Digital ecosystems: The secret to sustainable growth

Sush Labs

Digital ecosystems, insurance

As dynamic and managed services become increasingly accessible, legacy systems and solutions that are built and maintained in-house are fading into the past. Today, digital ecosystems that bring together different services and applications are the way of the future. 

Still considered a new model for some organisations, digital ecosystems are transforming industries, enabling businesses to connect the right experience to the right people on the right platform. They are enabling leaders to roll out new services, optimise customer experiences, boost agility and innovation, secure data dominance, and integrate advanced technologies such as artificial intelligence, blockchain and big data analytics - all which would have been impossible on legacy infrastructure.

Defining digital ecosystems: how they work and why they’re beneficial

‘Digital ecosystems’ describes a group of interconnected IT resources, including APIs, web services, microservices and applications, that function as one unit. This can be made up of internal and external partner systems and apps, supplier and customer data, and third-party tools. 

Massive global players such as Uber maintain thousands of different microsystems within the same overarching ecosystem. Various benefits, on top of those mentioned above, include the ability to change out services without compromising the entire system, and to do so at speed. These ecosystems can also be continuously curated to meet business needs, including governance and compliance requirements, and help to establish principles of openness and flexibility within an organisation. 

While digital-first organisations such as Uber have paved the way for the digital ecosystem framework, more traditional industries are also moving into adopting this mindset and setup. For instance, while the insurance industry is still seen as very traditional, leaders in the space are gradually moving more assuredly into digitisation. In fact, research firm Novarica highlights the trend towards digital ecosystems in insurance, finding that more than 65% of insurers have deployed APIs/microservices as of Q4 2019. In addition, research from Accenture reveals that 84% of insurance executives say ecosystems are crucial to their business strategy.

To consider what is driving insurance businesses to make this transition, we can look at the benefits. A digital ecosystem can encompass the entire customer journey, from quote to claim. This includes touchpoints with a number of different and formerly disparate applications, such as CRMs, policy administration systems, broker portals and third-party data service providers. 

One of the biggest barriers to entry for this particular industry is the potential security and governance concerns regarding open versus closed systems. While legacy setups are often far more cumbersome and difficult to maintain, they do offer more governance, security and predictability as they are managed entirely in-house. However, large digital services providers and platform owners, such as Apple, are placing more importance on security, resulting in a growing trend of a number of industries, including the more traditional, moving towards investing in digital ecosystems.

The three main benefits of digital ecosystems

To understand the power of digital ecosystems, we can take a closer look at how they improve customer experience, establish componentisation and drive data dominance. 

Digital ecosystems enable businesses to optimise customer experiences by increasing the number of touchpoints with customers, increasing transparency across services and costs, and by providing new services at speed. In addition, businesses can integrate systems and tools that extend customer support and personalisation. This includes offering chatbots and conversational marketing, virtual deliveries, personalised offers, and partnerships with aligned brands. Connected smart devices and intelligent solutions, as well as forecasting and prediction tech also helps businesses to better understand customers interacting with their brand and purchasing goods or services.

Componentisation describes the ability to break an ecosystem down into separate components and treat each one accordingly. Componentised, open ecosystems allow businesses to reduce costs, improve agility and system reliability, and also develop innovation. Flexibility is enabled by modularity, that is, the ability to swap out components based on the business’ needs. Similarly, if a single service goes down it can be replaced without putting other components in jeopardy. 

Componentisation also encourages IT planners to define the roles of different components. This makes it easier to identify areas that require more attention and improvement, and overall enhances the quality of services and reduces overall IT spend.

Finally, data dominance is a huge benefit of digital ecosystems. Big data analytics is changing the game across every industry, and having a digital ecosystem enables businesses to build up, scale and organise data. This can include integrating analytics or data visualisation platforms, business intelligence platforms, artificial intelligence tools, and internet of things (IoT) technology.

Being able to more effectively capture and curate data can lead to teams having a clearer view of customers, partners and key stakeholders, and help establish a practice of making informed decisions. Over time, IT teams can align their time and budget to activities that will have the biggest impact - be that developing mobile applications, improving customer support portals, or another avenue.

CIOs and CTOs: Leading businesses into our digital reality

The role of CIOs and CTOs in our increasingly digital world cannot be understated. These leaders must become the visionaries of digital ecosystems and work to shift culture and technology to this new mode of operating. Developing a digital ecosystem business model is not necessarily a simple task, and it can bring up organisational and technical challenges. However, with this as your foundation, you will be able to better understand and capitalise on opportunities that make the most sense for your business. You will be able to improve service offerings, boost customer loyalty and drive sustainable growth.

Initiate the discussion now

Get in touch with an expert at Sush Labs.

Contact Us