For a business, there may be a great deal of benefits for increasing the interconnectivity of the products and services they offer. In the era of digital business models and digital services, this is especially true. An ecosystem of products and services offers much more value to the customer than any individual product or service; or indeed a collection of products or services that have little integration.
What is a Digital Ecosystem?
The term digital ecosystem is used to describe a group of products, services, or even organisations which are interconnected.
A digital ecosystem might be formed from two or more organisations that have different digital offerings and, together, can offer their customers a wider & more comprehensive set of services. Organisations can create digital ecosystems by combining their own digital offerings with products and services provided through partnerships – these are often mutually beneficial; the partner offers a product or service that is enhanced via integration into the digital ecosystem.
An example of this Amazon, who offer customers an ecosystem of digital services under their own brand-name, but also integrate their services into other products – there are Alexa-integrated cars now, and several other Alexa-integrated devices. A company we spoke to that provides managed IT services London businesses rely on told us that their partnerships with Microsoft and other vendors meant that they can offer their own ecosystem of services, too.
Types of Digital Ecosystem
A digital ecosystem can be setup in a few different ways. Either the offerings in the digital ecosystem all originate from a single organisation, or if the main company offering the digital ecosystem has a number of partners supporting it. Larger digital ecosystem providers tend to invent the majority of their services themselves, but also rely on strong partnerships. With that said, digital ecosystems can be divided into two main groups.
- In-House – a perfect example of an in-house digital ecosystem is Microsoft’s. The company offers a range of products – such as Microsoft 365, Microsoft Azure, and more. All their products integrate with one another and fulfil all the different requirements an organisation might have. Microsoft manufacture their own laptops – Microsoft Surfaces – which come with the Windows operating system pre-installed, and potentially also Office 365 apps. A Microsoft Surface computer is a physical example of the Microsoft in-house digital ecosystem.
- Partnership – as alluded to earlier, the other most common kind of digital ecosystem is when two or more organisations form a partnership so that they can offer an interconnected network of each of their products and services. This is the way Amazon works – they have over 60 different partners contributing to their ecosystem. However, a partnership-based ecosystem could be comprised of as little as two companies.
Benefits of a Digital Ecosystem
Whether a business decides to form their own ecosystem in-house, or partner with another organisation, there are many benefits that they can gain. Below is a brief list of the core benefits:
- Business Agility – a lot of things can happen within a market that can make some products or services in lower demand than others. If a business has an ecosystem of offerings for their customers, they are unlikely to be crippled by a fall in demand for one of them.
- Customer Loyalty – think of the company Apple. The brand inspires immense loyalty from their customers, and a big part of that is due to the way their products offer the best performance when use together. A digital ecosystem should offer a synergistic increase in value compared to when you use any one product or service on its own.
New Revenue Streams – When we spoke to the IT support provider London businesses have used in the past, they described how their used their interconnected offerings to quicky develop new service offerings. If you have partnerships with other organisations that have different resources and infrastructures in place already, then you have the ability to devise new services for your customers much more quickly. This means you can quickly spin up new revenue streams.