May 2005 Digital Business Ecosystems: ICT in support of Lisbon Agenda F. Nachira European Commission DG-INFSO - Unit “ICT for Enterprise Networking” Head of Sector “Technologies for Digital Ecosystems“ F. Nachira European Commission DG-INFSO - Unit “ICT for Enterprise Networking” Head of Sector “Technologies for Digital Ecosystems“ Advanced International Summer School “e-Business and Complexity: New Management Practices” 2005 Session: The emergence of Novel Organisational Forms in the Globalising Planet: Toward the Business Ecosystem ?

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 2 Lisbon Objectives: “ a strategic goal for the next decade ” To become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 3 ICT key role ICT adoption Responsible of 40% growth in productivity ICT as sector 6% GDP 6% employment Integration in good and services Strategic sector “The EU needs a comprehensive and holistic strategy to spur on the growth of the ICT sector and the diffusion of ICTs in all parts of the economy” Kok report

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 4 New strategic framework: i2010 initiative Comprehensive and holistic approach: Umbrella initiative for EU Information Society and Media policies (regulation, research and deployment) Three priorities: Completing the Single European Information Space Strengthening innovation and investment in research Achieving an Inclusive European Information society

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 5 Legislation, regulation Financial support: Two distinct and complementary financial instruments CIP: To drive forward innovation through the adoption and best use of ICTs FP7: To strengthen Europe ’ s leadership role in mastering and shaping the development of ICTs Coordination, consensus-building i Community Actions

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 6 Knowledge, products and services (for growth and jobs) ICT in FP7 Research shaping ICT development ICT in CIP Uptake and best use User needs evolving requirements Uptake barriers (legal, economic,..) Acceptability of solutions New research challenges New technologies, applications Technology trends. Vision of the future Innovation Research i 2010

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 7 Putting the knowledge triangle at work “Triangle of knowledge” research: educationinnovation Europe needs to invest more and better Europe must perform better in producing knowledge through research in applying it through innovation in diffusing it through education

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 8 CIP Competitiveness and Innovation framework Programme New programme to boost growth and jobs in Europe By providing horizontal measures supporting competitiveness and innovation Entrepreneurship (SMEs) & innovation By addressing three main “technological” domains underpinning the whole economy Eco-innovation (environment) ICT Policy Support Intelligent Energy (energy efficiency & renewable energy) ICT Policy Support : Stimulates innovation through wider adoption and better use of ICT

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 9 ICT in FP7: Objectives,Main Themes ICT Technology Pillars Software, Grids, security and dependability Integration of Technologies Applications Research providing the knowledge and the means to develop a wide range of ICT-based services and applications ICT supporting businesses and industry (business processes; collaborative work; manufacturing) Future and Emerging Technologies “To enable Europe to master and shape the future developments of ICT so that the demands of its society and economy are met”

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 10 Create favourable conditions Create a climate conductive to investments, innovation and enterpreneurship: the conditions for Attracting biz and entr. direct investments Attracting enterprises Attracting skilled and qualified workforce Service & technical Infrastructure Business & financial conditions Human capital, knowledge and practices Governance regulations & industrial policy How to create a favourable environment for business and people: a socio-economic eco- system ? Paradigm shift: from planning to nurturing a business ecosystem

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 11 Peculiarities of EU economical structure Cultural diversity (model of business, approaches, practices, …) Dimensions of enterprises (SMEs vs. LE) Historical presence of clusters with diffused tacit unstructured knowledge, skills and infrastructure Turn peculiarities and diversity into into competitive advantages How ICT could support? Which ICT ?

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 12 Knowledge-base economy: migrating towards service economies mediated by ICT More interrelations More specialised resources More R&D / innovation Small companies have limited specialised resources Access to global value chains Access to knowledge Access to specific services (e.g. legal) Threshold and Digital Divide SMEs : a weakness or a potential for Europe ? SMEs Threshold (“Activation energy”, and Digital Divide) Threshold (“Activation energy”, and Digital Divide)

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 13 SMEs in a Dynamic knowledge-based global economy Growth Node Business EcosystemIndustrial District Virtual cluster How to reach the critical mass of resources ? How to cope with the increased complexity ?

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 14 Which ICT technology for business ecosystems ? Scenario: “… the actual slowly changing network of organizations will be replaced by more fluid, amorphous and often transitory structures based in alliances, partnership and collaborations”... “…building a community that share business, knowledge and infrastructure”(1) “To support this scenario of aggregation of services and organizations, is required a further stage in ITC technology adoptions and an infrastructure which exploits the dynamic interaction (cooperation and competition) of several players in order to produce systemic results; innovation and economic development.” “ Towards a Network of digital business ecosystems fostering the local development ” (EC, Discussion paper, 2002)

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 15 Evolution in ICT-adoption: Increased complexity in business networking key role of the knowledge (knowledge soc./econ.)

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 16 How deal with complexity: ecosystem metaphors Economy and Society as Ecosystems Rothschild,’90: Organisms & organisations are “nodes in networks of relationships”. Mitleton-Kelly, 2003: Orgs are co-evolving within a social ecosystem Business Ecosystems J.F. Moore, 1993 & 1996 Customers, lead producers, competitors, other stakeholders. Interaction (within a business ecosystem); decentralised decision-making and self-organisation. M. Iansiti and R. Levien, 2004 A large number of loosely interconnected participants who depend on each other for their mutual effectiveness and survival “The keystone species” determine the co-evolutionary processes. Digital Ecosystems European Commission 2002 Ecosystem paradigm applied to digital world SAP, HP, … Natural Ecosystems Dynamic, constantly remaking themselves, adapting to the environment, evolution

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 17 How to deal with the complexity? No easy answer, no short-term solution long-term process, but intermediate results Paradigm shift : machine model => living organism model building a machine => nurturing players and conditions Local actors Small organisations R.O. Univ. P.A. Gov. Cooperative effort : among local actors (gov, biz, uni-res) among EU regions How to foster this change of paradigm ?

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 18 Lessons from the living world Is built on composition and complex hierarchies No central control, no plans defined in advance Fault tolerant: No central point of failure, just viability concept Diversity and autonomy (recursive) Adaptation to the local conditions Selection and evolution But you need an infrastructure supporting the life (composed of living organisms too - rec. concept), and a critical mass of individuals and biodiversity (bootstrap problem) But This infrastructure determines/shapes the potential evolutionary paths (regulation) © ecosystems

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 19 Dynamic composability for evolution A digital component is made by components (“lego” approach) which: are distributed should change for allowing evolution all elements could switch and change (sw, modality of usage, protocols) Reusability of existing initiatives (web services, GRID services, semantic web) protocols => adaptation to local conditions

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 20 The digital ecosystem Which ICT infrastructure for this new paradigm ? How could ICT support the transition from industrial district to knowledge-based business ecosystem ? Computing and telecom. Infrastructure Diffused + Formalised knowledge OS service-oriented architecture vision, new paradigms How to create ICT infrastructure that allows digital components to exhibit natural behaviour Visionary approach + intermediate results

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 21 Peculiar approach promoted by DG INFSO/D5 Focus on regional development and local identities Fosters enterprise dynamic cooperation and knowledge sharing Develops enabling technologies + support deployment of interconnected network of digital ecosystems Support network for SMEs (knowledge, practices, services), provides equal opportunities of access (mitigates digital divides) Pervasive common infrastructure (which also evolves), open source and community principles No central control, no point of failure, no dominant position, no pre-defined business model Variety of digital ecosystems, self-adapting to local conditions The “digital environment” is populated by “digital species” with their business model and description The environment enables species to behave like species in the natural world Interacts Expresses an independent behaviour Evolves – or become extinct – following adaptation Digital Ecosystem Vision: a new “digital common”

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 22 What is a Digital Ecosystem ? THE DIGITAL ECOSYSTEM is a pervasive “digital environment” that supports the business ecosystems that is populated by “digital components” that evolves and adapts to local conditions with the evolution of the components THE “SOFT” SUPPORT INFRASTRUCTURE, WHICH MEDIATES SERVICES & INFORMATION (knowledge) EMPOWERING THE NETWORKING AND THEIR SHARING architecture / structure

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 23 What is a Digital Component ? DIGITAL COMPONENTS could be: software components, applications, services, knowledge, business processes and models, training modules, contractual frameworks, laws and hopefully a mixture of all these formalised knowledge A USEFUL IDEA, EXPRESSED IN A LANGUAGE (formal or natural), LAUNCHED ON THE NET, WHICH CAN BE PROCESSED (by computers and/or humans) ©XPLANE

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 24 A systemic approach to enterprises global collaboration open-source, public, distributed pervasive environment - spontaneous evolution, adaptation and composition of services, digital content and sw components - embedding biz rules, revenue models, ontology... Derivative work from Salzburg Technical University

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 25

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 26

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 27

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 28

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 29

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 30

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 31

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 32

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 33

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 34

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 35 A representation of the digital ecosystem Adaptive, pervasive, self- organis/evolv. infrastructure Services and processes Semantics

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 36 Knowledge Economy DBE Research issues in Digital Business Ecosystem Business Ecosystems and Regional Economies Open source biz models, commun. Process, business ecosys. Formalised Basic Models and Services Execution environment “life support structure” Digital Ecosystem Open-source service- and knowldege-oriented infrastructure Dinamic, Adaptive, Selt-organising Infrastructure Potentisal FP7 Research areas Semantics of services Syntax of economic behaviour Business rules and Regulatory Framework Formalisation of Knowledge (Languages)

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 37 ICTs catalyse improve New organizational & business models Policy supports The Digital Ecosystem integrated approach “Digital Ecosystem Infrastructure” Derivative work from P.Dini - London School of Economics to reduce the digital divides - among regions - among SME and LE to foster local economic growth and innovation; new forms of dynamic business interactions: enabled by digital ecosystem technologies Growth Competitiveness, market & internal efficiency Cooperation & innovation networks improve lead to encourage provide resources Open Source Evolutionary infrastructure make viable shape & foster supports support Biology enhances

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 38 Local Business Ecosystem co-funded by DBE project Local Business Ecosystem joined as new pilot Potential future take-up local ecosystems Digital Ecosystem: pilot regions (June 2005) THE CRACOW DECLARATION ON LOCAL AGENDA i2010 IN EUROPE AND THE PROMOTION OF DIGITAL SOLIDARITY AMONG THE CITIES OF THE WORLD i2010 Local Agenda Goal 6 – Digital ecosystems and training centres Each Local and Regional Authority will promote the creation of digital ecosystems within their territory.

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 39 Elements of debate I Role of Embedded Knowledge in ecosystems Keystone organisations and Glocalisation In the classical industrial districts a tissue of similar and complementary industries became the engines of regional economic growth Tacit and explicit knowledge was embedded in the territory; Now in a knowledge-based economy the role of knowledge is even more crucial ICTs promise to provide a similar repository of knowledge that supports economic growth and social development, but they must be able to capture, formalise and retain knowledge so that it can remain a public good at the sectoral and regional level The digital ecosystems provide such a public good in the form of an adaptive environment that retains and distributes glocally the knowledge created Because the knowledge of digital ecosystems, is diffused in the territory: in the human capital and in the network of small firms and in the business and social networks, it cannot be moved

European Commission Directorate-General Information Society and Media Unit D5 : ICT for Enterprise Networking F.Nachira Ostuni - 7 July 2005 eBMS Summer School 40 Elements of debate II How the Ecosystems differ? The EU vs US approach and vision due to ~= socio-econ. structure ? (SMEs, few keystone, diversity): generate dependencies, risks? Different culture/regul. (swpat) The SAP case: SAP: A Sea Change In Software The German legend's move into Lego-like modules could revolutionize the way companies do software SAP builds a new ecosystem around NetWeaver, SAP. Thousands of independent developers could start writing specialized programs that plug into the NetWeaver framework Instead of waiting years between humongous software releases, there can be what the company calls a constant "conveyor belt" of improvements. Like Microsoft Windows on desktop PCs and servers, NetWeaver could define an industry standard for creating new business applications..