This article appeared in the Managing Innovation & Disruptive Technology column on CIO.com. Click here to view the article on CIO.com.

In their quest for IT innovation, CIOs need to look beyond the typical “most innovative companies” lists. Innovation today is taking place at the platform level, which necessitates thinking more about vendors and partners in terms of how they fit into your ecosystem.

According to the IDC FutureScape: Worldwide Future of Industry Ecosystems 2021 Predictions, leaders can no longer view their organization in isolation, and future success comes from being part of an industry ecosystem. In fact, IDC predicts this year that industry ecosystems will generate a 40% greater innovation rate than traditional approaches.

A key part of any strategy related to industry ecosystems is deciding which to join and be a part of as a participant and which ecosystems you might like to take more of a lead role as an orchestrator. The possibilities are endless: You might decide to place several bets and even form hybrid ecosystems where you’re building on top of an established ecosystem with your own partners and IP that creates a new derivative of the ecosystem itself.

Another key element, especially if you’re building your own industry ecosystem and go-to-market strategy, is which technology partners to align with and how to future-proof as much as possible. In this article, we’ll focus on exactly that—i.e., How to find innovative technology partners for your own industry ecosystem so you can generate net new revenues from new business models.

Start With Your Strategy

The first step is to start with your strategy and your current state, and future vision. Many industries are moving from the use of standalone products and point solutions towards a more integrated suite of tools, often provided as a cloud-based platform business model. Organizations are looking to extend their revenues from project-based services to subscription-based services for annuity revenues.

As an example, this is happening right now in the Architecture, Engineering, and Construction (AEC) industry. For decades, work has been performed on a project-by-project basis using CAD and BIM software to create specific 2D and 3D deliverables for clients. With advances from major software providers such as Autodesk and Bentley, the industry is now moving more towards integrated suites of tools and industry clouds, which open the door to new business models and more collaborative ways of working.

As the use of digital twins advances in the industry, this opens up new possibilities for annuity revenues instead of project-based revenues by allowing AEC firms to manage and maintain these infrastructural digital twins (e.g., buildings, bridges, and roadways) for their clients.

“Digital Twins are the biggest opportunity to improve the overall value contribution of technology to infrastructure since the personal computer. Even with today’s digital twin applications, the opportunities to improve the overall value to the ecosystem are far greater than that of traditional CAD or BIM.”

Keith Bentley, Bentley Systems

By starting with your strategy, you can get a good sense of the diverse set of vendors and toolsets you utilize across your divisions and departments today as well as the future vision for where you believe things are heading. Most likely, it’s heading towards a cloud-based platform business model with an ecosystem of technology providers filling in the various service layers in the technology stack—such as visualization, design and modeling, collaboration, digital twins, integration, edge/IoT, cloud and data analytics.

While your services layers may vary based on your industry, this logical architecture from an IT services perspective is a great way to think about the various technology partners you may need in your ecosystem.

Validate Your Vision

One way to validate your future vision is to monitor the signals coming from the market in terms of mergers and acquisitions. Going back to our AEC industry example, Autodesk’s recent acquisition of The Wild demonstrates the value of integrating AR/VR technologies into digital twin solutions so that customers can better visualize and collaborate around design or operational decisions regarding their physical assets.

These types of acquisitions help to illustrate where the center of gravity lies, such as the digital twin in this example, and the various technology enablers, such as visualization technologies, that you need to incorporate. Of course, rather than reinventing the wheel when thinking about your own ecosystem, you can often build on top of these existing industry ecosystems and platforms with your own unique IP and partner IP.

This App Store type of business model, where you innovate on top of the platform, enables you to focus on niche industry apps for your customers while at the same time not having to worry about some of the lower-level plumbing such as the digital twin layer, integration layer, data layer, and cloud foundation. What’s more, the larger players realize they can’t be all things to all people, so they are purposefully architecting their platforms to be open and extensible.

Identify Emerging Vendors

Now that you know the various types of services you may need in your ecosystem, the next step is to identify suitable technology partners.

On the internal side, what better way to detect emerging vendors than to crowdsource across your own organization? An emerging vendor tracker, or similar, can be easily set up to allow Associates within your organization to easily share details about emerging vendors they’re working with as well as those on their radar. The tracker can help you identify which relationships are in early discussion and those that have active pursuits and projects.

If you have relationships with academia, they can often help you with market and competitive analysis and share their findings in terms of both emerging trends and technologies in your industry as well as emerging vendors. Incubators are another great source of insights and a way to discover innovative new technology providers in your niche. Industry-specific incubators and venture funds can be even better because of their in-depth knowledge of your industry.

Identify the disruptors

A common mistake when looking for innovative technology vendors is to look at companies touted as the most innovative or to go with best-of-breed, on the assumption that innovation is baked into their roadmap. It’s likely that neither approach will net you the innovation you’re looking for.

Best-of-breed works well for internal IT, such as your ERP or CRM, or anything under the covers in terms of client-facing solutions, but when it comes to your value proposition and differentiation, you need to look elsewhere. In this case, the best-of-breed tools become the table stakes that you utilize as the foundation for your ecosystem or industry-cloud, and your core IP comprises your own IP plus that of those innovative players that you’ve developed unique relationships with.

The “most innovative” lists you find on the internet are often based on public or editor opinion and end up surfacing the usual suspects with strong brand awareness. While they may be leading players in the market, this does not guarantee continued innovation. If you do look at the “most innovative” lists, be sure to check the methodology involved and see how it fits your own definition and expectations for what constitutes innovation.

A better approach is to look for who’s disrupting the disruptors. Even the disruptors have a life span, and after 5-10 years, they’re likely to start getting disrupted themselves. As an example, look how Wasabi is disrupting AWS in the cloud storage arena.

Create Your Industry Cloud

Returning to your future vision and your envisioned ecosystem and industry cloud, you can now use this model as a framework to identify and position partners for your ecosystem. You’ll likely tap into best-of-breed providers for foundational services such as cloud services, integration services, and collaboration services, and then those more specialized partners that you’ve identified for specific industry apps that you want to take to market.

This industry cloud approach will help to jumpstart and accelerate your efforts so that you can focus on the application layer where your organization has business expertise and less on the internal plumbing. It’s also flexible so that you can mix and match services within your industry cloud—i.e., your technology partners—to create unique new industry apps for various customers and use cases.

Spending time thinking about your industry ecosystem, future business models, and innovative technology partners will be time well spent!

This article appeared in the Managing Innovation & Disruptive Technology column on CIO.com. Click here to view the article on CIO.com.