Chapter 1
Why CIOs are critical to ecosystem success
CIOs must leverage technology to make their organizations the partner of choice as business ecosystem adoption accelerates.
Three broad factors bring ecosystems to the CIOs attention and will shape the technology strategies that ensure their success:
- An ecosystem’s ability to address and accelerate business outcomes and identify opportunities, as well as its ability to integrate different technologies.
- The seven distinct ecosystem business models that CIOs can use to drive growth and create value.
- The ecosystem’s multi-partner structure that can quickly drive innovation, value and growth, by combining the particular strengths of each partner and by sharing brand credentials to enhance the final product.
Business ecosystems address a wide range of strategic business issues and challenges. They are being used to enable growth, make operations more efficient and manage risk. According to The CEO Imperative: How mastering ecosystems transforms performance, companies with high-performing ecosystems reported 2.1x more revenue growth and 1.5x more cost reductions than low-performing ecosystems.
CIOs and their teams have the opportunity to make their organizations the partner of choice as ecosystems grow. By adopting a platform approach, with extensive application program interfaces (APIs) and connectivity capabilities, an organization can rapidly onboard new partners while leveraging the full power of the ecosystem model.
Revenue growth through ecosystems
2.1xmore revenue growth was reported by companies with high-performing ecosystems versus companies with low-performing ecosystems.
Cost reduction through ecosystems
1.5xmore cost reductions were reported by companies with high-performing ecosystems versus companies with low-performing ecosystems.
Chapter 2
Not all ecosystems are alike
As seven distinct ecosystem models emerge, CIOs are faced with further technology challenges they must overcome.
A further variable for the CIO is that not all ecosystems are alike. We have identified seven distinct ecosystem models that companies are using. Their selection is defined by the:
- Level of competition
- Level of market dominance
- Commercial model
Seven ecosystem business models
Ecosystem model |
Participants |
Characteristics |
Examples |
| The symbiotic ecosystem | Dominant technology company | Participants leverage the dominant company’s core platform |
SAP and enterprise software providers |
The marketplace ecosystem |
Member place operator is the orchestrator
|
· Members pay fee to participate · Multiple brands are present |
Amazon and online vendors |
The scaling ecosystem |
Participants are peers, none are dominant |
Participants combine strengths to achieve benefits of scale |
Airlines combine to create global network |
The accretive ecosystem |
Non-competing firms |
· Complementary products · Common customer base · Combine to create larger, better customer proposition |
EY and P&G alliance |
The co-optive ecosystem |
Competitors, each with relative strengths |
Leverage strengths to create improved product |
Clorox and Febreze create scented trash bag |
The value chain ecosystem |
Different participants across a value chain |
Orchestrate to achieve higher value for end customer |
A digital port that combines vessel, crane, customs and warehouse operators |
The integrator ecosystem |
Diverse set of participants |
· Integrator combines participants to create end-to-end solution · Integrator takes full commercial responsibility for end-product |
Use case of an innovative insurance platform |
Each model presents a different set of technology parameters for its members’ CIOs. A primary differentiator is the dominance of the ecosystem leader.
In symbiotic and marketplace models, dominant technology leaders act as standard setters and platforms for other participants. The CIO’s role within this model, is to create a powerful technology platform that can onboard disparate partners, while integrating data and keeping it secure.
In the more decentralized governance of the co-optive or value chain models, multiple CIOs must reach a consensus on data standards, interoperability, and cybersecurity. CIOs must recognize which system (or systems) they are operating under and the technology model it drives.
The greatest challenge for CIOs operating within an ecosystem can be the model’s participant structure. CIOs find it difficult enough to integrate data, drive common standards and maintain security within the boundaries of their enterprise. Challenges – technical, people and governance – can increase in a multi-participant environment of the business ecosystem.
Technology challenges in building business ecosystems
Technology governance
Achieving leadership and common direction is critical in any partnership or alliance. But common infrastructures, analytics and customer interface require near 100% adherence for effective operations.
Ecosystems, therefore, require a strong technology governance structure from all participants. As a practical matter, this implies a dedicated functional group to ensure internal systems are fit for purpose to interoperate in a multi-party environment, and that all governance and inter-operations are accounted for and rationalized.
Data integration
A powerful asset of successful ecosystems is the combined data of the participants. For example, a well-integrated model will create a cohesive experience for the combined customer franchises and include the offerings of each ecosystem member. Common taxonomies, integration standards, visualization and artificial intelligence (AI) will be required.
Interoperability and cloud
Ecosystem participants will each have different systems, devices, applications and communication networks. Participating CIOs will need to agree on common core standards and then build out the interfaces that enable systems to talk to each other.
The key to this dilemma will be a common cloud platform that embraces the platforms of all of the ecosystem’s members. This platform enables the ecosystem orchestrator to integrate data, set level standards for interoperability, and build a shared data fabric. The common platform will also enable a hybrid-cloud structure that meets the highest security standards of its participants. Cloud is an essential platform for the successful ecosystem.
Cybersecurity
This is an area of zero compromise. Multiple cyber-systems can present weaknesses and vulnerabilities to hackers. Breaches can then enable access to the core systems of the participants. Here, ecosystem operators should work to adopt the strongest available zero-trust protection capabilities, not adopt the least common denominator amongst the participants.
Technology talent
In today’s business climate, all organizations are finding it a challenge to find the tech talent to staff their internal operations. The ecosystem IT team cannot be an orphan group of part-timers or second-best team members. They need to be of a skill level that matches or exceeds the standards of its participants.
Chapter 3
Five steps CIOs should take to build successful ecosystems
CIOs should engage in five key actions to help realize the full benefits of ecosystem transformation.
1. Embrace, understand and plan for the ecosystem ambitions of your company
Accept that ecosystem requirements are coming your way if they have not done so already. Understand your company’s ambitions. Above all, understand which ecosystem model they are adopting and plan your technology accordingly. Also, recognize that if successful your company may adopt multiple ecosystems.
2. Construct a strong technology orchestrator function
A strong, respected and accepted central function will be required to propose trade-offs, decide common standards, and maintain strong security for all. The ecosystem IT function must be empowered to drive internal change.
3. Build to the highest common standard
Participants will inevitably come to the organization with different levels of digitization and systems. In general, you cannot ask the strongest to compromise on systems and networks that integrate with their own. Build to the highest common standard. This is particularly true in cybersecurity.
4. Leverage the data of all
Make the most of the combined data of the participants. Integrate from all sources, build common analytics and merge rich data sources into a single view of the customer and combined analytics. Combined data can be one of the greatest assets of the ecosystem.
5. Use technology to make your company the ecosystem partner of choice
Establish ecosystems as a core competence of the organization. Use a platform approach to make ecosystem partnering rapid and effective. Integrate easily and leverage the data of all participants. Make your company easy to connect and share data with, and the most capable of managing common technologies issues that may arise.
Conclusion
There are clear challenges – technological and otherwise – in making ecosystems a success. However, given the high adoption rate of ecosystems across almost every industry, avoiding these challenges is not an option for CIOs.
The larger picture is that ecosystems can create dramatic success for companies – in revenue growth, operating efficiencies and managing risk. These rewards can far outweigh the challenges of getting there. Creating excellence in ecosystem technology can be a strategic and operational driver of success in today’s complex and ever-changing business landscape.
Related content
Summary
CIOs play a pivotal role in delivering an organization’s technology strategy and in building and maintaining the tech architecture. This process involves embedding a network of business ecosystems that will help ensure successful tech-enabled transformation, delivering value, growth and a competitive edge. Recent EY research illustrates the impact ecosystems can have in accelerating business outcomes, highlighting how CIOs can lead successful ecosystem integration.
