The digital business ecosystem GAIA-X – A session of the FINDER inclusive digital innovation week

GAIA-X – digital business ecosystem by design

The professional literature[1][2][3] highlights a couple of design principles to achieve a successful setup of a healthy digital business ecosystem. The summit therefore was existential to growing legitimacy by presenting that GAIA-X is shaping its governance based on these, interdependent, design principles:

• Demand orientation; stating a mission allows enthusiastic actors to push into the ecosystem instead of pulling them in securing pro-active, responsive behaviour for the joint value creation
• Openness; in form of a transparent environment enabling an easy access
• Self-organization; enabling participants to act autonomously to increase commitment
• Loose coupling; so that participants can join freely and engage in open relationships so that there are no heavy dependencies determining the success of conducted projects
• Domain clustering; enabling the grouping of participants in projects based on shared interests

Challenges identified, faced and tackled

Nevertheless, open strategizing also presents those involved with the challenge of finding of losing established business models of value appropriation. In the case of GAIA-X, there are two factors that endanger common business models of participants:

1. The lower costs (should costs be charged) of developed services or products are passed on directly to the user of the data. This significantly reduces the achieved profit.
2. Differing ownership of input data, managed through data sharing agreements and data use statements, impedes the distribution of the benefits achieved.

Hence, participants have to find new ways to appropriate value within the value chain and thus generate profit from their engagement in the digital business ecosystem.[6][7] According to Mr. Tardieu the participants at GAIA-X are fully aware of that challenge:

“Of course, our concern is how do we create data spaces in which those involved will be able to further their own interests too. We also think about how those who put the most effort in from the start don’t lose out to those who might join later when the hard work is done. We reject the idea of selling data. It is an old-fashioned way of thinking.”

Part of this process is the integration of researchers as they are developing novel ideas to tackle this challenge. A recently idea explored is the approach of ‘Tickenomics’, originating at the University of Toulouse. The underlying mechanism is illustrated by Mr. Tardieu through an analogy: “One example [of Tickenomics] would be to suppose you are in a place with no transportation system. You are selling tickets (or lots) to travellers, to towns and to whole regions. At some point, you will have enough money to create the transportation system. And that is when the tickets become valuable. It might be slow getting started but as soon as everything is in place, it takes off quickly. So we are looking at ways we might introduce ‘tickets’ without the possibility of these leading to monopolies.”

Furthermore, open strategizing[8] allowed the participants of GAIA-X to identify the following barriers which hinder the successful realisation of the visionary mission:

1. The absence of portability (also known as vendor lock-in or the risk of ‘mainframe syndrome’) – preventing companies from committing to cloud due to future risk.
2. The potential lack of interoperability – whereby differences in the technical infrastructure may hamper or even render data sharing impossible
3. The importance of data sovereignty – as otherwise companies would refrain from moving to the cloud due to the risk of misappropriation of shared data.

At the same time the mission-driven initiative also produced a mode of operation to tackle these barriers according to Mr. Tardieu: “The challenges of data portability, interoperability, and common commercial and legal frameworks have different implications for different industries. That is where GAIA-X is helping participants come together to define use cases for their industries and to share information that can make industry data spaces possible. This collaboration is important.”

GAIA-X enables mission-oriented work in industry-specific projects

With the mission, design and barriers of the digital business ecosystem being fleshed out, naturally, the question occurs how GAIA-X will manifest itself through the realisation of projects. Mr. Tardieu pointed out that therefore the domain clustering is of importance as it defines groups to create “data spaces” on an industrial level. Therefore, the FSI industry is a prime pilot since, due to the high level of regulation, collaboration between participants of the public and private sector is required when tackling the challenges of data portability, interoperability, and common commercial as well as legal frameworks.

“By working together, they (public & private actors) can increase the chance of success. And this isn’t just about sharing data, remember. It’s also about infrastructure too. Especially where regulations dictate compliance at a local level. You can’t just do it at the application level. This is something GAIA-X is working on.”

Furthermore, he lined out that the FSI industry “is ‘ahead of the pack’ because of PSD2 (for a brief overview of PSD2 see this blogpost). We wouldn’t have seen the huge development of FinTechs without it. But this is only half of the work. Data ontologies are key and you will soon see the priority use cases from the financial services and insurance sector start to emerge based on GAIA-X projects.”

The first pilot project – the safe Financial Big Data Cluster – investigating the use case of a joint platform to fuel artificial intelligence services, is currently developed by participants of the private and public sector with involvement of FINDER (for an introduction see this blogpost).

Added benefit to the FSI industry through GAIA-X

While there are different initiatives (for instance, the EU Alliance for Industrial Data and Cloud) Mr. Tardieu sees the benefit of GAIA-X in its holistic approach since it is the only initiative that is addressing all the necessary elements together from root-to-tip. The initiative captures the alignment of technical standards and services for interoperability and portability (the roots) through the federated trust and sovereignty services (trunk) up to the definition of ontologies, APIs and technology standards for compliance (leaves).

“Gaia-X may seem gigantic but we don’t think that the big issues we are trying to tackle can be ‘sliced’ into smaller parts. In Financial Services and Insurance, this is especially true at a time when cloud adoption needs to accelerate and there is so much change within the industry.”

We will be looking out in the future to see how GAIA-X and its pilots will develop thereby changing the European Financial Service & Insurance industry. Stay tuned for more in the future.

– Jonas Geisen, ESR