CIOs need to embrace the digital startup within their organization

BANGALORE, INDIA: Worldwide IT spending is projected to surpass $3.9 trillion in 2015, a 3.9 percent increase from 2014, and much of this spending will be driven by the digital industrial economy, according to Gartner, Inc.

The impact that the digital business economy is having on the IT industry is dramatic. Since 2013, 650 million new physical objects have come online. 3D printers became a billion dollar market; 10 percent of automobiles became connected; and the number of Chief Data Officers and Chief Digital Officer positions have doubled.

In 2015, all of these things will double again.

Gartner defines digital business as new business designs that blend the virtual world and the physical worlds, changing how processes and industries work through the Internet of Things.

“This year enterprises will spend over $40 billion designing, implementing and operating the Internet of Things,” said Peter Sondergaard, senior vice president at Gartner and global head of Research. “Every piece of equipment, anything of value, will have embedded sensors. This means leading asset-intensive enterprises will have over half a million IP addressable objects in 2020.”

Every Business Units is a “Technology Startup”

There is a dramatic shift in IT spending power. Sondergaard said there is a shift of demand and control away from IT and toward digital business units closer to the customer.

“Thirty-eight percent of total IT spend is outside of IT already, with a disproportionate amount in digital. By 2017, it will be over 50 percent,” Sondergaard said. “Digital startups sit inside your own organization, in your marketing department, in HR, in logistics and in sales. Your business units are acting as technology startups.”

Gartner estimates that 50 percent of all technology sales people are actively selling direct to business units, not IT departments. Millions of sales people, and hundreds of thousands of resellers and channel partners are looking for new money flows in the fluid digital world, and they are finding eager buyers.

Become a Bimodal Organization

Bimodal IT fills the digital divide between what IT provides and what the enterprise really needs. Mode 1 is traditional, and the systems that support them must be reliable, predictable, and safe (like a great IT organization). Mode 2 is nonsequential, emphasizing agility and speed (like a startup) because disruption can occur at anytime.

Sondergaard used the example of smart machines to highlight the disruption caused in digital business. Smart machines are an emerging “super class” of technologies that perform a wide variety of work, of both the physical and the intellectual kind. For example, school computers have been grading multiple tests for many years, and now they are grading essays, unstructured tests that require analysis.

“Not is the grading more accurate, but students actually work harder on their essays when they are graded by a smart machine,” Sondergaard said. “Other professional tasks won’t be far behind: financial analysts, medical diagnostics, and data analytics jobs will be impacted. Knowledge work will be automated.

Smart robots will appear not just on the manufacturing floor, where they do physical work, but in the workplace and even in the home. Smart machines will automate decision making. Therefore, they will not only affect jobs based on physical labor, but they will also impact jobs based on complex knowledge worker tasks.

Impact of Digital Business on Jobs

Digital businesses will impact jobs in different ways. By 2018, digital businesses will require 50 percent fewer business process workers. However, by 2018 digital business will drive a 500 percent boost in digital jobs.

Hottest Skills in Digital Business

Right now, the hottest skills CIOs must hire or outsource for are:

Mobile

User Experience

Data sciences

In the future, three years from now, the hottest skills will be:

Smart Machines (including the Internet of Things)

Robotics

Automated Judgment

Ethics

Over the next seven years, there will be a surge in new specialized jobs. The top jobs for digital will be:

Integration Specialists

Digital Business Architects

Regulatory Analysts

Risk Professionals

“The new digital startups in business units are thirsting for data analysts, software developers and cloud vendor management staff, and they are often hiring them fast than IT. They may be experimenting with smart machines, seeking technology expertise IT often doesn't have,” said Sondergaard. “You must build talent for the digital organization of 2020 now. Not just the digital technology organization, but the whole enterprise. Talent is the key to digital leadership. Build credibility and build the two-speed organization.”