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What Is a Digital Ecosystem?

Feature Article | January 20, 2017 by Andreas Schmitz

A “Data Space” is being created in Berlin; digital hubs and initial platforms throughout Germany are showing how digital ecosystems work. A breakthrough is imminent.

The basis for digital ecosystems is already long-established: the American researcher James F. Moore first published his theory of business ecosystems in the Harvard Business Review 23 years ago. Although digitization only played a minor role in business concepts back then, the foundations of his approach are remarkably similar to those of today’s digital ecosystems.

Launching innovations “with a balance of competition and collaboration” is how Johannes Winter, chief technology officer at acatech, describes the objective of such approaches. Specifically, in co-evolution with customers and partners, who all improve by working together, and utilizing network effects in which a platform becomes more and more effective as its user numbers grow – ideally creating a self-reinforcing cycle.

Apple Was First; SAP, Siemens, and Others Are Following

“The amazing thing is that the players in a network don’t even have to know one another,” explains Winter. He cites the iPhone and AppStore as one of the first successful ecosystems: “More than 400,000 app developers are now working on new applications independently of one another. The more users download the apps, the more attractive the platform becomes for developers, and vice-versa.” A virtuous circle.

Germany is also seeing an increasing number of examples of companies building on digital ecosystems. Berlin’s renowned Charité, hospital, the German Cancer Research Center (DKFZ), and SAP are building a kind of “mini-ecosystem for decentralized patient care.” Doctors, cancer experts, and big data specialists are pooling their knowledge on a platform, to find the best possible therapy options for patients based on their shared experiences.

The Mindsphere platform by Siemens enables machine builders and system manufacturers to rent out their equipment by the hour, to optimize its utilization. It won’t take much more to solve the chicken-and-egg problem: “Many companies are still waiting for others to take the first step,” assesses Winter. Capgemini, an IT service provider and SAP partner, estimates that just 15 percent of companies currently encourage disruptive approaches; 85 percent are sticking with their existing business models.

IoT in the Data Space: How B2B Ideas Are Born

It is therefore no wonder that activities aimed at building such ecosystems are becoming increasingly important. In December 2016 SAP introduced its “Data Space” in Berlin, a place where startups, SAP, and SAP customers can develop new B2B ideas for the Internet of Things together, as well as share information about and experiences with digitization in general.

The ground floor, which is open to visitors, features the “Data Hall,” which companies can book for their digitization-related events, and a “Data Kitchen,” where people can order their food on smartphones, as one would expect from the IoT. The first floor is reserved for the IoT accelerator program, where startups can establish digs and work on solutions together with SAP and customers.

SAP recently announced plans to invest EUR 2 billion in the IoT in the next five years. “Our Berlin project is aimed at speeding up innovations and accelerating solutions for our customers,” says Eva Zauke, COO and cross product management for Line of Business Digital Assets & IoT Product development unit at SAP, about the accelerator approach.

Beginning in January 2017, startups will work on specific projects, together with SAP and customers, for six months each. “Startups have no shortage of ideas, but often lack access to a customer network,” says Zauke, referring to relevant surveys. “We give them that.” Startups increase the diversity of ideas, while the provided technologies — which are not limited to SAP products — heighten scalability and co-innovation with customers improves the practicability of the solutions for the market.

At the Berlin Data Space startups will work on solving specific tasks, together with SAP and customers

At the same time, the Data Space is part of SAP’s ongoing efforts to be an agile company that promotes innovation. “A large ecosystem of partners, infrastructure providers, consultants, and developers is particularly crucial for developing IoT solutions,” says Zauke to explain the concentration on the IoT.

After all, devices, software platforms, and service models rarely all come from a single provider. Investments in the cloud, the “app houses” where SAP co-innovates products with customers, the SAP Innovation Center in Potsdam for innovative software development, the HanaHaus in Palo Alto, and now the Data Space in Berlin are all intended to demonstrate one thing: that innovation is very important to SAP. And in this process, it is increasingly important to be perceived as an intermediary instead of flying the SAP flag. “We are designing new solutions in the digital ecosystem,” declares Zauke.

What Thomas Zeller, CDO at UnternehmerTUM, Expects of Digital Hubs

This is also the objective of the “digital hubs,” which the German government brought to life at the recent IT summit in Saarbrucken: Bringing founders, startups, technology companies, and researchers together to promote innovation is the objective of the five hubs created to date, in Dortmund, Hamburg, Frankfurt, Munich, and Berlin.

The Mobility Hub in Munich is one of them. Three major global players – BMW, MAN, and Audi – are all very close to the Mobility Hub in Garching, near Munich. The Hub also houses UnternehmerTUM, a company that Susanne Klatten founded more than 14 years ago, with the aim of promoting a culture of entrepreneurship in Germany. Today, students and researchers from TU Munich go in and out here – together with startups, companies such as Siemens, Bosch, and Osram, and VC organizations like the German Private Equity and Venture Capital Association (BVK), eCapital and the High-Tech Gründerfond. Successful startups such as Flixbus, Konux, and Celonis have passed through its hallowed halls. In mid-December, the CDOs of the major car companies will sit down together for the first time at the Mobility Hub to discuss the pending transformation of the mobility sector.

Chief Digital Officer Thomas Zeller a business information engineer and the man for agility at UnternehmerTUM, will be there. One of his projects in the digital hub concept is the “Digital Product School.” Here, he wants to demonstrate how agile development works for companies and students alike.

“In the Digital Product School concept, an interaction designer, a product manager, and three developers work together for three months. In doing so, they learn how agile teams work,” explains Zeller. “Companies have enormous demand, but both students and companies generally lack the relevant experience.”

Each digital hub has a different focus and they are all still refining their concepts. Nonetheless, Zeller believes digital hubs have great potential: “They provide a major opportunity to gain recognition as one of the leading places for talents, startups, investors, and established companies from all over the world that hope to develop the mobility solutions for the future.” And in doing so, ultimately become a crucial ecosystem for the subject of mobility, together with partners.

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