August 4, 2015

In business, as in nature, it’s all about ecosystems

Riikka Pyykkö

Head of Alliance Coordination, CA-AM, Tieto

Summer is a good time in the Nordics to write and think about ecosystems. We all see and hear the nature's ecosystem full and alive.

The word ecosystem has entered the everyday business language. We mention business ecosystem when we speak about the future of business and customer interaction. Why is that? Why do we have business ecosystems on our agenda right now? What is the difference between a business ecosystem and a value chain?

A fundamental business change

The maturation of technologies, like social, mobile, analytics, cloud, 3D printing, bio- and nanotechnologies, is rapidly shifting the competitive landscape. No industry will be immune to disruption - the change is led by the consumer centric industries, such as retail and banking, but the trend is quickly flowing into B2B services as well. The changes around us are going to enable much better customer solutions than today. Consumer is in the focus when new solutions are created.

Emerging technologies create an environment that is connected and open, simple and intelligent, fast and scalable:

  • Connected and open, as indicated by the proliferation of mobile devices and Internet access, necessitating new levels of trust and accountability with partners and consumers
  • Simple and intelligent, as advances in technology continue to reduce and mask complexity and organizations leverage analytics and insights to drive decision-making
  • Fast and scalable, as transactions increase in number and frequency and the cost of collaboration inside and outside the organization continues to decline.

IBM Institute for Business Value published a paper about the new age of ecosystems in 2014 in which they introduced these attributes of emerging business environment.

In the new environment, no company alone can provide the experience consumer expects. So we need each other in the solution creation.

Companies together creating customer value

A business ecosystem is a group of companies together creating value to customers through developing and aggregating repeatable solutions. Customers have business needs, like the need of real-time visibility to supply chain with controlled access and transparency to accurate, timely and complete information across the supply chain. The solution is created together: combining the best hardware, operational software and perfect connectivity is important, but in addition we need eg. information services and analytics to fulfill the business need. Solution creation is connected and open.

A business ecosystem produces more value as a whole, than the sum of the individual members acting independently. Value creation in a business ecosystem is networked and mutual, whereas in a traditional value chain, value creation tends to be linear. A key item to agree upon with the members of the ecosystem is the purpose of the ecosystem.

Members may also have different positions: one is usually the orchestrator driving the joint customer value and attracting new members to join. Members may play in several roles within different ecosystems: one brings its IPR, another takes the role of an aggregator or service provider ensuring the customer interface. Ecosystems evolve through time, and therefore the position and role of an individual member may grow into something else. Also governance of the ecosystem needs to be arranged.

A few concrete ecosystem examples

In Tieto, we are actively seeking, creating, and orchestrating business ecosystems to create customer value. In the areas of Customer Experience Management, Industrial Internet and Cloud, Tieto is innovating, developing solutions, and going to market with other ecosystem members.

Still another example of our concrete work within ecosystems is our end-to-end business integration service that covers the full financial value chain from order to cash and purchase to pay, with several technology partners and service providers as members in the ecosystem.
To add just one example more, we have an active role in an ecosystem that enables a fluent information flow between colleagues, processes and systems, across organizational boundaries within municipalities in Sweden. Several authorities, service providers, banks, and other information users are connected to our service, providing additional customer value.

Choose your ecosystems

Tieto is actively seeking potential domains and potential business ecosystems to build or to engage in. We believe most customer value is created in the industry-centric ecosystems, based on customers' business needs in their business transformation. We have key assets like our own IPR, capability to aggregate full solutions, or providing different kinds of world class cloud services in an automated way. Therefore we can attract other companies with the assets, and provide even better services and more value to our customer. In the current disruptive market, we believe this is best done through business ecosystems.

When admiring the nature's ecosystem or thinking about business ecosystems, we need to remind ourselves that hard work is required to build and grow the ecosystem. If you are a customer, invite us to address your business needs together with our partners. If you are a company with systems or solutions for the Nordic markets, let's get together and collaborate. Let us join forces!

In your business too, the environment will be going through a fundamental change. You will need partners to survive and thrive. Choose the business ecosystems you build and engage in consciously and after careful thought. The world is full of ecosystems, but you only make business in some of them.

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