The growth of business ecosystems in an innovation-driven world

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According to Accenture, 84 percent of executives say ecosystems are important to their strategy of digital transformation to drive innovation. This requires a profound change in thinking about how you manage your data in a secure way to power workflows that extend to external partners. The next wave of the Internet will be all about enabling these ecosystems. Are you ready for it?

Currently, over 70 percent of the data in the world is created by consumers, according to IDC. The Internet today is largely driven by our desire to share our digital lives with friends and family, enjoy movies and music, shop and stay informed. It took around 20 years for this second wave of the Internet to develop – the social and mobile era. The first wave of the Internet was all about building out the basic infrastructure for email, Internet telephony, video calls and the World Wide Web. Today, we're about to see yet another profound shift in the nature of the Internet to enable business ecosystems – the so-called third wave.

Within just six years, IDC forecasts enterprises will be responsible for creating 60 percent of the data in the world. The total size of the datasphere will grow to 163 zettabytes – ten times the 16.1 zetabytes of data generated in 2016. Already the Internet of Things (IoT) connects billions of devices and machines thanks to reliable mobile connectivity and other wireless standards like LoRa and Bluetooth. In fact, in 2018 more objects were connected than human beings on this planet. But beyond this, the third wave of the Internet will enable better data flows between the systems that business ecosystems use to power business processes.

According to Helmut Reisinger, CEO at Orange Business Services, "Today’s Internet has gone far beyond connecting knowledge workers to each other and connecting sites. It's also about connecting people to objects, objects to business processes and business processes to technology infrastructure. The third wave of the Internet will enable ecosystems of enterprises, manufacturers, suppliers, customers, regulatory and administrations to work together with sufficient levels of openness and trust, ensuring privacy and security. At Orange we call this the Internet of Enterprises."

The rise of business ecosystems will generate petabytes of data. Reisinger believes the Internet of Enterprises is needed to enable this data to be collected, shared, analyzed and utilized securely to continuously enhance the consumer experience in sectors as diverse as manufacturing, logistics and financial services.

The third wave of the Internet

What do we mean by an ecosystem?

In the early 20th century, botanist Arthur Tansley coined the term 'ecosystem' to describe any community of organisms that interacts with each other and their environments. To be able to survive and thrive, these organisms had to both compete and collaborate with one another around the available resources.

In his 1993 Harvard Business Review article, Predators and Prey: A New Ecology of Competition, Business Strategist James Moore took the description further and applied it to business, suggesting that it was no longer sufficient to view a company as a single firm in a given industry. Companies needed to be members of a business ecosystem, made up of participants and co-dependent entities from multiple industries. They had to be able to continuously evolve in response to changes in the market environment and value chain – just as in the biological version.

Today, business ecosystems aim to bring more integrated and intuitive products and services to market to build consumer trust and preference and remain competitive. Co-innovation is often a central goal. Co-innovation recognizes the fact that no single company has a knowledge monopoly and is able to deliver dominant products and services to the market on its own. By bringing in new organizations – potentially in adjacent business areas – you add fresh perspectives and competencies, increasing your innovation rate.

An example of a thriving modern day ecosystem is Apple's App Store, which has been around for about a decade. Apple was initially reluctant to open up the iPhone to third-party developers, but the developer community pressured for it, were eventually invited in and began to create APIs, and the rest is successful collaborative "ecosystem history."

Automotive is another case in point. All of the global players are moving towards being "mobility service providers." Car makers and tech firms are partnering to develop driverless car technology in tandem. When breakthrough technologies are needed to create more environmentally sustainable vehicles, such as better batteries, key players join together and then go on later to compete in the marketplace.

Meanwhile, third-party logistics providers (3PLs) that handle ocean and air freight and fourth-party logistics providers (4PLs), who look after last-mile deliveries, now do much more than just move products from one place to another. Instead, they're creating dynamic and responsive supply chains that can create a competitive advantage for shippers – the manufacturers supplying retail stores or the OEMs delivering parts to automotive assembly plants. Close collaboration is required to keep inventories lean, handle cross-border customs checks and meet customers' demands for faster shipments of products, customized to their lifestyles.

In financial services, we're seeing the rise of open banking ecosystems. The use of open APIs allows third-party developers to build applications, products and services for a bank that acts as a marketplace. Using APIs means that banking data is available in real-time, providing consumers with better ways to conduct transactions, save and invest their money via multiple channels, including messaging tools like Facebook or What's App, while consumers benefit from better loan terms since lenders will be able to look at historical transactional data to determine borrowers' risk levels.

Change is clearly on the agenda. According to Accenture, 76 percent of business leaders surveyed in 2018 agreed that current business models will be unrecognizable in the next five years – and that ecosystems will be the main change agent. The same research found that 46 percent of execs are already actively seeking ecosystems and new business models to transform the way their organizations operate.

Technologies that will enable the IoE

Connecting business ecosystems requires the use of open, extensible digital technologies that enable organizations to plug into each other quickly and unplug once those partnerships cease to exist. Gartner recently published its Hype Cycle for Business Ecosystems 2018, highlighting the fast evolution of the enabling technologies.

Orange believes API management, multi-cloud orchestration, artificial intelligence (AI), blockchain, robotic process automation (RPA), adaptive cyberdefense solutions, 5G network slicing and intent-based connectivity (SDN/NFV) solutions are all likely to be part of the mix. They provide ecosystem players with the requisite control over ecosystem data, workflows and security. The architecture of the Internet of Enterprises will need to be open enough that it enables fluid, flexible business ecosystems to be able to make customer- and data-driven decisions, while safeguarding security and privacy.

Helmut Reisinger concludes, "In today's competitive business landscape, companies cannot go it alone. They need partners that bring industry knowledge and data-driven customer insights to foster co-innovation. Industry leaders are recognizing the power of ecosystems – a proven construct that can help drive growth. Delaying is not a realistic option when so many disruptors are taking advantage of this stepping stone to growth. It's why Orange has developed the industry expertise, technology partnerships and IT and integration capabilities through our acquisition strategy and in-house R&D to enable companies to take the next step into a data-driven, ecosystem world with the Internet of Enterprises."

 

For more information on our digital transformation capabilities and ecosystem enablers, visit our consulting practice.