Grow by assembling an ecosystem


The software industry is hyper-competitive, with thousands of global firms jostling for “winner-take-all” market share and financial returns. What separates the winners from the also-rans and failures? Increasingly, the differentiator is less about the software itself and more about business practices.

Many CIOs are realizing that high-performance IT is about more than serving customers better, improving product quality and driving higher operational efficiencies. Increasingly, it’s also about accelerating software development cycles, integrating disparate systems and delivering a consistent “omni-channel” customer experience.

To satisfy these needs, an increasing number of firms are adopting an “ecosystem strategy.” In the natural world, an ecosystem is an interdependent community of living and non-living things. In the business world, an ecosystem is an interdependent community of producers, suppliers and stakeholders.

An ecosystem strategy better delivers on customer needs and shareholder value by focusing attention on a single core offering, and then bringing in partners to provide secondary products and services that support, and are supported by, the core offering. Some well-known practitioners of the ecosystem strategy include Apple (third-party developers, accessory suppliers), Facebook (third-party developers), IBM (third-party developers, hardware suppliers) and Amazon (third-party book vendors).

Case study: Perfecto Mobile

Perfecto Mobile provides cloud-based quality assurance testing for mobile apps. The Israeli-based multinational’s strategic pivot in 2013 offers a good example of how a firm with startup-level resources can thrive by constructing a healthy business ecosystem within a staid market.

The traditional approach to software quality assurance is to test new code at the end of each development cycle. This approach, however, can prove too slow, risky and expensive in the faster-paced, higher-risk world of mobile computing, where devices, networks and tools change on a regular basis.

“The rapidly-evolving market is driving organizations to deliver better apps faster, while managing quality and reducing risk,” says Eran Yaniv, chief executive of Perfecto Mobile.

Perfecto concluded that the only way to meet the market’s needs would be to provide customers with an end-to-end, flexible, on-demand solution that embeds quality assurance testing throughout the entire development cycle. The problem: Perfecto did not possess the resources to provide this level of service while still keeping up with technological and market trends.

Going it alone, Perfecto’s choice was: either/or.

So Perfecto opted for an ecosystem strategy to provide what Mr. Yaniv calls “continuous quality.” “Perfecto’s continuous-quality strategy leverages not only our unique technology but also an extensive ecosystem of partners, from global system integrators to regional services providers,” he says. “We empower these partners with the expertise and knowhow of utilizing our Continuous Quality Lab to expand their business as well as ours and provide true value to our customers.”

Perfecto’s Continuous Quality Lab includes everything required to test mobile applications quickly and effectively — specialized testing practices and standards, infrastructure, automation and multiple device support — all delivered through the cloud. It has helped catapult the firm to market leadership, winning Red Herring’s Top 100 Global award for business innovation in 2014.

Takeaways

An ecosystem approach makes great business sense for software vendors for the following reasons:

  1. It fully delivers on customers’ bespoke testing and product needs on a “when needed, as needed” basis.
  2. It enables rapid operational scalability and flexibility.
  3. It deploys best-in-class capabilities that minimize integration concerns that come with working with unrelated vendors.

However, completely reimagining how you structure client-facing and operational IT can be a tall order. Legacy systems, operational complexity and cultural stasis are just a few of the potential roadblocks. To help address these problems, firms must develop certain competencies and cultural norms, including:

  • Ambition: Companies need gumption to tackle big business problems and address persistent customer demands.
  • A medium-term vision: It takes time to identify, attract and integrate the right technologies, practices and partners.
  • Open interfaces: Software companies need powerful APIs (application protocol interfaces) and methodologies to seamlessly connect their technology with complementary applications and protocols.
  • A partnering mindset: Striking partnerships is good. Cultivating them to maximize their benefits is better.
  • The right systems: Deploying and managing an ecosystem strategy requires strong IT and business processes, including: good reporting, trouble-shooting and collaboration mechanisms.

For more information on our services or work, please visit the Quanta Consulting Inc. web site.

 

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