A digital ecosystem is an interconnected set of offerings that fulfils consumers’ needs in one integrated experience
by ASILA JALIL / Pic by AFP
MALAYSIA has experienced accelerated digital transformation as a result of the Covid-19 pandemic, but efforts are now needed to build a comprehensive digital ecosystem for an integrated digital experience to consumers.
EY-Parthenon Asean and Singapore strategy leader Joongshik Wang said digital readiness in Malaysia is relatively higher than in other countries as more organisations realised the need to transition into a digitised environment.
However, he said this is still insufficient to encourage the growth towards a sustainable digital ecosystem nationwide.
“We had conversations with real estate companies, traditional retailers, healthcare services who want to pick up the digital process and move towards digital transformation.
“But these actions are still not reaching the desired digital ecosystem because they interpret it as small investment or shaking hands with some of the solution providers.
“The interest and level of transformation are being accelerated during the pandemic, but there is not enough room for the digital ecosystem to be better and bigger,” Wang said during the virtual launch of the EY study entitled “Building successful digital ecosystems in South-East Asia” yesterday.
The report suggests a digital ecosystem is an interconnected set of offerings that fulfils consumers’ needs in one integrated experience, comprising businesses across different sectors that collectively offer a broad range of products and services.
It said the ecosystem would also be largely fuelled by fast-growing tech unicorns in the region.
Of the 15 unicorns in the region last year, EY noted that they are concentrated in Singapore or Indonesia, while Malaysia |has none.
The study highlighted there were 101 start-ups valued at US$100 million (RM424 million) and above in the region last year that could be the next unicorn.
Of the total, Malaysia only accounted for 8% of them alongside Vietnam compared to Singapore and Indonesia that constituted 57% and 21% respectively.
EY Asean regional managing partner Liew Nam Soon said Singapore has a small population size compared to others with a pool of talent and favourable legislation that help create the right digital ecosystem.
Meanwhile, Indonesia has a large market size that helps propel the growth of unicorns in the country.
“This does not mean that Malaysian companies are not doing a lot of digitalisation. The application for digital banking licences that came from a slew of different industries represent its efforts in digitalisation,” he said.
The EY study revealed that collaborative consumption and the sharing economy have been rising in South-East Asia, driven by the region’s average internet penetration of 63% and a growing tech-savvy middle-class population that is moving up the socio-economic ladder.
This development paves the way for sharing models across different sectors such mobility, travel and hospitality, as well as real estate.
It also highlighted areas that organisations need to consider when navigating digital ecosystems, including evaluating the organisation’s digital ecosystem maturity.
Organisations should also define their business model that is based on different parameters, namely the nature of the ecosystem, the scale of industry partnerships and the revenue model, the business model it will undertake as a digital ecosystem participant.
The report noted organisations should identify the most suitable role to undertake whether they want to be a digital ecosystem orchestrator, partner or enabler.
Organisations should identify the nature of the ecosystem, product market fit and monetisation model and key enabler for the ecosystem before defining the evolution roadmap.
“Digital interactions in both business-to-business and business-to-consumer activities are expected to stay and gain ground even after the pandemic, and enterprises in South-East Asia will be seeking to transform their business digitally to drive profitable growth as well as work with partners to provide solutions leveraging technology to address value gaps,” Liew said.
He said a partnership model could provide significant momentum for an organisation’s digital transformation journey.
He added that companies must be clear of their strategic objectives — whether to achieve core business growth; enter a new market segment through new or digital offerings; optimise operations or a combination — to chart their roles in a digital ecosystem effectively.