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Bimodal business changes tech investments

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Kathy Gibson reports from Gartner Symposium in Cape Town – In the new digital world, the way companies manage and buy technology will change.

Peter Sondergaard, senior vice-president and head of research at Gartner, says that the new focus on algorithms will change what companies should do.

“You should do an inventory of algorithms, and assign ownership to them. You can then identify which algorithms should be private and which should be made public. If an algorithm has value but is not lynchpin of your business, you can licence, trade or sell it – or give it away.

“in this way a market for algorithms will emerge. Or, more accurately, a market for snippets of software that do specific functions. Each will solve a problem or create a new opportunity.” Sondergaard says these algorithmic economy will propel the next leap in the internet of things. Algorithms will define products, and organisation will be valued on the algorithms they have that create value.

“Agents and algorithms do complex things with high stakes,” Sondergaard points out. “They will make decisions that can man life or death. And this raises some difficult ethical questions once tackled by humans. Things like risk and privacy that are now all encoded in software. So we have to get them right.”

Organisations need to make sure they get on top of this issue, he says. “The risk and security officer of today will be the risk, security, safety and quality officer of the future.

“The old security model focused on protection. We have become obsessed with external attacks, chasing the impossible goal of total protection. But the new reality is that breaches happen daily – 65% of CEOs say their risk management is falling behind.

“The new concerns are not just protection, also safety and quality, so CIOS are devoting more budget and people resources to security. By 2017, IT organisations will spend 30% of their budgets of risk, security and compliance, and allocate 10% of their people.”

Because the stakes are life and death, the level of risk will increase in all industries. “IT has to move away from perfect protection to detection and response using automation, outsourcing and network-based algorithms,” Sondergaard says.

To achieve this goal, he advises CIOs to set with resilience. “Clean your own house and stay up-to-date with the basic stuff – everyone will get attacked; 71% of organisstions have had to go into disaster recovery mode over the past two years. Minor problems are constant and major incidents are inevitable. But be ready and act more like an intelligence officer.”

The next step is to focus on detect and response; and then to focus on people.

“Many incidents start with phishing or other social engineering attacks on users. People are often an easy targets – they have incredibly powerful technology at their disposal that they can use for smart and dumb things. Leading organisations are addressing this head on. They are transforming their culture through relaxed awareness, nudging employees in the safest direction, with consequences for people who deliberately misbehave.”

As algorithms change the way technology is implemented in the business, Sondergaard says the way companies invest in technology has to shift.

“To accelerate the creation of new digital technology platforms, leading companies are becoming venture investors,” he says. “They are investing in small technology startups, buying technology they can take into the future, buying and integrating them into their businesses.

“It started with financial firms buying fintech companies, now manufacturers and retailers are buying startups that add value. The winners will be those that are investors in technology – no longer just buyers of technology.”

Even companies that don’t invest in their own technology will see changes in the way the buy technology. “The landscape for the technology buyer will change anyway,” says Sondergaard. “If you are buying products and services you will need new capabilities that most traditional suppliers don’t have.

“You will need to partner with suppliers who have the technology to support your new digital organisation. Mode 2 suppliers offer short-term engagements, with pay-as-you-go models. You won’t have to change your platform to support a project.

“Stand-out suppliers will be experts in your industry and will see how your organisation is at risk from others in adjacent industries. They will look around corners with you and help you see the future.”