Gartner: ‘Hello Algorithms, Goodbye Apps’
Algorithms will soon replace apps as they reshape business, IT, and the ways in which organizations interact with customers, partners, and employees, according to researchers speaking at today's Gartner Symposium/ITXPO in Orlando.
The shift is part of the ongoing transformation to a bimodal world, said Gartner CEO Gene Hall. The research firm – which first coined the bimodal term to describe IT departments' need to focus on both traditional IT (keeping the lights on, upgrades, and maintenance) or Mode1 and innovative, transformative, DevOps units or Mode2 – is now extending that vision to encompass entire organizations.
Leading enterprises increasingly include departments that feature units focused on traditional products and services, as well as new fleet-footed divisions that create and build a digital business strategy, said Peter Sondergaard, senior vice president and global head of research at Gartner. At the foundation of these digital businesses: Algorithms, he said.
These algorithms allow organizations to calculate the value of their relationships, the value of trust they have forged, and their most important algorithms, for example, he said. They are more important than big data or analytics, said Sondergaard, and savvy CIOs will become adept at promoting and leveraging adoption within their enterprises.
"If the most important thing you offer is data, you are in trouble. Big data is not where the value is. Data is certainly necessary, but it is transient. By itself it will not be transformative. You organization may view you as the data keeper, but anyone can gather data. Anyone can store it. You get a little more credit if you analyze it. Data is inherently dumb," he said. "Algorithms are where the real value lies. Algorithms define value."
So what are algorithms? They can be viewed as recipes, said Sondergaard, citing Coca-Cola's famous – and heavily guarded – soda recipe. Complex algorithms are evolving around financial trading and healthcare, he said. And some corporations – like Tesla and Goldman Sachs – are sharing their algorithms, added Frank Buytendijk, vice president and distinguished analyst at Gartner.
"In 2020, consumers won't be using apps on their devices; in fact, they will have forgotten about apps. They will rely on virtual assistants in the cloud, things they trust. The post-app era is coming," Sondergaard said. "The algorithmic economy will power the next economic revolution in the machine-to-machine age. Organizations will be valued, not just on their big data, but on the algorithms that turn that data into actions that ultimately impact customers."
Integrated into the Internet of Things (IoT) and smart devices, algorithms will learn as they evolve, making them even more useful to organizations – and posing an ethical and security dilemma to government, populations, and enterprises, researchers said. Since algorithms will, for example, power cars and drones, they could produce results their designers never intended, said Sondergaard.
"Agents will create new agents and robots will create new robots, so yes, we have to get algorithms right," he said.
That said, algorithms themselves can help protect infrastructure. Today, organizations spend about 90 percent of their security resources on prevention, with the balance going toward detection and response, said Sondergaard. However, enterprises should devote approximately 60 percent of budget and resources to protection and 40 percent to detection and response, he advised.
"Without [using] intelligent algorithms for security, you will not be able to innovate," said Sondergaard.
IT departments can innovate in other ways, Gartner analysts recommended. They can acquire startups. They also must divest themselves of systems or services that don't add value; things like legacy systems or solutions held due to ownership bias, said Mary Mesaglio, research vice president at Gartner.
"Take a good look at pet projects, historical dust that might be dragging you down, and cut them loose. Don't be a legacy fatalist," she said. "The reality is if somebody else can do it and will do it better than you, then they should do it. Today, you're not the only option. You may not be the best option. Shed ownership of non-differentiating software. I know many of you may be doing cloud for non-basic stuff, but it may be great for non-basic stuff too. The cloud is more secure. And it's great for innovation."
Almost three-fourths (73 percent) of CIOs are intuitive thinkers, Mesaglio said. Combining this skill with technological, business, and innovative knowledge, today's IT leaders are well-situated to drive their organizations into the new era of digitization and algorithms.