Digital transformation is in full swing. But decision makers are now being challenged to go further and create digital ecosystems that encompass customers, employees, developers, suppliers, and even extended networks of related businesses.
Digital ecosystems are communities that use shared, scalable resources to pursue challenging objectives and common interests. They are the key to disrupting existing markets and competing effectively in a mobile and digitally connected world, according to technology analysts at Accenture and Gartner.
By providing platforms for accessing shared assets – such as software, data, and compute resources – ecosystems help organizations deliver high-value products and services with greater speed and efficiency.
“The ecosystem is about value creation,” says HRIZONS president and CEO Jim Newman. “There is a unique opportunity to bring value to business because you are learning all the time and spotting opportunities in the market that no one vendor can deliver.”
Relying on partnerships to accelerate growth
Organizations have traditionally added products and services in carefully planned steps. But such a systematic approach is hard to sustain in today’s marketplace since many new offers are quickly obsoleted or commoditized. This new reality means organizations must be more fluid, adaptable, and responsive to changing conditions.
Moreover, it is crucial to take action while in a position of financial strength, according to Sodales Solutions founder and president Sana Salam. “Companies need to reinvent themselves when they are growing,” she says. “Not when they are falling apart. That is when they are best positioned to experiment and change the business.”
Digital ecosystems facilitate this process by bringing together unique capabilities. For example, collaborating with suppliers accelerates a product or service launch by allowing more cost sharing and reducing investment risks. Similarly, including customers in the process builds demand by giving them a stake in the development process.
Using the cloud to build connections and enable change
Many organizations choose to build ecosystems on a cloud platform. The cloud provides access to sophisticated infrastructure, resources, and tools when needed and with less cost. Plus, unlike most in-house infrastructure, cloud resources are easy to scale, use, and reconfigure for different participants and program objectives.
The cloud also enables lines of business to fast-track new processes and involve ecosystem participants in strategies that foster continuous improvement.
Scott Harrison, Sr. Director America’s Platform Partner Ecosystem, SAP, cautions that these actions ultimately change how an ecosystem consumes information technology and blurs the lines between what is personal and what is owned by the enterprise. Organizations can clarify these issues by establishing simple governance guidelines. The rules ensure members are collaborating in an equitable and effective manner and using shared assets and technologies to support the community’s goals.
“You need to keep it simple,” Harrison says. “Sometimes we come up with elaborate models but lose sight of what it is that makes us successful day in and day out.”
Adapting to a new way of measuring value
Organizations can lead their own ecosystems while belonging to other communities. These collaborative environments expose employees to new ideas, emerging trends, and technical solutions. These interactions are especially important for larger enterprises where corporate culture and insular thinking tend to drive decision-making.
“When companies become large, they are frozen,” says Salam. Ecosystem interactions shake up the status quo and force decision makers to think differently about a range of critical issues.
Collaborating also creates personal connections between participants. Connections and exposure to new ideas often change how ecosystem participants produce value for their employers or sponsors. This new way of working means decision makers need to adjust how they assess the performance of these individuals and business units. For example, a supplier may be reluctant to share an innovative idea if there is no mechanism for ensuring an appropriate financial reward.
“There is a lot of learning that goes on at the management level,” says Harrison. “That is often the biggest obstacle to realizing return on investment.”
Want to learn more? Listen to the SAPRadio show, “Reinventing Your Company: Partnership and the Cloud,” and follow @SAPPartnerBuild on Twitter.
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