Divest. Digital. Disrupt.

'Look at how you solve the problem, not what you sell.' -- Peter Sondergaard, Gartner

Gartner’s 2015 Symposium predicts turbulent times ahead for those businesses that don’t take note of the forthcoming disruptive digital storm.

It’s said that Cape Town’s quick-changing climate means you can experience four seasons in one day. The rapid rate of change wasn’t limited to the weather, however, as thousands of delegates descended on Kaapstad for Gartner’s annual Symposium in late September.

The analyst firm forecast a vision of disruption facing the tech industry and wider business world in the coming years. The Margin was there to report back what was relevant to the channel.

“The digital business model first focuses on what the customer does, not what they want,” Peter Sondergaard, Gartner’s global head of Research, told the audience. He talked about the bimodal tech landscape, whereby IT departments focus on maintaining stable legacy systems to run the business, while also developing faster, agile, customer-centric digital solutions to innovate and grow the business.

“Beyond IT, businesses are starting to go bimodal [operationally and structurally] to capitalise on digital innovation opportunities,” he added.

Sondergaard acknowledged that with this came two different types of suppliers: the “old school” mode one type and mode two digital suppliers characterised by a “pay as you go” model.

Successful suppliers in a digital world should be well-versed with the wider changing landscape, he noted, and they can extract innovation across industries to apply for clients.”

Standout suppliers will be au fait with your industry, and look around corners with you,” he said. “They will understand competitors from other industries, as they move to disrupt your industry.”

Frank Buytendijk, Research VP at Gartner, introduced the ‘economics of connections’ a notion  characterising modern disruptive businesses. This approach  consists of three parts -- give, take and multiply.

“Give access to everything that’s more valuable shared, such as Tesla sharing some patents as it knows this will improve production cost-efficiencies, drive standards and grow its ecosystem.

“Take advantage of other resources, including new skills, new budgets and data from ‘things’. Finally, multiply refers to the ecosystem’s connections interacting directly with each other to become the economic platform."

This requires a different mindset; rather than controlling everything, the business needs to divest and trust the parts of the network. “In this scenario, influence scales, control doesn’t," Buytendijk said.

As reliance on external parties comes to the fore, a business’s trust strategy will need to be established.

Best to divest

Those businesses that learn to leverage the power from the economics of connections stand to benefit. “The best divestors produce return on investment 1.8 times higher than those who own everything,” noted Buytendijk.

Key divestment principles include cutting back on business operations that don’t add value. While this can involve letting go of some aspects and trusting the network of connections to fill the gaps, it also leads to outsourcing some business processes. Increased reliance on outsourcing was a message being pushed through the event, which is good news for channel businesses providing such services. However, Buytendijk noted, companies should never divest key data, platforms or  proprietary algorithms.

Brian Burke, Research VP at Gartner, imparted some key digital business rules. “You’ll never fix or control everything. In a moment, every consumer, customer, business, partner or thing could be an opportunity. Switch from ‘‘boxing thinking’’ to ‘‘ tai chi thinking’, he said.  Currencies other than money will become more important in this new business world, he added.

The Margin questions whether margin-focused channel businesses can voluntarily switch from a tried-and-tested focused sales approach to ‘‘trusting in the network’’, without a competitive market player forcing the hand.

So how does that affect me? Digitally-driven disruption offers two key lessons to the channel. Firstly, CIOs and business leaders are being advised, based on technology evolution and international market trends, this is the general direction to take their businesses. Uncertainty and new paths provide opportunity, whether that’s selling technology through increased outsourcing of non-core operations, or soft skill support, such as change management services or training -- tech education in organisations was specifically identified as a need to be addressed by CIOs.

The second aspect is to determine how this changing business landscape will impact the operations of your own business. Mark Raskino, VP and Gartner Fellow, noted: “In the digital world, technology disrupts the traditional roles and allows customers to be manufacturers, designers, distributors, and even financiers.”

Is the South African technology supply chain ripe for disruption? Are you ready to capitalise on that? Perhaps the best piece of advice in the face of digital disruption comes from Sondergaard: “Look at how you solve the problem, not what you sell.”

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