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Economics of Connections fuelling digital business, says Gartner

Wed, 30th Mar 2016
FYI, this story is more than a year old

Business and IT leaders must structure their business and technology investments in a way that will capitalise on the new economic realities of a digital economy, according to Gartner.

"In the flash of a digital business moment, a customer may become a partner or even competitor," says Betsy Burton, vice president and distinguished analyst at Gartner.

"Digital business requires an organisational architecture that seamlessly accommodates economic agents in different roles depending on context, and can cope with an exponential increase in interactions from many different things, people and customers,” she explains.

Gartner calls new economic models arising from digital business the "economics of connections."

According to the analyst firm, this idea builds upon Metcalfe's law, which was originally used to describe telecommunications networks and states that the value of an agent within a network increases exponentially as the number of connections increases.

For example, a network of two telephones can only make one connection, but a network of five can make 10 connections, and so on, Gartner says.

"Digital business significantly changes this type of value calculation that guides investment decisions," says Burton.

"First, tens of billions of things will join the billions of people and millions of businesses online. Second, any of these agents will be able to play multiple roles: customer, partner, supplier, employee, competitor, or a combination of them,” she says.

Burton says the exponential increase in connections that digital business brings and the different roles each agent may take in the network are making the architecture of digital business less siloed.

"People, processes, information and technology are more fluid and integrated," she says.

"To accommodate these dynamic connections among people, businesses and things, enterprise architect (EA) practitioners will have to design a digital business architecture to support them,” Burton explains.

In addition, Burton says EAs must create deliverables that help business and IT leaders engage agents beyond the initial transaction.

She says speaking with peers in digital marketing and customer experience would be a good starting point, but the scope of opportunity for interactions in the economics of connections must include partners, employees, suppliers and more.

"EAs need to start developing unified solutions to track dynamic contextual information about various agents in different roles, as well as what drives their behaviour," Burton explains.

"With this ecosystem, they can identify the critical agents in their digital economy and quantify their value in terms of money, goods, influence and reputation,” she says.

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