This research note is restricted to the personal use of A01681987@itesm.mx. G00274814
The Six Forces That Will Shape Business and Technology in 2030 Published: 1 February 2016
Analyst(s): Stephen Prentice
Six technology-enabled trends will change business fundamentals, including the nature of markets and assets. This research shows what business will look like in 2030, and advises CIOs how to educate the CEO about the challenges.
Impacts ■
Six trends will force CEOs to rethink the fundamentals of business.
■
The Internet of Things will force CEOs to change their business models.
■
Increasingly algorithmic and ultimately autonomous things will replace many business decisions for business leaders.
Recommendations CIOs: ■
Produce a briefing document on these long-term trends for your CEO. Note both the opportunities and the threats for your enterprise's business and your industry.
■
Stress that these trends are not science fiction; they are already visible and demand serious attention from the enterprise right now.
■
Update infrastructure to support the demands of smart machines. Pilot migration projects to build relevant skills and experience.
■
Seek the support of the CEO to establish a multidisciplinary task force from across the enterprise to explore the possibilities of algorithmic business.
Analysis The enterprise could easily go out of business by 2030 if it underestimates digital business. The average life span of a company in the S&P 500 has decreased from 67 years in the 1920s to just 15
This research note is restricted to the personal use of A01681987@itesm.mx.
This research note is restricted to the personal use of A01681987@itesm.mx. 1
years today. "More than one-third of businesses today will not survive the next 10 years," says John Chambers, Cisco's former CEO. "Companies should not miss the market transition or business model nor underestimate your competitor of the future — not your competitor of the past."
2
Digital business will not just change IT operations and tactics; it will change the very nature of business. It will drive some enterprises out of business — indeed, it already has — and it will bring epochal change in less time than Google has existed. CIOs should prepare CEOs and CFOs for the scale of disruption facing the business by telling them about three impacts (see Figure 1). Figure 1. Impacts and Top Recommendations for CIOs Preparing CEOs for Digital Business Disruption
Source: Gartner (February 2016)
Impacts and Recommendations Six trends will force CEOs to rethink the fundamentals of business Trend No. 1: From Global to Personal — Enterprises operate in an increasingly global economy, but workers and consumers increasingly expect to be treated as individuals. The continuing growth of the Internet allows business to occur on a human scale. More people work for themselves or as freelancers rather than for a single company their entire lives. The threat to many large enterprises comes not from comparable corporations, but from startups below their competitive radar screen. People now expect tailored offerings from their suppliers — manufacturers will even create an individualized product for a single customer.
Page 2 of 9
Gartner, Inc. | G00274814 This research note is restricted to the personal use of A01681987@itesm.mx.
This research note is restricted to the personal use of A01681987@itesm.mx.
Trend No. 2: From Hierarchies to Meshes — Traditionally, enterprises were organized hierarchically, with well-defined reporting lines, and enterprises also preferred well-defined relationships with customers and suppliers. However, the Internet has a peer-to-peer structure. To thrive in digital business, enterprises must move toward a flat, mesh-like structure, both internally and externally, in which every agent has equal access to other agents. Power decentralizes. Enterprises must deal with Internet collectives, smart cities, parallel Internets, crowd-based movements, self-regulation and other self-forming networks. Digital markets emerge as people, business and things start to collaborate, trade and even collude. Trend No. 3: From Fixed to Fungible Assets — Enterprises used to create value by exploiting assets they owned. Now enterprises can make money by mobilizing assets that others own — for example, Airbnb booking accommodations in private homes. Digital technology is now changing the very nature of many physical assets that businesses may have previously seen as irreplaceable barriers to entry. Fungible assets enable enterprises to create digital businesses that can circumvent barriers to entry, such as taxi licenses (see Table 1). Table 1. Reimagining the Nature of Assets From
To
Train ride
Car share
The local curry house/casual restaurant
Just Eat (U.K.), Grubhub (U.S.) and dozens of take-aways/take-out options
Trust and reputation
Social recommendation and reputation score
Knowledge
Cloud-based virtual assistant
Production line
Local 3D printing service
Taxi and delivery
Uber car and driver
Capital
Crowdfunding
Experience
Community
Source: Gartner (February 2016)
Trend No. 4: From Devices to Connected Humans and Things — Computers and information used to be separate from the physical world. Now physical objects, and even people, are connecting to the Internet. Wearables and embedded devices have become important sources of information, and offer new ways to communicate. Personal assistants such as Cortana, Google Now and Siri deliver contextually sensitive decision support. Smart appliances enable new businesses that help people manage their lives intelligently. Trend No. 5: From Big Data to Algorithmic Business — Humans used to make all the decisions about the growing mountains of data that technology generates. Now enterprises are starting to
Page 3 of 9
Gartner, Inc. | G00274814 This research note is restricted to the personal use of A01681987@itesm.mx.
This research note is restricted to the personal use of A01681987@itesm.mx.
design algorithms to automate decisions. Algorithms run digital advertising today. In the future, they will run whole business processes. Sensor networks, virtual sensors (the time/location stamped record of individual transactions or system access), quantified self and advanced analytics enable fact-based risk assessment and decisions — but they also raise issues around intellectual property protection, surveillance, privacy and ethics. Trend No. 6: From Resources to Smart Materials — Enterprises used to take raw materials and turn them into finished goods. Now technology increasingly influences new materials and the engineering/manufacturing methods used to take advantage of them to create entirely new types of products with advanced capabilities. Technology is increasingly intersecting with biological and material sciences to shape the future of the physical world. Significant developments in this space lie in the areas of genetic and bioengineering, grapheme, smart fabrics and memory materials, nano-scale polymers and composites as well as advanced manufacturing processes such as 3D printing. Recommendations: ■
Produce a briefing document on these long-term trends for your CEO. Note both the opportunities and the threats for your enterprise's business.
■
Stress that these trends are not science fiction but deserve serious work from the enterprise right now. The six trends are already in motion, although the greatest impacts may not be visible for several years.
The Internet of Things will force CEOs to change their business models An unknown competitor is already developing a business model that will make your enterprise obsolete. The Internet of Things (IoT) gives a nimble, imaginative challenger great power. Gartner estimates there will be more than 26 billion connected devices by 2020. Every product, service, process and device will be digital, and they will connect with one another to share information. In 2030, the resulting "product cloud" will in many cases be more valuable than the product itself. Numerous examples exist today, including: ■
The intelligent gas cylinder displays gas usage and flow, and indicates the remaining time. It increases safety and efficiency.
■
A smart soccer ball analyzes performance and provides feedback to the player. It can substitute for a coach in some ways.
■
The Tesla Model S offers autopilot and auto park functions. It connects for free to a supercharger network in some locations. Software upgrades to provide additional functions are downloaded via the Internet without the need to visit a dealership.
By 2030, new business models will replace traditional ones, even in asset-intensive industries. Indeed, industrial companies have already embarked on such digital transformations: ■
3
Rio Tinto: Rio Tinto calls its vision the "Mine of the Future." It aims to create an autonomous mine. The company uses its mines in Western Australia as a test bed, where it has deployed automated drilling equipment, automated trucks and an automated railway.
Page 4 of 9
Gartner, Inc. | G00274814 This research note is restricted to the personal use of A01681987@itesm.mx.
This research note is restricted to the personal use of A01681987@itesm.mx.
■
Ford: Ford's Blueprint for Mobility envisions vehicles that connect to all parts of the travel environment, including other vehicles, pedestrians and infrastructure (for example, traffic 4
signals, buildings and other modes of transportation). The connected vehicle would automate much of a trip so that travel occurs faster and more safely with less environmental impact. Recommendations: Ask the CEO to: ■
Prepare: Update infrastructure to support the demands of the IoT. Pilot migration projects to build relevant skills and experience.
■
Watch: Investigate what traditional competitors are doing with the IoT as well as companies in adjacent markets that might use the IoT to enter your market. Watch for the emergence of new business models and factor them into your own enterprise's strategic planning.
■
Plan: Invent a business model based on five IoT usage models: ■
Manage: Empower customers to manage their lives more efficiently.
■
Monetize: Turn IoT information into a product worth paying for.
■
Operate: Take over the operation of the customer's house or other facilities.
■
Extend: Add information-based services to your product.
■
Experience: Improve the customer's experience of your brand.
Increasingly algorithmic and ultimately autonomous things will replace many business decisions for business leaders To grasp the size of the disruption that digital business will cause, let's look beyond the next year or two to imagine what the world will look like in five, 10 or 15 years (see Figure 2). By 2020, will you: ■
Own a smartwatch?
■
Have packages delivered by drone?
■
Stay in a hotel run by robots?
■
Trust Cortana to make a decision for you?
5
In fact, you can do some of these things already. By 2025, will you: ■
Allow algorithms to make transactions on your behalf?
■
Work alongside a robot?
■
Buy a bionic ear?
■
Use a metacoin platform?
6
Page 5 of 9
Gartner, Inc. | G00274814 This research note is restricted to the personal use of A01681987@itesm.mx.
This research note is restricted to the personal use of A01681987@itesm.mx.
By 2030, will you: ■
Do business with an algorithm that is a legal entity? For example, a company with a lot of intellectual property sets up a fully automated subsidiary that owns its patents, and uses technology to evaluate submissions and grant permissions without human intervention.
■
Own a domestic robot?
■
Ride in automated cars?
7
Figure 2. The Phases of Digital Business
Source: Gartner (February 2016)
In digital business, the physical and digital become inextricably interconnected. Information becomes the proxy for the physical, and physical assets become replaceable. Smart machines and software algorithms will optimize business outcomes through goal-seeking and self-learning. At first, they will act as proxies for people and businesses, but ultimately they will move autonomously toward goals set by us.
Page 6 of 9
Gartner, Inc. | G00274814 This research note is restricted to the personal use of A01681987@itesm.mx.
This research note is restricted to the personal use of A01681987@itesm.mx.
Over the coming decade, increasing numbers of business decisions will be made (initially in the guise of "decision support," but increasingly in a trusted manner on behalf of business leaders) by the algorithms that power smart systems. Just as marketing automation makes better decisions than gut feeling about which messages to send the audience, more sophisticated algorithms could make better decisions about running a business than experienced managers. The next decade will see the emergence of a wide range of algorithmic smart assistants that will enable human workers to be more productive and efficient. Recommendations: ■
Meet with your CEO and CFO to discuss the disruptive potential of algorithmic business. If smart machines continue to develop at their current pace, what parts of the business could they run on their own in five to 15 years? Stress that algorithmic business is real and that the enterprise must take sensible steps to prepare.
■
Ask the CEO to establish a multidisciplinary task force from across the enterprise to explore the possibilities of algorithmic business. Where might the enterprise set up one of its own? The best opportunities might lie outside the enterprise's current markets.
■
Start to experiment with technologies to run algorithmic business. Look at existing smart machine technology, and consider how you can develop it further in-house to give your enterprise a competitive advantage.
Gartner Recommended Reading Some documents may not be available as part of your current Gartner subscription. "Planning for What Comes After Digital Business Primer for 2016" "When Smart Things Rule the World — Introducing Autonomous Business" "Smarter Things Will Challenge the Human Desire for Control" "Digital Ethics, or How Not to Mess Up With Technology" "Creating Net-New Industries for the World in 2030" "Maverick* Research: The Programmable Economy Is the Ultimate Destination for Digital Business" Evidence We based this document on Gartner's general research into digital business, on an examination of leading-edge technologies, and on forecasts and scenarios about the long-term development of algorithmic business. 1 K.
Gittleson. "Can a Company Live Forever?" BBC News. 19 January 2012.
Page 7 of 9
Gartner, Inc. | G00274814 This research note is restricted to the personal use of A01681987@itesm.mx.
This research note is restricted to the personal use of A01681987@itesm.mx.
2 J.
Bort. "Retiring Cisco CEO Delivers Dire Prediction: 40% of Companies Will Be Dead in 10 Years." Business Insider. 8 June 2015.
3 Rio 4
Tinto, Mine of the Future, Next-Generation Mining: People and Technology Working Together.
"Our Blueprint for Mobility" and "Case Study: Connected Vehicles." Ford.
5 B.
Molina. "Amazon Unveils New Prime Air Drone Prototypes." USA Today. 30 November 2015.
6 D.
Paresh. "Does Bitcoin's Underlying Technology Have Other Uses? Investors Think So." Los Angeles Times. 9 August 2015.
7 L.
Kelion. "CES 2015: The Robots Moving in to Your House." BBC News. 8 January 2015.
Page 8 of 9
Gartner, Inc. | G00274814 This research note is restricted to the personal use of A01681987@itesm.mx.
This research note is restricted to the personal use of A01681987@itesm.mx.
GARTNER HEADQUARTERS Corporate Headquarters 56 Top Gallant Road Stamford, CT 06902-7700 USA +1 203 964 0096 Regional Headquarters AUSTRALIA BRAZIL JAPAN UNITED KINGDOM
For a complete list of worldwide locations, visit http://www.gartner.com/technology/about.jsp
© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner’s prior written permission. If you are authorized to access this publication, your use of it is subject to the Usage Guidelines for Gartner Services posted on gartner.com. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner’s research organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner’s Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see “Guiding Principles on Independence and Objectivity.”
Page 9 of 9
Gartner, Inc. | G00274814 This research note is restricted to the personal use of A01681987@itesm.mx.