Ultraconnected world, Internet of Things changing business models
PETER SONDERGAARD Digital businesses will have lower margins than those of current business models and will rely on volume, scalable cost structures and agility
The communications connections that are emerging between people, business and objects will change the way businesses operate, says technology research and analysis firm Gartner senior VP and global research head Peter Sondergaard.
This change will impact on all businesses and lead to an end-to-end digital value chain, as well as business processes that will create and exploit rapid and transient business opportunities.
“Businesses will require a bimodal information technology (IT) model in their organisations to transition to a digital business. The current IT use model in companies will remain dominant, while the new model will need to be agile and responsive.
“This new model will require different people and objectives, compared with the current IT use model. It should be focused on innovation and creativity, as well as on developing new business models, opportunities and customer engagement strategies,” explains Sondergaard.
However, companies require the rock-solid predictability afforded by current IT use models and a steady evolution towards new business processes is expected.
“These new business units could take the form of IT start-up companies, where resources can be rented to keep initial investment costs low, with additional resources added if results are positive. Managing these new business units as start-ups is an effective way of managing costs, while rewarding outcomes and stimulating innovation.”
New business opportunities will arise from engagements among people. These opportunities will be fleeting and Sondergaard terms them “business moments”, which will be centred on human experience.
The ability to capitalise on these moments will require companies to integrate near real-time analytics into all their processes, especially customer-facing processes.
“Businesses must build an internal environment to support this new way of doing business. However, this is not solely an IT challenge, but a business challenge and should be led by the CEOs and CIOs. Gartner research has found that no part of business will remain untouched by changes in IT and every budget and decision is essentially an IT budget or decision, requiring leadership from the top,” emphasises Sondergaard.
Further, pressure on companies’ margins will only increase, and developments to capture new business opportunities must also offer lower costs of doing so.
Digital businesses will have lower margins than those of current business models and will rely on volume, scalable cost structures and agility.
By 2018, digital business will require 50% less business process workers and 500% more key digital business jobs, compared with traditional models.
Increasing spending on technology to support changes to business units must address problems or barriers in work processes and this response to business data change should be the main driver of change, doubling as preparation for digital business models.
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