Platform Economy - Tech Vision 2016 Trend 3

1. Trend 3: Platform Economy

2. People First: The Primacy of People in the Digital Age

3. The Accenture Technology Vision 2016 identifies five technology trends fueled by the people first principle and that are essential to business success in the digital economy. Intelligent Automation Liquid Workforce Platform Economy Predictable Disruption Digital Trust People First: The Primacy of People in the Digital Age Copyright © 2016 Accenture. All rights reserved. 3

5. Building these types of new platforms requires starting from the ground up 5Copyright © 2016 Accenture. All rights reserved. This includes: Technical Architecture Governance Security How? Create open standards and APIs to be sharable and attractive to ecosystem partners. Use a cloud foundation, technically designed to scale with the network effects of the ecosystem.

6. Back office systems will need to support real-time business models 6Copyright © 2016 Accenture. All rights reserved. SAP HANA real-time health analytics and predictive medicine As these ecosystems develop more connections to mobile and IoT devices, platforms need to support real-time business models and data architectures Real-time is the basis for connected intelligent machines, vehicles, and mission-critical facilities Key enabler = in memory computing & databases

7. Real-time use cases abound in consumer smartphone apps Social/Facebook: share experiences instantly Transportation/Uber: watch your taxi navigating toward you Connected Car: infotainment and on-demand services Chat apps: instant group communications with no latency Smart home: the lights turn when you walk in the house TV remote: change the channel from your smartphone And are driving the next generation of mission critical systems Healthcare: continuous patient monitoring hospital to home Industrial: real-time management of $ billions of critical assets Logistics: real-time tracking of every that moves Energy: smart grid electricity usage, optimization, and security Connected Car: emergency services alerted instantly upon collision Transportation: driverless vehicles of all kinds Real-time use cases abound in the consumer experience and are rapidly expanding into all business sectors 7Copyright © 2016 Accenture. All rights reserved.

8. These new platforms also = adoption of New IT 8Copyright © 2016 Accenture. All rights reserved. Multi-speed change engine Managing platforms and ecosystems of digital partners and developers communities will drive your New IT into high gear New IT extends into platform ecosystem governance to support your ecosystem Digital business partners Developer communities Cloud partners Security partners Architected / designed for continuous change Agile (Release/Change Management): DevOps (Process, People & Tools) Testing (Rapid, Ecosystem-based) By 2018, over 60% of new apps will use cloud- enabled continuous delivery and cloud-native application architectures to enable faster innovation and business agility. IDC FutureScape: Worldwide Cloud 2016 Predictions, IDC, Doc #259840, November 4, 2015

9. Once in place, enterprises will use these platforms as new types of business models 9Copyright © 2016 Accenture. All rights reserved. “Products have features. Platforms have communities” Marshall Van Alstyne MIT Initiative of the Digital Economy Co-author, Platform Revolution, (to be released March 2016) Connected Collaborative Scalable Platform business models are: … business strategies based on creating value externally with communities of users, partners, and developers

11. Tech Companies and Born- Digital Organizations Alibaba Alphabet Amazon.com Apple Baidu eBay Facebook JD.com LinkedIn Netflix Priceline.com Salesforce Tencent Twitter Yahoo!Internet Companies $16,752 +15,187.1% Platform Companies $2,560,902 Internet Companies Apple Axel Springer Copart Fox Communications IAC/InterActive Corp. iLive iStart Internet Live Microsystems Netcom Online Netscape PSINet RentPath Storage Computer Corp. Wave Corporation Web.com Tech companies & born digital organizations are dominating the digital economy with platform business models. Private venture-backed startups are also driving record-high valuations: More than 140 ‘unicorns’ (private companies with valuations of $1 billions or more) have a total market cap of over $500 billion (“The Unicorn List,” CB Insights, 2015) 70% of ‘unicorn’ startups are platform companies (Center for Global Enterprise, 2015) Is anyone successfully doing this? Market Cap Valuations – Internet vs. Platform Companies Market Cap of Top 15 Public Platform Companies: $2.6 trillion Market Cap of Private ‘Unicorn’ Companies: $500 billion TOTAL: $3+ trillion Copyright © 2016 Accenture. All rights reserved. 11 1995 2015 $MM

12. As a leader in the digital revolution for healthcare, Philips is launching Philips HealthSuite platform with 3 tech partners: Salesforce.com Amazon IoT Alibaba Cloud. With a platform business model Philips is driving new growth paths that complement its core business in medical equipment. The platform business model lives alongside the traditional product business Companies are using their platforms to lead in the digital revolution 12Copyright © 2016 Accenture. All rights reserved.

13. This is a big picture change Traditional Value-Chain Business Models Value creation is two- way and continuous Value creation is linear and one-way Platform-Driven Business Models Developers Publishers Content owners Retail Services Platform Ecosystem Production Distribution Marketing Consumer 13Copyright © 2016 Accenture. All rights reserved.

14. Having a platform strategy and the business know-how to exploit it is more important than “owning” an ecosystem. By 2018, IDC predicts that more than 50% of large enterprises – and more than 80% of enterprises with advanced digital transformation strategies – will create and/or partner with industry platforms.1 IDC predicts that the number of industry clouds will reach 500 or more by 2018, up from today's 100-plus.2 Digital leaders from non-tech sectors are now also building platforms 1 “IDC Predicts the Emergence of "the DX Economy" in a Critical Period of Widespread Digital Transformation and Massive Scale Up of 3rd Platform Technologies in Every Industry,” IDC, November 4, 2015 2 “Industry Cloud: The Largest Vertical Growth Opportunity for Technology Vendors and Services Firms Through 2025,” IDC, November 19, 2015 Schneider GE Bosch ABB Disney SONY Ford GM TomTom Pfizer Novartis Merck Carepass Cigna edX Walmart American Express Nasdaq OMX Copyright © 2016 Accenture. All rights reserved. Industry Platforms: 14

15. Platform Economy: 100-Day Plan 15Copyright © 2016 Accenture. All rights reserved. 1. Appoint a C-level champion to lead a cross-functional team of technologists, business experts, and economists. 2. Identify and prioritize parts of the business that are prime for platform business models. 3. Identify the parts of the business that are most vulnerable to attack by disruption from new platform-based business models (from incumbents and startups inside & outside industry). 4. Align the platform opportunities alongside existing product and market strategies (platform business models live alongside traditional product strategies). 5. Present initial findings to the Board and establish a top-down C-level enterprise-wide commitment to pursuing platform business models as a strategic growth path. 6. Assess your knowledge gaps of the new rules of business: demand-side economies of scale, power law distribution, network effects, and asymmetric competition. 7. Launch a company-wide campaign on the new rules of business and platform business models. Create a network of internal platform champions to evangelize the message. 8. Assess your digital technology capabilities and gaps in building platform ecosystems. 9. Prioritize the overall opportunities and threats, and then start with a small initiative to pilot, including internal initiatives to start the journey into platform business models.

16. Platform Economy: 365-Day Plan 16Copyright © 2016 Accenture. All rights reserved. 1. Finalize plans to launch the initial pilot to work with a cloud partner to build a platform around one of the most information-intensive parts of the business. 2. Formalize agreements with the cloud partner that will be building the foundation of the platform. 3. Develop a multi-phase plan to transform parts of the business to platform business models. 4. Identify platform opportunities inside and outside your industry based on your executive training programs and platform knowledge base. 5. Establish a formal governance plan and organization to manage digital partnerships and developer communities in order to optimize the value of the platform ecosystem. 6. Formalize an approach to track and report on platform growth opportunities, relevant ecosystems, and competitive threats from both inside and outside the industry. 7. Communicate the vision of where your company fits in an economy without industry sector segmentation and with boundary-less competition.

17. Predictions 17Copyright © 2016 Accenture. All rights reserved. Immersive becomes Pervasive. Businesses go beyond AR, VR and MR to create platforms on which customers, employees and partners can experience all the five senses – together – in any environment they choose. This leads to the early stage of dematerialization where people can be present virtually anywhere in the world at any time and meet with their friends.

18. Key Takeaways 18Copyright © 2016 Accenture. All rights reserved. The strategic use of technologies to create platform business models is driving unprecedented growth opportunities in the rapidly expanding digital economy. Driven by the new rules of business, platform business models represent the most profound disruptive change in the global macroeconomic environment since the Industrial Revolution. While tech and digital born organizations have been dominating the digital economy with record-high market caps, non-tech digital leaders across all industries are developing platform strategies now (the new tech leaders).

19. What’s Next Non-techs become next innovation giants. Within 3 to 5 Years, non-tech companies will emerge as leaders of technology and business model innovation, shifting power away from the traditional tech and digital born organizations. New geographic innovation hubs emerge. This shift will inherently drive a geographic dispersion of innovation hubs away from tech centers like Silicon Valley to a variety of global hubs with industry concentrations. Ecosystems drive market caps. Within 3 to 5 five years, market cap valuations will be largely based the power of ecosystems and digital assets, including the network effect of platform interactions and control of key digital technologies such as algorithms and APIs. 19Copyright © 2016 Accenture. All rights reserved.