Business value of digital platforms

Digital isn’t transforming business. It’s redefining what a business is. We spent decades thinking in clean categories: product vs. service, direct vs. indirect revenue, ownership vs. subscription. That framework worked when value was tangible and static. But when intelligence is embedded in the offering, those lines blur... • A machine isn’t just a machine if it continuously learns. • A service isn’t just a service if it’s powered by live operational data. • And the production data you used to archive for compliance? It can now be packaged, analyzed, and sold as insights that customers will actually pay for. The real shift isn’t adding technology. It’s re-architecting value. This revolution is captured brilliantly in the book: 𝐷𝑖𝑔𝑖𝑡𝑎𝑙 𝐵𝑢𝑠𝑖𝑛𝑒𝑠𝑠 𝑀𝑜𝑑𝑒𝑙𝑠 𝑓𝑜𝑟 𝐼𝑛𝑑𝑢𝑠𝑡𝑟𝑦 4.0: 𝐻𝑜𝑤 𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛 𝑎𝑛𝑑 𝑇𝑒𝑐ℎ𝑛𝑜𝑙𝑜𝑔𝑦 𝑆ℎ𝑎𝑝𝑒 𝑡ℎ𝑒 𝐹𝑢𝑡𝑢𝑟𝑒 𝑜𝑓 𝐶𝑜𝑚𝑝𝑎𝑛𝑖𝑒𝑠. 𝐅𝐨𝐮𝐫 𝐏𝐢𝐥𝐥𝐚𝐫𝐬 𝐨𝐟 𝐃𝐢𝐠𝐢𝐭𝐚𝐥 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐌𝐨𝐝𝐞𝐥𝐬: • 𝐃𝐢𝐠𝐢𝐭𝐚𝐥𝐥𝐲 𝐄𝐧𝐚𝐛𝐥𝐞𝐝 𝐕𝐚𝐥𝐮𝐞 𝐂𝐫𝐞𝐚𝐭𝐢𝐨𝐧: Value driven by tech, not just supported by it. Think smart thermostats optimizing energy, not just controlling it. • 𝐌𝐚𝐫𝐤𝐞𝐭 𝐍𝐨𝐯𝐞𝐥𝐭𝐲: New offerings or ways of doing business—like predictive maintenance or on-demand manufacturing. • 𝐃𝐢𝐠𝐢𝐭𝐚𝐥 𝐂𝐮𝐬𝐭𝐨𝐦𝐞𝐫 𝐓𝐨𝐮𝐜𝐡𝐩𝐨𝐢𝐧𝐭𝐬: Customer relationships built through apps, IoT, and connected services. • 𝐃𝐢𝐠𝐢𝐭𝐚𝐥𝐥𝐲 𝐃𝐞𝐫𝐢𝐯𝐞𝐝 𝐔𝐒𝐏: Unique selling points rooted in data and digital capabilities. But how do we map the revenue streams emerging from these shifting dynamics? I’ve come to see it through three essential components: • 𝐂𝐨𝐫𝐞 𝐕𝐚𝐥𝐮𝐞 𝐏𝐫𝐨𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧 (What is being offered?) • 𝐕𝐚𝐥𝐮𝐞 𝐂𝐫𝐞𝐚𝐭𝐢𝐨𝐧 𝐌𝐞𝐜𝐡𝐚𝐧𝐢𝐬𝐦𝐬 (How is value created?) • 𝐑𝐞𝐯𝐞𝐧𝐮𝐞 𝐒𝐭𝐫𝐞𝐚𝐦𝐬 (How is value captured?) 𝐑𝐞𝐚𝐝 𝐟𝐮𝐥𝐥 𝐚𝐫𝐭𝐢𝐜𝐥𝐞: https://lnkd.in/ewhRUM28 ******************************************* • Visit www.jeffwinterinsights.com for access to all my content and to stay current on Industry 4.0 and other cool tech trends • Ring the 🔔 for notifications!

Happy to share that Melissa Schilling and I have an article forthcoming in the upcoming special issue on #platformregulation at 𝗔𝗰𝗮𝗱𝗲𝗺𝘆 𝗼𝗳 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 𝗣𝗲𝗿𝘀𝗽𝗲𝗰𝘁𝗶𝘃𝗲𝘀! The article, 𝘏𝘺𝘱𝘦𝘳𝘤𝘰𝘯𝘵𝘪𝘯𝘶𝘰𝘶𝘴 𝘐𝘯𝘯𝘰𝘷𝘢𝘵𝘪𝘰𝘯 𝘢𝘯𝘥 𝘋𝘦𝘮𝘢𝘯𝘥-𝘚𝘪𝘥𝘦 𝘓𝘦𝘢𝘳𝘯𝘪𝘯𝘨: 𝘞𝘩𝘺 𝘋𝘪𝘨𝘪𝘵𝘢𝘭 𝘗𝘭𝘢𝘵𝘧𝘰𝘳𝘮𝘴 𝘌𝘯𝘫𝘰𝘺 𝘓𝘰𝘯𝘨𝘦𝘳 𝘢𝘯𝘥 𝘔𝘰𝘳𝘦 𝘌𝘹𝘱𝘢𝘯𝘴𝘪𝘷𝘦 𝘔𝘢𝘳𝘬𝘦𝘵 𝘓𝘦𝘢𝘥𝘦𝘳𝘴𝘩𝘪𝘱 𝘗𝘰𝘴𝘪𝘵𝘪𝘰𝘯𝘴, explains the notion of '#digitaldominance' or why successful digital platforms often enjoy sustained and expanded positions of market leadership.   The article explains why #digitalplatforms like #Amazon, #Apple, and #Google maintain #marketdominance for extended periods across multiple sectors. It highlights two key shifts enabled by digital technologies: 1) Continuous innovation without interruptions (#hypercontinuousinnovation), allowing platforms to evolve seamlessly and lock users into their ecosystems, and 2) Learning from customer interactions (#demandsidelearning) rather than just moving down the learning curve on the supply side. This lets platforms predict user needs, personalize experiences, and increase #switchingcosts, making it harder for competitors to attract users. Together, these factors create self-reinforcing cycles that help digital platforms sustain and expand their leadership, raising important considerations for managers and policy makers. I am attaching a copy of the paper here, but you can also grab it from #ResearchGate if that's more conventient. Any comments or feedback are welcome - we hope the article is useful!

Bloomberg data visualizes the advertising industry’s structural shift: Google Advertising revenue grew from roughly $50B (2012) to over $250B (2024), while the top four agencies combined (WPP, Omnicom, Publicis, Interpublic) remained essentially flat around $50-60B. Google alone now generates 4-5x the revenue of all major agencies combined, a gap that widens every year. • Divergent Trajectories: In 2012, Google and the four agencies combined were roughly comparable in revenue. By 2024, Google is 4-5x larger. The digital advertising transition didn’t just shift budgets—it concentrated value in platforms rather than intermediaries. • Agency Stagnation: Individual agency revenues (WPP, Omnicom, Publicis, Interpublic) have barely grown in 12 years. The industry’s total addressable market expanded dramatically, but agencies captured none of that growth. Platforms absorbed the digital advertising surge entirely. • The Intermediary Squeeze: Brands increasingly buy Google and Meta ads directly through self-serve platforms. Agencies’ traditional role—media buying—gets disintermediated when the platform is the media and the buying interface simultaneously. • Scale Advantage Compounds: Google’s $250B+ revenue funds AI tools (Nano Banana, Performance Max) that further automate campaign creation. Each innovation makes direct brand-to-platform relationships easier, reducing agency necessity for production tasks. • The Bull Case Challenge: Analysts argue agencies pivot to strategic orchestration across platforms. But this chart shows the value capture question: even if agencies remain relevant for strategy, the revenue pool they can access is dwarfed by platform economics. The visualization frames the ad agency debate: can strategic advisory services sustain businesses when production and media buying, historically the revenue engines, migrate irreversibly to platforms? The gap suggests agencies must reinvent their value proposition entirely.

Most PE firms still cannot price digital into EBITDA. The hardest conversation we have at Claymore is almost never about which technology to buy. It is about proving how that investment shows up in EBITDA. That is where the room goes quiet. Everyone says they want digital transformation. Everyone wants better data, better systems, better reporting, better lead flow, better conversion, better customer retention, better pricing visibility. Fine. Now tell me what any of that is worth. Not in theory. Not in a vendor demo. Not in a strategy deck with coloured boxes and a lot of optimistic verbs. In EBITDA. How much margin improvement comes from better call routing. How much revenue lift comes from faster speed to lead. How much churn reduction comes from cleaner customer data. How much pricing discipline comes from actually seeing the numbers before month end. How much SG&A comes out when the business stops paying people to manually patch together nonsense from five systems that do not talk to each other. This is the bit private equity still struggles with. They know digital matters. They just cannot always connect it to enterprise value in a way that survives contact with an IC memo or a board meeting. So digital gets stuck in an awkward category somewhere between growth initiative and expensive hobby. That is usually because the investment was never tied tightly enough to the commercial engine of the business in the first place. A better CRM does not create value because it is modern. A BI tool does not create value because the dashboard looks clever. A new website does not create value because the management team finally stopped using something built in 2016 by a cousin of the founder. It creates value when it changes revenue, gross margin, conversion, retention, pricing, labour efficiency, or working capital in a way you can measure. Otherwise it is just software. Private equity has spent years pretending digital is important while talking about it like it is separate from value creation. It is not separate. It is either a direct lever on EBITDA or it is a distraction with a login. #ClaymorePartners #notveryprivateequity.com #PrivateEquity #ValueCreation

A question I have heard more often this year from distributor CFOs and boards: what is the actual working capital case for moving to a platform. Here is how I frame it as a CEO, operator to operator. Start with three lines. 1. Days-sales-outstanding. Platform ordering and platform invoicing tend to compress DSO because disputes close earlier and customers self-serve on their own history. For a distributor doing real volume, every day of DSO is meaningful. 2. Days-payable-outstanding alignment with manufacturer terms. When sell-through data is clean and timely, terms with manufacturer partners actually reflect reality. That unlocks cooperation neither side can get in a PDF-driven relationship. 3. Cost to serve per case. The line nobody loves to measure. This is where the split between platform distributors and legacy distributors becomes visible in hard dollars. I spent the first part of my career in software. What I learned on that side of the table: the ROI case is almost always modeled too conservatively, because it captures the direct savings and misses the second-order capability. The real return tends to be in the capability that shows up six months later and did not exist before. I am not going to put a dollar figure on what platform distribution generates for any specific business. It is too specific to the company. But the line items above are the ones to model. We just launched a refreshed https://hubs.li/Q04fjkzG0, and the case study library on it puts a handful of real distributor and manufacturer outcomes on one page. That is the cleanest way to see the second-order capability without me claiming anything on your behalf.

Most businesses do not need a technical lecture on a data platform. They need to understand one thing: How does it help us make better decisions, move faster, reduce risk, and create new value? ➡️ That is the real conversation. ➡️ A data platform is not just a collection of tools. It is the trusted foundation that brings together scattered data from CRM, ERP, spreadsheets, emails, external systems, and operational sources, then turns it into reliable, reusable, and AI-ready information. ▶️ When explained in business language, a data platform means: • one version of the truth • faster and more reliable reporting • stronger governance and security • better KPI visibility • improved customer understanding • easier experimentation with AI and analytics • a foundation for new products and services The mistake many teams make is starting with architecture diagrams, pipelines, and platform components. The better approach is to start with business questions: ➡️ “Where is our single source of truth?” ➡️ “Why do numbers differ across reports?” ➡️ “Can we trust this data?” ➡️ “How do we move faster with less manual effort?” ➡️ “How do we make AI actually usable in the business?” That is where the value of a data platform becomes clear. A simple way to explain it in meetings: ➡️ A data platform is a central, trusted place where we collect, clean, organize, secure, and deliver data so the business can get fast, reliable answers and build smarter products, reporting, and AI solutions. ➡️ Good data platforms do not just store data. They make the business more reliable, faster, reusable, secure, and AI-ready. That is the message leaders understand. #DataPlatform #DataStrategy #DataGovernance #AI #Analytics #BusinessIntelligence #DigitalTransformation #DataEngineering #ProductManagement #Leadership Image Credit : Marcel Dybalski

Companies running a platform business model - connecting 3rd parties to exchange value around your product/platform - have dominated most of B2C and B2B tech for decades (Uber, Airbnb, AWS, Microsoft, Atlassian, etc). In the era of AI, platform businesses will still win, but it will be the ones that use AI most effectively and efficiently and adopt to market changes driven by AI. Here's how: ➡️ More supply: AI will make it easier across the board to build apps/products/content. This means businesses and consumers can customize certain tools/experiences themselves, but it won't change that professional level production - in consumer and business - which is also AI-aided, will continue to provide a superior more robust supply (think self-created films versus professionally made films or customizing a sales app to run your pipeline versus an enterprise sales solution). Platforms will need to continue to connect that supply with buyers and they can enable their sellers with AI assistance, whether that is AI tooling to accelerate coding, integrations, or content. ➡️ Hyper-personalization: Because supply will increase if platforms enable sellers via AI tooling, platforms will need to leverage AI to better match buyers with the RIGHT products, services, and partners. ➡️ Automation at scale: From fraud detection to dynamic pricing, platforms can use AI to operate smarter and faster, improving the buyer experience. ➡️ Outcome-based monetization: Beyond transactions, AI enables platforms to charge for actual business results. ➡️ Intelligent and relational ecosystems: The abundance of supply (more products/services) and noise (think AI content, AI BDRs, AI sellers) that AI creates in the broader market means that buyers will lean in even more in vendors and peers they trust. Platforms that use AI tools to orchestrate meaningful connections and layer that with genuine human interactions in the right places will drive stronger network effects and ecosystem growth. The result? Successful platforms will become less connectors—and more active orchestrators of value, optimizing every interaction in real-time.

Nearly 20% of a $500M network operator’s revenue turns over every year. At 1% monthly churn & 7% net growth, an operator must win roughly $95M to stay on trajectory. Now layer in win-rate physics: • On-net wins ~25% • Near-net wins ~3% • Off-net wins ~1% • Deals you don’t participate in win at… 0% The exact percentages vary by operator, but the asymmetry is consistent. According to Omdia, roughly 70% of new IT industry demand is partner-led, flowing through wholesale, TSDs, SIs, VARs & MSPs. If you are not digitally reachable, serviceable, & quotable inside those ecosystems, your effective win rate is zero. The real question isn’t “How do we sell more?” It’s: How do we ensure we participate in every viable demand signal, & route it to the highest-yield network position before a human generates a quote? That’s where Location Truth changes the economics. When you know deterministically, at the location level, whether demand is on-net, buildable, or off-net, you reweight the probability distribution of wins. Small mix shifts matter. Digital GTM is not just conversion optimization. It is participation #assurance. Participation expands the numerator. Routing precision improves the denominator. Across industries, digital leaders typically achieve: • 5–10% incremental revenue uplift • 3–5 points of EBITDA improvement • Mid-single-digit cost efficiency gains • Multi-year compounding performance advantage Applying disciplined digital benchmarks to a $500M operator, with focused execution & supplier and partner integration: Year 1: • +$7–10M revenue • +$10–15M EBITDA • ~1 point margin expansion Year 3–5: • +$40–50M revenue delta • +$35–45M EBITDA delta • 3–5 point margin improvement • ~$300M+ enterprise value lift at standard multiples Structural optimization. Now consider the ecosystem reality. If roughly 70% of demand flows through partners for B2B, and those partners expect real-time serviceability, standards-based APIs, and machine-readable pricing, then participation becomes infrastructure. This is where a Federated Ecosystem Fabric matters. When build-vs-buy is digitally consumable: • Every inquiry is evaluated instantly • Every build decision is informed in seconds • Every off-net deal can be bundled intelligently • Every partner motion becomes scalable This is yield optimization, not cost cutting. The operators who get this right won’t grow 30% overnight. They will: • Participate in more of the 70% partner-driven market • Shift opportunity mix toward higher-yield • Operate 3–5 points more margin-dense • Compound 2–3% faster than peers For private equity: It’s participation rate and win-rate physics. For CEOs: The leverage is routing precision and ecosystem reach. For CFOs: The upside is durable margin and predictable flow capture. Location Truth enables precision. Federated ecosystem connectivity enables participation. Automated GTM across onnet, nearnet, and offnet maximizes yield. That’s how multiples expand.

Last month helped a founder who insisted: "No CMS. Custom code only." His startup had more vision than budget. Custom development would have cost 5x his budget and delayed launch by months. After explaining the realities, he chose WordPress. Smart move. The Website Platform Truth: ➜ WordPress (62.7%): Dominates the market for good reason Scales from mom-and-pop to enterprise Best for: Content-driven businesses, service providers Weakness: Security requires attention ➜ Shopify (6.4%): E-commerce specialist with proven conversion rates All-in-one solution for selling online Best for: Product businesses without technical teams Weakness: Ongoing costs increase with success ➜ Wix (3.9%): True no-code solution anyone can manage AI-powered tools for the tech-averse Best for: Local businesses, solopreneurs Weakness: Limited customization depth ➜ Squarespace (3.0%): Design-forward templates that impress immediately What-you-see-is-what-you-get simplicity Best for: Visual brands, portfolios, restaurants Weakness: Less flexible for complex needs ➜ Joomla (2.4%): More technical but highly customizable Strong multilingual support built-in Best for: Membership sites, government, education Weakness: Steeper learning curve ➜ Custom Development: Built precisely for unique business requirements No compromises on functionality or security Best for: Financial services, healthcare, enterprise Weakness: Significant investment of time and money The market has spoken. For most businesses, established CMS platforms deliver the best ROI. Custom development shines when standard solutions genuinely can't meet business objectives. What's driving your website platform decisions today? Technology preferences or business outcomes? #DigitalStrategy #CMSDecisions #ExecutiveInsights

These days everyone wants to be a #SuperApp but only a handful have managed to succeed. Those who have share one common denominator: monetization. Let’s see how it can be done. Here is my summary of the most successful strategies: 1.  An ecosystem play – as opposed to providing mere access to an array of different services – with seamless, integrated, end-to-end experience across all aspects of modern life. 2.  #Payments as the undisputed underlying layer that acts as a connecting base for the multitude of offerings on the platform. 3.  A wide range of integrated payment methods catering for different use cases and target audiences (P2P, BNPL, money transfer, instant payments, online payments, QR codes, etc). 4.  Low customer acquisition costs as a direct result of the platform play and then up-selling and cross-selling of high-margin financial offerings (i.e. lending, investment, insurance, e-commerce, digital #banking) and merchant added-value services (i.e. merchant financing, collection technology platform). 5.  #Data as the predominant tool for driving high engagement with tailor-made offerings that transformed how, when and in which context services are offered. 6.  A two-sided consumer and merchant ecosystem with the platform acting as the bridge that not only connects the two sides but fuels growth from one to the other in an open, two-way dynamic relationship. In such a set-up platform engagement (consumer side) enables merchant growth creating a self-reinforcing loop based on high frequency and high repeat rates that lead to consumer stickiness and retention. 7. Software and cloud services to a range of B2B partners (enterprises, telecoms, digital platforms, fintechs), which act not only as a platform amplifier but also as multiplier of customer engagement that unlocks additional customer data points and insights. 8.  A subscription-led ecosystem for merchants: the platform becomes the enabling layer for partners, merchants and other tech providers to accept payments through a wide variety of instruments, including subscription-based models that create permanent revenue and stickiness. 9.  Help merchants drive revenue growth via marketing channels: merchants sell discount deals, gift vouchers and other digital goods like tickets to platform users. 10.  Leverage a network of banks and other FS providers to expand distribution channels. 11.  First-mover integration advantage with the local ecosystem. Paytm was, for example, the first app to launch UPI Lite in India and has subsequently enabled wallet interoperability that allowed full KYC Paytm Wallets to be universally acceptable on all UPI QR codes and online merchants. Opinions: my own, Graphic source: Paytm quarterly reports Subscribe here to my newsletter: https://lnkd.in/dkqhnxdg