The business ecosystem

'Business ecosystems' refers to organisations forming partnerships with other organisations. Those that do not assimilate risk losing their edge.

Read time 5min 50sec
Preetesh Sewraj, CEO and chief innovation analyst at Product of the Year.
Preetesh Sewraj, CEO and chief innovation analyst at Product of the Year.

According to the Accenture Technology Vision 2015 report, based on a global survey of more than 2 000 IT and business executives, four out of five respondents said they expect to see a dramatic blurring of industry boundaries. In addition, 60 percent said they plan to engage new partners in their industries, and 40 percent said they plan to connect with digital partners outside their industries.

These relationships - dotted lines of partnership - are known as business ecosystems. The notion hinges on the theory that businesses cannot be responsible for all the knowledge and capabilities necessary for all aspects of their business, and will instead benefit from leaving the work to the experts.

In this way, various professional and organisational functions are now carried out by a network of providers, all interconnected in the ecosystem, but no longer working for the same organisation. Think, for example, of a modern car with an onboard computer system. Those computer systems may be created by someone other than the car's maker, but they are now an inherent part of the car's functionality.

We spoke to a number of South African decision-makers to discover the extent to which business ecosystems have been identified as a standard practice in South Africa, and whether they are adopting such relationships in their own business. Although the CIO survey typically talks to CIOs (as the name would suggest) or other IT decision-makers, because of the broader business nature of this topic, we were often referred to business leaders in the various organisations we approached.

The platform ecosystem

Lee Naik, MD of Accenture Digital in South Africa, says the next evolution of digital technologies has been the emergence of the platform ecosystem. This is where organisations attempt to establish a digital platform that, at its core, has an exponential networking effect that allows those using the platform to reach an unprecedented number of customers and partners.

He lists examples of platform businesses such as Facebook, Uber, Twitter and Airbnb, which have established vast networks of customers that the organisations can then target for a variety of new service offerings.

"However, we are starting to see that traditional businesses are reimagining the services they provide within a platform context," says Naik. "For example, we are seeing financial organisations launch digital direct offerings, which place the bank at the core of an ecosystem of partners. The bank would then link multiple partners into a connected offering."

He adds that the extent of the partners is wide-reaching and can include education, health, entertainment, travel and numerous other partners within the ecosystem. "By establishing this network, the banks essentially re-intermediate themselves into the transactional life of the customer." He says that industry boundaries are blurring because businesses are tending to choose the option of linking with other partners in the ecosystem rather than trying to build something entirely new on their own. "This essentially creates a win-win for all concerned, but leaves those businesses that focus on differentiating with their traditional industries in a weakened competitive position."

No one organisation is able to provide every possible solution to their clients.

Lawrence Weitzman, Business Connexion

Preetesh Sewraj, CEO and chief innovation analyst at Product of the Year, fulfils the role of CIO in his organisation. He says he's observed that companies are working with other organisations when they don't have the capacity or expertise to extend their own function. This is true in his organisation as well.

"We conduct a lot of research and our methodology was developed 30 years ago in France," he says. "That methodology remains sound, but the method of capturing the information has changed - especially in a complicated market like South Africa."

Gathering information

Product of the Year has had to call in a research partner to develop a two-tier approach for data collection - computer-aided research for the lower LSMs and an online system for the higher LSMs. This information has to be collected in real-time.

"The core of our business is that we are a research company. It's our own methodology, but the information-gathering processes are owned by our research partner. This is just one example of many of the blurring of lines and functions happening between organisations."

As another example, he mentions Popimedia, a company that has built its own API into Facebook's advertising system to control the placement of ads. "This product has been created into another company's ecosystem to allow the whole to work better. We work with them because they run things much more effectively for us, so, there again, the lines have been blurred."

Business Connexion group executive Lawrence Weitzman says the company has a proven history of successful partnerships with global vendors and invests significantly in ensuring that it meets partner criteria, and that it has the required skills.

Global competitiveness

"Partnerships of this nature create a channel for global vendors to make their technologies available in territories where they might not have a physical presence," he says. "As a result, we are able to provide world-class solutions and services to our clients."

This isn't simply an aspect of doing business for Business Connexion. Rather, Weitzman views this approach as crucial for survival in today's competitive landscape.

"No one organisation is able to provide every possible solution to their clients. However, through our multi-vendor relationships, we are able to provide a much broader variety of hardware, software and other solutions, ensuring that we can meet a broader range of their needs."

This doesn't only benefit the organisations themselves, but also the market that is on the receiving end of its services.

"These partnerships drive IT services providers to constantly be at the top of their game. As competition continues to grow, we need to ensure that we provide solutions and services that meet our partners' global standards, which, in turn, drives significant value for our clients."

While business partnerships aren't new, and neither is the concept of outsourcing services, it's the interconnected nature and the synergy that these ecosystems now deliver that represent this new way of doing business. It seems unlikely that any organisation will be erasing these dotted lines of interconnectivity as the business - and technology - world becomes ever more complex.

This article was first published in the May 2016 edition of ITWeb Brainstorm magazine. To read more, go to the Brainstorm website.

See also