Ecosystems and Capabilities as a Service

7 years ago, I got an invitation from Prof. Wil Van der Aalst to participate in a research project lead by the Fraunhofer university, related with using process mining on process event logs, from different companies. The idea was to benchmark and compare how the a similar process was being executed (e.g.: order to cash) in a way that all the companies involved could learn how its process was behaving vis-à-vis the others. There was also another technical research challenge related on data preparation that allow balanced, not biased, process performance comparison. Data sources were being managed and stored by ERP’s and even on the case the ERP used was the same, challenges related with version, database schema or process flow design were also relevant in the research domain.

In those days, companies were not prepared to share such kind of data, it was considered a loss of competitive advantage to expose and compare performance with competitors. Digital transformation was a strategic concept that was not born yet, that resides on how value chain separation fades and starts to intersect with other value chains of different industry sectors, that enables new business models that were not even possible (in todays environment a oil company can provide electricity poles to recharge electrical vehicles, from distributed energy source provided by an utility company) . To another extent, a company is no longer as a member of a single industry sector but as part of a business ecosystem that crosses a variety of industries.

I am working lately with e-commerce companies in Asia. Despite they still pursue a growth strategy in terms of average customer spending, merchants onboarding, sales increase, they are also looking to transform themselves into a software company. For example an e-commerce company wants to stop to transport an order to the customer, to evolve the shipping capability to streamlining sourcing, planning, execution, settlement and end-to-end transport optimization and introduce responsive packaging systems (critical for food safety) or Just in Time supply integration via real time condition monitoring, meaning, the e-commerce company can start exploring direct supply integration with electronics companies or automotive industry. The more they penetrate into new industries by the evolution of the capability, that can include among others: Collaborative Commerce, Product accountability, Supplier Risk Management, Demand Forecasting, Warehouse Management, Smart Contracts, they are able to grow outside their core business and can start providing Retail-as-a-Service for companies that want to enter in the market they operate, connecting local factories where the products are produced to the front end commerce portals and the underlying delivery to the consumers. The capability is not a property and competitive advantage of the e-commerce company is now shared and sold as a service to other companies.

Other area that I see looming is to re-use technologies that were crafted and used in multiple companies. Some start-ups that operate in the artificial intelligence arena are making of their business model to keep the IP and redeploy it in other customers, in particular A.I. models. Like in the example of the Fraunhofer research project, the objective is to improve the models used – for example: for credit risk scoring, fraud, asset integrity management. Customers require that data keeps private, but they do not mind to reuse models that are being evolved in other companies if they fit and they will seek to substitute for the next version as it progressed and continue to deliver better results.

In this kind ecosystems, companies coevolve capabilities around a new innovation: they work cooperatively and competitively to support new products, satisfy customer needs, and eventually incorporate the next round of innovations, as ecosystem evolve and originate other ecosystems, consumers or business users can interact, transact,  for a wide range of offerings, without leaving the ecosystem. For the companies that operate in the ecosystem, this means having access to new revenue sources. To the companies that are served via these new kind of ecosystems, it is also a way of lower cost of ownership, speed to market and access more evolved technologies to operate.

 

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