Digital Ecosystems and Digital Platforms:
Made in Germany

Digital Ecosystems, Platforms and the Platform Economy

Digital Ecosystems and the platform economy will change every industry in many ways. Platform business differs significantly from traditional business and requires a complete rethink of one’s own positioning and one’s own business model.

We at Fraunhofer IESE know that it is difficult for companies to dive into this topic in a targeted manner. To make it easier for you to get started, we offer answers to central questions about Digital Ecosystems beyond the buzzwords. To this end, we have summarized our experiences with companies from a wide range of domains.

Digitales Ökosystem wie ein Bienenschwarm
© iStock.com/Jag_cz

What are Digital Ecosystems?

Definition of Digital Ecosystems

A Digital Ecosystem is a socio-technical system in which companies and people cooperate that are independent but expect to gain mutual benefits from participating. A Digital Ecosystem has a digital platform at its center that supports this cooperation particularly well via ecosystem services.

A Digital Ecosystem  

  • addresses actual needs of potential consumers
  • delivers added value that was previously unattainably without the ecosystem service,
  • is attractive to both providers and consumers of services, and
  • provides added values for all partners involved in the ecosystem service.

The overall benefit of a Digital Ecosystem thus results from the combination of the digital brokering platform and a large set of partners who participate in the Digital Ecosystem for mutual benefit and whose interactions via the platform lead to network effects.

Examples

Good and successful examples of Digital Ecosystems have emerged around platforms such as AirBnB, Uber, Apple App Store, or Amazon Marketplace. It is striking that most of the very large Digital Ecosystems that we are familiar with come from the U.S. In addition, many very large Digital Ecosystems have recently emerged in China, e.g., WeChat or Alibaba, but these are perhaps still unknown to us. But, there are also some established Digital Ecosystems here in Germany, such as Delivery Hero, ImmoScout24, or Flixbus, which many people may not even know as a Digital Ecosystem.

So there are very many successful examples today, and new ones appear all the time. While many previous examples were more from the B2C area or even the C2C area, the trend is now also moving more strongly towards Digital Ecosystems in the B2B area.

Emergence

A Digital Ecosystem is created when a company sees an opportunity to do a promising new type of business and initiates the Digital Ecosystem. This means providing an initial version of the digital platform and finding the first partners (companies or people) who want to participate. From there, both the platform and the partner network must be continually expanded because, after all, that is what the Digital Ecosystem thrives on.

Digital Ecosystems differ significantly from traditional business and require a complete rethink of one’s own positioning and business model. That alone is already a lot to ask, but speed is also of the essence because many companies are simultaneously striving to establish competing Digital Ecosystems. In doing so, they are not only competing against local rivals, but are also directly involved in global competition.

To successfully build a Digital Ecosystem, more needs to be considered than just the direct partners that interact with the platform. As Digital Ecosystems often profoundly change existing businesses, the initiator of the Digital Ecosystem must usually also consider the possible interests and potential business models of the partners end-to-end.

Relationship to the Platform Economy

While a Digital Ecosystem is a very concrete association of companies, people, and IT systems, the Platform Economy is a fundamental economic principle, similar to capitalism, for example. A Digital Ecosystem can be built with the intention of functioning according to the principles of the Platform Economy. This means that such a Digital Ecosystem is about clear economic interests and there are typically multi-sided markets in which participants conduct their transactions via the digital platform. However, there are also Digital Ecosystems that do not belong to the Platform Economy, but pursue other goals, for example Wikipedia.

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Digitales Ökosystem wie eine Sonnenblume
© iStock.com/Racide

What opportunities do Digital Ecosystems offer to companies?

New business models and network effects

The initiation of a Digital Ecosystem offers enormous opportunities because it can change the entire way business is done in a particular domain. So the often overused term “digital transformation” fits very well here. The opportunity exists to realize completely new business models and an enormous increase in efficiency in a domain. This often goes hand in hand with harmonization in the business, technical, and legal sense, in which the platform initiator/ecosystem initiator invests, thereby offering added value to the partners. This creates a great incentive for the ecosystem initiator to grow the Digital Ecosystem and make it successful, which leads to benefits from increasing network effects.

 

Freedom of design

The initiator of a Digital Ecosystem has considerable creative leeway and can earn money from it by conducting future business via their digital platform. The initiation of a Digital Ecosystem appears particularly promising if a company can identify a business segment that could benefit significantly from a Digital Ecosystem, but for which no successful one exists yet. As many companies are currently considering which Digital Ecosystems and digital platforms they could initiate, this also means being quick and not leaving the field to others. This is especially true for B2B ecosystems.

 

Germany – great opportunities for companies with B2B ecosystems

In Germany, there are many strong and traditional companies that have the necessary influence and also the necessary financial resources to establish successful Digital Ecosystems. In Germany, we should also focus on B2B ecosystems, in particular, whereas many of the Digital Ecosystems that are already well known tend to come from the U.S. and rather focus on B2C. We should not let these opportunities bypass us unexploited.

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What challenges exist in dealing with Digital Ecosystems?

Integrated
Big Picture

An absolute success factor is the integrated and clearly coordinated consideration of business, technical, and legal aspects. This runs right through all aspects of the overall strategy of the Digital Ecosystem and leads to an overall complexity that is not easy to master. In the context of Digital Ecosystems, taking an end-to-end view means designing across all stakeholders and across the platform and thinking ahead, especially to ensure quality attributes.

Complexity

As a matter of fact, the final result of a business model for a Digital Ecosystem often looks frighteningly simple. This is somewhat deceptive because it can easily give rise to the impression that one should also be able to arrive at a similarly convincing result with a manageable amount of effort. Here, experience shows that a similar situation tends to occur every time: At the beginning, the ideas are not clear at all and it often takes months of the most intensive design work to arrive at a result that looks simple and is also convincing for the partners. 

Speed

Speed is important when building Digital Ecosystems. An ecosystem that attracts many partners quickly and, above all, builds up a large community of customers very quickly has a better chance of achieving long-term success because this makes it more and more attractive for other partners. To achieve this, companies must learn to enter the market with a product that is just “good enough”, but not yet perfect.  

Perseverance

It is also important to look at the establishment of a Digital Ecosystem over a period of years and to have a vision of how to build it, while continually reacting to lessons learned and adapting the plan. Companies also need perseverance in financial terms because the commitment to Digital Ecosystems usually only really pays off after years and not after a few months already.

Uncertainty and No Guarantee of Success

The establishment of a Digital Ecosystem is accompanied by many uncertainties. The initiator has no “power of command” and therefore can only shape the overall conditions. Unfortunately, there is no recipe that can guarantee success. Nevertheless, we can, of course, learn from mistakes already made (our own and those of others).

Creative Drive and Financial Strength

To master the establishment of a Digital Ecosystem, your company needs a strong creative drive and the urge to transform a domain and, in most cases, also your own company, against many odds. Furthermore, significant financial resources are also needed, as strong investments are required to build the digital platform and grow the number of partners involved.

Establishment of the Partner Network

The partners must have a benefit from participating in the ecosystem; they must be a good fit because they need to interact with each other; and their numbers must grow quickly because only then will the necessary network effects occur, which will further increase the attractiveness of the ecosystem.

Fraunhofer Reference Model for Digital Ecosystems

The importance of taking a holistic view of the Big Picture of a Digital Ecosystem has already been emphasized above. The Fraunhofer Reference Model for Digital Ecosystems provides an overview of the relevant aspects.

This begins with the organization that initiates and operates the Digital Ecosystem, extends to all the partners involved and the user community, and also includes direct and indirect competitors. In this regard, it is important to take an integrated view of business, technical, and legal aspects for all points listed in the model.

Fraunhofer Digital Ecosystem Reference Model
© Fraunhofer IESE

Where does my company stand with regard to Digital Ecosystems?

Six typical phases in the lifecycle of a Digital Ecosystem. Based on the following statements, you can easily determine where your company currently stands.

 

1 | My company has not given any thought to Digital Ecosystems yet

Then your company is in the positioning phase and must at least think about Digital Ecosystems, because they will influence the environment of all companies. Then these three decision options are open to you:

  • Join one or more ecosystems that already exist or are in the process of being established,
  • Initiate your own ecosystem, or
  • Make a deliberate decision to stay away from Digital Ecosystems.

 

2 | My company has decided to build a Digital Ecosystem

Then your company is in the design phase of the Digital Ecosystem. This primarily involves the detailed development of concrete ideas for an ecosystem service and testing them on concrete examples. To do this, you need to comprehensively and thoroughly think about the Digital Ecosystem and explicitly design the functionalities, asset flows, money flows, data flows, and contractual relationships.

 

3 | My company has a precise idea of what the Digital Ecosystem should look like

Then your company is in the phase of examining the prospects for success in terms of feasibility and viability, based on the initial design. This means that you need to shed light on the business, legal, and technological aspects of all decisions made so far that affect your organization, the partners, and the user community.

 

4 | My company has assessed the prospects for success of the envisaged Digital Ecosystem

Then your company is in the MVP phase. If you have developed a promising idea for an ecosystem service, you should develop a Minimal Viable Product (MVP) as quickly as possible, and use it to take up a position on the market. This means that you should reduce the scope and complexity of the developed idea to such an extent that you can produce a useful result as quickly as possible. To do this, you can, for example, take out certain functionalities or do processes that can be automated manually at first. However, the developed MVP should be able to illustrate the basic idea and functionality of the ecosystem service very well and generate enthusiasm.

 

5 | My company has released an MVP of its Digital Ecosystem and is thus “live”

Then your company is in the phase of starting growth. Through early adopters and additional measures to bring partners together and create incentives, you must successively bring more participants into the ecosystem so that supply and demand will increase. This is also where the initial and intended network effects begin.

 

6 | My company has successfully completed an initial growth phase with its Digital Ecosystem

Then your company is in the phase of expanding growth. You need to make your Digital Ecosystem and the platform fit for fast and high scalability by means of a high degree of automation and a powerful organization. Because this is the only way you can fully benefit from the characteristics of Digital Ecosystems: The number of partners and available offerings leads to self-reinforcing network effects.

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How does IESE support my company regarding Digital Ecosystems?

No matter in which phase of your Digital Ecosystem project you are: Fraunhofer IESE is the ideal partner for your company.

As an institute for innovation-, systems-, and software engineering, Fraunhofer IESE is in a position like no other to provide you with holistic support for Digital Ecosystems – starting with the initial intent and continuing throughout the entire lifecycle of a Digital Ecosystem. In doing so, we cover a very wide range of services. We can help top management with strategic decisions, assist with the design and construction of the Digital Ecosystem and the digital platform, and clarify technical implementation issues with the developers.

Tailored to your needs, we offer different types of cooperation:

  • We completely take over tasks for you
  • We actively support you in your tasks, work with you, and provide guidance to your team
  • We teach you our methods so that you can apply them on your own

 

The graphical overview below shows key activities along the phases of the establishment of your Digital Ecosystem. The individual services are explained below the figure.

Grafik Digitale Ökosysteme Leistungen Fraunhofer IESE
© Fraunhofer

Ecosystem Strategy Definition

We support you from the very beginning, starting with the first important activity, the definition of an ecosystem strategy for your company. Do you want to join one or more ecosystems already in existence or in the process of being established? Do you want to initiate your own ecosystem? Or do you want to make a deliberate decision to completely stay away from Digital Ecosystems? If you want to initiate an ecosystem, we will support you in thoroughly working out and checking which ecosystem services you can offer to generate attractive added value for all participants in your Digital Ecosystem.

Ecosystem Ideation

The core idea of already existing ecosystems often seems simple and obvious. However, it requires enormous creativity to design such concepts that ultimately appear to be so simple. Our creativity techniques, which have been used successfully many times and which are specially tailored to ecosystems, will help you find and concretize the core idea of your Digital Ecosystem. We do not only examine the economic, technical, and legal framework conditions, but also consider all participants of the planned ecosystems and their interests as well as arising asset, data, and money flows.

Ecosystem Platform & Ecosystem Service Building

This activity is about building the ecosystem platform and the ecosystem services. This encompasses almost all areas of software and systems engineering and places a wide variety of requirements on the quality properties to be achieved. Building the ecosystem platform and the ecosystem services extends almost over the entire lifecycle of a Digital Ecosystem once the target direction has been clarified. We tailor our support to your individual needs in all phases from initial design to expanding growth. In these phases, we lend a hand with a wide range of service running in parallel. During the whole time, you will benefit from our integrated and holistic approach.  

Ecosystem Organization Building

Building a Digital Ecosystem has drastic effects on your organizational structure. Which organizational form is suitable for your planned Digital Ecosystem must be decided individually. We support you in examining possible forms of organization and establishing new roles needed for building a Digital Ecosystem.

Ecosystem Partner Network Building

Without partners, a Digital Ecosystem is worth nothing, even if you have built an outstanding ecosystem platform. We not only support you in finding the right partners, but also help motivate them to participate and are committed to including them in the Digital Ecosystem at the right time and in the right combination (onboarding). 

Ecosystem Community Building

Without a large and engaged user community, a Digital Ecosystem is worth nothing, even if you offer an innovative ecosystem service. We help you to actively build up a user community and nurture it over time. 

Ecosystem Assessment

If you want to build a Digital Ecosystem, this is an immensely challenging and long-term undertaking, where you can be heading in the wrong direction for a long time without realizing it. It is therefore worth checking from time to time whether you have embarked on the right path. It is never too early or too late to do this: In every lifecycle phase of your Digital Ecosystem, we support you as a neutral partner with an objective assessment of the current direction and status of your Digital Ecosystem. However, it is especially the early phases in which it is necessary to check intensively whether the right course has been set. Because the more advanced your project is, the more difficult and expensive it is to change course.

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Why should my company collaborate with IESE on Digital Ecosystems?

Digital Ecosystems offer the opportunity for disruptive repositioning and increasing influence with a huge scope for design. Network effects and participation in business in the Digital Ecosystem promise a future-proof position in your own domain.

As described above, building a Digital Ecosystem is extremely challenging. On the one hand, this is due to the complexity to be mastered of numerous tasks that have to be considered in an integrated manner. On the other hand, you enter new territory with each task and are faced with a high degree of uncertainty. Nevertheless, you need to get to market quickly with your Digital Ecosystem and grow rapidly because you are in a race with competitors who want to establish Digital Ecosystems in parallel. It has been shown that early market entry offers significant advantages.

 

We will be happy to support you in overcoming these challenges associated with your Digital Ecosystem. With our contributions, we help to make your Digital Ecosystem successful.

Digitales Ökosystem wie eine Schneckenmuschel Nautilus
© iStock.com/Bereta

Our contributions to your successful Digital Ecosystem

We provide orientation and leadership, but always remain neutral.

This guarantees you a targeted approach and the good feeling of not forgetting anything crucial.

 

We draw on experience from many projects and domains.

This helps you avoid mistakes that other companies have already made, with painful and expensive results.

 

We support you from strategic decisions to technical implementations, from the start of your ecosystem project throughout the entire lifecycle to strong growth.

In this way, you secure a strong partner that takes an integrated and coordinated view of the various complex challenges. At the same time, you avoid having to find a specialized partner for each task and having to spend a lot of effort coordinating all partners.

 

We have clearly organized the terminology surrounding Digital Ecosystems.

This saves you unnecessary and lengthy terminology discussions or even the extremely expensive effects of terms and concepts that are not clearly understood. (A common understanding is achieved more quickly.)

 

We have consolidated our experience into methods that can be applied flexibly and have been tried and tested many times.

This enables you to master the high uncertainty and complexity of your ecosystem project faster and more unerringly.

 

We really get involved right from the start (not just in an advisory capacity) and roll up our sleeves with you.

This ensures that you can start your project right away, giving you a head start in a competitive field by going live sooner. It also allows you to optimally build up your team over time, which then learns directly from our experienced staff.

 

The Fraunhofer-Gesellschaft is the largest applied research organization with a wide range of expertise in more than 70 institutes.

This ensures that you get access to technology and engineering expertise from all disciplines relevant to your ecosystem in all domains within the Fraunhofer partner network.

 

We will support you, too, in conceiving, shaping, and successfully growing your Digital Ecosystem!

Regardless of whether you ...

  • are currently thinking about how your company should position itself on Digital Ecosystems,
  • are strongly determined to establish a Digital Ecosystem, but are still working on the exact direction,
  • are already quite sure that you are on the right track, but would like to discuss your ideas with experts,
  • are already in the process of construction and are looking for experienced systems and software engineering support for your digital platform, or
  • have any interesting ideas and questions and would like to discuss them with us.
 

Contact us!

 

We will be happy to support you and make time for you! Schedule an appointment with us, by email or by phone, or via LinkedIn.

What references does IESE have regarding Digital Ecosystems?

We have been designing Digital Ecosystems for many years together with numerous customers from different industries. In parallel, we are intensively engaged in research projects to further enhance our methods and develop novel ecosystem concepts. Below, you will find some examples of projects with our customers and selected research projects.

Automotive & Mobility

Caruso Dataplace

Digital Ecosystem built around a data marketplace focused on vehicle telematics data in the automotive aftermarket.

Financial Services & Insurance Providers

DATEV

Design of Digital Ecosystem services.

Customer testimonial


“Thanks to its experience with the topic of Digital Ecosystems, its pragmatic approach, and especially its neutrality, Fraunhofer IESE is a very important technology partner.”

 

Alexander Haid
Managing Director Caruso GmbH

 

Smart Country / Smart Rural Areas

Smarte.Land.Regionen

Digital Ecosystem and digital services for rural counties.

Smart Country / Smart Rural Areas

Digital Villages

Digital Ecosystem for smart rural areas.

Construction Industry

Infra-Bau 4.0

Digital Ecosystem for the end-to-end networked planning and realization of infrastructure construction projects.

Agriculture

COGNAC

Digital platform and ecosystems for digitalized agriculture with high productivity balanced with sustainability, resource efficiency, and product quality.

Automotive & Mobility

Smart MaaS

Smart mobility platform in cities.

Smart Country / Smart Rural Areas

Digital Teams

New models for working and living in rural areas based on a Digital Ecosystem of smart services.

Agriculture

Insights Collaboration Space

Making ideal use of data in Digital Ecosystems to provide smart services.

Industrie 4.0

MANTIS

Collaborative maintenance economy to unlock new market potential through Predictive Maintenance.

Automotive & Mobility

KomMaaS

Mobility as a Service for municipalities