How platform teams can move from cost center to strategic investment
If you work in a so-called platform or internal product team, you know this reality: You are at least two steps removed from key business indicators that leadership cares about. And this leads to challenges in how you operate and how the organization interacts with you and your platform team.
Most public material about product management focuses on end-customer-facing teams, often in the B2C space. In this article series, we want to look at teams that create technology-driven solutions that no end customer will ever see. The product managers and leaders of platform teams are responsible for products that their co-workers consume via APIs, SDKs, or other internal interfaces.
The difference in value creation
The value creation for a product team responsible for a checkout flow is direct:
The product team can present a clear impact to senior leadership.
In comparison, the value creation for a platform team that provides payment processing is more indirect:
Each abstraction introduces measurement complexity and attribution challenges. Most likely, the customer-facing team integrating the new payment channel capability will earn all the glory, while the platform team “just did their job.”
The current economic climate makes this even harder. Budgets are focused on shiny AI features, while rising compute costs create increasing cost-saving pressure. It's an uphill battle to make the case for long-term platform investment, even if these platforms are needed to enable differentiated AI capabilities.
Meanwhile, many platform product managers don't focus on value and viability risks in favor of short-term stakeholder and dependency management.
Why does platform product management look different?
Several factors make the playing field fundamentally different.
1. Ambiguous customer definition
Customer-facing PMs can point to a clear customer segment they are currently focusing on. They address segments like “marketing managers in enterprise healthcare organizations.” Every senior manager can tell who their customers are and how the company is addressing them.
In comparison, platform products face stakeholder complexity. They constantly hear from teams, their team leads, and managers. As well as architects, security, compliance, and various other roles, each with their own needs and ideas. When everybody is seen as a customer, customer-centricity becomes meaningless.
Typical segmentation approaches don't apply. Platform teams need to develop a clear differentiation within their consumer and stakeholder landscape. User Research is a different game when research participants are your co-workers.
2. Indirect value attribution
Many customer-facing teams directly impact top-of-mind business metrics such as user acquisition, retention, specific conversion rates, ARPU, or engagement.
In platform teams, technical metrics focused on throughput and stability (DORA metrics) and proxy metrics such as platform adoption are often used. These are important metrics, and technical leadership may request them. But business stakeholders often can't make sense of these metrics.
Ultimately, teams are measured on their economic value. When the connection to business impact is hidden, platform teams are often seen as pure cost centers.
3. There is no glory in prevention
Customer-facing teams are often asked to be bold and innovative. Even a bold new feature that doesn't move the needle might be something great for marketing reasons. Establishing focus is much easier when the PM can point to the latest feature that everybody can't wait to release.
Platforms are best when they are invisible. Big announcements for new platform capabilities are rare. But whenever there is a hiccup, people will show up to complain. Maintenance, stability, and reliability are table stakes. Keep-the-lights-on is not just necessary padding. It is part of the core product proposition.
Platform product managers often have to ensure the machine keeps running smoothly while enabling the long-term strategy. Jumping from one short-term success to the next won't work.
How did we end up here?
This disconnect from the product management field isn't accidental. Many platform teams evolved from infrastructure and operations teams, which were always treated as cost centers.
Meanwhile, product management frameworks focused on B2C success stories that don't directly translate to internal contexts. Applying them often doesn't work when the customer is a co-worker with political power.
In other cases, teams focused solely on clean architecture and state-of-the-art tooling and technology. They fell into the trap of building better versions of the wrong thing.
The disconnect between business rationale and the technical perspective led to significant trust issues due to language barriers and limited comprehension. As a result, we see underfunded platform teams, because their value stays illegible to the business.
Why platforms need product management thinking
Given that stability and reliability are often in focus, why do we even consider internal APIs and tools as products that benefit from innovation and product thinking?
To answer this question, let's look through the lens of the four core product risks as defined by Marty Cagan.
Feasibility
This is where most platform teams shine. They are driven to provide the best technology for their organization and make it robust. The most senior engineers are often attracted to these technical products.
Usability
Many platforms are built by engineers for engineers. This often results in at least good-enough usability. While a design perspective would be helpful for many teams, it's usually not the biggest hurdle to success.
Value
To better understand value, we have to redefine the customer as a consumer. Internal consumers don't pay for the solution, and often can't choose alternatives. Even if a free-to-choose model is a healthy platform pattern for mature organizations, platform use is often mandatory. In either case, the platform needs to provide a solution that's actually valuable.
Even for mature platform teams, the value question gets easily buried in stakeholder chaos. Many decisions are driven by those pushing the loudest. Instead of exploring: “What opportunity has the most impact?” time is spent in opinion-driven prioritization processes.
Defining value, as a core product management responsibility, needs to be addressed strategically. This means identifying what's actually hard for consumers, clearly describing the resulting opportunity, and testing multiple approaches before even diving into feasibility and usability questions.
Viability
When thinking about viability, we have to recognize that we work within the business for the business. Platforms mostly have an enabling function.
The core question: Is this platform worth funding because it creates an economic advantage?
Typical goals of a platform are:
Protecting revenue by increasing security, reliability, and stability, or mitigating legal risks (ensuring data protection, compliance adherence, and reporting obligations).
Saving costs by centralizing capabilities, automating manual tasks, or enabling co-workers to be more efficient with better tools.
Explaining the platform's business logic is a key factor that product management must provide to the organization. If a platform PM can't articulate why the business should fund the team, every budget review will be a frustrating dance.
Platform teams often focus only on creating better technology and making everyone around them happy. But when struggling to explain how they prioritize and what business impact they create, they quickly fall into an “expensive request taker” pattern. This results in a downward spiral of fulfilling wishes from any stakeholder while being pressured to run on smaller budgets.
The common anti-patterns
When platform teams face increasing pressure from stakeholders and leadership to “get more efficient” or “deliver faster,” they often fall into one or several of these anti-patterns.
Elaborate prioritization frameworks
Teams start using RICE scoring, buy-a-feature, weighted scoring, value vs. effort, MoSCoW, or any other framework to ”objectively” prioritize a long list of ideas and requests.
All these frameworks aim to prioritize among many solution ideas, often packaging assumptions into rational-sounding scores. But even if the discussions become more rational, they won't solve the underlying problem: missing strategic context expressed in opportunities to leverage.
When there is no clarity about who the team serves and what the organization's current focus is, no scoring system will solve the ambiguity that every stakeholder will exploit.
Dependency Management Processes
Teams spend days in big-room planning, connecting tickets across the organization, and cycling through roadmap alignment sessions, only to find out that the plans are never accurate enough. These processes try to manage the symptoms of a lack of focus. As long as the platform team lacks a deep understanding of its consumers and the broader business landscape, coordination will always feel like pulling on an endless thread. Time that could be spent enabling the business by solving a specific problem for a specific consumer is wasted on non-value-adding work.
Improving requirement intake
Another very common anti-pattern is over-investing in better forms, templates, and ticketing systems to ensure stakeholder wishes are captured more clearly. Expecting to deliver quicker with fewer surprises.
This is an illusion. Even if the requests become more detailed, requesters lack context. They have no incentive to consider the economic value of the platform teams' time. They don't have an overview of patterns between multiple consumers. Nor do they have the deep insights into the newly emerging technological capabilities. Through continuous product discovery, the team needs to get ahead of feature requests and work strategically on the most critical issues.
This lack of strategic direction-setting unites all anti-patterns. To act strategically, platform teams need two core things that these approaches don't provide.
A clear understanding of who they serve and how to differentiate these groups.
A clear model to connect their work to business impact.
There will always be more work than anyone can do. Pushing feature wishes up or down a list is not the right approach.
The path forward
To put platform teams on the value-creating side of the business logic, we have to embed the platform's positioning more deeply into the organizational logic.
The first step is to develop a differentiated understanding of the groups around the platform team. Starting with questions like, ‘Who is consuming the platform? Who is influencing decisions? Who is sponsoring the platform?’ This is the key to equipping the team to communicate and collaborate effectively within their organization. It also enables product discovery beyond typical opinion-driven meetings or mechanical requirement-gathering.
The second step is to clarify the connection to the business model. The team must connect platform capabilities grounded in defined product outcomes (what is possible for people with this platform) to business impact. The goal is to position the platform as a strategic investment rather than a cost center.
When platform teams can clearly articulate their stakeholder groups and their connection to the business model, two things change. First, prioritization becomes defensible. By discussing what operational gains the platform will enable, it's no longer about managing requests, but about making strategic bets. Second, budget conversations transform. Instead of justifying existence, it's about aligning where to invest.
The principles are the same. The application to the unique challenges of platform products is what makes platform product management distinct.
What's next
This first article provides an overview of the core approach to platform product management. The second one will delve deeper into how to differentiate stakeholders from “everyone gives some input” to clear categorizations and strategies for leveraging these different perspectives. The third article will dive deeper into how to connect what's actually relevant to the business with what internal consumers need to thrive.
Christoph Steinlehner
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Experience the new way of doing product management
Experience the new way of doing product management