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Key Elements and Enablers for Developing a Digital Ecosystem for the IoT


As industries become more disintegrated, the digital ecosystem will become ever more important as the ultimate way to organize and compete.

Communities

Communities, and in particular developer communities, give rise to the ecosystem and are a key force for driving the network effects. These ecosystem partners should be able to create products and services based on the platform resources (via APIs), as well as those of other ecosystem partners. As discrete products and solutions are put together to address a specific user need, value is created by the ecosystem as a whole. This means not only that innovation happens at a faster pace, but also takes diverse routes that otherwise would not be envisioned and produced by a single company.

This is a difficult endeavor for most companies as it moves away from traditional operating models whereby service providers controlled the entire value creation processes. However, in the new ecosystem-driven world communities are essential and therefore service providers need to redefine the way they create and foster partner communities. A suitable revenue model and in particular partner support functions can help with this.

Revenue model 100

Having the right revenue model is a critical aspect for the successful development of digital ecosystems. Service providers looking to attract ecosystem partners need to define the right revenue generation and distribution model – one that incentivizes partners to join the ecosystem, reduces risks for partners to innovate and fits with the business model of the individual partners. This is again an area that presents a challenge for service providers in defining what is most suitable at specific stages in the ecosystem development journey and finding the right balance between adoption and cost control.

Support functions

Of course, ecosystems need not only be created but also supported. This is obvious yet often overlooked, misunderstood, or simply underestimated. This is basically about the internal organization and the related support functions. This not only means being able to recruit but to incentivize and support ecosystem partners throughout the partnership lifecycle. This is a capability that goes beyond arms-length partnership agreements. Dedicated teams are required to support the ecosystem. This support includes technical (e.g. how to use an API) and also marketing (e.g. sell your apps on our marketplace) and operational support (e.g. “fulfilled by Amazon”). For this, it is very helpful to take the view that ecosystem partners are similar to customers – they need to not only be attracted but also be provided with a world-class “partner experience”.

Governance

Lastly, for the ecosystem to work well and grow, a clear set of rules is required. An ecosystem governance model establishes very clearly the rules of engagement among the ecosystem partners. It also sets out processes to deal with disputes, as well as how value will be distributed based on the agreed revenue model as described earlier. In the end, just like all other enablers described here, the governance model needs to be defined in a way that supports the development of the ecosystem and helps create value for all stakeholders.

Conclusions

The digital ecosystem is an crucial part of a digital transformation strategy. As industries become more disintegrated, the digital ecosystem will become ever more important as the ultimate way to organize and compete. Building a digital ecosystem is a complex undertaking that requires many interconnected factors to be balanced. The challenge for service providers is to define a ecosystem strategy and implementation plan that is holistic. One that takes into account all the elements described above and which embraces an ecosystem mindset.



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