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The Rise of Digital Ecosystems

March 29, 2022
Read Time 2 mins

Johannes Groenewald, GM for Demand Factory and Marketing, Tarsus Distribution

Once a novel idea, digital platforms have become increasingly common. A digital platform enables a business to accelerate its time to market, increase revenue, reduce costs, empower communities and create innovative products for customers. Very few industries have been spared the impact of digital platforms and the number of digital disruptors in traditional markets and platforms grows by the day. As do the list of now familiar names associated with the platforms such as Uber for transport, AirBnB and hospitality, Sage with ERP and HR, Zoho and CRM and Fiverr as an online marketplace for freelance services. 

The COVID-19 epidemic has hastened digital economic trends that were not expected for another five to 10 years, upending daily life and giving rise to new social dynamics and consumer patterns. In many aspects of our personal and social lives, it has served as a watershed moment. The digital economy, particularly the platform economy, has been one of the most heavily impacted sectors. new social dynamics and consumer patterns. In many aspects of our personal and social lives, it has served as a watershed moment. The digital economy, particularly the platform economy, has been one of the most heavily impacted sectors.

"An extension of the digital platform, the platform economy, is a complex network of stakeholders that connect online and interact digitally in ways that create value for all parties. Digital ecosystems extend across multiple markets and industries and have the advantage of creating value exponentially because of the network effects of the internet." Johannes Groenewald, General manager: Demand Factory, Tarsus Distribution

Business ecosystems appear to be a long-term solution to the issues of digital transformation and an innovative future model that can prepare SMBs for the expanding digital economy.

How can SMBs reap the benefits?

Being a part of the platform economy can help a company expand and innovate. This is true not only for large corporates, but also for small and medium-sized digital businesses as the ecosystem enables faster growth, making it easier to develop new product categories and added-value opportunities. It catalyses the ability to access new resource pools, reach out to new client groups by focusing more precisely on their needs, respond more flexibly during the digital transformation, and implement change in a more natural and agile manner.

Most of the companies with the world’s highest market value – including Apple, Amazon and Microsoft – are tech companies that generate their revenue from the digital ecosystems they created.

Ecosystem 2.0: Climbing to the next level, a report by McKinsey Digital, asks whether more traditional competitors can adopt ecosystem strategies. The researchers found that the path to business ecosystems has been opened up, in part, by the ubiquity of digitisation and data and the emergence of advanced analytics, tools that give companies better insight into customers and market niches, allowing them to personalise products as never before. Another stumbling block is that traditional companies do not want to abandon their legacy investments that need to be replaced with digital platforms.

The path has also been made easier by the mistakes companies made in their early attempts to participate in digital ecosystems. According to the researchers, absorbing those lessons, while making the most of new digital technology, can help companies move up their industry’s innovation curve quickly. The improvements envisaged are what they call “the promise of Ecosystem 2.0”.

Ecosystems allow participants to consolidate a range of customers, often across sectors. They enable SMBs a more careful and considered approach to the digital economy in consultation with partners, making it easier to develop and test new business models.

Developing a business ecosystem can have a big impact on long-term company growth, enabling innovation and creating enormous potential for each participant in the value chain.

What to think about before joining an ecosystem

Being part of an extended platform involves risks, coordination and a significant amount of mutual cooperation and dependencies for all involved. Planning and a forward-thinking strategy are essential.

Everyone involved should be in agreement about several factors:

  • The value proposition of the platform;
  • Identifying the stakeholders involved with the platform;
  • The solutions required to achieve this proposition;
  • The number needed to implement these solutions, and
  • Whether the total margin from the value proposition justifies the costs and risks involved.




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