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Prepare for the Digital Industrial Economy: Gartner

This results in every budget being an IT budget; every company being a technology company; every business becoming a digital leader; and every person becoming a technology company, says Gartner senior vice president Peter Sondergaard.

The digital world is here, says Peter Sondergaard, senior vice president at Gartner and global head of research at the analyst firm, speaking at the Gartner Symposium/ITxpo in Orlando, Florida.

This results in every budget being an IT budget; every company being a technology company; every business becoming a digital leader; and every person becoming a technology company. This is resulting in the beginning of an era - the Digital Industrial Economy, he says.

“The Digital Industrial Economy will be built on the foundations of the Nexus of Forces (which includes a confluence and integration of cloud, social collaboration, mobile and information) and the internet of everything by combining the physical world and the virtual,” says Sondergaard.

We will throw more computers into our laundry in a week than we’ve used in our lifetimes so far

Peter Sondergaard.

The analyst firm forecasts worldwide IT spending to reach US$3.8 trillion in 2014, a 3.6 percent increase from 2013, but says it is the opportunities of a digital world that have IT leaders excited.

“Digitalisation exposes every part of your business and its operations to these forces. It is how you reach customers and constituents; how you run your physical plant; and how you generate revenue or deliver services. Enterprises doing this today are setting themselves apart and will collectively lead the new Digital Industrial Economy,” says Sondergaard.

Sondergaard says the internet of things creates a new economy. Gartner predicts that the total economic value add for the internet of things will be US$1.9 trillion dollars in 2020, benefiting a wide range of industries, such as healthcare, retail, and transportation.

In 2009, there were 2.5 billion connected devices with unique IP addresses to the internet, most of these were devices people carry such as mobile phones and PCs. In 2020, there will be up to 30 billion devices connected with unique IP addresses, most of which will be products.

“Computing power will be cheap and covert. We won’t know it is there; it will be in our jewelry and in our clothing,” says Sondergaard. “We will throw more computers into our laundry in a week than we’ve used in our lifetimes so far.”

Many of the vendors who are on top today, such as Cisco, Oracle, and Microsoft, may not be leaders in the Digital Industrial Economy.

“Digital changes the IT market in a big way through the internet of things,” says Sondergaard. He says in the technology and telecom sectors, revenue associated with the internet of things will exceed US$309 billion per year by 2020.

Mobile smart devices, meanwhile, have taken over the technology world. By 2017, new device categories: mobile phones, tablets, and ultra-mobile PCs will represent more than 80 percent of device spending. Gartner also forecasts that by 2017, nearly half of first-time computer purchases will be a tablet. Therefore, Sondergaard says, mobile is the destination platform for all applications.

The next wave of IT suppliers

The digital world runs faster for many traditional IT suppliers. In the past, the top technology companies reigned over the industry for long periods of time. However, now the leaders in areas such as cloud and mobile were not on many CIO’s radar five years ago.

“What many traditional IT vendors sold you in the past is often not what you need for the digital future. Their channel strategy, sales force, partner ecosystem is challenged by different competitors, new buying centres, and changed customer business model,” says Sondergaard.

“Digitalisation creates an accelerated technology-driven start up environment across the globe. Many of the vendors who are on top today, such as Cisco, Oracle, and Microsoft, may not be leaders in the Digital Industrial Economy.”

With all of this valuable data within the IT organisation, cyber security will be an ongoing concern, both inside and outside the enterprise. Sondergaard says IT leaders should anticipate events and headlines that continuously raise public awareness or create fear.

“The security of embedded technologies that your organisation has right now may be the most important operational responsibility you will have in 2020,” says Sondergaard.

Digitalisation will create new infrastructures and new vulnerabilities in our infrastructures, he says. At the same time he recommends building a portfolio of security vendors and to establish more agile security processes.

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