CIOs attending Gartner’s Catalyst conference in London were urged to have a strategy to deal with the so-called Digital Dragon, referring to companies such as Alibaba, Amazon, Baidu, Google and Tencents.
Addressing delegates about how IT has changed since the emergence of these global internet businesses, Gartner analyst Dave Aron, said: “IT used to be about back-office systems, but we’ve entered a new era.”
The conversations in business now focus on ethics, trust and different kinds of security. “Digital is a reimagining of the $100 trillion global economy,” he said.
As an example, Aron cited his conversations with car manufacturers and their interest in how to make the car a platform for services.
“130 billion minutes a year are wasted by people sat behind the wheel of their car,” said Aron, when asked how businesses can become more focused on the needs of their customers.
“Customer experience is not enough in a digital world,” he said. “It’s not about developing a beautiful user interface. Almost no company is customer-centric.”
In Aron’s experience, businesses and governments may try to make it easy for the customer or citizen to interact with their services – but this is not customer-centric. “Being truly centric is about understanding our role in the customer’s digital life,” he said.
Digital giants redefine business
According to Aron, Amazon, Google, Baidu, Tencent and Alibaba represent infrastructure for everything. “They are the most complex organisations we have ever seen,” he said. “They will be more important than countries. They are the master of physical logistics and infrastructure of everything – and they have deep pockets.”
The diverse range of services they offer – from ecommerce and payment services to insurance and logistics – means these organisations will touch every single industry. “They are in all industries,” he said. “Digital dragons are hiding in plain sight and they are your frenemy.”
Linda Liukas, author, illustrator and founder of Rails Girls, said: “Big tech firms change our world far more rapidly than religion.”
Research from Gartner has found that only 20% of CEOs are doing something about these digital dragons, and just a quarter say they will do something in the future. Gartner recommends that businesses have a strategy and do a Swot (strengths, weaknesses, opportunities and threats) analysis of the digital dragons.
“They can’t know about every single industry,” said Aron. “There may be room to partner. Know the dragons. Understand the breadth of their products and strategy going forward. What do they want to do to you?”
Gartner recommends that businesses dedicate up to five full-time staff to understanding the strategy of the mega firms that operate in the same sector. For instance, in the internet of things, a business may include Hitachi and Siemens among its digital dragons.
“They want to sell to you,” said Aron. “They may build a platform for your industry, create products in your industry or take data from your industry.”
As Computer Weekly has previously reported, GE tried to establish itself as a digital dragon through its Predix platform for predictive analytics on the industrial internet. However, Aron believes few organisations have the resources to develop a platform by themselves.
He recommended that CIOs should consider the digital dragons as part of their mid-term technology planning.