Digitalizing Pipeline Ecosystems

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California Polytechnic State University, San Luis Obispo *

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420

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Information Systems

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Oct 30, 2023

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docx

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Uploaded by CaptainWaterStork35

Digitalized business models for pipeline ecosystem  Pipeline systems: value-units are delivered to consumers thru tightly coordinated value streams.  Existence of economies of scale and scope are at the basis of the consideration by most producers to using the services of other organizations to carry out most value stream work activities.  Transaction costs are involved with the “make-versus-buy decision”. Answering this question is comparing the cost of doing it yourself (production cost) and cost of having someone else do it for you (transaction costs).  Because of difficulties faced by producers in reaching consumers, producers use downstream intermediaries in order to reach a large number of consumers. Similar logic can be applied in the use of upstream intermediaries (supplier to producer). Digitalizing Pipeline Ecosystems Over the last century pipeline systems have been the dominant organizing paradigm. But the nature of market- focused ecosystems has evolved dramatically particularly with regard to the value-units delivered to consumers, enabling digitization and digitalization and the payment and trust systems employed. Most significant changes for pipeline ecosystems Digital Complements (ERA 1) o New digital technologies, industry data/document standards and results from analyzing digitized transaction data enabled value stream participants to overcome many of the constraints (that were inhibiting efforts to improve internal processes and external workflows). o Electronic Data Interchange , value stream participants could interconnect their workflows. o Digital complement, enhanced producers value propositions strengthening the producers market position and relative influence within value system. o Intermediaries gained increased influence in value streams. o Made use of well-established payment and trust systems (e.g. credit and debit card, PayPal) Digital Value-units (ERA 2) o Emerged from the development of the World Wide Web (WWW), a connectivity mechanism enabling firms and individuals store data/document in online space. o Purely digital value units . Digital goods have for more opportunities for large-scale growth than physical goods. (Lower cost structures and greater long-tail effects). o Platforms. Digital technologies to host digital and digitally enable resources. This came as a response to the challenges of having long and wide industry value streams. With a value stream platform, value stream participants can better plan work activities, coordinate data, information and material flows that permeate a value stream and collaborate. o Omni-channel promotion, ordering and delivery, the key targets of platform enhancement. As a result, value stream participants enlarged the portfolio of channels through which participant interaction occurs. Social Complements (ERA 3) o Emerged from the coming together of smart devices (piece of digital technology), value units social media complements (consumers engaging with producer/retailer/consumers) and pervasive connectivity (smart devices being interconnected) producing Big Data . o Digitalization enables value stream participants to maintain an awareness of targeted events across a value stream, an adjacent value stream and also to capture data of these events and apply statistical and mathematical models to develop a deeper understanding of the context. o Self-regulation: capability to capture, archive and analyze large streams of related data. Disintermediation, Reintermediation and Intermediary Transformation Digitalization capabilities arising from the 3 eras of digital disruption caused radical structural changes in pipeline ecosystems. The primary drivers of the changes are:

o Disintermediation : bypassing intermediary thus shortening and narrowing a value stream. o Reintermediation : appearance of new intermediary thus lengthening & broadening a value. o Intermediary Transformation : existing intermediary vertically integrates and becomes a producer.

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