Gartner: CIOs Need To Welcome Age Of The Algorithm

At the recent Gartner Symposium/ITxpo in Orlando, Senior Vice President of Gartner Research Peter Sondegaard delivered his firm’s view on data and algorithms to CIO’s:

“If the most important thing you offer is data,” Sondergaard said, “you are in trouble.  Big data is not where the value is. Data is certainly necessary, but it is transient. By itself it is not transformative. The organization can view you as the data keeper, but anyone can store data. Anyone can hire someone to store data and even analyze it. Data is inherently dumb. It doesn’t do anything unless you know how to use it and act with it. Algorithm is where the real value lies. Algorithms define action.”

Having been responsible for data governance/data quality of a significant data warehouse and business intelligence/analytics simultaneously at a major bank, I can’t agree more.  Of course we need to have the right quality of data in order to manage risk and capital but having the data is one thing – getting it in a useful form is also important…. yet taking action with analytics-driven insights is where value is created.

Sondegaard continues :

“By 2020,” Sondergaard said, “smart agents will facilitate 40% of interactions. Consumers will forget apps. The post app era is coming. By 2020, Microsoft’s strategy will be centered on  Cortana instead of Windows.”

Notice Garter’s “post app era” view on agents.  I also agree that today’s “apps” will become agents.  I believe, further, that this lines up very well with the rapid expansion of revolutionary Blockchain technology and future “smart contracts” which are essentially acting as smart agents.

Sondegaard gets it perfectly right:

“The CIO needs to become the keeper of the algorithm. According to Sondergaard you can start with three easy steps:

  1. Inventory your algorithms. This isn’t just about software. Anything in the business can be an algorithm from the secret recipe for your product, a business process you do especially well, or a true algorithm around parsing data. The important part is that you are aware of the algorithms that make your business work and are unique to you.
  2. Assign ownership to algorithms. Decide who owns and operates each of these algorithms vital to your business. Sondergaard recommends your CDO be put in charge of not only your data, but also your algorithms.
  3. Classify your algorithms. Decide which to give and which to hold private. Sondergaard expects that, “A market for algorithms will emerge. Or more accurately, a market for snippets of software that so a specific thing.” Buytendijk added, “By 2018, one out of three businesses will be monetizing their information assets.” In other words, the data you have is useless, but if you have a skillset for making use of data, the skillset itself has value above and beyond the data you collect.”

I coined this approach to business as “Algonomic” because we need to move beyond just the data to the actual use and impact of the data … and though it’s the decision-making algorithms that drive value, data is still the fuel.

To continue the discussion on Blockchain, smart contracts and algorithms, please follow “Algonomic” at (Twitter: @algonomic)

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