Data has become the currency of the always-on world. However on its own, it is not enough - companies need to make sense of the wealth of data they have and this is where the algorithm economy comes in.
This is according to Warren Olivier, regional manager for southern Africa at Veeam, who notes there is no need for businesses to just keep collecting large amounts of data and doing nothing with it.
Gartner defines algorithmic business as the enablement of business value through the action of algorithms on data.
Given the growth of big data, decision-makers are realising it is necessary to extract value from it, says Olivier.
For the most part, the focus has been on getting systems in place that take care of data storage and its management, he adds.
"With people being connected to corporate back-end systems using a variety of devices from wherever they are 24/7, it makes sense to have the building blocks in place. However, this is no longer good enough," says Olivier.
Algorithm marketplaces will disrupt the analytics ecosystem and likely even the whole software ecosystem, says Alexander Linden, research director at Gartner.
Gartner believes that the predominance of algorithms will only increase in the digital age, especially with the growth of the Internet of things, adds Linden.
Linden says forward-thinking analytics and IT leaders should understand their mechanics and implications to start benefiting soon.
According to Gartner, while basic data analysis has obvious value, it won't transform the business in a way that competitors couldn't also replicate.
True change will happen when businesses apply unique algorithms to their information, rather than simply collect more data, it explains.
Steve Prentice, VP and Gartner research fellow at Digital Business Leadership Group, says algorithmic business will extend and embed business intelligence into the very fabric of a potentially highly automated business.
"It is important to note that algorithmic business is the next big thing within digital business, says Gartner. It is not a separate trend from digital, but describes how best-practice organisations will approach digital by encoding intelligence in their software and enabling business moments to scale, it adds.
"As digital business takes hold and the volumes of data from the Internet of things and the mesh of data created by multiple devices and myriad of daily transactions grows almost exponentially, increasing use of algorithms (and the automation they bring) represents the most cost-effective and efficient way to handle the volumes of data and to exploit the growing numbers of business moments that arise."
According to Prentice, the rapid rate of technology change, the growing levels of connectivity between individuals, business and smart devices and the growing volatility and flux in the marketplace all conspire to favour increased use of non-human systems to identify and exploit opportunities.
"Background trends such as cloud computing, ubiquitous connectivity, growth in smart connected devices, more data and growing social acceptance of inline activity and technology-based solutions all contribute towards growing acceptability whilst providing the infrastructure to support data collection and analysis on a previously impossible scale."
Some organisations are starting to realise the power of their algorithms and are then starting to make them available on a broader basis - such as Goldman Sachs with their trading algorithms, says Prentice.
"We are starting to see the mass introduction of algorithms as researchers develop ways to make algorithms smarter and more effectively mine those new or previously untapped data resources."
Over time those smart systems and the algorithms that power them will gain greater capabilities and will start to optimise business outcomes through goal seeking, adaptation and some form of self-learning, says Prentice.
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