Jukka Kääriäinen, Leila Saari, Katri Valkokari, Arto Wallin & Pasi Pussinen
Platform economy describes a phenomenon in which platforms bring together different actors (such as buyers and sellers) and enable the exchange, co-creation or sharing of information, goods and services between the parties.
At the heart of digital platforms is the facilitation of interaction between the two different platform sides – the producers and the users. The producers operating on digital platforms create and offer complementary products, content and services according to rules set by the platform. The users acquire these products, contents or services via the platform. The owner of the platform, in turn, determines and controls who can access the platform and under what conditions. The owner of the digital platform tries to enable maximum value creation between the different parties of the platform. To enable this, the owner provides a variety of suitable tools, operating models and rules.
The two key concepts in the platform economy are core interaction and network effect. Core interaction refers to the most important interaction enabled by the platform, without which the operation of the platform would not be possible. Core interaction determines why a platform exists and what value does its operation create? Network effects refer to a phenomenon specific to the platform economy, where the number of platform users affects the perceived value. The two-sided platform shown in figure below illustrates the network effects. Direct network effect describes the impact that the number of same-side players of a platform has to the value created for each actor. Although network effects are often discussed in a positive sense, it is worth noticing that the effect can also be negative.
VTT has published a study (in Finnish) about platform ecosystems based on two Business Finland funded projects: SEED (https://seedecosystem.fi/) and KEKO (https://kekoecosystem.com/). The publication discusses the concepts of platform ecosystems, talks about the diversity of the platform ecosystems and encourages companies to look at the possibilities of the platform economy. Furthermore, publication presents practical examples how four Finnish SME companies implemented ecosystem-based business by utilizing platforms:
AirFaas is a multi-party Supply Chain Management ecosystem. It is a platform where factories can provide their production capacity to meet customer needs. The vision of AirFaas is “Factory-as-a-Service” platform. Customers bring their production needs and specifications to the platform for tenders. If this results an agreement, the platform also provides financial services, where appropriate, through a third party. Furthermore, it provides supply chain management tools in a single platform for parties.
Weecos is a marketplace platform providing sustainable design products, such as clothing, accessories and interior design products, to consumers. Design brands that have passed sustainability audit can create a store on the platform and consumers can search for products suitable for their own sustainability values (e.g. handmade, plastic-free, organic) through the stores of the Weecos store platform. Thus, the mission of the platform is to bring supply and demand together – i.e. “matchmaking” them as effectively as possible.
Awake.AI provides a platform solution to improve the efficiency of ports using artificial intelligence. The platform’s customers are, in particular, small and medium-sized ports, whose digitalisation requires development to enable future autonomous maritime transport. The platform ecosystem has initially focused on streamlining and optimizing the ship-port-land transport logistics chain, such as forecasting the arrival of a ship. The platform utilizes the collected data, for example through machine learning, to form an insight, which is further utilized in intelligent services.
Wastebook is a waste management tender platform and circular economy service based on a mobile platform. It aims to bring together waste producers and waste management service companies on the same platform. With the help of the platform, the customer can assess waste recycling and the composition of the waste. For waste management companies operating on the provider side, the platform enables the channel to acquire customers and managing offers. The platform ecosystem comprises also an IoT company as a partner, whose solution allows waste management companies to measure and monitor the amount of waste in the waste container in real time using Wastebook IoT devices.
Kääriäinen, Jukka; Pussinen, Pasi; Wallin, Arto; Valkokari, Katri; Saari, Leila; Mölsä, Airi; Pirttimaa, Tiia; Blomstedt, Edward; Lusila, Hanna ; Poikonen, Jussi; Ahokas, Mikko. Alustatalouden esimerkkejä Suomesta, VTT Technical Research Centre of Finland, 2021. 19 p. (VTT White Paper). https://cris.vtt.fi/en/publications/alustatalouden-esimerkkej%C3%A4-suomesta