Joongshik Wang, EY-Parthenon Asean Leader says:
“Being part of a digital ecosystem allows businesses to leverage the network effect to create a competitive advantage. However, to do so, companies must get their digital transformation strategy and capabilities right. The question is whether they should design or join a digital ecosystem, and there are three strategic choices that businesses can undertake: buy, build or partner.
“While the established, traditional firms – given their large user base, reach and capital assets – are well-placed to orchestrate a digital ecosystem, they are often outpaced by the emerging digital natives that are ahead in digital adoption. Most traditional firms have been focusing on their core business and may be hesitant to build a platform-based business due to legacy systems and corporate culture. Thus, traditional firms are turning to collaborating with e-commerce and last-mile platforms to offer digitalized, streamlined and omnichannel experiences to their customers.”
Three key considerations in navigating digital ecosystems
The EY report highlights the areas that organizations should consider when navigating digital ecosystems:
- Evaluate the organization’s digital ecosystem (DE) maturity: The three maturity levels are: DE adaptor, where the transformation is at a modular level and limited to a particular business unit or geographic market; DE accelerator, where the organization scales the transformation to a company and industry level; and DE attacker, where the organization drives large-scale transformation across multiple industries through cross-sector collaborations and leverage technology capabilities across different parts of the value chain.
- Define the business model: Based on different parameters, such as the nature of the ecosystem (e.g., open or closed), the scale of industry partnerships and the revenue model, the organization defines the business model it will undertake as a DE participant.
- Implement the ecosystem: Once an organization has identified a DE opportunity, they need to follow a step-wise process to design an ecosystem. This includes identifying the most suitable role to undertake (i.e., be a DE orchestrator, partner or enabler); the nature of the ecosystem, product market fit and monetization model; and the key enablers of the DE before defining the evolution roadmap. DE orchestrators must also consider how they will mobilize the DE – whether through building, buying (M&A or investment) or partnering (joint venture, alliance or strategic contract).
Liew concludes: “Digital interactions in both B2B and B2C activities are expected to stay and gain ground even after the pandemic, and enterprises in Southeast Asia will be seeking to transform their business digitally to drive profitable growth as well as work with partners to provide solutions leveraging technology to address value gaps. A partnership model can provide significant momentum for their digital transformation journeys. Importantly, companies must be clear of their strategic objectives, whether it is to achieve core business growth, enter a new market segment through new or digital offerings, to optimize operations or a combination. This will help them chart their roles in a digital ecosystem effectively.”
Notes to Editors
EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets.
Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.
Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.