2011 — The Year of the Platform?

The French web entrepreneur Loïc Le Meur identified “platforms” as one of the key technology trends at the World Economic Forum in Davos in January. American Airlines started to feel its power when combating Orbitz and Expedia.  Apple recognized its value when it created the app store for the iPhone; and is now trying to repeat that success with the Mac store for its computers. Your kids are inhaling the many benefits of a platform through their use of Facebook. When Ford launched its efforts to change how people interact with their cars through SYNC® and MyFord Touch™, Ford is banking on the power of the platform to ensure drivers will enjoy an ongoing flow of updates and added services. To me, it sure looks like everything is becoming a platform.

Why stand-alone applications fall short

Stand-alone applications are a thing of the past. They just cannot compete with the cost effectiveness, flexibility, extensibility, innovation cycle and rapid time-to-market that platforms offer. An application is a closed environment that does whatever its original developers intended it to do, and nothing more. That is not sufficient for the demands of today’s FX markets.

Steve Lohr wrote in a recent New York Times article “The combination of hardware, software and services is what corporate executives, economists and analysts call a platform. Successful technology platforms sustain and reinforce growth. And this self-reinforcing cycle is known as a network effect. It helps the platform owner and raises a barrier to competitors.” He goes on saying that “Still, the technology business — with its interconnected hardware, software and networks — tends to be where platform strategies are most prevalent and the payoff greatest.”

The Internet has changed products into services and services into platforms, delivered on demand, to the screen of your choice.

Ceaseless innovation

Since Adam Smith wrote about the concept of an “invisible hand” for the first time more than 200 years ago, it has seen many interpretations. Nobel laureate Milton Friedman called Smith’s Invisible Hand “the possibility of cooperation without coercion.” Technology platforms accelerate this effect through a unique feedback loop: the network effect. I’d like to think that this concept is what drives economic success for many companies on Integral’s FX Grid.  We provide the platform for every participant to do what is in their best business interest, while enriching the entire community.

On FX Grid, network effects might constitute themselves in the increased variety and diversification of liquidity, in the more successful matching of complimentary FX counterparties, and in the fact that even very unique business models will find the critical mass required to become profitable, due to the sheer scale of the platform. There is no limit to anyone’s creativity, and as long as they adhere to a few technical standards and dealing rules, it will work seamlessly on FX Grid. Plug and play.

Applications, as well as they may have been designed, are closed entities. Their only chance to grow and evolve is with the next release.  Only platforms offer the ability to share innovation almost instantaneously among the many different participants that form this ecosystem.  It is this combined economic interest that drives the development of the platform for the benefit of everyone. Integral acts as the playground monitor but also an innovator. This allows for rapid evolution and growth, while ensuring everything ‘just works’.