We are in the era of digital transformation. From helping us make better decisions to providing information and giving options to choose from, digital transformation has already impacted our lives in numerous ways.
What is more important, is to realise that even though a lot of things are old-school, digital transformation is continuously increasing its presence across the industries. McKinsey’s survey indicates that the trends w.r.t online sales will continue even after the pandemic and that 71% of the interviewed audience is ready for ecosystem offerings.
The idea behind a digital ecosystem is similar to that of a natural ecosystem as it should be adaptive and should provide sustainable solutions with regards to the products and services.
A Digital Ecosystem is a dynamic network of stakeholders who connect and interact digitally to achieve a mutually beneficial alliance. Further citing McKinsey, “ecosystems will account for 30% of global revenues by 2025”. It helps a business in focusing on providing values and meeting customer expectations without having to worry about age-old delivery practices.
Digital ecosystem brings together a lot of companies from across the industries on the same plate where they are offered access to a common set of analytics, datasets and other applications. The massive amount of data that is generated serves as a goldmine for analytics. It provides every company, regardless of their size, an opportunity to gain a competitive edge.
Modern day banking systems are an example of digital ecosystem. The apps these days integrate all services in one place thus creating a fully functional ecosystem.
Implementing new technology becomes easier with such an ecosystem in place thus allowing companies to utilise next gen technology and services effectively. A vast set of products backed by a robust set of partnerships makes it easier for businesses to weather economic change by using the “combined resources” factor to full effect. Having partnership with companies who already have the technology and infrastructure in place allows you to launch new products in shorter time and thus generate new sources of revenue in relatively less time.
e.g. During the pandemic, Alipay, an online payment platform, expanded to a lifestyle platform in a mere three weeks and was able to launch features such as online consultation with doctors, food delivery, insurance offerings, etc.
Multi-company ecosystems give access to a huge customer base without the company having to incur a lot of Customer Acquisition Costs.
Creation of a digital ecosystem improves workflow efficiency and working relationships with partners and customers which, alongwith automated data processes, reduces the operational cost.
In the process of creating a successful ecosystem, companies unite their data and this data-driven behaviour adds a lot of value to the analytical part. The more information you have about your customer, the better understanding you will have about their buying behaviour and hence you will be able to cater to their needs in a better way. Machine learning and automation makes it possible for companies involved in this kind of system to analyse and interpret the vast amount of data they generate.
With every organisation trying to woo customers one way or the other, it actually comes off as a challenge to do something out of the box and create value for customers each time. It’s important to have a holistic approach across each department and adopt a customer-centricapproach. Replacing the siloed departments of the traditional structure, the digital ecosystem is a collaborative and dynamic environment, which values innovation and growth above everything and thus preparing the system to be robust in the face of change and adapt accordingly.
Why is the need to build a digital ecosystem?
- To fastrack the digital transformation -Partnering with companies that are digitally innovative can jump-start one’s journey of digital transformation. Building a digital ecosystem can give one access to products and technologies that would be very time-consuming to build in-house.
- To improve performance -A well-established digital ecosystem allows an organisation to focus its energies on providing values to customers and improve performance by removing all the redundant practices.
- For adding value to customer relationships -It allows one to constantly monitor and cater to the needs of customers thus helping the goodwill of the company.
- For transforming supply chains -Supply chains that used to function separately in the market are now coming together to support the development of new services and products thus creating supplier ecosystems.
An enabled digital ecosystem puts businesses in a position to better serve their customers and stay ahead in the competition. While many companies have some sort of ecosystem in place, they fail to integrate this system throughout the company.
A digital ecosystem is an essential part of digital transformation and therefore it becomes all the more important for organisations to adapt to this culture because at the end of the day, the winners of tomorrow will be the ones who are ready to capitalise on the changes of today.
By Rajiv Shah, President and CEO, Digital Business Services (DBS), Happiest Minds Technologies