What Is a Digital Ecosystem? Bridging Gaps for Tech

The word “digital” may mean slightly less in an all-digital world.

A term like “internet dating” will eventually just be called “dating” — no need to qualify when it’s the rule, and not the exception. As worded by our own Michael Fauscette, the phrase “digital transformation” in the current landscape is, in general, “an overused buzzphrase” applied to the gradual but inevitable migration of all businesses to the modern, streamlined processes enabled by technology.

When the transformation is largely over, it will — or should, anyway — just go back to being called “work.”

In the meantime, though, the digital transformation carries on. And “digital ecosystems” is another phrase on the lips of tech influencers around the globe. You can expect to hear the term more and more throughout 2018, in both industry news and broad analysis.

We recently explored the subject in our Digital Trends series, alongside other omnipresent topics like artificial intelligence and the internet of things (IoT). Much like those tech revolutions, your company will likely dive into digital ecosystems in one way or another before you know it — if you haven’t already, of course. So there’s no time like the present to familiarize yourself with the core concepts. 

What is a digital ecosystem?

Ever been to a coworking space? These are shared environments with a variety of amenities where many different people are at work on distinct tasks, yet have the ability to network, interact, exchange ideas and collaborate for the greater good of all. The utilitarian use of the space saves everyone money and effort, while enabling “coworkers” to benefit off each other in ways they couldn’t before. The sum is greater than the parts, in other words.

A digital ecosystem is a similar concept, but utilizes computerized space and tools rather than physical. It can extend to teams across organizations, unite unrelated companies, and serve as a bridge between brands and their customers. By condensing processes and data into these smart, responsive environments, we can not only advance certain industries, but entire aspects of life. This revolution may be starting in the workplace, but will soon make homes, cities and routine tasks more efficient by leaps and bounds.

There are several categories of platforms or cloud services that can, together, comprise a given digital ecosystem. The mixture depends on the needs of the varied departments, partner organizations and people making use of it. Amazon and Google have been at it for years now with their outsized offerings that seamlessly integrate to form a greater whole: AWS and Google Cloud, respectively. Following their lead, some of the biggest companies in the world are rolling out fully formed digital ecosystems to modernize and centralize consumer- and business-related clusters of tasks. Others are rolling out software updates that help their existing tools synergize with neighboring platforms in a custom ecosystem.

Today, the ceiling of possibilities is rising exponentially with technologies like containers, machine learning as a service and serverless computing entering the fold. Each new digital ecosystem is a unique animal, like a Mr. Potato Head of carefully selected parts that serve a purpose both on their own and together. They allow businesses to move faster, maximize productivity, and minimize on-premises investments and liabilities. The inherent benefits multiply with every partner organization sharing applications, information and bandwidth through mutual use of the ecosystem.

A 2017 study revealed that 79 percent of top-performing modern organizations participate in a digital ecosystem, while less than half of “average performer” companies have made the leap. This could be due to a combination of factors: budget, resistance to change or simply being ill-informed. As with any tech trend, the budget factor will diminish as vendors vie for mass adoption and bring down costs. Brands will have to deal with the other two on their own volition. Hint: If your tech stack already works together in some fashion, you’re on your way.

What is a technology stack?

Your technology stack is “a collection of software pieces that — when used together — achieve a common goal.” Sometimes these are all third-party platforms, such as the ones you’ll find browsing the pages of G2. In many cases, there are components that are developed in-house and deployed as a functional appendage of the company, on both the client side and internally.

There is no right or wrong way to “stack.” But it’s important to understand the anatomy of your stack: What does what, who uses what, and so on. Then, diving deeper: costs to run each tool, specific performance metrics, integrations, limitations, etc. The better you understand your software stack, the more you’ll realize the impact on your company and the potential for optimization. If your team determines a certain need is not being addressed, you can challenge your development team or a development services provider to build an app (or group of apps) from scratch.

Certain business functions, particularly in some small or more long-standing companies, are still performed independently of current technology. Let’s call them “digitally agnostic,” or as some would say, old-fashioned. In other cases, offices may utilize a number of disparate software products, without paying mind to their integrations (or lack thereof). This is akin to a freestanding bathroom and kitchen on different ends of the same street — without the walls, roof and hallways connecting them.

A digital ecosystem is the full realization of one’s tech stack (or at least a specific portion of it) as a cohesive unit under one roof. Vendors and buyers alike are seeing the benefits of software-as-a-service (SaaS) tools that communicate with each other, feed off the same networks, and are accessible from a single interface. In addition, companies are realizing they can lower costs and improve agility by “cohabitating” cloud-based platforms with other companies, especially if the companies have a working relationship or can take advantage of each other’s native applications or data. 

There is a significant element of trust involved — particularly with regards to cybersecurity risks — even if a digital ecosystem is just leveraged by different departments in an enterprise organization. But recent research speaks volumes on the upsides, and there’s little doubt that any concerns will be adequately addressed by the world-class development teams pushing the ecosystem economy forward.

G2's Tom Hardin puts it nicely in our digital trends blog series on digital ecosystems. With regards to digital ecosystems, “The key for business success … is not only in embracing the technological advantages of a digital environment, but also choosing and nurturing the right digital partnerships.” 

“When these digital partnerships are forged,” Hardin said, “companies are creating transformative digital ecosystems that will impact operations, products and the market as a whole.” Depending on these partnerships and their aligned visions, ecosystems can (and will) take shape as just about anything the companies dream up.

In 2015, companies that generated at least half of their revenue through use of digital ecosystems saw growth and profits that were 27–32 percent higher than average. In the short time since, that silly phrase “digital transformation” has come to mean more things to wider samples of the population. Hospitals, farms and even homes are leaping forward into digital ecosystems of their own, with interconnected technology that is revolutionizing our lives in real time. The term “digital ecosystem” is starting to mean as much as “digital transformation” before it — making it harder to pin down and, like it or not, harder to escape.

Examples of digital ecosystems

The rule of thumb in building a digital ecosystem is that there are no rules. Last year, Wired explored the topic in great detail, in a piece titled “Why Navigating Digital Ecosystems Is an Art, Not a Science.” This statement is evidenced by the ingenuity in some headline-grabbing ecosystems released or in the works from various brands.

Emerson Electric, for example, is continually expanding its Plantweb ecosystem — most recently with Plantweb Optics, a collaboration platform for technicians, engineers and managers that gives them unprecedented insights into manufacturing operations and machine health. Plantweb leverages “a suite of analytical expert applications” and state-of-the-art IoT hardware to help plant workers do their jobs better, and learn from company-wide plant performance and asset data to improve efficiency and address potential problems before they happen.

Automaker Fiat teamed with a diverse group of companies including Facebook, TomTom and TuneIn to bring its UConnect platform — originally launched in 2003 — into the Ecosystem Age. Now, the “connected vehicle platform” offers a surplus of modules for navigation, connectivity, entertainment and communication that leverages partner technology and data, and comes pre-installed in select Dodge, Jeep and Chrysler vehicles. The platform is a work in progress, like any advancement in tech, but it’s pushing the boundaries of what digital ecosystems can do — and where, and for who.

In the healthcare field, Philips is making strides with its HealthSuite platform, originally introduced in 2014. As described on the Philips website, HealthSuite is “an ecosystem of connected products, software and services that uniquely span every step of the health continuum, and every stage of a person’s health and wellness journey.” Data collected from patients, doctors, nurses, pharmacists and the like is analyzed and repurposed as a steady stream of improvements to the system, along with the diagnosis and standard of care recommendations it provides.

Doctors can monitor patient progress through the same interface where patients can review treatment plans and ask questions to the correct specialist, among countless other things (e.g. adjust settings on connected air purifiers). It’s an undoubtedly huge (and pretty cool) step forward that is bound to save lives — not to mention time and energy for all involved.

Digital ecosystems vary as widely as the natural environments they take their name from. In nature, organisms live and thrive in situations where the terrain, climate and fellow organisms all cater to this particular group’s biological needs. And it’s a two-way street, as the living things do their part to keep the ecosystem healthy and contribute where they can.

Digital ecosystems are here

Your company may not be a polar bear or a cactus, but you have equally specific needs in order to succeed. There is an ideal digital ecosystem for you, your partners and your customers — and if it doesn’t exist yet, it eventually will. You can play a hand in its creation, and now is the time to start planting seeds and picturing possibilities. While there is tech out there that separates us, digital ecosystems are bound to bring us closer together — even with our competition. We’re excited to follow the evolution of this trend, and provide resources to help businesses of all kinds find the ecosystem they can call home.