatory and legal mandates, create unique requirements that go beyond a core software product’s functionality. Customers lobby vendors to expand and improve their products, whether formally, within the context of customer panels and direct conversations with product management or informally, when talking to sales representatives and within user conferences. Given their commercial impact, they are the most visible players in the product community.

But there is more to influence than money; indirect voices also aid product direction. Software evangelists promote product requests and direction through user groups, conferences, message boards, blogs, and podcasts. This kind of advocacy has value beyond its functional and technical merits because of its independence and thus legitimacy. An evangelist who publicly says, “That’s wrong, it shouldn’t do X, it must do Y.”, or “Have you thought of this, it’s what your competitors do but you’ll do better because we’re better.”, or “Look at what I can do with this tool. No other product can.”, sends the message to customers, partners, and competitors that the vendor can receive constructive criticism and praise and thus improve the product. Confidence builds trust, trust engenders enthusiasm, enthusiasm recruits new customers.

Partners are the mechanism

Both of the above groups present opportunity for the vendor and, if acted upon, value for the customer. While much of this potential can be met by the software vendor itself, choices based on resources, priorities, and market size determine which, if any, of the community’s ideas and needs are acted upon. Partners bring the specialization and additional resources to the ecosystem that releases those unfulfilled needs. They have the business domain knowledge, understanding of real-world tool functionality, and product development resources to use a core software platform as the jumping off point for more – more functionality, more customers, and most importantly – more solutions.

Development teams within partners expand the pool of manpower, allowing the vendor to focus on the key product while not ignoring market growth. Partners often specialize in vertical markets such as technology or manufacturing and always focus on addressing specific business and technical fields, for example, general ledger expertise versus implementing factory automation. Through their specializations, partners develop a strong sense of customer needs and software opportunities.

What a core product really does in the field is best understood by those who implement it. That knowledge around the real-world possibilities drives what a platform product extension should and should not do.

For an ecosystem to work well, partners must be actively supported by the vendor. If a platform is explicitly locked down or if extension is informally discouraged, only the bravest and most determined (some might say foolhardy) partners will attempt to build their own products. A vendor, both philosophically and technically, must allow partners to take its core product in new directions. While encouragement and direct meetings with product management and development can help guide the partners, ultimately they must blaze their own trail. That path, whether more or less taken, is where customer wants and needs are met.

The market is the place

The foundation of an open platform, the advocacy of customers and evangelists, and the insight and resources of the partners are ecosystem prerequisites, but if they cannot come together in a common place where solutions can be accessed, evaluated, and purchased, the advantages of an ecosystem to all parties is lost. A marketplace where the vendor, partners, and customers meet is the key enabler of a product ecosystem.

A software ecosystem marketplace, beyond the organization and curation of platform products, must perform the functions of a consumer marketplace – purchasing, distributing, and facilitating customer support. Where it differs from an Amazon is in the specialized nature of the products – selling a pair of shoes is not the same as touching a corporation’s core data and processes – and in the customer expectation that a platform product has a base level of quality and adherence to good architecture and development practices.

A note about support – the partner products within a marketplace are by definition not the vendors’. As such, while product support may be channeled through the vendor, it is performed by the partner.

Bringing it together in an ecosystem

Once a marketplace is in operation, the ecosystem is in play. Customers and evangelists have a place to see their advocacy manifested in tangible solutions to their needs, partners have an environment to innovate and create, and platform software vendors have an exchange where their product becomes greater than the sum of its parts.

Like all partnerships of disparate constituencies and ambitious goals, getting it wrong is easy. An ecosystem must be embraced by the software community and partners and nurtured by the core product vendor to be successful. Despite the risk and concomitant effort on all sides, the advantages are too great to ignore – an ecosystem brings together community, innovation, and vendor to deliver products that customers need in greater scope, speed, and depth than a vendor can deliver.

Having seen what can be achieved in our own case as an ecosystem partner, we believe that software vendors that do not embrace the ecosystem model are missing out on their product’s full potential and potential customers.

Equally, we would argue that customers who do not invest in software ecosystems are not getting the best solution for their business needs and requirements. Selecting software that supports an ecosystem is more likely to deliver the greatest value for their money and prospective success.

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