Ettienne Reinecke, Chief Technology Officer; Scott Gibson, Group Executive ─ Digital Practice; and Alison Jacobson, Group Principal Digital Strategist, provide insights and predictions on what we can expect to emerge as key digital business themes in the year ahead:
Last year, when we shared our thoughts on the main technology themes for 2016, we spoke about digital transformation being high on the corporate agenda … and already reshaping the competitive landscape. Today, digital has moved well into the mainstream.
But what does ‘digital’ really mean? It’s a term that’s often used to describe a collection of many thoughts. Digital isn’t something you can simply ‘buy in’ or adopt overnight. We believe that embracing ‘digital’ is about building truly customer-centric business models on IT ─ the network, data centre, applications, and other infrastructure ─ which may be on-premise, or cloud-based.
The digital business model is agile, it’s cost effective, it’s global, and it can scale. And we believe that the time to embrace it is now.
For some, the digital age is creating a degree of uncertainty … but it’s also opening the doors to exciting possibilities. We believe it’s an era of infinite potential.
Let’s explore some of the key themes in digital business that we see emerging in 2017…
Control and ownership of data and metadata will emerge as a point of discussion and contention in the year ahead. That’s because data and metadata are the ‘gold dust’ that allow businesses to gain rich insights about customer behaviour, and thereby differentiate themselves in the market.
Truly digital businesses are ones that have their customers firmly in their sights. Think of the businesses that we admire for being digitally-proficient: Airbnb, Amazon, Facebook, and Google. What differentiates them is their obsession with customer service and insights. Their entire business models are focused on tracking consumers as they move through the world.
So disruptors aren’t the ones that own the technology … they’re the ones that own the customer.
The value of metadata is increasingly being recognised: while ‘crunching’ data allows you to derive business intelligence in order to make informed decisions, analysing metadata allows you to identify specific behavioural patterns.
As a result, businesses are becoming increasingly protective of their metadata and wary of who has access to it. Organisations don’t just want ownership and control of their data for compliance reasons but more importantly, to ensure they can perform analytics. We expect that this will trigger some interesting discussions between businesses and their cloud providers. Where are the boundaries with respect to ownership? We foresee this issue resulting in a bit of ‘push and pull’ among the various parties.
If data and metadata are to be competitive accelerators for your business, you need to devise a strategy to ensure that you have control of, and access to, all of it – not just what’s being generated by the IT function. The challenge here is that ‘shadow IT’ – that is, the independent sourcing of IT services by business units – is rife in most organisations.
In 2017, forward-looking CIOs will turn their attention to developing a data model that ensures there’s continuity and governance with respect to data and metadata
CIOs need to strike a balance between granting business units the freedom to make application-related decisions and ensuring that data isn’t being dispersed in an uncontrolled manner by various parts of the business ─ which may result in its loss and ultimately, the erosion of its value.
In 2017, forward-looking CIOs will turn their attention to developing a data model that ensures there’s continuity and governance with respect to data and metadata, and most importantly, that they can extract business value from these assets.
This isn’t easy. Our consulting teams are increasingly being asked by clients for help in understanding and adopting analytics. We enable them to determine how they can derive more insights from their data and metadata in order to make better-informed decisions than ever before.
Earlier we defined ‘digital’ as a business model that’s built on IT. This means that automation and DevOps are no longer just relevant to application developers in the IT department – they need to be embraced at every level within the organisation.
Over the last year, there’s been a great deal of interest in new DevOps companies such as Puppet, Chef, and Terraform. With good reason. But, these new players’ technologies shouldn’t be dismissed as something of interest just to developers; we believe automation has to be at the very foundation of all IT systems and processes.
If your business is still operating in a traditional, ‘analogue style’ and the only part of the organisation that’s embraced DevOps is IT operations, you’ll get a ‘disconnect’ because you’ve optimised part of the system, not the whole. Automation across the entire IT landscape ─ including development, provisioning, and operations for both on-premise and cloud-based systems ─ will provide the agility and the cost benchmarks required to be competitive.
To become a true digital business, your entire operation needs to function like a well-oiled DevOps practice
To become a true digital business, your entire operation needs to function like a well-oiled DevOps practice – one that involves continuous delivery, automated testing, and constant, iterative updates and improvements. You have to view infrastructure and systems as code that can be programmably automated.
We believe that if automation and DevOps become part of your business’s mindset and culture, they’ll become a source of competitive advantage.
In most industries, central ‘authorities’ exercise control over the community of participants and as a result, claim that they have a reason to charge a premium for processing transactions.
These centralised transaction models are beginning to be disrupted by peer-to-peer platforms like Blockchain, which support micro transactions that are virtually free of charge and can be performed in real time and at scale.
In the last few months we’ve seen Blockchain technology extending beyond the financial services community into the world of consumer goods and other sectors. It’s even being used to eliminate counterfeiting.
The fact that today’s digital disruptors are themselves being disrupted by decentralised transaction models illustrates the potential impact of these platforms. Uber, for example, operates according to a centralised transactional model. It acts at the middleman, and takes its 20─30% cut of the cost of the ride.
But in some markets Uber is being disrupted by a small start-up called Arcade City which uses a Blockchain platform to provide the same service. In their case, the transaction is peer-to-peer: they open up a ledger between the driver and the passenger directly. The passenger and the driver negotiate on the price and Arcade City takes its 5─10% of whatever price they agree upon.
Another good example is the announcement by the Australian Stock Exchange (ASX) that they will launch a Blockchain-based settlement platform. This will allow near-realtime settlement of equity trades, for a fraction of the current cost charged by legacy settlement companies. It’s easy to see how this can disintermediate traditional models.
We also believe a peer-to-peer transactional model will be fundamental to ensure the commercial viability of many Internet of Things (IoT) applications, where the payload data and the charge is minute, and time is of the essence. IoT, to be truly prolific, will require a peer-to-peer transactional model that is real-time, ultra-low cost or free, supports micro-transactions at scale, and provides the required security – all very much part of the promise Blockchain presents.
We believe that in the year ahead Blockchain, or a similar technology, will continue to disrupt centralised transaction models while also addressing another shortcoming in the industry – cybersecurity.
Over the last 10─15 years, the security segment has focused on protecting the perimeter and, more recently, on detecting intrusions and defending against them. But the architecture for protecting important information hasn’t changed fundamentally.
With technologies like Blockchain ─ which involve a distributed ledger and strong encryption ─ there’s no longer a central data environment to attack. So they inherently solve many of the current cyber threats we face.
Today, the world of IT is truly hybrid. There’s no such thing as a greenfield environment, unless you’re a very small start-up. This means you need to manage a blend of on-premise and cloud-based assets ─ and your cloud assets typically won’t be delivered by a single provider.
We believe this will have implications on the skills sets that businesses require. In the world of hybrid IT you need to be able to treat your on-premise assets like software, and be skilled in managing cloud-based infrastructure and software. The focus will move from ‘units of build’ to entire workloads that are underpinned by a complete reference architecture that has been tested and validated and has clear scaling metrics. These workload reference architectures are characterised by the level of automation at the provisioning, transition, and operational cycles. The way you design and operate systems in a hybrid IT environment is vastly different – as is the breadth of skills required.
In the world of hybrid IT you need to be able to treat your on-premise assets like software
In a hybrid IT environment, people need to work in multi-party, multi-vendor ecosystems. So you need individuals with a collaborative mindset, who can look inside and outside the organisation – across a very porous business boundary – and draw on resources that aren’t necessarily on your payroll and assets that aren’t on your balance sheet. In the world of hybrid IT, it’s no longer about integrating systems, it’s about integrating ecosystems.
That’s easier said than done. Migrating to and managing a multi-party, multi-platform IT environment is complex. How do you ensure orchestration and automation and ensure that workloads move seamlessly between the various platforms and your on-premise environment? What about metering and billing? What about your data ownership and metadata access? How do you leverage common service abstractions? How do you ensure security and compliance? Today, even large enterprises with substantial IT budgets – which in the past were able to keep pace with change with an insourced IT model – are realising that they don’t have the skills required to operate a hybrid environment.
This may well stimulate discussions in the market about the merits of engaging with cloud brokers or specialist hybrid IT managed services providers that can offer an end-to-end ‘service layer’ or a lifecycle of managed services that includes service design, transition, and operational steady state services to eliminate this complexity.
Over the last year, the level of technological innovation – and adoption of those innovations – has reached an all-time high. As the rate of innovation accelerates, we’re seeing market ‘disruptors’ starting to be disrupted by players that are using next-generation technologies.
The data centre provides us with an interesting example: Hypervisors and virtualisation have dominated data centre transformation discussions over the last few years. These technologies haven’t yet been fully adopted… but they’re already being disrupted by containerisation.
The interest in containers isn’t surprising: they involve a micro-services architecture, you can leap-frog the process of virtualisation, and eliminate the need for hypervisors entirely. Containers are operating system-independent, so you can easily move them between your on-premise environment and different cloud providers.
We believe that the rise of containers has the potential to disrupt a number of current incumbents in the market. Some of the larger players who ‘missed the virtualisation boat’ and are placing their bets on containers, seeing them as a means to raise an offensive against virtualisation vendors. Meanwhile, hyper-scale providers such as Google are open-sourcing container technologies, making the technology accessible to many who would not have been able to afford the innovation, and spurning rapid ecosystems and further solutions to make this development robust.
We believe that the rise of containers has the potential to disrupt a number of current incumbents in the market
Containers will most likely be a key enabler of hybrid IT, especially in the data centre, allowing workloads to be moved between different compute environments with much greater ease than today’s virtualisation environments allow. This has been a major inhibitor of true hybrid IT to date. Once this barrier is removed, the market will see an acceleration in the adoption of hybrid IT models.
So, this is certainly going to be an interesting trend to watch in the year ahead.
We believe technology is the key that unlocks potential for businesses, and for the world,in ways we’re only beginning to comprehend. By applying our capabilities in digital infrastructure, hybrid cloud, workspaces for tomorrow, and cybersecurity, we look forward to continuing to help our clients accelerate their journeys to become digital businesses in 2017.
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