The digital world is no longer a collection of individually functioning websites and apps, but more like a network of ecosystems made up of interconnected products.
These digital ecosystems consist of information technology resources, from apps to data platforms, that facilitate collaboration and data exchange to benefit both business partners and customers. Companies can leverage these ecosystems to reach new customers and new revenue streams.
Understanding the dynamics of the digital ecosystem will help you become a more informed ecosystem participant in a constantly evolving digital world.
What is a digital ecosystem?
A digital ecosystem is a network of interconnected information technology resources, such as websites, apps, devices, and data, that work together to support actions like online shopping and education.
Digital ecosystems often require collaboration between internal and external participants. One model is for companies to integrate the various software and tools they use to run their business to create their own internal digital ecosystem that facilitates workflows and data exchange.
However, digital ecosystems often involve multiple companies. These ecosystems connect companies, partners, and even customers to foster collaboration and innovation. An example of a successful digital ecosystem is the Apple App Store, which connects app developers with iPhone users. This multi-company approach creates a richer, more dynamic ecosystem for all involved.
Types of Digital Ecosystems
Digital ecosystems come in many forms, each with their own structure and level of complexity. Here we will discuss three main types of digital ecosystems:
A functional digital ecosystem
These are digital ecosystems in their simplest form, built around a single company’s offering. They provide a consistent customer experience by integrating different functions within a company’s existing product or service suite. An example of this would be a photo editing software program that allows users to connect to the program’s cloud storage service and stock photo library. This ecosystem serves the needs of photographers by providing all the tools they need on a common platform.
Platform Ecosystem
Platform ecosystems are more complex, with multiple companies working together on a central platform. The platform uses interconnected information technology resources to facilitate interaction and data exchange between ecosystem participants.
Online Learning Platform Coursera is a prime example of a platform digital ecosystem. Coursera acts as a central platform that facilitates course offerings, student enrollment, and interaction, while multiple universities and instructors provide valuable content that engages users. This integrated digital ecosystem gives students access to diverse learning opportunities (more than they could get from a single company or institution), instructors expand their reach, and Coursera generates revenue from its network of participants.
Super Platform Ecosystem
Super-platform ecosystems are the most widespread and influential, often encompassing vast networks of platforms, services and devices. They act as key players in the digital environment, shaping user behavior and influencing different industries.
A large technology company like Amazon is a good example of a super-platform ecosystem. Amazon acts as an online marketplace, but also integrates cloud services, payment processing, content streaming platforms (such as Prime Video), and other capabilities. Super-platform ecosystems offer a comprehensive suite of services and often have a global reach, making them a one-stop shop for many consumers.
Benefits of a digital ecosystem
A successful digital ecosystem benefits both businesses and users: businesses can collaborate to access new markets, operate more efficiently, share data, and create connected products, while users enjoy more convenient and richer experiences from integrated products and services.
Here we will elaborate on four key benefits of digital ecosystems.
Improved user experience
A robust digital ecosystem removes obstacles in the user journey by integrating products and services. Imagine a fitness tracker app that can connect to a smartwatch, a meal planning app, and a music streaming service all at the same time. This ecosystem allows users to track their workouts, monitor their calorie intake, and listen to motivational music — all within a single digital platform.
Multi-company partnerships
These digital ecosystems allow companies to enter new markets and attract partners through multi-company partnerships. For example, a ride-sharing app could partner with a performance venue to offer concert-goers who book through a third-party ticketing app a discounted ride to and from the show.
Each participant in the ecosystem (rideshare app, venue, ticketing company) will be able to acquire new users and have access to shared user data. This collaboration reduces customer acquisition costs for businesses and allows users to benefit from discounted ride fares and a seamless customer experience.
Streamlined Operations
Data exchange within a successful digital ecosystem allows businesses to optimize workflows and personalize user experiences: for example, integrating an e-commerce platform with a network of logistics companies can leverage real-time data to recommend faster delivery options and track deliveries to better serve customers.
Creating business value
Collaboration within a digital ecosystem fosters innovation. In a healthy digital ecosystem, ecosystem partners can leverage each other’s strengths to create new products and services, unlocking new revenue streams.
Role in the digital ecosystem
Within a digital ecosystem, businesses play different roles at different points, each contributing to the functioning of the overall network. There are three main roles that businesses can play:
consumer
In this role, companies use the services and products offered within the ecosystem to achieve their goals. For example, a small marketing agency might use cloud-based design platforms and social media management tools within a larger digital ecosystem. These tools help them create graphics and efficiently manage their clients’ social media accounts.
producer
These companies play a key role in creating and delivering valuable products and services within the ecosystem and shaping a positive user experience. Modular producers create specialized tools and services that seamlessly integrate with existing platforms. For example, a software company might create a project management tool that complements the functionality of a popular chat or video conferencing tool.
Orchestrator
These companies act as central hubs, facilitating business intelligence and data exchange between different ecosystem participants. They often manage the infrastructure and data, establishing rules and standards for the smooth functioning of the ecosystem and ensuring a consistent customer experience. Social media apps such as Facebook are orchestrators that facilitate interactions between many producers (brands, news websites, etc.) and individual consumers.
Digital Ecosystem FAQs
What are some examples of digital ecosystems?
Amazon is an example of a digital ecosystem because it offers an online marketplace, video and music streaming, smart home devices, and payment processing services, all of which are interconnected.
What is the difference between a digital platform and a digital ecosystem?
A digital platform is a host that connects different users and facilitates transactions. Digital ecosystem is a broader term that includes some platforms that facilitate multiple types of exchanges. For example, a digital platform might host buyers and sellers of second-hand goods. It may be considered a digital ecosystem if it integrates with a logistics platform to share data and provide users with seamless delivery to improve the customer journey.
What are the functions of a digital ecosystem?
Digital ecosystems connect platforms, services and devices to support the exchange of data and capabilities between participating companies, with the goal of streamlining business processes and delivering a wider range of connected products and services to enrich customer journeys.
