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Creating the economy of connections

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Kathy Gibson reports from Gartner Symposium in Cape Town – The CIO has a vitally important role to play in building a transformed digital business.

“It’s all about building an innovation competency,” says Peter Sondergaard, senior vice-president and head of research at Gartner. “You need people who can nurture innovation.

“The role of the CIO is to act as guardian, operator and innovator. You need to be the trusted ally to the business.”

The top five reasons that CIOs cite as barriers to them achieving these goals are lack of skills, funding, culture, business expectation and legacy platforms.

“But these are the same things you said five years ago,” Sondergaard says. “Something has got to change.

“How do you address these issues aggressively and break the cycles to create a new type of economic value based on interconnections between people and things?”

The answer is to create a business that leverages connections between people and things will unlock the economics of connections, says Frank Buitendijk, vice-president and senior research analyst at Gartner.

This new business model – the economics of connections, as he calls it – is built around the concept of give, take and multiply.

The “give” part of the equation, he says, is part of the hard realities of the 21st century, where companies find that sharing their intellectual property creates larger ecosystems and drives more value. “Every organisation has some information or capability that is worth more shared with others than keeping it to themselves. Companies don’t have to start immediately with sharing complex algorithms, but start with one API and see what happens.”

“Take” involves using the algorithms and APIs that other companies open up, and using them to create value. “If you take advantage of all those resources, the passion and power can go exponential,” says Buitendijk.

Currently the shared resources relate to people: if the model is extended to embrace things as well, it can grow enormously.

“So you should look to start with people and embrace the power of things like citizen development. Then go further with things, with the sensors that are already out there.”

This give and take economy leads to an active and dynamic network of connections held together by the CIO.

“Once the networks are built, the goal becomes to multiple all the connections,” says Buitendijk. “These are facilitated and encouraged by the CIO but not controlled by him.

“And this is where the acceleration really takes off.”

So what is holding organisations back from embracing this economy of connections? David Willis, vice-president and distinguished analyst at Gartner, says that control, inertia and trust are all inhibiting factors.

“The good news is that CIOs have more influence now than they did in the past,” he adds. “In fact, half of CIOs say they are business partners in the organisation.”

But is it enough to be business partner? “The head of IT may be accepted as a business partner. He may have everything under control and work closely with the business team – but he is not a C-level peer.”

Instead, CIOs need to have more influence, Willis says, collaborating on a different level and espousing a vision for the future.

“He needs to be a reliable ally with a vision that the entire organisation gets behind.”

He cautions that digital transformation cannot be seen as simply a project. “It’s not something that can be given to a particular executive. Instead, they all need to work together as allies.”

Currently, only 23% of CIOs are considered to be trusted allies. “But this trusted ally is a C-level leader,” Willis says. “They lead whether the technology is owned in the IT department or somewhere else, because sometimes the technology owner could be the chief marketing officer, or the head of digital strategy.”

Where the CIO is seen as a trusted ally, he is more likely to be the one driving change within the organisation, ensuring the economics of connections becomes a reality.

“Do you have what it takes to be a trusted ally?” Willis asks. The answer is that CIOs are better position than others. Research shows that 70% of CIOs are intuitive, compared to just 40% of other executives.

“This means you are better at solving complex problems in creative ways – you can solve problems but keep your eye on the big picture.”

A major inhibitor to the economy of connections is inertia.

“There are things you could just stop doing,” says Willis. “You can divest of some monoliths; clean up the portfolio.

“There is no need to own all of the infrastructure; or even all the development infrastructure.

“Divestment means getting rid of stuff you no longer want or require.”

Successful organisations tend to have got rid of their dead wood, Willis says, and it frees up resources to drive new growth – and these new initiatives generally show a much better growth than legacy projects.

“You can’t divest of everything, but if it doesn’t distinguish your organisation, let it go.”

Trust is another big inhibitor, possibly the biggest one. “Economic value fails if there is distrust,” Willis says.

Buitendijk adds that trust is really about delivering – again and again and again.

“Connections are useless without trust,” he says. “Where trust is lacking all connections need to be controlled – and this means there can be no economics of connections.

“Trust matters in business.”

Unfortunately the global level of trust is not particularly high – and it’s even lower in South Africa at just 48%.

“So how do you trust algorithms that you don’t know the ins and outs of?” Buitendijk asks. “you have to either trust until there is a reason to distrust; or distrust until there is a reason to trust.

“Both choices have their problems: if you are too trusting you risk people or things taking advantage of you; if you are mistrusting you might miss business opportunities.

“The answer is that you need to do both. Sense and respond is technology that can help you to trust everyone to the exact level where they give you a reason not to.”

The goal is to offer a better customer experience while lowering fraud – but trust works both ways so customer and organisations need to be able to trust one another.

“Trust is an emotion; it is the confidence that people have in your future behaviour. And it could be more manageable and tangible than you think: it is about producing results, being predictable, working in a human context and being visible.”