As post pandemic inflation soars, companies - no matter how big or in which industry - are facing huge challenges to control costs whilst continuing to grow revenue, launch highly innovative and compelling new digital offerings and improve overall customer satisfaction. They are meeting this challenge head on by driving their digital transformation harder using simple solutions that are easy to try, easy to buy and easy to consume (so called “out of the box”) that provide an immediate and measurable financial payback. Invariably, the benefits from these solutions are unlocked by leveraging state of the art technologies like apps, 5G, edge compute, cloud, IoT, AI, ML, DLT, robotics, drones etc.
It sounds easy but this presents a real challenge for their existing solution providers. Traditionally, they may have focused on selling standardized products using standard price lists but now, to retain their enterprise customers they need to offer fully formed solutions and services that will drive digital transformation. The worry is that the capability to do this, particularly as a service deployed globally on the cloud, are typically much broader than their organization can provide.
How do they do this then? By evolving their business model to sell multi-partner solutions, co-created together within a community or ecosystem. This is the logical next step for many solution providers to win new customers and retain existing ones by being able to better meet their needs (whilst being able to federate costs, risks and expertise within their ecosystem of partners).
This demand for solutions has meant 2021 was undoubtedly the year in which ‘the science’ of building a partner ecosystem became mainstream.
Ecosystems are underpinned by digital business platforms and marketplaces, where success is measured in terms of achieving Minimal Viable Community (MVC) of like-minded ecosystem partners around your platform. This community is needed to self-perpetuate the ideation and co-creation of new innovative solutions that enterprise customers want to buy to drive their digital transformation forward. This network effect creates the choice and economies of scale for providers within the ecosystem, in effect, a winner takes all scenario or a so called “Amazon fly-wheel effect”.
Deeper customer understanding leads to new revenue horizons
There remains, however, much uncertainty or even confusion about how to make the ecosystem model work. The key to it is to always start with the customer and the problems they are trying to solve. This solution “pull” requires product managers with the right mindset that can resist the temptation of product “push” models, such as AppStores, offering largely ‘me-too’ software libraries, each with limited uniqueness or value. In this same “push” category are the horizontal components that require enterprise customers to take on the cost, complexity, and risk of integrating into solutions, with none of the economies of scale and specialization that the ecosystem model can provide.
The creation of that MVC is key to deepening their understanding of their customer’s needs and building solutions around their requirements. It enables product managers to focus on a specific customer challenge that the members of the community can use to derive the perfect solution. It’s critical that in building the ecosystem, partnerships are selectively chosen based on the capability to achieve the desired outcome. Openness within that environment is also key in rapidly experimenting and trialling solutions that are highly repeatable and can be sold globally as cloud services.
Redefining the organization around solution pull
We are starting to see this in some industries. In telecoms, we’re seeing the birth of technology communications players who have transitioned from selling a horizontal component (pure connectivity) and to selling solutions. For the industry, ecosystems and 5G enabled solutions will be crucial if telecoms is to generate payback on its almost $1 trillion investment in 5G networks.
Vodafone announced the split of its IT and solutions business from its core networks as part of its TechCo vision, while BT brought in new leadership to spearhead its new digital business unit. Vodafone has gone on to recently announce plans to develop open partner ecosystems to target new revenues from what it calls a “long list” of technology use cases. This is essentially the telco sector acknowledging that they can’t continue to repackage offers designed for the consumer market and push them to the enterprise if they are to ward off competition from alternative service providers and hyperscalers.
Transforming industry verticals and unlocking growth for the enterprise
We’re also seeing signs of the evolving ecosystem model through Nokia’s partnership with AWS to enable cloud-based 5G radio solutions, as well as Google Cloud and Ericsson coming together to help CSPs deliver capabilities to the edge. Each of these models is being driven by the transformational potential that new technologies can have on the enterprise, enhancing productivity and efficiency, as well as reducing CAPEX and OPEX.
Take for example a farmer purchasing a smart agriculture solution that allows them to monitor crops in real time to improve quality and yield, while also optimizing labor involved. Or similarly, a restaurant purchasing a smart kitchen solution to manage supply levels, energy efficiency and remote appliance control. While these solutions can unlock growth for the enterprise customer, the customers themselves will not have the time or technical skills necessarily to understand them, so they rely on their solution provider working with a partner ecosystem to deliver a solution that simply works for them.
Larger scale solutions, those provided over a 5G private campus network with its own multi-access edge compute and AI/ML at a large manufacturing facility for example, come with literally thousands of IoT sensors to enable near real-time highly secure communication for factory floor robotics. Systems can process data in real time to vastly improve the safety and speed of production. There are also examples of AI and drone deployments at British ports to identify, track and analyze the number of vehicles across the port at any given time.
The ecosystem model is quickly maturing and there’s an increasing urgency for businesses looking to establish themselves in the enterprise solutions market, to orchestrate partners and co-create repeatable, scalable solutions. This doesn’t mean building yet another AppStore to “push” a variety of individual highly standardized products but building a marketplace that combines ecosystem partner specialisms to provide outcome-based solutions that perfectly solve those customer needs.
