Five powerful lenses for understanding ecosystems where 5G adds real value
In our first episode of this series, we discussed how the cellular ecosystem is evolving with the 4G to 5G transition, becoming more complex and interconnected with IT and industry-specific vertical ecosystems. To succeed in this new landscape, stakeholders must understand both the players and the relationships involved.
But operating with a single descriptive model or map is challenging when working in large ecosystems like that of the evolved cellular landscape. The broad spectrum of stakeholders and the nature of business opportunities involved call for flexibility in tailoring the framework to different situations. This need for flexibility does not, however, mean needing to start each collaboration from scratch with a clean slate. Here we identify five lenses and starting points which will serve most needs well when it comes to describing roles and relationships in the extended 5G ecosystem.
1. An ecosystem centered around a process or a use case
One standard anchor for ecosystem conversations is processes, use cases, or clusters of use cases you want to improve. Such an ecosystem addresses processes that might exist in one or multiple industries.
Here, the starting point is a major unsolved problem, where digital transformation is an essential part of the solution. By starting with a significant unsolved problem or challenge in a business process, you can get a strong focus on what value to create. The whole ecosystem revolves around the issue, starting from a minimum viable solution and gradually improving until a target solution is in place.
Process and use case-centric ecosystems focus on identifying and delivering big leaps in customer value in areas such as process efficiency, cost reduction, employee safety, competitiveness, or fulfilling regulatory requirements. The ecosystem orchestrator plays a crucial role in determining and finding all the supporting functions required to solve the complete problem.
The nature of the problem can be about improving the experience or taking out a share of the cost for the beneficiary. The network and cloud infrastructure is likely to support multiple processes and use cases, with the actual value coming from the ease of adding new ones. A vital part of the scaling is adjusting the solution tailored for one industry to fit another industry or use place.
Orchestrators of process or use case ecosystems can be system integrators or developers of software applications.
Examples of business process-centric ecosystems could include supply chain management, asset management or field service management.
2. An ecosystem centered around smart physical things, close to users and end-customers
The Internet of Things movement generates many new categories of things, which become smart with the integration of compute, memory, connectivity and software applications. A large share of these devices are currently connected with non-cellular technologies. Going forward, we expect a wider variety of things with integrated cellular networking capabilities. As of June 2022, we have seen announcements of 24 different types of things with integrated 5G networking capabilities.
A ‘things’ ecosystem focuses on creating value within and around a thing as the anchor. The starting point for a thing-centric ecosystem view is things the beneficiary can use for multiple purposes. This next generation of smart things has integrated compute, memory and battery, and wireless networking capabilities – WiFi or cellular. Device makers opt for 5G when their things consume or generate large amounts of data – video or artificial intelligence (AI), for example. High-performance, low-latency communication lets us offload compute, memory and battery to a nearby edge.
Smart things depend on software and continued updates to conserve value and remain relevant. The ability to capture data from a thing to understand how users use it daily is growing in importance – and offers new opportunities for value creation. Multiple industries and use places can be in play when analyzing a thing ecosystem. A thing can contain more than one wireless networking interface, and providers choose as few and as relevant as possible to keep down the cost.
The orchestrator of a thing ecosystem is often the provider of a smart thing – a vehicle manufacturer, a provider of industrial robots, or a consumer electronics manufacturer.
Examples of thing-based ecosystems that take advantage of 5G today are smartphones, vehicles, robots, head-mounted displays, and drones. All except smartphones and fixed broadband terminals are in the early stages of market adoption.
3. An ecosystem lens that gravitates around a physical or virtual place
The next ecosystem lens uses a location or place as the center of gravity for a conversation. The place we serve can be indoors, outdoors, virtual, or a combination.
A place-centric ecosystem view is attractive as a starting point as it is easy to understand where new values can be unlocked. This ecosystem view deals with one stakeholder as the orchestrator and more complex scenarios with multiple beneficiaries. Existing public cellular and private WiFi networking are insufficient to unlock the full potential, and network requirements often include superior networking capabilities tailored to specific use cases.
A central theme for a place-centric ecosystem is to offer superior experiences to consumer or enterprises, with or without incremental monetization potential. The journey to unlock value in a place is two-phased. First, you figure out a few use cases that motivate the investment in network and cloud infrastructure at that place. You want to find a few strong cases to get you going early, as building a proven business case is crucial for stimulating further infrastructure investment. Second, you extend the innovation to other drivers, where you can build additional small innovations that are demand-driven and leverage existing infrastructure in this place, adding further value.
Another key theme in this ecosystem model is that you have a multitude of beneficiaries. It’s important to define early on who all the beneficiaries are, and to align their interests. Each place can have private and public network needs, driving hybrid networks as a common scenario. Some places you want to target might also be virtual, so this ecosystem model applies beyond the digital transformation of existing physical places.
Orchestrators of place ecosystems often have a solid local anchoring and understanding of local market conditions.
Examples of ecosystems where 5G has started to gain traction in this category are sports venues, mines, airports, ports, factories, warehouses and universities.
4. An ecosystem that gravitates around a disruptive technology
The ability to create exponential innovations strongly correlates to the parallel introduction of multiple disruptive technologies. They can be disruptive independently, but when we combine them, we expect to see even more exciting innovations.
The starting point for a technology ecosystem view is the disruptive technology you see as the anchor. One example of such a disruptive technology is 5G, currently addressed by 600 players in 25 different categories in the broader ecosystem. It’s not the technology alone that will make the big difference – the innovation becomes truly valuable when it’s combined with adjacent, often also disruptive, technologies.
A technology ecosystem focuses on understanding how and where the technology can make the most significant difference. When introducing a new disruptive technology, the positioning towards technology alternatives and the status quo is the common starting point. An essential job for the technology ecosystem's orchestrator is to secure investments that are timed correctly. This reality is especially true for networking solutions with two ends that must meet. We are at an exciting time in the market when multiple disruptive technologies come to market simultaneously. Most, if not all, depend on wireless connectivity, where 5G can play a significant role.
Orchestrators of tech ecosystems are often large technology providers with extensive research and investments in the ecosystem to secure a strong base that reduces the market risk for contributors. This might include how disruptive technologies complement each other, alignment of standardization efforts, identification of early technology leaders and collaboration from early-stage prototypes to commercialized technologies.
Examples of disruptive technologies adjacent to 5G are edge computing, AI, the Internet of Things, extended reality and the metaverse. We see disruption potential for semiconductor, battery and energy storage, blockchain or cryptocurrency and security technologies on the component level. If we move up, there is disruption potential on the application level for autonomous and electric vehicles, robotics, drones, Industry 4.0, green energy and genomics.
5. An ecosystem shaped by an industry or customer segment
Finally, a very common approach in describing an ecosystem is to consider it in terms of the industry or customer segment served. This is a customer-centric ecosystem model which focuses on customers with similar needs and highlights potential solution synergies between customers in the same industry.
The starting point for this model is an industry, or industry segment, going through a digital transformation to become a smart industry. Most digital transformations result in real-time-data-driven operations where connectivity to assets and locations is a critical enabler for collecting data and executing any remote operations based on the insights from the data.
Both IT and networks are evolving from on-premise solutions to horizontal platforms leveraged for various use cases. An industry can be served by both public and private networks, depending on the nature of the business process and related business application (including data integrity needs and related processing architecture).
The vertical ecosystem already serving this industry possesses deep insight into the industry's unique business process challenges – a great advantage in determining where and how to take action. The first top-down estimates for the business potential of digital transformation start around industries. The realization happens one level below and depends on insights of improvement potential of specific business process. After solutions are created with a lead customer, they can often then be scaled across the entire industry.
The increased demand for flexibility or agility is a significant challenge – one where IT and networks can make a meaningful difference. Tools such as cloud computing and wireless connectivity, for example, can increase agility, and we can expect to gradually add more advanced use cases along the journey.
Orchestrators of industry ecosystems possess specialized knowledge about the vertical industry, such as those players with broad portfolios of products and services serving the target industry and system integrators.
Examples of ecosystems in this category where 5G has started to gain traction are manufacturing, energy, healthcare, sports and media and transportation.
Finding the right lens for your ecosystem challenges
We hope these five different lens options will help you find an optimal angle or map that fits your ecosystem challenges. It’s important to keep in mind that the most appropriate lens may vary over time as the market matures and ecosystem engagements evolve. By providing a portfolio of lenses, we also hope you will gain the required flexibility to move between perspectives without starting from scratch for every new opportunity.
If you are interested in learning more about how to map these complex ecosystem relationships – including a framework to help visualize them – be sure to catch the next post in our ecosystem evolution series. To ensure you don’t miss out, sign up for the series and be notified as each new episode is released.
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Contact the authors
If you have any questions on this topic, would like to hear more detailed examples of any of these ecosystem lenses, or have suggestions for how you’d like this blog series to end, feel free to contact the authors via email or reach out directly via their LinkedIn profiles: Peter Linder, Olle Isaksson, Harald Baur.
Acknowledgement: The authors of this ecosystem evolution blog series would like to acknowledge the work and contributions of Arthur D. Little, who conducted a joint analysis with us earlier in 2022.
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