Big data is useless without algorithms, Gartner says

Big data was so yesterday; it's all about algorithms today, according to Peter Sondergaard, Gartner Research senior vice president.

Speaking at Gartner Symposium ITxpo 2015 on Tuesday morning, Sondergaard explained that key to helping companies grow the digital side of their business is to tap into algorithms.

"Big data is not where the value is. Sure, data is necessary, but it's transient. By itself it will not be transformative. Your organisation may see you as the data-keeper, but anybody can gather data today, anybody can store it, and anybody can hire somebody to do data analysis -- no matter how big the data set is.

"Data is inherently dumb. It doesn't do anything unless you know how to use it, how to act on it, because algorithms is where the real value lies. Algorithms define action," he said.

In fact, Gartner has forecast that total IT spending in Australia will reach almost AU$80 billion in 2016, a 2.8 percent increase from 2015. Meanwhile, in New Zealand, IT is forecast to surpass NZ$11.7 billion, a 2 percent rise on 2015.

In addition, Gartner predicts worldwide spending on the Internet of Things will exceed $2.5 million every minute in 2016, and in five years 1 million new devices are expected to come online every hour.

"The algorithmic economy will power the next great leap in machine-to-machine evolution in the Internet of Things," he said.

"Products and services will be defined by the sophistication of their algorithms and services. Organisations will be valued, not just on their big data, but the algorithms that turn that data into actions, and ultimately impact customers."

Sondergaard said in order for businesses to take advantage of algorithms, they need to run their digital business alongside their existing analogue business, something in which Gartner has dubbed as the "bimodal business" strategy. He said this will become a key strategy for businesses as analogue revenues flatten, and as intelligent algorithms will help businesses act on the data they have.

According to Sondergaard, CEOs believe that their digital revenue will increase by more than 80 percent by 2020.

"Organisations are creating separate business units, focusing on digital, separate from their traditional businesses (Mode 1)," he said.

"They are trying new ways of reaching the customer, of running operations, of driving diverse innovation. They are acquiring and investing in digital technology companies, not waiting on existing suppliers to build capabilities because they have to start in a different place."

Another area Sondergaard addressed was security, saying that CIOs need to rethink their security and risk investments by recommending enterprises move their investments from 90 percent prevention and 10 percent detection and response, to a 60/40 split instead.

"You can't control the hackers. You can control your own infrastructure by using more automation, more outsourcing, and more network-based algorithms," he said. "Simplify your systems. We must move away from trying to achieve the impossible perfect protection, and instead invest in detection and response."

Disclosure: Aimee Chanthadavong travelled to Gartner Symposium ITxpo 2015 with Gartner.