Enterprises must fully exploit digital economics

Enterprises must fully exploit digital economics as it causes real market disruptions and help in exploiting new value creation opportunities for the company.

Chris Howard, vice president and distinguished analyst, Gartner said, "Digital technologies are expanding the value of traditional products and services by using data, content, algorithms, analytics and the connections between economic agents in a digital ecosystem. Some organizations, such as GE, Uber, Hitachi and Monsanto, are already beginning to change the basis of competition by exploiting digital value to fuel business growth. They have understood that the framework for exploiting the value of digital business is digital economics."

Gartner defines digital economics as the creation, consumption and control of value associated with digital products, services and assets in organizations. Digital economics creates a framework for enterprises to understand and account for how much of an organizations business value can be defined as potential or realized digital value.

Saul Judah, research director, Gartner said, "While this tactical approach to digital value can result in very real process and financial improvements, the greatest potential for digital value lies in more strategic initiatives, such as creating new markets, empowering employees, changing the basis of competition and crossing industry boundaries.

Gartner predicts that by 2018, the new economics of connections will drive organizations to increase investments in connected physical assets and systems by 30 percent. Connections between people, businesses and things have business value. That business value exists in the connection itself as well as the asset being exchanged through the connection. Economic value, therefore, is a function of the number, context and usage of connections in the enterprise.

Algorithms and analytics offer accelerators of value and are themselves of exchangeable and monetizable value. An analytics process may use algorithms in its creation, which could also be monetizable through an algorithmic marketplace, making it available to enterprises of all types and sizes to use. "Without a corresponding economic framework, these elements of digital value remain a loose collection of digital tools and techniques," said Judah.

"IT leaders should establish a digital economic framework that connects digital value to a renovated economic architecture. This will help them establish a strategic, commercially sustainable foundation for creating new markets and new revenue source," added Judah.