The digital ecosystem paradox – learning to move to better digital design outcomes
- Mark Skilton
- May 9, 2014
- 5 min read
Does digital technologies raise quality and improve efficiencies but at the same time drive higher costs of service as more advanced solutions and capabilities become available demanding higher entry investment and maintenance costs?
Many new digital technologies introduce step change in performance that would have been cost prohibitive in the previous technology generations. But in some industries the technology cost per outcome have be steadily rising in some industries.
In the health care market the cost per treatment of health care technology was highlighted in a MIT Technology Review article (1). In areas such as new drugs for treating depression, left-ventricular assistance devices, or implantable defibrillators may be raising the overall cost of health, yet how do we value this if patient quality of life is improving and life extending. While lower cost drugs and vaccines may be enabling better overall patient outcomes.
In the smart city a similar story is unfolding where governments and organizations are seeking paths to use digitization to drive improvements in jobs productivity, better lifestyles and support of environmental sustainability. While there are several opportunities to reduce energy bills, improve transport and office spaces exist with savings of 40% to 60% consumption and efficiencies complexity costs of connecting different residential, corporate offices, transport and other living spaces requires digital initiatives that are coordinated and managed. (U-city experience in South Korea (2)).
These digital paradoxes represent the digital ecosystem challenge to maximise what these new digital technologies can do to augment everyday objects, services, places and spaces while taking account of the size and addressable market that all these solutions can serve.
What we see is that technology can be both a driver of the physical and digital economy through lowering of price per function in computer storage, compute, access and application technology and enabling new value creation; conversely the issues around driving new value is having different degrees of success in industries.
Creating value in the digital economy
The digital economy is at a tipping point, a growing 30% of business is shifting online to search and engage with consumers, markets and transactions taking account of retail , mobile and impact on supply channels (3); 80% of transport, real estate and hotelier activity is processed through websites (4); over 70% of companies and consumers are experiencing cyber-privacy challenges (5), (6) yet the digital media in social, networks, mobile devices, sensors and the explosion of big data and cloud computing networks is interconnecting potentially everything everywhere – amounting to a new digital “ecosystem.
Disruptive business models across industries and new consumer innovation are increasingly built around new digital technologies such as social media, mobility, big data, cloud computing and the emerging internet of things sensors, networks and machine intelligence. (MISQ Digital Strategy Special Issue (7)).
These trends have significantly enhanced the relevance and significance of IT in its role and impact on business and market value at local, regional and global scale.
With IT budgets increasingly shifting more towards the marketing functions and business users of these digital services from traditional IT, there is a growing role for technology to be able to work together in new connected ways.
Driving better digital design outcomes
The age of new digital technologies are combining in new ways to drive new value for individuals, enterprise, communities and societies. The key is in understanding the value that each of these technologies can bring individually and in the mechanisms to creating additive value when used appropriately and cost effectively to drive brand, manage cyber risk, and build consumer engagement and economic growth.
Value-in-use, value in contextualization
Each digital technology has the potential to enable better contextualization of the consumer experience and the value added by providers. Each industry market has emerging combinations of technologies that can be developed to enable focused value.
Examples of these include
Social media networks
Creating enhanced co-presence
Big data
Providing uniqueness profiling , targeting advice and preferences in context
Mobility
Creating location context services and awareness
Cloud
Enabling access to resources and services
Sensors
Creating real time feedback responsiveness
Machine intelligence
Enabling insight and higher decision quality
Together these digital technologies can build generative effects that when in context can enable higher value outcomes in digital workspaces.
Value in Contextualization
The value is not in whether these technologies, objects, consumers or provider inside or outside the enterprise or market. These distinctions are out-of-context from relating them to the situation and the consumer needs and wants. The issue is how to apply and put into context the user experience and enterprise and social environment to best use and maximise the outcomes in a specific setting context from the role perspective.
With the medical roles of patient and clinician, the aim in digitization is how mobile devices, wearable monitoring can be used most efficiently and effectively to raise patient outcome quality and manage health service costs. Especially in the developing countries and remote areas where infrastructure and investment costs, how can technologies reach and improve the quality of health and at an effective cost price point.
This phenomena is wide spread and growing across all industry sectors such as: the connected automobile with in-car entertainment, route planning services; to tele-health that offers remote patient care monitoring and personalized responses; to smart buildings and smart cities that are optimizing energy consumption and work environments; to smart retail where interactive product tags for instant customer mobile information feedback and in-store promotions and automated supply chains. The convergence of these technologies requires a response from all businesses.
These issues are not going to go away, the statistics from analysts describe a new era of a digital industrial economy (8). What is common is the prediction in the next twenty to fifty years suggest double or triple growth in demand for new digital technologies and their adoption.
Platforming and designing better digital outcomes
Developing effective digital workspaces will be fundamental to the value and use of these technologies. There will be not absolute winners and losers as a result of the digital paradox. What is at state is in how the cost and innovation of these technologies can be leveraged to fit specific outcomes.
Understanding the architecting practices will be essential in realizing the digital enterprise. Central to this is how to develop ways to contextualize digital technologies to enable this value for consumers and customers (Value and Worth – creating new markets in the digital economy (9)).
Platforming will be a central IT strategy that we see already emerging in early generations of digital marketplaces, mobile app ecosystems and emerging cross connecting services in health, automotive, retail and others seeking to create joined up value.
Digital technologies will enable new forms of digital workspaces to support new outcomes. By driving contextualized offers that meet and stimulate consumer behaviors and demand , a richer and more effective value experience and growth potential is possible.
The challenge ahead
The evolution of digital technologies will enable many new types of architect and platforms. How these are constructed into meaningful solutions is both the opportunity and the task ahead.
The challenge for both business and IT practitioners is how to understand the practical use and advantages as well as the pitfalls and challenges from these digital technologies
What can be done using digital technologies to enhance customer experience, employee productivity and sell more products and services
Where to position in a digital market, create generative reinforcing positive behavior and feedback for better market branding
Who are the beneficiaries of the digital economy and the impact on the roles and jobs of business and IT professionals
Why do enterprises and industry marketplaces need to understand the disruptive effects of these digital technologies and how to leverage these for competitive advantage.
How to architect and design robust digital solutions that support the enterprise, its supply chain and extended consumers, customers and providers
References
http://www.technologyreview.com/news/518876/the-costly-paradox-of-health-care-technology/.
http://www.kyoto-smartcity.com/result_pdf/ksce2014_hwang.pdf.
http://www.smartinsights.com/digital-marketing-strategy/online-retail-sales-growth/
http://www.statisticbrain.com/internet-travel-hotel-booking-statistics/
http://www.fastcompany.com/3019097/fast-feed/63-of-americans-70-of-milennials-are-cybercrime-victims
https://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/cyber-crime.pdf
http://www.misq.org/contents-37-2
http://www.gartner.com/newsroom/id/2602817
http://www2.warwick.ac.uk/fac/sci/wmg/mediacentre/wmgnews/?newsItem=094d43a23d3fbe05013d835d6d5d05c6
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