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Gartner: Time to take algorithms seriously

Legacy systems and existing supplier relationships are barriers to digitisation. Instead, CIOs should focus on algorithms, says Gartner

To support digital business initiatives CIOs need to be looking at embracing algorithms, according to analyst Gartner.

The annual Gartner Symposium in Barcelona has previously focused on initiatives such as social, cloud, analytics and mobile technologies, to drive digital business initiatives. But 2015’s event kicked off with the analyst firm advising CIOs to break free of the legacy IT that has so far constrained their IT strategy.

Rather than looking for new projects to drive digitisation efforts, Gartner recommended that CIOs drop their existing IT suppliers, work with startups and focus on using algorithms in their businesses to create differentiation.

"Over half of enterprises are creating innovation units and are trying new ways to reach customers," said Gartner senior vice-president Peter Sondergaard.

These businesses are actually acquiring technology companies rather than waiting for their existing IT suppliers to innovate, he added.

Gartner estimated that by 2017 less than 50% of the IT budget will be owned by IT. So rather than control IT, Sondergaard recommended that CIOs should focus their IT strategy on influencing the technology direction of the business. "You must change the perception of IT value," he said.

Specifically, Sondergaard urged CIOs to focus less on analytics. "Big data is not where the value is. It will not be transformative. Data is inherently dumb unless you know how to act on it. It is algorithms that define actions," he said.

He also recommended CIOs to put their chief data officer in charge of algorithms.

"Decide which algorithms are public and which are private," said Sondergaard. "Some of these algorithms will be given away as snippets of software that do a specific function. Others will remain private because they are valued by the business."

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He urged CIOs to recognise that their old IT platform is not suitable for new digital initiatives. Instead, CIOs should create a new technology platform with a different set of suppliers, said Sondergaard.

Gartner suggested CIOs should divest the IT systems in their organisations that are not critical to helping their business move forward in a digital era by outsourcing them. 

Sondergaard said to be transformational CIOs will need new digital suppliers to create a digital competency for their business. "Leading companies will invest in small tech startups to create a differentiated customer experience," he added.

From a supplier management perspective, Sondergaard said he expects the IT landscape to change. "Most suppliers will struggle to deliver what you need," he said, adding that CIOs should look for companies that take a fail-fast approach to projects and offer usage-based cloud pricing.

CIOs should seek out suppliers who can help them see future opportunities, added Sondergaard.

As Computer Weekly has previously reported, application programming interfaces (APIs) are being used by some organisations to drive digitisation efforts. APIs provide a way to give third parties access to internal algorithms.

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