2018 Hype Cycles: Riding the Innovation Wave,

A Gartner Trend Insight Report

Published: 13 August 2018 ID: G00363408

Analyst(s): Marcus Blosch

Taking advantage of innovations in digital technologies to create new

business models, services and experiences remains a priority for many
organizations. New waves of innovation build on what has gone before to
create new opportunities.

Opportunities and Challenges

■ Innovations in digital technologies continue to appear at an almost relentless pace. Each wave
of innovation builds on what has gone before, opening up new opportunities to create business
models, services and experiences.
■ An inclination toward the business ecosystem continues to define much digital innovation, with
many organizations reaching beyond platforms to the opportunities of distributed ecosystems
powered by technologies such as blockchain.
■ Innovation remains challenging. Creating new business and operating models, building the right
skills and competencies and culture of innovation is a big step for most. Real innovation is
much more than just technology.

What You Need to Know

■ Digital innovation can be thought of as three waves — the first wave a focus on the value chain,
the second wave a focus on building the platform and the third a focus on the distributed
ecosystem. Each wave has a different theme and focus, and each builds on what came before.
■ Decide where your organization is on its innovation journey, and decide where the right focus is
for you. Use the Hype Cycles to track the themes and technologies that are relevant to you. And
don’t forget to look to the future, and how the next wave will play out in your organization.
■ Shift your perspective, as much as creating new business models and technologies, each wave
asks you to change the way you see the world, from being very internally focused to being part
of a dynamic, evolving business ecosystem.
 Insight From the Analyst
Use Gartner’s Hype Cycles to Drive Your Digital Innovation Initiatives

Marcus Blosch

For many organizations, the pressure is on to innovate their business and operating models with the
latest digital technologies. Almost every organization has a digital strategy, even though many
business and IT executives still aren’t really clear what digital means. There are many innovative
technologies to choose from. The challenge facing executives is understanding where their
organization needs to innovate, and what technologies are relevant. And it’s here that Hype Cycles
can help.

The first step is to understand your business and operating models. Business architecture and, in
particular, business capability modelling help provide that insight. It’s then possible to identify where
we need to innovate, and what types of technologies are relevant. Perhaps we want to create a new
customer experience or optimize a key business process. The next step is to identify the relevant,
smart assistants for our customer experience and perhaps the analytics for our business process.

The Hype Cycles for these technologies will then show us the technologies in each space, and
where they are in their life cycles. Based on our attitude to risk, we can then decide if it’s time to
invest or wait until the technology develops further. We can bring this together in our technology
1
evaluation process. Hype Cycles are an important part of any organization’s innovation process.

We have organized the 2018 Hype Cycle Special Report around five trends that are at the heart of
the current wave of digital innovation. We hope this special report inspires you to look more deeply
into the Hype Cycles relevant to you, and to the Gartner research on business ecosystems and
digital transformation.

Executive Overview
Definition
The hype around all things digital shows no sign of easing, with many organizations focused on
2
digital business transformation. It’s hardly possible to look at the business or technology world
without finding a story about the latest technology, the cool new business models and startups
appearing, or that AI will soon take all our jobs. But as with other technology innovations, from the
3 4
telegraph to the internet, we can identify waves of innovation, each transforming organizations
5
with the next wave building on what has gone before (see Figure 1).

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 Figure 1. Waves of Business Innovation Driven by Technology

Source: Gartner (August 2018)

The first wave of innovation focused on the value chain, a linear process like converting raw
materials to products that are then brought to market. Technologies like cloud and mobile allowed
organizational processes to become more real time, analytics helped automate and optimize, and
collaborative technologies helped the workforce become more productive. These improvements
helped the value chain, essentially doing what we do now but better. This wave is still playing out,
6
and is set to be the focus for many organizations for some time to come.

The second wave is focused on building platforms to allow the business to enable new services and
experiences for customers. Platforms are underpinned by technologies, such as cloud and
analytics, multiexperience platforms, and open modular architectures. This turned organizations
7
outward into the business ecosystem with the aim of creating new services and experiences for
customers. The platform also allowed the organization to mediate and play an active role in its
8
business ecosystem. This itself is underpinned by technologies like cloud and analytics, and also
9
with open modular architectures and APIs, along with a shift to voice and immersive technology to
create new experiences. This wave is still rolling through.

The third wave builds and deepens what has gone before, oriented outward toward the business
ecosystem. The key theme here is a need to participate in these ecosystems, but not necessarily

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 have control over them. This perspective has been driven by technologies such as blockchain, and
10
a recognition that many challenges (such as smart cities ) need such an approach.

Looking forward to 2019, we can expect to see each of these waves diffuse and continue to build
on each other. New technologies and innovative ideas will no doubt appear and play their part in
this. In our 2018 Hype Cycles we aim to give you a deeper understanding of those individual
technologies and their stage of development so you can effectively plan your innovation strategy for
the year ahead. (For those of you who are new to Gartner’s Hype Cycles, or looking to refresh your
understanding, take a look at our guide “Understanding Gartner’s Hype Cycles,” accompanying this
report).

Research Highlights
As each wave of innovation rolls through, the technologies and focus areas change. Part of this, of
course, is the broader business and IT industry looking for the new story, but part of it is
organizations building on what has gone before for them. A look at our top 10 Hype Cycles over the
11
last three years (2015 to 2017) shows this happening (see Figure 2).

Figure 2. Top 10 Hype Cycles Over the Last Three Years

Source: Gartner (August 2018)

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 There has been a lot of change in the Hype Cycles attracting attention, though the Hype Cycle for
Emerging Technologies is clearly a reader favorite. In the 2017 Hype Cycles we can see the
importance of the three “A’s” — Hype Cycle for Artificial Intelligence, Hype Cycle for Analytics and
Business Intelligence, and Hype Cycle for Data Science and Machine Learning — and the
appearance and rise of Blockchain — Hype Cycle for Blockchain Business and Hype Cycle for
Blockchain Technologies.

Core technologies remained a top 10 Hype Cycle — Hype Cycle for Cloud Computing and Hype
Cycle for Internet of Things. Again, we expect these to be popular in the 2018 Hype Cycles, as
many organizations are still building these out. Security has always been an important issue, and
with the focus on the business ecosystem, it is set to be of increasing importance. A quick look at
our fastest-moving innovation profiles shows there’s a lot going on (see Figure 3).

Figure 3. Fastest Moving Innovation Profiles in the 2018 Hype Cycles

Source: Gartner (August 2018)

Our expectation for the 2018 Hype Cycles is that we will see these themes continue to attract
interest. At this stage, we can see five themes playing out over the next year (along with a small
selection of Hype Cycles):

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 1 — The Shift From Platforms to Business Ecosystems
Over the last three years, many organizations have been focused on developing a platform strategy
12
and building out their platforms. Platforms are set to become an important part of the business
and operating models of many organizations. But the focus of attention in business ecosystems has
been on the “distributed” model — where the organization plays a part, but does not necessarily
control, the business ecosystem. Over the coming year, we expect to see Blockchain become more
influential both as a business model and technology, and for organizations to develop a better
understanding of their business ecosystem.

Related Hype Cycles:

“Hype Cycle for Business Ecosystems, 2018”

“Hype Cycle for Blockchain Business, 2018”

“Hype Cycle for Blockchain Technologies 2018”

“Hype Cycle for Smart City Technology and Solutions, 2018”

“Hype Cycle for Platform as a Service, 2018”

2 — The Increasing Importance of Intelligence

Intelligence has may strands to it, from artificial intelligence to analytics and machine learning. Each
of these strands has a particular theme, set of applications and associated technologies. And these
different strands can apply to many different places in the business and operating model. So there’s
lots of opportunity for organizations. Over the coming year we expect organizations to build the
business and operating models, the skills and competencies, and the technologies to more deeply
leverage intelligence.

Related Hype Cycles:

“Hype Cycle for Data Science and Machine Learning, 2018”

“Hype Cycle for Analytics and Business Intelligence, 2018”

“Hype Cycle for Artificial Intelligence, 2018”

“Hype Cycle for the Internet of Things, 2018”

“Hype Cycle for Back Office Analytic Applications, 2017”

3 — Digital Security Comes to the Fore

As organizations turn themselves outward into the business ecosystem, they expose themselves.
Their actions, data, intellectual property and assets are now spread far more widely, and often with
a less control or influence. Risk and exposure can come from anywhere in the business ecosystem,

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 and often from unexpected places. Organizations must become much more aware of the risks they
face, and develop a more sophisticated approach to security, privacy regulations and compliance in
the ecosystem.

Related Hype Cycles:

“Hype Cycle for Cloud Security, 2018”

“Hype Cycle for Data Security, 2018”

“Hype Cycle for Threat-Facing Technologies, 2018”

“Hype Cycle for Privacy, 2018”

“Hype Cycle for Application Security, 2018”

4 — Creating New Customer Experiences

13
Growth remains a top CEO priority. A focus on the customer and creating new services and
experiences is an important part of many organizations’ growth strategies. Platforms can provide
the way to create and deliver these services, along with new ways to understand and interact with
the customer. New technologies, such as voice, smart assistants and immersive technologies, open
the opportunity to create entirely new experiences.

Related Hype Cycles:

“Hype Cycle for Customer Experience Analytics, 2018”

“Hype Cycle for Digital Design, 2017”

“Hype Cycle for Wearable Devices, 2018”

“Hype Cycle for the Connected Home, 2018”

“Hype Cycle for Digital Commerce, 2018”

“Hype Cycle for CRM Customer Service and Customer Engagement, 2018”

5 — Increasing Employee Engagement

An engaged, collaborative and productive workforce underpins every organization’s efforts to
innovate and deliver the services and products customers want. A younger workforce is joining
organizations, with very different expectations on how technology fits into their working and private
lives. New workforce technologies can provide productive ways of working that allow employees to
deliver those superior customer experiences.

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 Related Hype Cycles:
“Hype Cycle for the Digital Workplace, 2018”

“Hype Cycle for Unified Workspaces, 2018”

“Hype Cycle for Human-Machine Interface, 2018”

“Hype Cycle for Mobile Apps and Multiexperience Development, 2018”

This is, of course, just a small selection of the 2018 Hype Cycles. We would like to invite you to go
deeper by visiting the Hype Cycle landing page on Gartner.com. This gives a complete list of this
year’s Hype Cycles, and breaks them down into different groups to help you find those relevant to
you.

Lastly, following shortly after the publication of the Hype Cycle Special Report, we publish the My
Hype Cycle Toolkit. This allows you to select the innovation profiles relevant to you and your
organization, and create your own Hype Cycles. This is a very powerful and useful tool, so look out
for that. And, of course, if you have any questions, reach out to the analysts in those Hype Cycles of
interest to you.

Related Priorities
Table 1. Related Priorities

Priority Focus

Cross-Industry Innovation and This cross-industry research will show CIOs how to participate in the creation of
Disruption business and customer value by combining innovations, processes and
technologies from multiple industries.

CIO Leadership in Innovation In the digital era, the CIO serves as a business leader and an IT leader. This
and Strategic Business Change initiative focuses on the first job, showing how the CIO can contribute to the
development of an enterprisewide strategy.

CIO Leadership in Governance, Leadership in governance, strategic execution and operational performance targets
Strategic Execution and establishing situational governance to drive strategic execution and operational
Operational Performance performance excellence.

Source: Gartner

Gartner Recommended Reading

Some documents may not be available as part of your current Gartner subscription.

“Understanding Gartner’s Hype Cycles”

“Driving the STREET Process for Emerging Technology and Innovation Adoption”

Page 8 of 11 Gartner, Inc. | G00363408

 “Six Barriers to Becoming a Digital Business, and What You can Do About them”

“Top 10 Strategic Technology Trends for 2018: A Gartner Trend Insight Report”

“Four Definitions Make a Digital Business Strategy Process More Effective”

“Digital Business Transformation: Closing the Gap Between Ambition and Reality”

Evidence
Gartner Research Circle survey “API Usage and Its Role in Digital Platform Growth”:

■ This research was conducted via an online survey in March 2018, among Gartner Research
Circle Members — a Gartner-managed panel composed of IT or IT-business professionals.
■ In total, 129 members participated.
■ Qualified participants included business end users with either an IT or IT-business focus as a
primary role. Respondent organizations currently use APIs (73%); currently implement APIs
(17%) or plan to implement APIs in the next 12 months (10%). Respondents are involved in
organization’s API strategy at some capacity.
■ The survey was developed collaboratively by a team of Gartner analysts and was reviewed,
tested, and administered by Gartner’s Research Data and Analytics team.
1 “Driving the STREET Process for Emerging Technology and Innovation Adoption”

2 “Digital Business Transformation: Closing the Gap Between Ambition and Reality”

3T. Standage. “The Victorian Internet: The Remarkable Story of the Telegraph and the Nineteenth
Century's Online Pioneers.” Bloomsbury USA. 25 February 2014.

4W. Isaacson. “The Innovators: How a Group of Hackers, Geniuses, and Geeks Created the Digital
Revolution.” Simon & Schuster. 6 October 2015.

5 “Catch the Wave,” The Economist.

6 “Industrial Internet: A Visual Journey — IoT Infographics,” GE Digital.

7 “Digital Business Transformation: Closing the Gap Between Ambition and Reality”

8 “Eight Ways Ecosystems Supercharge Business Models”

9 APIs are crucial to digital platforms. Gartner’s 2018 survey “API Usage and Its Role in Digital
Platform Growth” found that 38% of respondents reported that APIs are critical for a Digital Platform
strategy.

10 “Turning Smart Cities Into Intelligent Urban Ecosystems”

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 11We have used a simple metric looking at the number of client views each Hype Cycle had over its
published year.

12 “4 Starting Points for Digital Business Transformation”

13“2018 CEO Survey: CIOs Should Guide Business Leaders Toward Deep-Discipline Digital
Business”

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