Ecosystem and Marketplace Strategy with Alan Glickenhouse of IBM

It’s a matter of getting businesses to understand that’s where the real money is, and it’s definitely not in just charging a penny per API call or something like that.

For our latest “What I’ve Learned…” interview at OpenChannel, we sat down with Alan Glickenhouse, IBM’s Digital Transformation Business Strategist. He helps leading enterprises with strategy for Digital Transformation and the API Economy, has authored over 100 papers, articles and videos at both the business and technical level, and helps clients in all industries across all geographies. Previously Alan has held worldwide leadership positions as a member of the Global Business Integration Tiger team, SOA Tiger team, WebSphere SWAT team, and Worldwide SOA Sales Executive. Alan is also a frequent speaker at many industry conferences on such topics as API Economy, API Management, Strategy and Governance, and he sat down with us to share what he’s learned along the way…


OpenChannel:
You’ve written about whether a platform is just a marketplace plus an ecosystem, or more than that. How do you define a platform and what makes for a great platform?

Alan Glickenhouse: That’s a very good question. I find this topic particularly interesting and tend to go with the definition that a platform is greater than just a marketplace plus an ecosystem.

That article was about getting to a company’s core competencies and exposing those in a way that other businesses can use. It’s not just about partnering and have a location that people can come to get assets.

It’s about looking at new ways for other companies to leverage what your business already does. Probably the best example, which I used in the article was Amazon, who went from one item type (books) to multiple items, then third party items and eventually becoming the selling machine for other business to build upon.

When I talk to certain companies that have that kind of potential, we always discuss platform as an area that they need to think about.

OC: How should a company think about building an API focused marketplace?

AG: Again, a very interesting topic that I’m getting asked about more and more. 

An important question is “how do I get people to come to the marketplace?”. There has to be a synergy between what you offer and what your potential partners offer that lets you both come together in a single location. It has to be complementary.

I wonder how this is going to shake out because everybody wants to be a marketplace, but not everybody’s going to end up being a marketplace.

I haven’t won the lottery lately, so I don’t have 100% confidence in my predictions but there may be some industry specific scenario where industry groups will form a marketplace outside of any individual player. 

Then there’s going to be the big gorilla marketplaces where very large players will dominate. Potentially others could come in as first movers, but even first movers sometimes get wiped out by the big guy that comes in later.

OC: An important decision is when to participate in somebody else’s ecosystem versus build your own ecosystem. Other guests have talked about this, how do you talk to the companies about deciding one or the other, or both?

AG: I talk to a wide variety of customers, but the larger ones may be the more challenging because they have a history of slow movement, owning everything and a hesitancy to put anything outside the company. That’s much more difficult than dealing with the companies that have less of a legacy. There are two approaches – One is fight it, the other is don’t fight it. 

If they are truly adopting digital transformation and want to become more agile, get more customers, do innovative things, then the idea of getting outside your company and partnering into other ecosystems, is going to be much easier to accomplish. 

Where that’s not the case, many want to be more cautious as they move forward and start with internal scenarios that don’t even expose things outside the enterprise. From there, they’ll go to existing partners, and then expand from there. They’re going to take longer to get there, but for their culture and their company, it may be the only way they can move forward.

OC: You wrote a line “can we digitize relationship creation where a platform is vetting partners in a much more programmatic way? Onboarding of partners can be a big barrier, how should companies think about onboarding digital partnerships?

AG: That article is about digital ecosystems past, present, and future. The past was simple partnering. The present has two parts. One is the business side of creating relationships, and the other is the technical implementation of that partnership.

So in the present state, we can automate some of the onboarding of the partner and build APIs since we know what they need from our systems. Once the business relationship is settled, we can give them access to a developer portal and they can then onboard themselves in a self-service manner. So that’s the present.

The future is, how do we automate the business side of this relationship? I think there’s part of it that clearly has to happen, there has to be some proven level of trust, some kind of authentication that a potential partner that is trying to sign up is in fact, a valid business.

There needs to be something like a certified authority that validates who you are and that you’re a valid, reliable partner. Then you can get to any number of degrees beyond that for how scalable and secure you are and all kinds of other things. 

There needs to be some kind of a trust scenario whether it’s at an industry level, or a government level. Then you could potentially go down the path of business relationship. I think there’s a lot of innovation yet to happen here.

OC: One of your seven API use cases is Partner. What should a company focus on to grow an ecosystem of API partners?

AG: There needs to be the right roles put in place at a company. One of the biggest mistakes I see companies making is just relying on creating APIs as the way to get partners. That just isn’t going to work. 

In almost all companies, the people who build the product are not the same people who go out and get sales or drive usage of the product.

For some reason, we lose that knowledge when it comes to APIs. We think that we’ll just build some APIs for partners, and then everybody’s going to start using it. 

I talk about an API product manager role that has the responsibility to market the product and go to the right communities, show them why their API is valuable, and drive the success.

OC: We love your meme in this post about monetization, and you talk about monetizing APis in a way that facilitates onboarding of partners to reach new customers (called “Indirect”). What do companies need to do to be successful at this?

AG: It’s a great question and I think indirect is the big area where people should focus. 

There’s this general idea of API monetization as driving customers to a direct monetization model, and that idea is doing a disservice to the opportunity that sits in front of companies. 

Direct monetization seems very attractive but the problem is, nobody works on that model. It’s not about how many times somebody does business with you. It’s about the value of doing business with you. I’ve had the conversation many times on monetization where I explain that it’s more than just charging for APIs, I explain why indirect is a better model, but then the listener keeps coming back to wanting to charge for APIs.

The challenge with monetization is, as soon as you get into a conversation about monetization, it becomes a conversation about measuring return on investment for doing APIs and direct monetization is very attractive from an “easy to measure” perspective 

But really, it comes down to the business-driver of reach. In my mind, reach and partnering as a use case are the things that will drive the biggest economic value to companies.  B2B is great for this. You can multiply the effect of your offerings and get them to market faster by reaching new customers that weren’t even looking for what you are offering – but getting your offers in front of them through partnering.

It’s a matter of getting businesses to understand that’s where the real money is, and it’s definitely not just charging a penny per API call or something like that.

Ecosystem Monetization Strategy

OC: What’s something you’re really good at or love to do that most people don’t know.

AG: Most people know this but I travel constantly for work and I just returned from an around-the-world trip. Leaving my home, I went to Barcelona to speak at a conference, then from Barcelona to New Zealand to Australia and finally came home. It’s the third time I’ve done a true around-the-world and loved it.  But even when not working, I love to travel for vacation as well.

Build your Marketplace Strategy!

We want to thank Alan for taking the time and sharing his insights. If you want to learn more, you can check out Alan on Twitter, Linkedin and we highly recommend reading his blog posts.

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