Jaakko Elovaara 14.03.2017 13 min read

5 Things To Consider When Digitalizing Your B2B Ecosystem


 “Digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.” Gartner, 2017.

As Gartner states: “The next evolution of digitalization is here: the rise of the digital ecosystem — where enterprises, competitors, customers, regulators and other stakeholders form an interdependent business network.”

The world is full of networks that connect companies, stakeholders, and business processes across industries and commerce. Most of these networks are document repositories focused on a limited amount of supported processes and file formats. Many are at the earliest stage in the digitalization evolution – let’s call it the “save as PDF”-level. At the moment, not enough networks genuinely enable modern API management – neither agile process nor data integration.

Enterprises and market leaders are capable of creating their own networks within their ecosystems. This allows them to ensure both customer and stakeholder loyalty and satisfaction. In addition, as Gartner pointed out the interoperability of any network, globally, is progressively gaining importance.

Here are 5 things to keep in mind while building your strategy for digitalizing your B2B ecosystem:

1. Industries need to listen and learn from each other

Digitalization, regardless of industry, has become a necessity.

Global trade and supply chain have focused on digitalization for ages, but there is still much to be done. Older structures and models stall the ability to accelerate profitability and efficiencies within the domain. Traditional players are operating on outdated IT and completely lack the ability to react with agility and speed to disruption in the market. Time will tell what happens, but many companies under such circumstances will struggle in the future.

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Banking is slowly starting to wake up after all the crisis and tough times that have harmed performance in recent years. Some banks are investing in new ways to better connect with their customers. Nowadays, customers have options. They can simply walk away and sign up with the competitor. There are newcomers as well, such as Alipay, Apple, and Google that bring disruption to the banking sector. Banks, much like insurance companies, struggle to operate with old systems and cost structures. We see new insurance companies growing, as they offer what today’s customers need – a seamless, digitalized customer experience. Customers are younger, tech-savvy and not willing to pay for suppliers’ inefficiencies in providing modern solutions. And this is exactly how it should be.

The same trend is occurring in software as well. Mid-sized ERP players are threatening and terminating older players, piece by piece. They have better solutions for specific needs, better focus and are better able to execute in many different cases. Naturally, some of these newcomers will be acquired over time, and then anything can happen. The SME-focused software players are focusing on their core mainstream software offering and sourcing for add-ons from other parties such as data integration. Let’s assume you are running a SW business with +10K customers globally. You already have enough on your plate extending your offerings, providing better, intuitive customer experience based on the customer feedback. Instead of starting to develop a reliable integration service for example, you should focus on your own core-business. An integration solution as an external service will enable you to connect additional and existing customers with defined data sets into your business ecosystem in a fast and affordable manner. After investing in an integration solution and focusing all your internal resources on your business, you will quickly see customer loyalty increasing day by day.

Listen to the markets, talk to your peers and learn from them. Biggest cost element could be the lost time-window if you end up choosing the wrong focus based on false decisions.

2. Focus on interoperatibility

Due to the rapid growth of global commerce, customers have numerous available options. Therefore, you better listen to their needs. If you are not listening, you’ll see an increasing churn. Interoperability is a game changer in modern business. There have been and will continue to be, multiple networks that companies must leverage in their different development stages of digitalization. You must ensure your technical partners support this strategically crucial element. Top tier freight forwarding companies are questioning the freight commerce sites and networks. Why is that? Simply, because they are afraid. They only have their own suppliers and contracts to be leveraged. For the end-customer some other service could perhaps be a better fit. This is the normal daily business.

3. Agility is a must and change is constant, so is disruption

There are a lot of technologies available that can do the job for you. Some are old, some are stiff, some are expensive and slow, and some are exactly the opposite. The world is constantly changing, thus increasing agility and capability should be among your top priorities, along with the ability to adapt to emerging changes in real-time. Disruption will not go away, and everyone should be prepared to see the scenarios upfront and be a few steps ahead of the competition.

Many enterprises have heavily invested in old technologies and still the depreciation years are going on for the investments. This can slow down the willingness to invest in new agile solutions.

Technically speaking, there might have been times when your whole partner network has spoken EDIFACT over SFTP, or X12 over AS2. Or perhaps your partner network communications were built on top of RosettaNet. That is not true anymore. In a constantly changing network of business, you cannot rely on one standard or protocol, but you should aim for connecting to anyone, anywhere. And do it quickly. Invest in technology but leave the task of interoperability bridging to others – that’s not your core business anyway.

The pace of innovation is accelerating very fast. Decisions made in the past might have been best at that time, but those times have come and gone.

4. Don't underestimate the "long tail" in your ecosystem

Often times, businesses speak of 80/20 rules. 20% of the customers bring 80% of the revenues. It all depends on you, but make sure you do not forget the ”long tail” - a big number of smaller customers. These customers create the your run rate business. The long tail typically has been left alone. At Youredi, we work with several software companies that provide the same data integration services and customer experience to all of their customers, irrespective of the customer's size. 

5. Choose the technology that best supports your business model

Start easy, step-by-step when co-operating with a technology partner. Find a partner that can support your business model. Be on the lookout for leverage, best practices, a firm understanding of the network model and interoperability. Do not work with a company that protects its own legacy, at your cost.

You will not have thousands of B2B customers connected to your service in a month or maybe even several. Regardless of the B2B business you are in, this is an evolution that you must begin to embrace as soon as possible. If you fail, which can happen, then you are not tied into massive investments and long-term commitments. Be very sensitive to the your unit costs. Pricing must make sense. Aim to initially purchase a turnkey service. Insource later, if even needed.

Make sure your digitalization partner focuses greatly on R&D. If you choose something that is already outdated, you are setting yourself up for failure.

In a recent, for example, Gartner recommends:

- Make the re-envisioning of your integration strategy a top priority.
- Design-for-interoperability approach by pushing an API-first style.
- Build up, incrementally, a hybrid integration platform (HIP). For integration specialists, LOB developers and business users in a self-service fashion
- Select integration providers for your HIP pragmatically. Incumbent integration providers may not be ready.

Ensure your focus is on mastering interdependence and your key team is armed with an open, external mindset.

Keeping up with digitalization trends is essential to survival and growth. If you cannot scale and meet customer demands, it is possible that you will find yourself fighting to dig out of the trenches. Fortunately, there are new processes and technologies to invest in, so you can remain relevant and competitive in your market.


Jaakko Elovaara

Chief Executive Officer (CEO), Youredi

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