What is the digital ecosystem?
Digital Transformation has a great impact on business processes of organizations. It allowed to abandoned the old-fashioned business environments and embrace the new digital technologies. This newly digitalized systems helps to streamline the business functions within the organisations and it also helps to successfully respond to the outside market turbulences and customer demands. Technological advancement affects to every segment in society and everything becomes digital. Therefore, digitally transformed business organisations require to find efficient methods to interact with external business entities. When an organisation interact with their market competitors, customers and partners, it’s always beneficial to use a common digital platform. Digital Ecosystem introduced to interconnect all these entities in order to reshape the businesses and improve performances.
The term ecosystem is derived from ecology, a branch of biology and it described as how all living organisms (plants, animals, microbes) interact with each other in a given area. It also described how these community of living organisms are interacted with non-living components (atmosphere, water, soil etc.) As mentioned earlier, digital ecosystems also adopt this same mechanism, which connect all interdependent entities in a digital environment. Gartner, a research and advisory firm, defined it as,
“A digital ecosystem is an interdependent group of enterprises, people and/or things that share standardised digital platforms for a mutually beneficial purpose, such as commercial gain, innovation or common interest. Digital ecosystems enable you to interact with customers, partners, adjacent industries ‒ and even your competition.”
Digital trends are reshaping the business environments more than ever. If an organisation doesn’t keep up with the new digital trends, it will negatively affect to their businesses. Situation become critical when their partners and competitors embrace new trends and they are not. Digital ecosystems change the business environments from simple business units to complex distributed systems. It also offers best productive ways to interconnect with customers and partners which leads to increase the productivity and effective cooperation between them. Since the new business trends are focused on more customer orientated models, a common digital platform is required between customers and business organisations to reach every customer demands. Gartner research shows that, 79% of top digital organizations are tend to join the digital ecosystem.
The impact of digital ecosystems on business
As same as every other digital technologies, digital ecosystems also affect to the most part of society including individuals and businesses. Business organisations embrace new digital technologies to gain the strategic advantages to their businesses. Businesses are getting more competitive and connection between stakeholders become complex. Therefore, business organisations expect to overcome the drawbacks of conventional business models by adapting to digital ecosystems. It will tightened the relationship, especially with the customers and other stakeholders. When an organisation plan to develop a digital ecosystem, they should be highly focus on how to fulfil the customer demands in order to remain in competitive market. Partnership between suppliers, sales distributors, partners and subservice providers is getting stronger with a common digital platform. But, top management must considers the present market trends and do adequate analysis before replace the existing business environment with digital ecosystem.
A digital ecosystem consists of interconnected components such as software, hardware, services, users and all these components share common digital platform. This interconnected nature of different components brings number of benefits to the businesses. It will increase the revenue of the companies. Since the companies could easily reach their customers through a digital ecosystem, they can provide a prompt and quality service to them and it will positively affect to the company’s income. It helps to increase the productivity of employees and also lower the operating cost of the business. More digitized and interconnected systems are inevitably decrease the human intervention to the operations and by that, companies can reduce the employees’ related cost. Digital technologies are constantly evolving, therefore digital ecosystem of a company has to keep up with the new digital trends and it will help to survive in the competitive market. Connected nature of these systems doesn’t allow to perform some operations individually and focus on perform that same tasks as groups. It will increase the efficiency of operations and save more time.
A Gartner survey shows that, CIOs of most major companies are already spending 18 percent of their budget on digitalization, they also predict that, figures will increase to 28 percent by 2018. NHS England has planned to build a digital ecosystem to avoid their day to day obstacles such as long waiting lists, process inefficiencies and staff shortages. NHS attempts to connect their hundreds of departments spread in different locations in order to cut down the cost and improve its staff and patients’ experience. Banking industry tend to join the digital ecosystems to increase their customer loyalty via mobile banking applications. Chase bank has introduced an application called Chase Pay, a virtual wallet which syncs with other Chase products which customers already use. Therefore, customers do not need to remember new login details and update information manually. Danish banking company called, Danske bank has created an online system to combine their customer data with house market listings, thereby providing potential house buyers with tax, heating and electricity cost estimates.
Digital ecosystems not only connect independent components in business environment, but also create complex network of interconnected components which eventually leads to a more digitalized society. Correct adaptation of digital ecosystems will open up endless opportunities.
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