Creating the great business leaders

DIGITAL ECONOMY
Learning Subject 2:
Digital Economy Ecosystem

Delivered by:
Digital Economy Team Teaching
 Fakultas Ekonomi dan Bisnis
School of Economic and Business Outline
Telkom University
1. Ecosystem Metaphor
2. Ecosystem Components
a) The Layered Internet as Ecosystem Component
b) Computer Infrastructure and Platforms as Ecosystem Components
c) Applications and Content as Ecosystem Component
d) Consumers as Ecosystem Component
e) Authorities as Ecosystem Components
3. Business Ecosystem in Digital Economy

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 Fakultas Ekonomi dan Bisnis
School of Economic and Business 1. Ecosystem Metaphor
Telkom University
▪ The concept of business ecosystems was first proposed by James F.
Moore in 1993 in a Harvard Business Review article (Moore, 1993):
“To extend a systematic approach to strategy, I suggest that a company be viewed not as a
member of a single industry but as part of a business ecosystem that crosses a variety of
industries. In a business ecosystem, companies coevolve capabilities around a new innovation:
they work cooperatively and competitively to support new products, satisfy customer needs, and
eventually incorporate the next round of innovations.”

▪ The digital economy ecosystem describes the relations and

dependencies between digital services, ICT infrastructures, digital
markets, and authorities in a socioeconomic context.

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 Fakultas Ekonomi dan Bisnis
School of Economic and Business 2. Ecosystem Components
Telkom University
▪ Basic building blocks

Notes: NP (Network Provider); ISP (Internet Service Provider);

▪ Interdependencies
(Content Provider); DP (Device Provider); ASP (Application
Service Provider)

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 Fakultas Ekonomi dan Bisnis
School of Economic and Business 2. Ecosystem Components
Telkom University
▪ The complexities and dependencies in the digital economy ecosystem result in a
market that is never the same from one day to the next.
▪ In complexity economics, the basic argument is that the economy is ever-
changing and will never reach a stationary state. The reasons for this are rooted
in the digital economy ecosystem and the rate of technological innovation.

▪ New technologies often lead to new business models, thereby causing changes
in the digital economy ecosystem.

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 Fakultas Ekonomi dan Bisnis
School of Economic and Business
Telkom University
a. The Layered Internet as Ecosystem Component
▪ The three planes correspond to three
independent business areas
(Audestad, 2007):
1. Networks
2. The development, production, and sale
of user equipment
3. The provision of services, information,
system management, and remote
sensing and control
6 Creating the great business leaders
 Fakultas Ekonomi dan Bisnis
School of Economic and Business a. The Layered Internet as Ecosystem Component
Telkom University
▪ Decoupling of Application Service Provider and Internet Service Provider – Case of Over The Top
(OTT) Services

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 Fakultas Ekonomi dan Bisnis b. Computer Infrastructure and Platforms as Ecosystem
School of Economic and Business
Components
Telkom University
▪ The most common platform is cloud computing offering services ranging from pure infrastructure
support to complete software packages and any combination thereof.
▪ The key concept in cloud computing is “Everything as a Service” with acronyms EaaS or XaaS.
▪ There are three main categories of services:
1. Infrastructure as a Service (IaaS)
2. Platform as a Service (PaaS)
3. Software as a Service (SaaS)
▪ Grid computing is the interconnection of many heterogeneous computers to perform particularly
large computational tasks.

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 Fakultas Ekonomi dan Bisnis
School of Economic and Business c. Applications and Content as Ecosystem Component
Telkom University
▪ The number of applications available to customers is enormous, in particular,
after the smartphone entered the market in 2012. The number of available apps
in Google Play Store and Apple’s App Store were about 3.0 million and 3.4
million, respectively, by the end of 2020 (Statista, December 2020).
▪ The biggest companies in the digital business, e.g., Facebook, Twitter, YouTube,
and Google, are conglomerates consisting of several subsidiaries providing most
of the content associated with the company.

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 Fakultas Ekonomi dan Bisnis
School of Economic and Business d. Consumers as Ecosystem Component
Telkom University
▪ The consumers in digital markets play an essential role in the digital economy not only as
consumers of digital goods but also as a source of feedback to designers and providers of
the goods that may be used to improve the product.
▪ Consumer adoption (or user adoption) of information and communication technologies
and digital services is a key element to apprehend the creation of dependencies in the
digital economy ecosystem.
▪ Aspects concerning consumer adoption rate:
1. The technology or digital service must be adopted by some initial consumers to have any impact
on the market evolution (DOI theory; critical mass).
2. Early market adoption is particularly important if the market growth depends on network effects.
3. The adoption of a technology or digital service may depend on other technologies or digital
services to be widespread and fully adopted by consumers.
4. When a technology or digital service starts to attract consumers and the use of it increases, it may
trigger the evolution of new technologies or services.
5. New dependencies and entirely new stakeholders may appear as the digital service evolves and
gets adopted by even more users.

10 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School of Economic and Business e. Authorities as Ecosystem Components
Telkom University
▪ The role of the authorities as watchdogs in the digital business sector
is, therefore, important to avoid concentration of too much power on
just a few stakeholders in the digital economy.
▪ Legal regulations may also have an impact on the visibility,
development, and use of related digital services (e.g: ECJ decision on
Uber as a transport company has significant bearing on their business
operations)
▪ Most of the large corporations in the digital economy have been
accused of misconduct in one or several of these areas (tax evasion,
unethical or illegal exploitation of personal information gathered about
consumers and users, infringements or circumventions of competition laws and
regulations, building of lock-in barriers to create monopoly advantages,
unsustainable environmental foot- print and use of energy, exploitation of
workforce, and negligence regarding child work)

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 Fakultas Ekonomi dan Bisnis
School of Economic and Business 3. Business Ecosystem in Digital Economy
Telkom University
■ New ecosystem are likely to emerge in place of many traditional industries by 2025 (HIS World
Industry Service; Panorama by McKinsey; McKinsey analysis

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 Fakultas Ekonomi dan Bisnis
School of Economic and Business Quiz
Telkom University
▪ Which information and communication technologies (ICTs) does
Dropbox depend on?
▪ What digital services depend on Dropbox?
▪ What impact has the authorities on the business operations of
Google?

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Fakultas Ekonomi dan Bisnis
School Economics and Business

Thanks!
Any questions?
You can find us at:

http://tel-u.ac.id
@seb_telu

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 Fakultas Ekonomi dan Bisnis
School Economics and Business

References
▪ Harald Øverby and Jan A. Audestadt. Introduction to Digital Economy. Springer. 2021
▪ Venkat Atluri, Miklos Diez and Nicolaus Henke. (2017). McKinsey Quarterly. Competing in a world
of sectors without borders.
https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/
competing-in-a-world-of-sectors-without-borders

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