Digital ecosystem enable enterprises to drive business processes more efficiently in a fully manageable manner

A digital ecosystem is a distributed, adaptive, open socio-technical system with properties of self-organisation, scalability and sustainability inspired from natural ecosystems.
Digital ecosystem models are informed by knowledge of natural ecosystems, especially for aspects related to competition and collaboration among diverse entities.

Why digital ecosystem is important to business?

Digital ecosystems enable enterprises to drive business processes more efficiently in a fully manageable manner. Digital ecosystems deliver value through:

increasing sales

Digital ecosystems increase access to data and the insights it offers allow companies to understand their customers’ preferences and habits better. Through this understanding, companies can ensure a consistent and relevant message across their customer service and digital channels. Companies are then better positioned to innovate based on those insights and offer new products and services that are designed to meet the ever-changing demands of consumers. This can translate to increased sales.

guaranteeing ROI

Greater understanding of the modern consumer enables the company to plot the touchpoints along the buyer’s journey and optimise products and services to meet their demands. A digital ecosystem ensures that every channel is performing at its optimum level.

Example: Ecosystem
A 2019 study by McKinsey found that companies with an ecosystem had higher EBIT than those without, suggesting that over a five-year period, an ecosystem could capture an additional 10 % in EBIT growth (Fong et al. 2019).

opening new revenue sources

Digital ecosystems drive new revenue streams through consolidated ecosystem integration. Organisations can then track and analyse comprehensive data flowing through the business and use it to create new products and services. Such integration not only strengthens current revenue-generating processes it also creates value-added services for new revenue channels.

Data analytics also reveal insights into consumer preferences that might have otherwise been missed. By consistently delivering products and services that meet the needs of the consumer, brands develop more customer loyalty and increase customer retention, while at the same time identifying new revenue streams and opportunities for growth.

Example: Target
Using data analytics Target (Salzman, 2019) can predict which customers are pregnant (to a reasonable degree of accuracy) by looking at their purchases and infer, within a two-week window, when the customer is due to give birth. Using this information, Target sends the customer coupons and advertisements for products that are relevant to an expecting parent. This insight benefited Target with an estimated $1 billion in additional revenue from being able to predict pregnancies.

reducing risks

While decision making in a traditional business enterprise is made on observation and informed guesswork, a digital ecosystem embraces the fluidity of data and data modelling to predict how decisions will impact the company. This dramatically reduces the risk involved in decision making while also enabling the company to be more receptive and agile to change. Decision making across the whole of the company, from marketing to logistics, can be improved to reduce risk and enhance the deployment of company resources.

In the digital economy, organisational data is typically available on demand 24/7 to enable companies to benefit from opportunities for productivity improvement and data sharing with customers, suppliers, and business partners. The concept of data on demand is an operational and competitive necessity for global companies, but unfortunately, it also opens them up to cyberattacks. New vulnerabilities are continuously being found in operating systems, applications, and wired and wireless networks. Left unaddressed, vulnerabilities provide an open door for cyberattacks that can cause business disruptions and devastating financial consequences. Managers need to manage these risks and should no longer question whether their networks will be breached, but when it will happen, how much damage will be done, how long the investigation will take, and how much the investigation and fines will cost.

increasing speed of technology adoption

A digital ecosystem enables enterprises to embrace new technology in ways that were previously cumbersome. For example, companies can take advantage of cloud computing services and software as a service (SaaS) solutions, like Salesforce, rather than rely on outdated legacy software. Through smart bundling and innovative products and services, companies are creating new avenues to bring aboard new technology more swiftly. The rate of adoption is increasing, as technology capabilities are reinforcing and creating a virtuous circle of value while lowering the risk of adoption. This is happening due to incremental and fast learning as well as faster access to information. Companies are also creating multiple touchpoints to engage customers, increasing the utility of their products and services and giving customers more reasons to use them.