Gartner Says the Digital World Re-Invents Industries and Destroys the Boundaries Between Them

Digital business applies unprecedented combinations of new technologies to generate revenue and value, so it’s imperative that CIOs step up and lead in the digital world, according to Gartner, Inc. The digital world reshapes industries, reinvents business processes and models, and creates business moments.

Gartner analysts examined the future of the digital world during the opening keynote today at Gartner Symposium/ITxpo, which is taking place here through Thursday. They said that in the digital future, the Internet of Things will become as active as humans and systems are on the Internet today.

“In the digital future, a human can talk to a ‘thing’ such as requesting a driverless taxi, just as easily as a ‘thing’ such as a building, can contact a human maintenance worker because the building predicts that a surge in foot traffic means the garbage cans must be emptied soon,” said Hung LeHong, research vice president and Gartner Fellow.

Re-Invention of Industries
The Internet of Everything will re-invent industries at three levels: business process, business model, and business moment.

“Digital technology is improving our products, services and processes, our customer and constituent experiences, and the way we work in our enterprises and within our partner,” Mr. LeHong said. “We do what we normally do, but digitalization allows us to do it better or develop better products.”

As companies digitize products and process, completely new ways of doing business in industries emerge. Gartner analysts expect more transformational changes as digital re-invents industries on the second level-the business model level.

Mr. LeHong referenced Square, Bitcoin and Kickstarter as examples of companies that have used digital to reframe the way old financial institutions and venture capitalists work. He also mentioned that Nike is playing on the edge of the healthcare industry with their connected sporting clothes and gear.

The third level of digital re-invention is created by the need to compete with unprecedented business velocity and agility. Gartner calls this the “business moments.” They are transient opportunities exploited dynamically.

Mr. LeHong used the example of large hotel chains such as Starwood, Hilton, and Hyatt hotels who first had to compete against the first wave of digital business models from the e-commerce era from sites such as Hotels.com. The new digital business model created by companies such as AirBnB is causing these hotel chains to compete against an expanding inventory of rooms, not in other hotels, but in their customer’s own homes.

“A ‘business moment’ can come from nowhere, yet are increasingly everywhere, and are almost never the same in product, time frame or competitor,” Mr. LeHong said.

Every Company Will Become a Technology Company
Technology will enable companies to optimize business processes, create new business models, and identify and exploit those business moments. This is why every company will become a technology company.

Gartner analysts highlighted three technologies that CIOs should be watching. They include the Internet of Things, 3D printing, and automated judgment.

“The Internet of Things creates a world where every non-trivial object is smart and networked,” said Nick Jones, vice president and distinguished analyst at Gartner.

“These smart objects can sense and report on their environment and status. Some can be controlled and all provide new types of value to customers.”

Some smart objects will be as simple as a sensor that tells someone when their plants need water, and at the other end of the spectrum there will be objects as complex as a person’s car.

Gartner analysts said 3D printing meshes with business principals of the digital world, and it will revolutionize industries as diverse as fashion, retail, real estate, and the military.

“3D printing lets you optimize business processes using new manufacturing techniques. It lets you create new business models that need agile short production runs, and it lets you support those unique ‘business moments’ with one-off manufacturing and personally customized products,” Mr. Jones said.

The Internet of Things will create tens of billions of new objects and sensors all generating real-time data. Gartner analysts said that data is money.

“It’s the source you mine for new business models and business moments. It’s the raw material from which you construct new products and services. It’s the evidence that enables you to visualize and optimize business processes,” Mr. Jones said.

“You won’t have the time or capacity to make all the decisions yourself. Computers can make sophisticated decisions based on data and knowledge, and they can communicate those decisions in our native language. To succeed at the pace of a digital world, you’ll have to allow them to do so.”

Leading in a Digital World
Gartner analysts said CIOs should try leading in the digital world at two speeds.

“Continue to run stable, mission critical systems using conventional approaches and methodologies, but don’t try to force-fit experiments, digital innovations, business moments through that approach,” said Dave Aron, vice president and Gartner Fellow.

“Instead, use agile, fast, just safe-enough techniques to explore, adopt and adapt to new opportunities and embrace the ones that stick.”

Mr. Aron pointed out that it isn’t only about agile development methodologies. It’s about partnering with smaller and more innovative enterprises, crowdsourcing, and lighter weight governance, metrics and leadership.

There is the emergence of Chief Digital Officers. Less than a tenth of businesses have them now, but Gartner expects a significant uptick in the next year.

“We see the Chief Digital Officer as an interim role, not around forever, but championing the escape from analog inertia,” Mr. Aron said.

“Revenue and strategy-focused CIOs will take an important leadership role, and back office CIOs will play a powerful operational role, but have less influence on strategy.”

Gartner analysts said one of the most important ways for CIOs to think of their job for the next few years is to think of them as “digital storytellers” in their business. In business, the dominant narrative has been the financial story. The CFO has ensured that every executive knew their part in creating the value of the enterprise.

“As you (the CIO) become the digital storyteller in your business, you must not only ensure that you have a powerful leadership story to tell, but also that every executive becomes a digital leader, clear about their role in your business’s digital story,” Mr. Aron said.

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