Kerrie McGrath
EY Asia-Pacific Microsoft Services Leader
Ecosystems may not be new, but the value that can be realized from them is growing exponentially. How can CIOs lay a solid digital foundation to prepare for a successful, sustainable ecosystem? Kerrie McGrath from the EY organization has a few ideas.
Ecosystems are now an accepted and critical part of business strategy. In fact, 88% of business leaders are leveraging ecosystems in their tech-enabled transformation plans.
The word “ecosystem” may be a bit of a buzzword, but the business model is basically an arrangement among two or more companies to collectively create value that is greater than each could create alone.
The pandemic propelled many companies toward ecosystems. The latest EY Tech Horizon research found the share of executives who were skeptical about ecosystem opportunities declined from 55% in 2020 to 21% in 2022. Asia-Pacific leaders are even less doubtful about ecosystems, with just 14% agreeing to a general sense of cynicism.
As economic uncertainty and fears of a recession keep many business leaders awake at night, it is unsurprising that 57% cite increasing efficiency and reducing costs as the biggest reasons for pursuing ecosystems.
But business leaders also recognize that ecosystems offer far broader benefits, like the opportunity to create new joint products (48%), extend into new geographies (47%) and foster creativity and innovation (46%). Ecosystems make it easier for organizations to connect with each other and their customers, to achieve a common purpose and to uncover – and ultimately share – a new value.
There are many types of ecosystems, and the EY organization has identified seven. These range from marketplaces like Amazon, where all brands can be present, to the “scaling” ecosystems favored by airlines, where individual players offer extended benefits to their customers through partnering.
Ecosystem business models bring together a broad range of skills, technologies, products, services, experiences and data from multiple partners. That means they are commercially, operationally and technologically complex, and strong technology governance is required.
As a CIO, you can prepare your company for ecosystems by readying your technology organization to rapidly and flexibly pivot as those opportunities for partnering arise. Here’s how:
- Refresh your IT strategy to build with the big picture in mind: Business conditions change rapidly, new business ideas require a rapid action to seize the market, and opportunities can arise at short notice. Effective partnering with the business allows IT leadership to make informed choices in strong alignment with your company’s long-term plans and visions. Ensure your refreshed strategy is signed off by the business and, potentially, the board to drive common accountability and to ensure IT and business objectives are in lockstep. Importantly, agree to a timeframe to govern changes so the strategy can evolve with your business. Don’t forget to leave room for experimentation with new technologies to drive transformation in new and different ways.
- Industrialize your IT foundations: Ecosystem participants will have different systems, devices, applications and communication networks. Prepare for data and systems integration by embracing common taxonomies, integration standards and common cloud platforms. No potential ecosystem partner will be prepared to lower its standards to meet yours. For instance, when you enter an ecosystem, expect to adopt the strongest available cyber capabilities rather than the lowest common denominator.
- Enhance your governance: A mature governance framework with a strong, respected and centralized IT function is essential to control projects, set standards, negotiate trade-offs and maintain strong security. How will projects be prioritized? How will vendor relationships be managed to take advantage of product roadmaps? How will different parts of your organization contribute ideas to innovate and support the ecosystem? How will the IT function be empowered to drive internal change? Formalizing the answers to these questions can help strengthen your governance.
- Collaborate to uplift your capability: Aside from formal ecosystem partnering, industry collaboration can strengthen connections that may have been previously underutilized, uplifting capability across entire organizations. For instance, we are seeing dynamic cybersecurity forums emerge as fiercely competitive companies collaborate to tackle a common threat to business. Collaboration is critical to provoking shifts in thinking inside your business to improve and grow.
- Invest in your technology talent: All companies are scrambling to source the right tech skills – and entering an ecosystem means ensuring that your IT team’s skills match or exceed the standards of other participants. This means adopting a multi-faceted talent attraction and retention strategy to ensure you can connect the dots between your aspirations and actual ecosystem outcomes.
Building a successful, sustainable ecosystem demands a different mindset and a different approach to technology. Your company may not be structurally set up for ecosystems yet. But by taking the right actions today, you can be ready to embrace the ecosystem opportunity tomorrow.