At a recent event that included quite a few attendees from well-known high-tech companies and owners of emerging businesses, I asked a simple question to a group I was chatting with: “So, what do you think about the opportunities around the digital economy, as far as your own businesses go?”
I got some interested looks, but no clear answers.
I suspect that, while most were well-versed in articulating their business opportunities, the majority of executives I spoke with simply did not have a clear plan of action around the opportunities that come with a digital economy. To many, the digital economy is still an answer trying to find the right question. Some fresh thinking may be necessary to leverage the opportunity.
I’ll admit, if I wasn’t tuned into SAP’s CEO Bill McDermott and his strategy for the future based in large part on this phenomenon, I might not know a lot about it either. Bill recently spoke about the digital economy, saying, “The opportunity is huge! Global means a fragmented and complex supply chain. All of this has to be integrated back into the core business. For CEOs today, the flow of data is actually more important than the flow of goods. That is why it is such an exciting journey and a bold move for SAP to go after the business network.”
It’s a big idea that, until you see it in action, feels more like a concept on a whiteboard that looks impressive but doesn’t quite offer clear opportunities—at least, not yet.
This much is clear: It’s here and now. It’s vast, and, for most businesses it’s complicated. But if you can tame the digital economy, it can mean big opportunity, and longevity, for solution providers who embrace it.
The digital what?
In short, the “digital economy” is one where value derived from products and services is exchanged through a global network of buyers and sellers. This network of companies and people is connected through technology—massive numbers of mobile devices, cloud, social media and machine-to-machine connections—and is 4.9 billion strong this year and expected to grow to 25 billion by 2020, according to Gartner.
This network of technology does exist today; that is easy to see by the numbers. But harnessing the power as a digital economy that consists of people, transactions and processes is an entirely different thing.
Show it in action, please
The digital economy focuses less on the value of a single enterprise and more on the value that the network of businesses across the globe can bring together. This short video demonstrates the digital economy. In it, an eyeglass manufacturer faces a production delay because she can’t get the materials she needs in time. But she quickly adapts and overcomes the situation. Using collaborative tools, she finds replacement materials, then tweaks the design and communicates the update to retail partners so they can proactively act on the change. Quick, efficient, simple. It all works out in the end.
Such scenarios don’t always run so smoothly in the real world. But you can be sure that all businesses, even your customers’ customers, are increasingly going to be more social, mobile and connected. Some well-known companies were even founded to take advantage of the digital economy. (Think Uber, AirBNB and ZipCar, among others.)
Building on a great foundation
Last summer, SAP teamed with MIT Technology Review to identify three main areas where the digital economy is having, or soon will have, the most impact. They are:
- Earning customer loyalty
- Enabling open innovation
- Enhancing resource optimization
Perhaps not so coincidentally, these are also areas in which solution providers certainly drive value.
All the puzzle pieces of a digital economy are there: the technology, the knowledge and the demand. Now all we need is you—solution providers to help put the pieces together and show businesses what the big picture looks like. After all, the Internet of Things (IoT), cloud, mobile, and social technologies are only the foundation for the digital economy.
The real work lies in the ability to help customers learn to conduct business in a new way. And who better to do that than the trusted partners and business and IT advisers to those companies?
Now is the time to learn more about IoT and the digital economy. Talk to your vendor partners, talk to your customers. The conversations are just beginning.
Is your business’s infrastructure ready to handle the demands of the digital economy? See Business Networks: The Platforms for Future Innovation.