Evolution of value creation
Today, digitalization is acting as a catalyst for the emergence of interconnected ecosystems by enabling seamless connectivity, data sharing, collaboration, and orchestration among ecosystem partners. This interconnectedness fosters innovation, agility, and resilience.
The transition to ecosystems
Ecosystems, in the business and technological landscape, are interconnected networks of organizations, technologies, and services that collaborate to create value beyond what any single entity could achieve alone.
The transition to ecosystems is seen as essential by many experts and enterprises, including those in the telecom sector. This as they they represents a strategic pathway to unlock innovation and build resilience. Research by Mckinsey shows the integrated network economy could represent a $100 trillion value pool by 2030, or about a third of the world’s total sales output.
Montgomery Hong, Worldwide Communications Industry Business Strategy Lead at Microsoft
This study shows that enterprises are gearing up for the transition from traditional value chains to value ecosystems as a response to the demands of the digital age, globalization, and changing consumer expectations. Overall, digitalization acts as a catalyst for the emergence of interconnected ecosystems by enabling seamless connectivity, data sharing, collaboration and orchestration among ecosystem partners. This interconnectedness fosters innovation, agility, and resilience, positioning organizations to thrive in an increasingly complex and interconnected business environment.
This shift is illustrated by 43% of decision makers having a constantly evolving co-operation on different levels with many partners, suppliers and other collaborators. This indicates a trend towards greater interconnectedness and interdependence among businesses. In traditional value chains, we see a step-by-step process where goods and services pass from suppliers to manufacturers, wholesalers, retailers, and finally, consumers. In interconnected ecosystems, enterprises observe increased collaboration and co-creation with customers, suppliers, and even competitors.
The move to value ecosystems is seen to liberate key values that include innovation through more collaboration. But also enhanced customer experiences and a broadened market access via global digital platforms. This is particularly seen in the product and service development that require more collaborations and innovation. As seen in figure 3, these transformations are reflected in the responses of 57% of decision-makers, claiming that collaborative tools for digital product development is already used in their companies.
Figure 3: Share of decision-makers across markets and industry sectors in companies already using collaborative tools for digital product development [Self-reported]
Trust becoming the key enabler for collaborations
With the increasing need for companies to share data and collaborate, trust is becoming a fundamental aspect in the transition. A concerning 65% of decision-makers report inadequate trust between their companies and customers, impacting the feasibility of connected offerings. Another 60% say a lack of procedures to securely share sensitive/proprietary data with external actors is a key challenge when it comes to digitalization of the product and service development at their companies. As a consequence, cellular is seen as a key infrastructure for collaborations emphasizing the need to incorporate robust measures to protect sensitive data and prevent unauthorized access.
This lack of trust may be related to privacy and security concerns. For example, car manufacturers and their suppliers may be hesitant to share vehicle performance or production process data, fearing that competitors could gain an advantage. Hospitals and medical research institutions may be reluctant to share patients’ data due to privacy concerns and regulatory compliance issues. The fear of cyberattacks and personal data breaches is always present across industry sectors.
To overcome these hurdles, privacy concerns need to be addressed by fostering transparency and accountability in data usage. This involves clear communication on data usage, robust privacy policies, and strict adherence to regulations such as GDPR.
Overall to bridge this reluctance to share data and to build trust, it is seen as crucial to establish data governance frameworks with clear mutual benefits and standardized agreements that protect all parties' interests. This can be done by offering clear value propositions for data sharing and incentivizing stakeholders to participate more openly in ecosystem collaborations. Some examples of initiatives creating such frameworks include Gaia-X and International Data Spaces.
Security apprehensions are addressed by implementing comprehensive cybersecurity measures. High costs and security concerns are perceived as substantial barriers to innovation by 57% of enterprises. Collaborative efforts on security standards, sharing threat intelligence, and security best practices are essential for protecting the entire ecosystem from cyberthreats. As cyberthreats is a shared concern companies come together in joint efforts and networks such as the IBM X-Force Exchange.
Trust is redefining value creation in the journey from value chains to interconnected value ecosystems.
The call for more open telecom networks
The telecom sector is at a crossroad, needing to reimagine its role within value ecosystems. As can be seen in figure 4, the interest in open Application programming interfaces (APIs) is growing, with 9 in 10 enterprises already using, or expecting to introduce externally provided APIs for communication services within five years, signifying a shift towards more open, collaborative networks. However, 62% of enterprises prefer to buy communication services from a global provider or aggregator rather than from a local mobile/cellular network service provider. This preference signals the increasing importance of API providers but also highlights the need among enterprises to scale globally across service providers.
Open APIs are critical for telecoms engaging in ecosystems, allowing seamless integration and collaboration with partners and third-party developers. By adopting open API strategies, telecoms can enable innovation within enterprises and enhance customer experiences. Two initiatives are the GSMA Open Gateway that is a framework of APIs designed to provide universal access to operator networks for developers and hyperscalers as well as CAMARA - an open-source project initiated by the Linux Foundation and GSMA to define, develop, and test network APIs.
Figure 4: Percent of decision-makers stating their companies are utilizing today, or planning to utilize in the future, externally provided API’s for communication services (e.g. voice, sms, video)
The evolution from value chains to ecosystems represents a profound change in value creation. Addressing concerns of trust, privacy, and security is central to success. This is an opportunity for the telecom sector to position at the heart of these ecosystems by fostering transparency, overcoming data sharing reluctance, and ensuring robust security measures. All of which will be vital in harnessing the full potential for innovation and growth.
Telecom companies are uniquely positioned to leverage their extensive networks and customer bases to orchestrate or participate in ecosystems that could include digital entertainment, smart home solutions, healthcare, education, and financial services. By doing so, they can transform from traditional service providers to integral players in a more expansive digital economy, thereby driving customer loyalty and unlocking value in adjacent markets.
