Prepare for the disruption of digital giants

By John-David Lovelock, vice-president & distinguished analyst, Gartner Inc. 

The needs of IT buyers are shifting. CEOs are focused on growth and are more focused on realizing business outcomes from their IT spend. Digital business is giving rise to new categories of business growth and the Nexus of Forces (mobile, social, cloud and information) has given way to digital business as the primary driver of IT spending growth.

Digital business is having a profound effect on the way business is done and how it is supported. A major source of disruption in the near future will originate from digital giants employing the latest technologies for competitive advantage. Digital giants such as Alibaba, Amazon, Apple, Baidu, Facebook, Google and Tencent, are shifting the dynamics of how people purchase things, where they go for information and indeed how they make some of the more critical decisions in their lives.

Think about buying food, visiting your grandmother, dining with a client, getting to another city, talking to a friend or riding a bicycle. Mobile apps and payments, smart agents (such as Amazon Alexa), and digital ecosystems (such as Apple HomeKit, WeChat Utility and City Services) will make the digital giants part of many activities we do as individuals.

These next generation offerings, such as the Internet of Things (IoT), blockchain and smart machines, are fueled by business and technology platforms that will be the ‘engine’ for brand new categories of revenue. The shift is now on business activities and not purely technology: it is how technology is disrupting and enabling new forms of business.

Gartner has ranked the top 100 largest tech companies worldwide, based on their revenue across IT (excluding communications services) and component market segments. The Gartner Global Top 100: IT is showing the shift from the Nexus of Forces (mobile, social, cloud and information) to digital business as the driver of IT purchasing.

This shift shows up most notably in the top five vendors in the Gartner Global Top 100: IT — Apple, Samsung, Google, Microsoft and IBM. Mobile phone revenue is down for three of the top four vendors that sell mobile phones, as are PCs/ultramobiles/tablets. However, the segments that support digital business — Internet-based IT products and services, digital media services and IT services — showed growth.

Digital Giants will leave their mark in 2017

As enterprises increasingly digitalize their products and services, digital giants (Google, Apple, Facebook, Amazon, Baidu, Alibaba and Tencent) can become involved in, or even take over, the digital experience.

So far, the focus of the digital giants has mainly been in the consumer, citizen and employee world. Digital business, however, is impacting all areas. For example, the industrial internet is a trend for asset-intensive enterprises to digitalize large assets and factories, and supply chains. Because the digital giants have not been involved in these B2B areas, there is opportunity for others to take the lead. A leader in the industry could create a digital ecosystem to coordinate how the combined airline, airport, aircraft engine — essentially the aviation sector — could work together to keep flights on time and operational costs lower. Cities could create a digital ecosystem to bring together public- and private-sector players to fulfill the vision of the smart city.

In B2B industries, the opportunity to be a “digital giant” of an industry is up for grabs and remains uncontested by the digital giants in the consumer world.

John-David Lovelock is a vice president, distinguished analyst and chief forecaster at Gartner, Inc.

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