We are entering a new digital industry economy where everyone will be a technology company. How will you lead your organisation to compete in this digital world?
Over the course of the next six weeks, this is one of the challenges we at Gartner will explore with more than 20,000 CIOs and senior IT executives as they converge from all over the world to attend Gartner Symposium/ITxpo in the US, Japan, India, Australia, Brazil and Spain.
If you’re planning on joining us, let me give you a sneak peek into one of the themes we’ll discuss during the event. If you’re not currently registered to attend, I hope to leave you thinking that you’d like to join us!
I have the honor of opening Gartner Symposium/ITxpo by delivering a keynote presentation, accompanied by several of my colleagues in Gartner research. It sets the theme for the event. In this year’s keynote, we’ll share that we’re on the threshold of a new era — a new era we call the digital industrial economy. It’s an era of profound change that will see every industry digitally remastered. The impact on CIOs, senior IT leaders and the IT organisation will be colossal as the organizations they serve adapt to survive and grow.
Let me explain.
We see digital disruption occurring at three levels within the private and public sectors, at different paces in different industries. This disruption is being powered by what we call the Nexus of Forces, something we have analysed in depth over the past couple of years. This is the convergence and mutual reinforcement of four interdependent trends; social, mobile, cloud and information (or big data, as others like to call it).
At the first level of digital disruption we see the use of ubiquitous cheap internet-enabled sensors improving products, services and processes in a fairly linear manner. Think of this as the "Internet of Things" in action; sensors in your stuff that basically make them better.
For example, the use of SenseAware by FedEx to provide you with near-real-time information about your package as it travels around the world. Or the Smart Ball by Adidas. It’s a football (I’m Danish, so that’s the round ball you kick, not the egg-shaped one you throw) that provides players with information on how to improve their technique. I could also use the example of how a sensor on a diaper alerts parents of the need for a change, but in my experience babies already let you know pretty loudly when they need attention!
At the second level of digital disruption we see something more than just linear improvements from the use of digital technologies in existing products and services. We see business models fundamentally changing due to previously unexpected new entrants into established markets.
For example, driverless cars by Google have the potential to radically change the automotive industry. Is the idea of buying a Google car so far fetched? And the impact of digitalised cars doesn’t just affect automotive manufacturers. If we’re not far from seeing driverless cars on our roads, what will it mean for the insurance industry? Will personal risk profiles for drivers mean anything when you’re not actually driving? What does this mean to your insurance policy? To insurance companies?
Another example a little closer to the here and now in this second level of digital disruption is the impact of Kickstarter on the venture capital industry. This is not a linear improvement in the VC industry — it’s a whole new competitor that was previously unthinkable just a short time ago.
But where we see the most radical change as a result of digital disruption is at a third level. This is where everyone becomes a technology company.
Everyone becomes a technology company?
Think about it. Hotel companies used to compete against other hotel companies by offering differentiated products and services based on technology. Remember when cards replaced keys and you could charge stuff to them? Cool, in a ‘90’s kinda way. Then along came Expedia,Hotels.com and others. They raised the stakes and changed the nature of the game, as customers were able to access competitive price information with just a click. But now hotel companies see a bigger competitor on the horizon and it’s more powerful than any fancy new technology feature or a new entrant into the marketplace.
That competitor is you, their customer. Everyone is a technology company!
AirBnB turns you, their customers, into their competitors. Got a spare room? Rent it out by the night. Last night, 40,000 did just that by renting accommodation in 250,000 rooms in 30,000 cities in 192 countries.
It’s not just hotels. Your car is sitting idle at the weekends or during work hours? Rent it out for a couple of hours with RelayRides. Need a loan? Skip the bank and borrow from each other. Prosper has nearly 2 million members that have lent over $600 million.
Getting the picture? A new digital industrial economy is emerging.
So you’re a CIO. You’re helping your organisation compete by making it easier for your business to sell and your customers to buy. You’re probably even better than those other companies in your marketplace. But how will you help your enterprise compete when you’re not just competing against other providers, you’re now competing against your customers?
If you think this doesn’t apply to you and your organisation, think again. Manufacture trains? You probably won’t see a left-field entrant from another industry compete with you anytime soon, but your biggest competitor now is probably your customer. It’s a commuter with a car who can now advertise a ride and connect with another commuter who prefers to pay per journey via her mobile device for a fraction of the cost of a ticket. The customer doesn’t care about SIC codes.
Peter Sondergaard is a senior vice president in Gartner.