As businesses reorganize post-COVID for continuous streams of revenue, digital ecosystems are key to their strategy. Here’s how to prepare, reveal Jim Houghton and Rupert Chapman, leaders in Cognizant’s Digital Business Consulting line of service.
The post-pandemic economy is shaping up as the age of innovation. It’s an experimental time in which accepted norms have been discarded and future success depends in large part on the evolution of modern ecosystems, a component that has long been talked about but too rarely put into practice. The relationships aren’t just alliances, strategic or otherwise. They’re connected networks that are interdependent and generate value for all involved.
It’s a new model that signals a new reality: No one entity, no matter how mighty, can do it all in today’s technologically intense and complex business world. As companies build for the future, extending their ecosystems and carefully planning the digital stack that supports it is the most strategic bet they will make.
Reassess, rethink, reinvent
In the wake of COVID-19, businesses are reassessing every aspect of their organizations. It’s a stem-to-stern review, and the intersection of technology, work and experience forms the focal point. That is, to gain the full business value of technology and integrated (and somewhat invisible) processes, companies are rethinking how work gets done. They’re also examining experience across the extended enterprise — a new and more expansive view that takes in all stakeholders: employees and partners, as well as customers. Technology’s role brings it all together: To enable the wide-angle view of work and experience, businesses must double down on technology’s criticality in making them happen.
Powering it all is the modern ecosystem, the network of relationships that is fundamentally the biggest change of all. While organizations are evolving work, experience and technology, the ecosystem is getting a wholesale makeover. Importantly, industry leaders have come to the realization that ecosystem optimization requires orchestration that typically comes in the form of a master systems and business process integrator.
It’s critical to view the rise of ecosystems in the context of the post-pandemic economy, which has delivered a jolting, real-world education in the value of extended partnerships and communities. We witnessed how the tightly coupled and global supply chains created over the past 20 years turned out to be surprisingly brittle. As businesses built out footprints worldwide, cost efficiencies took precedence over resiliency, which is often measured by the efficiencies of time and place. The results were networks so highly optimized and massively dislocated that they’ve been unable to survive the pandemic’s disruption.
Until now, ecosystems have been interesting but largely academic for C-suite executives measured by quarterly results. But the global shutdown and its lingering ramifications — supply chain fallout and inflation — have catalyzed our thinking. Concepts that once appeared abstract suddenly came into sharp relief, and the value of antifragile ecosystems became crystal clear.
The seminal work of MIT Center for Information Research (CISR) is making its way into mainstream business discourse — and with good reason. CISR’s view of adaptive business organizations highlights the dominance of ecosystem drivers among emerging digital business models.
What does a modern business look like?
COVID-19 isn’t the only force reshaping ecosystems. Adding unparalleled urgency is the need for businesses to take bold actions related to climate change and sustainability. We can’t forget that the ecosystems in direst need of our best thinking — and commerce’s contributions — are much larger than the B2C and B2B spheres. Among the defining conversations going on is what a modern business looks like.
As businesses rethink their roles and commit to new ones, resiliency will be a key characteristic of ecosystems. Sustainability will need to be at the forefront of all businesses, balancing the needs of people and planet with profitability. The modularity that’s the essence of the application programming interface (API) economy can play a major role in this new flexibility — once we get it right. That means providing the technological wherewithal to enable organizations across an ecosystem to plug, play and interoperate as if they are one. Too often APIs have been viewed merely as software when their real potential lies in business design.
For example, by making supply chain components modular, organizations can position themselves to accommodate business change without the massive disruption of 2021. Collaboration and standards will be critical, and their absence contributed to the fragility of past supply chains. One of the biggest mistakes companies made in adopting service-oriented architectures (SOA) was allowing a patchwork of definitions to spring up around the reusability of components. One company would bundle five functions into a single component, another would include just one, and another might pack in 20. Reusability became nearly impossible. Plug-and-play systems fell short of their promise.
Poised for a shakeup: How modern ecosystems are transforming
With business success no longer a zero-sum game, modern ecosystems are no longer optional. They’re also set to take a dramatically different shape. Companies have engaged in partnerships for forever, but most of the alliances were thinly disguised buyer-supplier relationships, typically one-off arrangements entered for a narrow purpose. Today’s ecosystems are poised for a shakeup: 80% of enterprises are expected to optimize their relationships with suppliers, providers and partners by 2024.
Even more radical will be the change in dynamics. With corporate customers preferring to search for partners by capability rather than tier level, up to 50% of major vendor partner programs are expected to place greater emphasis on partner expertise. Knowing your company’s role in the digital economy has never been more critical.
Perhaps most transformative, the new generation of ecosystems are interdependent. Parties share in the value that’s generated. For example, for an international distributor that had long served as the middleman between large vendors and small resellers, we created a platform that allows omni-directional commerce. The change frees the distributors’ partners to pursue modern, digital operating models. Through the full-service, eBay-like ecosystem, resellers not only benefit from optimized work and experience but also from the opportunity to build their businesses by forging new partnerships.
Among the greatest strengths of the platforms that form ecosystems’ connective tissue is their ability to scale personalization. When a multinational technology conglomerate sought to reinvent its partner experience, its goal was a digital platform on which 60,000 partners could bundle and package products in ways and build value through personalization such as tailored content based on sales roles. We rolled out the platform’s pilot in five sprints. Now fully launched, the centralized delivery of partner resources serves as a single source of information for 240,000 partner users. The ecosystem platform is projected to provide revenue loss avoidance of approximately $200 million per month in partner and customer attrition. Self-service reporting capabilities on cloud consumption will also help partners take advantage of cross-sell and up-sell opportunities.
The new role of orchestrator
The stakes are even higher in healthcare, where ecosystems’ interdependencies include patient care. Providers have long struggled with fragmented systems for electronic records as well as for the collection and storage of data from costly diagnostic equipment. The skyrocketing number of sensor-equipped devices — everything from smart watches to pacemakers — has heightened the industry’s need for collaborative solutions.
Among the weaknesses the pandemic has exposed across all supply chains, however, is a chronic lack of collaboration. As one observer told The Washington Post, “It’s like an orchestra with lots of first violins and no conductor. … No one’s really in charge.”
Now healthcare is taking the lead to define the pivotal role of orchestrators within ecosystems. Through modern technologies and partnerships, our experts are teaming with health tech giant Royal Philips to unite the medical industry’s patchwork of systems into a secure, central repository. Philips HealthSuite Digital Platform is built on Amazon Web Services and home to a rapidly growing set of healthcare solutions and devices, with more than 100 types of medical devices integrated into the platform to date. The innovation behind HealthSuite is that, rather than build systems in-house, healthcare companies can embrace their core capabilities and tap the platform to bridge longstanding gaps. Already companies such as Ypsomed and Alcon are leveraging HealthSuite to advance their patient-care mission and business goals.
Building out the ecosystem
There’s a certain comfort level to siloed functions. They’re familiar, and we know how to work within them. But the future of business is about continuous streams that depend on collaborative ecosystems to support technology, work and experience.