Managing Your 'Ecosystem'
(Originally appeared in Computerworld magazine January 22, 2001)
One way to view a corporation is through the "information ecosystem" it inhabits. An ecosystem emerges when a community and its surrounding environment function as an interwoven collective; from a corporate perspective, an information ecosystem is comprised of systems, data, processes, people and external entities that impact or are impacted by that corporation.
Ecosystems have always existed, but Internet-based business-to-business exchanges have increased the interconnectedness among suppliers, customers and even competitors. For an organization to survive and thrive within an information ecosystem, it must understand and optimize the relationships among the ecosystem's components and participants. Doing so brings value to your company, suppliers, partners and customers. Effective ecosystem management provides several benefits:
• You can respond more quickly to requests for change because you can envision the impact of changes on parts of the ecosystem.
• Exposing ecosystem relationships facilitates integration and streamlining of processes, systems and data, which in turn can reduce costs and increase responsiveness to customers.
• Knowing which third parties use or provide certain data allows you to respond more quickly to their needs.
• A comprehensive view of an ecosystem's components provides better insights into making decisions on cross-functional projects.
• Understanding relationships with third parties establishes a foundation for collaborating with them.
The auto industry provides one example of information ecosystem management. Major auto manufacturers have created business-to-business exchanges for buying and selling materials and are expanding these capabilities across their supply chains. They're also eliminating customer intermediaries through the creation of online marketplaces. But the most significant factor in the industry's quest to leverage its information ecosystem is that these efforts involve collaboration with competitors.
The recognition that corporations are part of a big picture has evolved as supply chain, electronic marketplaces and other Web-enabled business models emerge. As we increase our understanding of this view, we see how companies can effect change for the betterment of entire industries.
But existing ecosystem models, such as those forged by the auto industry, will change as well. The auto industry has institutionalized a "participant" model, in which a handful of larger members dominates the ecosystem. This will likely change as smaller members self-organize and lobby to offer input into the ecosystem's future.
To leverage information ecosystems, IT and business executives should focus on ecosystem understanding, collaboration and governance.
Understanding involves creating a knowledge base that reflects the relationships among data, systems, processes, business units and external entities. This knowledge can, in part, be shared with other members of the ecosystem - a supply chain, for example. Business-to-business relationships may then be reincorporated back into the enterprise knowledge base.
An ecosystem functions most effectively when its participants work together to tackle industry-wide challenges. This requires collaboration between your company and suppliers, customers and competitors. But internal collaboration among IT, business units, outsourcing firms and other elements within your company is also important because in the past, business and IT units have not always collaborated effectively.
Governance formalizes, through the creation of a legal entity, ecosystem models that are in many cases implicit. This is particularly important when developing supply chain, customer and competitive relationships. Governance defines how an ecosystem's participants should act and what rights they have. This includes issues such as direct access to data, data integrity, privacy, security, software ownership and licensing rights, as well as other areas that might emerge.
Rapid change, technological advancements, competition and other unknown issues will continue to emerge to challenge companies in every industry. Approaches to dealing with these challenges must consider the big picture. Understanding and managing your information ecosystem will better prepare you to deal with existing and unforeseen changes.