In a recent podcast, Phil Carter and I explored the convergence between business and technology ecosystems. This blog highlights some of the key takeaways from that podcast.

First, What do We Mean by Ecosystem Business Models?

When we talk about ecosystem business models, we’re talking about business models where relationships between interdependent organisations are purposefully established to create business value. In these business models, two or more partners seek to aggregate capabilities and co-create effectively to realise new market opportunities and create business value.

COVID-19 Has Highlighted How Interdependent Organisations Really Are

The current crisis we are experiencing has really highlighted how interconnected and interdependent companies, organisations and supply chains are. Critically it has highlighted the importance of real-time data visibility across different value chains. A great example of this comes from Post-NL, the Dutch post and parcel organisation.

In the height of the lockdown many of its logistics partners benefited from being able to see which stores and locations were open. It used an API platform to surface this data visibility to its partners, helping them to avoid wasted time and resources trying to deliver to locations that were shut down.

That is ecosystem value in action — delivering the right experiences to the right person at the right time across the right value chain.

We’re seeing a lot more industries exploring these types of ecosystem business models based on the power of technology to deliver this type of value.

Digital Transformation Involves Reimagining Business Models

While ecosystem business models have always existed in the bricks-and-mortar world, they can be built quicker and with much greater speed and impact with digital technologies.

This is why, in the B2C space, we have seen these ecosystem- and platform-based business models rise in prevalence. Uber, Spotify, eBay, Airbnb, Amazon and others have all built their business models around facilitating interaction and exchange between multiple parties. Now we’re seeing more and more organisations looking to replicate these successes in the B2B space.

In the podcast we highlight three examples:

  • OREN: a collaboration between IBM and Shell to launch a B2B digital mining services marketplace platform
  • Volkswagen Industrial Cloud: initially a collaboration between VW and AWS, then extended to include Siemens and now opening to a number of technology and industrial firms
  • The Circuit: a collaboration between the NHS, Microsoft and New Signature to create an ecosystem of “defibrillator” guardians

Innovation Often Happens at the Intersection of Industries

In all three examples above, partnerships were formed between companies from industry and technology vendors.

This is an evolution in the relationship between vendors and their customers from one of technology supplier to one of partnership.

Historically, technology vendors would sell a customer a product or service, sometimes directly, sometimes with a partner to implement and manage, but often the perceived ROI and user adoption was low, and the technology was underutilised.

As a result of the issues with that model, the “as-a-service” era emerged, which enables a lot more flexibility in terms of usage- or consumption-based models and where the partners’ role is really to accelerate value from those implementations. But there is still a gap. In 2019, organisations in Europe spent $256 billion on the technologies, solutions and services to enable digital transformation, but only 26% believe they have delivered a ROI from their digital investments.

We believe the third stage of this is ecosystem-driven, where the customer, the partner(s) and the customer are more integrated and inter-dependent and roles are more fluid and more dependent as to what value they deliver at a particular point. There is a need to put more skin in the game and focus on shared value.

The former VP for Digital IT at Adidas, Sebastian Drews, summed this up nicely when he said: “I don’t want to talk about vendors and suppliers, I want to talk about partners. I think in the digital economy the boundaries of corporations are being challenged and stretched anyway.”

Our Three Key Takeaways From This Discussion

  • The currency of the ecosystem is trust. Multistakeholder engagements require a clear view on governance at a process, data and structural level, and well-defined contracts in place to protect intellectual property and data privacy. Confidentiality, NDAs and other forms of agreements to protect the competitive secrets of respective organisations are also key.

 

  • Have clear purpose. When the purpose is unclear or roles are ill-defined, there is risk of trust breaking down. Participants must understand the broader goals and objectives of the ecosystem business model. While actual outcomes (and commercial models) may not be clearly defined in early stages of development, the engagement must be underpinned with a broader purpose — such as targeting a new market segment, disrupting a competitor or creating something new for a specific industry. It’s also important to think about monetisation models early. They should be based on a principle of shared value.

 

  • The role of the orchestrator. Every ecosystem must have an “orchestrator”. This is the lead company that identifies partners; organises and manages the ecosystem; defines the strategy; identifies potential participants; and clearly defines all roles, responsibilities, contributions and interactions upfront, so that all partners know what to expect. But who the orchestrator is will depend on the business value being developed. This could be the technology vendor, the integrator (e.g., a systems integrator) and, in many cases, the “customer as partner”. Leverage your partnering muscle here. While it’s unlikely that every ecosystem business model will require a partner programme, there is real value in sharing best practices in partnering. Most technology vendors have decades of experience in managing strategic technology partners and often complex partnerships, but most businesses do not.

To learn more about the convergence between business and technology ecosystems, please head over to https://www.idc.com/eu and drop your details in the form on the top right.

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