Digital technologies have deconstructed market structures that were once firmly established. Not only did they introduce new types of business models, but they also crippled the old ones - as is evidenced by several cases, such as those of Apple and Nokia, or Uber and traditional taxi businesses. Today, every business faces the following 2 challenges, which digital technologies can help to tackle: 1. Bringing down costs to compete. Technologies have progressed fast: Cloud computing replaced proprietary data centers, and pocket mobile devices are now favored over cumbersome desktops. With the right technologies in place, businesses can scale up and perform more efficiently, ultimately cutting operational costs. 2. Building digital platforms to adapt to the changing competitive landscape. Customers and employees are the 2 drivers of changes: their demands have changed, which requires businesses to change accordingly to adapt. For example, customers expect intuitive online shopping experience, while employees ask for productive and engaging workplace experience. Businesses can meet these demands only if they leverage digital platforms. This paper will examine the changing face of technologies, learn how digital platforms have inspired digital transformation, and discuss the architecture of a digital platform.

1. How to Thrive in the Digital Age:
Building a Digital Platform
May 2020
| A KMS Company Digital Transformation

2. Digital technologies have deconstructed market
structures that were once firmly established. Not
only did they introduce new types of business
models, but they also crippled the old ones - as is
evidenced by several cases, such as those of Apple
and Nokia, or Uber and traditional taxi businesses.
Today, every business faces the following 2
challenges, which digital technologies can help to
tackle:
1. Bringing down costs to compete. Technologies
have progressed fast: Cloud computing replaced
proprietary data centers, and pocket mobile
devices are now favored over cumbersome
desktops. With the right technologies in place,
businesses can scale up and perform more
efficiently, ultimately cutting operational costs.
2. Building digital platforms to adapt to the
changing competitive landscape. Customers and
employees are the 2 drivers of changes: their
demands have changed, which requires
businesses to change accordingly to adapt. For
example, customers expect intuitive online
shopping experience, while employees ask for
productive and engaging workplace experience.
Businesses can meet these demands only if they
leverage digital platforms.
This paper will examine the changing face of
technologies, learn how digital platforms have
inspired digital transformation, and discuss the
architecture of a digital platform.
1
Digital Transformation Introductuion
Introduction

3. Digital disruption is a transformation caused by digital technologies. It impacts the value of all existing
products and services.
Note that digital disruption is more than innovation. Innovation is the creation of something new. Disruption
not only creates something new, but it also displaces the old.
The world’s largest
taxi company, owns
no taxis
The largest movie
house, owns no
cinemas
The world’s largest
software vendors, don’t
write apps
The most popular media
owner, creates no
content
The world’s largest
communication
companies, own no
telco infrastructure
The world’s largest
accommodation
provider, owns no
real estate
Digital Disruption and its impacts
DIGITAL
DISRUPTION
Digital Disruption and its impacts
Digital Transformation

4. 3
Digital Transformation The Old Concept of Market Leaders
The Old Concept of
Market Leaders
Back in 1995, Michael Treacy and Fred Wiersema
published The Discipline of Market Leaders. This
book discusses competitive business strategies,
and has made its way to the New York Times Best
Seller list.
The book is the distillation of five years’ worth of
research on leading companies such as Wal-Mart, Dell,
Southwest Airlines, Home Depot, and many others. It
portrays market leader as one that has these 3 qualities:
• Customer Intimacy
• Operational Excellence
• Product Leadership
At the time this book was published, companies
that were leaders in their industries narrowed the
focus: Leading in one quality while meeting
industry standards in the other two.

5. 4
Customer Intimacy
- Cultivate positive customer relationship
Focusing on Customer Intimacy, these market
leaders incessantly adjust their products and
services to keep up with customers’ ever-changing
demands. They don’t pursue transactions. Instead,
they cultivate relationships with customers and
find ways to add more values to their customers'
lives. This is why these companies’ employees will
do their best to bring each individual customer
what he or she wants.
Home Depot and Nordstrom are the two examples
of this category. Home Depot clerks are never in a
hurry. Their only priority is to make sure the
customer gets the right product, regardless of
whether the product costs 50$ or 50 cents. Home
Depot does not target consumers who care only
about price.
Nordstrom is another example. Excellent customer
service is what makes Nordstrom successful. Its
employee handbook has only one line: “Use good
judgment in all situations”. If you want to know
The Old Concept of Market Leaders
Digital Transformation
where something is, a Nordstrom salesperson rarely
points the way. Instead, they will walk you there.
Nordstrom also wants its salespeople to walk
around the counter to hand things to customers,
rather than across the counter. Word has it that
Nordstrom's employees have to answer the phone
on no more than the 2nd ring.
Operational Excellence
- Competing through lower price yet higher
convenience
A company pursuing Operational Excellence leads
its industry with competitive price and
convenience. It always seeks ways to minimize
overhead costs, to eliminate intermediate
production steps, to reduce transaction costs, and
to optimize business processes across functional
and organizational boundaries.
In the 1980s, Compaq was doing everything it
could to make its PCs less expensive and faster
than IBM’s. Meanwhile, Michael Dell saw the
chance to outdo both IBM and Compaq by focusing

6. 5
not on the product but the delivery system. Instead
of selling PCs through dealers, Dell cut the dealers
out of the distribution process altogether. Dell sells
its products directly to customers and creates a
disciplined, extremely low-cost culture.
In the late 1980s, General Electric set out to transform
itself into a low-cost, no-hassle supplier to dealers.
Retailers acquired a computer package that gives
them instant access to General Electric’s online order
processing that was available 24/7. They can check
on model availability and place the orders for
next-day delivery. One dealer can say: instead of
telling a customer I have one or two units in order,
they can say we have 2,500 units in our warehouse.
The Old Concept of Market Leaders
Digital Transformation
Product Leadership
- Lead with exceptionally awesome products
Companies pursuing product leadership strive to
produce a continuous stream of best products and
services.
To reach this goal, they need to challenge
themselves in three ways. First, they must be
creative, recognizing and embracing new ideas
that usually originate from outside the company.
Second, they need to commercialize new ideas
quickly, in that business and engineering processes
have to be built for speed. Third, they must pursue
new solutions to the problems that their latest
product has just solved. The product leaders
continuously raise the bar.
Johnson & Johnson, Nike are two examples of this
value discipline.
• J&J’s product: Vistakon’s disposable lenses
caught rivals off guard, and they never caught up.
• Nike continues to innovate year after year,
product cycle after product cycle.

7. 6
While picking one strategy at a time to
focus--whether it's Product Leadership (PL),
Operational Excellence (OE) or Customer Intimacy
(CI)--was the right choice in the past, it’s no longer
relevant in today’s competitive marketplace. In the
pre-digital age, leaders such as Sony (PL),
McDonald’s (OE), Home Depot (CI) were the iconic
examples of each approach.
The Rise of Platform Business Model
Digital Transformation
The Rise of
Platform
Business Model However, today’s market leaders excel in all three
qualities. For example, Amazon has the widest
product choices, most efficient operations, and
most personalized customer experience in its
respective markets.
As companies seek to nail these qualities, a digital
platform is key. It has to provide robust and
efficient self-service infrastructure, deliver
excellent customer experience, and become a
“go-to” place for innovation.

8. The 5-layer
Digital Platform
The word “platform” alone refers to a raised
surface on which something can stand. This is
actually a good starting point to understand what
digital platform means:
“A Digital Platform is a layered architecture that
facilitates the development and delivery of
software applications across the business
networks.”
In short, it is the foundation on which businesses
build new digital applications. But the keyword
here is “layered”. This is because a digital platform
consists of layers, each is built on top of another.
Typically, a digital platform has 5 key layers:
Digital Transformation The 5-layer Digital Platform

9. Device layer: An IT device that stores and processes digital data. A
device layer could be a computer, a mobile phone, or a tablet. For
example, Paypal makes use of iPhones or Android phones as its
payment devices.
System layer: A system that runs digital software and physical devices.
A system layer could be operating systems such as iOS or Android. For
example, Paypal relies on operating systems such as Android or iOS to
deliver its payment services.
Network layer: Communication channels that transport data. The
network layer could be a local-area network (LAN) or the Internet. For
example, without the internet and credit card networks, it would be
impossible for Paypal to offer its services.
Service layer: AApplications that store, generate, and distribute a wide
collection of contents such as videos, texts, graphics, and audio. The
service layer could be 3rd-party applications. For example, PayPal’s
contents can be integrated into 3rd-party mobile payment applications
(such as Apple Pay or Google Pay) thanks to its Application
Programming Interfaces (APIs).
Content layer: Digital Data that comes under the form of audio, video,
text, and images. The content layer could be payment data or audio files.
For example, PayPal renders its payment data as purchase amounts,
merchant, date, and location.
The 5-layer Digital Platform
Digital Transformation

10. Digital
Digital Transformation The 5-layer Digital Platform 9
As one can tell, these layers allow developers to
contribute their digital applications to co-create
values with the layers’ owners. This can be both an
advantage and a challenge. Let’s take the complex
relationship between Kindle and Apple as an
example. Kindle leverages Apple’s tablets to
distribute its Kindle Apps. At the same time, Kindle
uses its eBook reader and Kindle tablets to directly
compete with Apple’s tablets.
Regardless of the industry you are in, you almost
certainly will use software applications and digital
platforms for about every part of your business, your
future product or service will use more software and
will become more complex. This means that more of
your people will work on software and that their work
will be harder to track and difficult to manage.
.
So you want a digital platform - here’s how
There are 3 ways you can go about building your
own digital platform.
Leverage current platforms: Businesses that lack
resources usually go this way. They make use of
free, open-source platforms such as Facebook,
Twitter, and Instagram to achieve certain
purposes, such as engaging customers. Many
fashion brands, even the big ones, use Facebook
and Facebook Messenger as support centers.
Through these social channels, customers can
easily place orders or ask for help. This works out
well because, in Vietnam alone, it is reported that
people spend nearly 2 hours and a half on social
media every day.

11. Find a partner: Partnership is one level higher than
using the existing platforms. To compensate for the
expertise that it lacks, a business taking this
approach would invest in a 3rd-party organization.
For example, fast food chains usually partner with
delivery platforms as delivery solutions.
Build one yourself: This is the toughest, and yet,
rewarding option. In-house development requires a
sizable investment and an army of talents, not to
mention a deep understanding of customers.
Those taking risks with this option succeeded
usually because they already had a solid customer
base. The Coffee House is a good example of
companies enjoying success in building their own
digital platforms.
The 5-layer Digital Platform
Digital Transformation

12. 11
Key Considerations
when building a digital platform
Before investing in your first digital platform,
here are some questions to ask:
Is my customer base large and strong enough:
Having a large number of customers sign up for
your platform even before it is released is a clear
sign of success.
Can the platform offer exceptional values?
Being able to provide something valuable that no
others can will help you stand out.
Will customers perceive my platform as credible?
If every other in your industry has a digital
Key Considerations when building a digital platform
Digital Transformation
platform, customers need reasons to join you.
In which way should my business charge users?
Based on your customers and their preferences,
you need to choose one payment method or
some that you believe will not only bring you
profits but also cheer your customers.
Pay-as-you-go and monthly subscription are the
common ones.
Can the new platforms marry well with the
legacy system? This is because most businesses
find it impossible to build new platforms while
discarding their old systems altogether.

13. Conclusion
New digital capabilities can be continuously built
on top of the digital platforms, helping digital
leaders excel in all three dimensions: Customer
Intimacy, Product Leadership, and Operational
Excellence. The idea that companies succeed by
selling values is not new. What’s new is how
customers define value in today’s markets.
It’s important to keep in mind that everything is
possible but not all at once. Pick the focus, make
decisions quickly, continuously look for new ways
to shorten the cycle times, redefine what is
possible, and forever change the term of the
competition.
Conclusion
Digital Transformation

14. KMS Solutions works closely with leading software companies across the globe to bring the most advanced
and innovative technologies to Asia Pacific. The focus is to help organizations achieve their business goals
through world-class fit-for-purpose solutions and proven industry best practices. KMS Solutions’ success is
ultimately measured by the positive impact that it makes to the client’s business.
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