Assess Risk and ROI With Gartner Hype Cycles

Fenika Bench


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Technology is evolving at a rapid rate. It’s easy to feel overwhelmed by the sheer number of new ideas, all promising to be the next big thing.

The Gartner Hype Cycle is a tool that aims to help businesses understand which new ideas are commercially viable.

What Is the Gartner Hype Cycle?

The Gartner Hype Cycle is a visual aid to help business leaders understand new technologies. Gartner defines it as “a graphical depiction of a common pattern that arises with each new technology or other innovation.”

The Hype Cycle methodology places emerging technologies at different stages on a chart based on their maturity and likely commercial viability.

Using this methodology, leaders can make better-informed decisions about whether a technology they’re considering is right for their goals.

For instance, some companies may be willing to invest in new, unproven technology with potentially high commercial rewards. Others may prefer something further along the cycle that’s mature, well understood and ready to be put into commercial use. Either way, the Hype Cycle can help businesses make smarter choices.

Related Article: Where Does Technology Fit in Customer Experience?

The Five Stages of the Gartner Hype Cycle

Technology consultant Muhammad Raza described the Hype Cycle as broadly covering “the initial (over-)enthusiasm of the industry when the technology is introduced, followed by a period of mass adoption when we begin to evaluate the promised value and later, a maturity phase when the technology is improved.”

The Cycle breaks down into five stages:

1. Innovation Trigger

In this early stage, innovators create a proof of concept or tech demo that shows how a new technology could be useful.

These demonstrations attract media interest, but the idea is unproven from a commercial point of view, and no consumer-ready products exist.

2. Peak of Inflated Expectations

When a new technology starts attracting attention from consumers and investors, there’s often an influx of both interest and money as companies look to experiment with it.

Writer and digital marketing consultant Kihara Kimachia wrote for IT Business Edge, “Eventually, that excitement reaches an apex and turns to disappointment as expectations are hard to meet for some reason.”

Kimachia cited expense and usability as two key causes of disappointment for early-stage technologies.

3. Trough of Disillusionment

Gartner described this phase as the time when “interest wanes as experiments and implementations fail to deliver.”

Some early pioneers of the technology may stumble at this point. Investment will only continue if the surviving companies improve their products and satisfy early adopters.

4. Slope of Enlightenment

At this stage, the technology is starting to mature. Working examples of how the technology can benefit an enterprise are available.

Developers and technology providers produce second- or third-generation versions of their products with improved stability and usability. Innovative enterprises start funding pilot projects, but more conservative companies remain on the sidelines.

5. Plateau of Productivity

Once a technology has been in use for an extended period and is well understood and widely implemented, it reaches the plateau of productivity.

Ivy Wigmore of TechTarget explained the nature of technologies in this stage, saying, “Its place in the market and its applications are well-understood.”

Wigmore also provided another marker for technologies in this stage: the introduction of standards for evaluating technology providers.

Related Article: Staying Ahead of Technology Disruption

Using Hype Cycles to Identify Technologies With Potential

Each year, Gartner produces graphs (like the one below) showing the Hype Cycle stage that emerging technologies have reached.

2021 Gartner Emerging Technologies Graph
August 2021 Gartner Emerging Technologies Graph

For example, in August 2021, technologies at the innovation trigger stage included:

  • Industry Clouds
  • Physics-Informed AI
  • Generative AI
  • Homomorphic Encryption

Meanwhile, at the peak of the inflated expectations phase are decentralized identities and non-fungible tokens (NFTs). These technologies have attracted a lot of media attention, with big corporations like Taco Bell, Pizza Hut and Pringles already introducing branded NFTS. Practical use cases, however, are still unclear.

Knowing an emerging technology’s maturity level helps business leaders assess the risk-reward ratio.

Evaluating Technologies With a Priority Matrix

Another tool in Gartner’s Hype Cycle methodology is the Priority Matrix. Gartner supplies a matrix with each domain’s Hype Cycle report. This matrix breaks down the benefit ratings of the technology (transformational, high, moderate or low) and the expected time to mainstream adoption, ranging from less than two years to more than 10 years.

Technologies at the top left of the matrix are high-priority because they have potentially transformational benefits and are close to being mainstream.

Those to the lower right are incredibly high risk since they offer little potential benefit and are still immature.

In a guide to understanding Hype Cycles, Gartner researchers explained, “The value of the Priority Matrix lies in focusing the discussion on where a company should target its evaluation of emerging technologies.”

The framework is helpful in making judgments about the explicit benefits of a technology for a company. It can also help defend against personality-driven investments, where influential individuals champion a technology they’re interested in, even if it isn’t suited to the company’s current needs or goals.

Other Information From the Hype Cycle

A technology’s position on the Hype Cycle chart is a good at-a-glance indicator of its maturity. However, Gartner also provides a separate maturity rating, broken down into seven categories:

  • Embryonic
  • Emerging
  • Adolescent
  • Early mainstream
  • Mature mainstream
  • Legacy
  • Obsolete

It’s possible for a technology to become obsolete before it reaches wide adoption. Technologies classed as mature mainstream, legacy and obsolete typically don’t appear in Hype Cycle graphs.

Gartner also considers market penetration, the “current penetration as a percentage of the anticipated target market.” Ranges start at less than 1% of the target audience and go up to more than 50% of the target audience.

However, these ranges are merely estimates and the projected target market could be widely misjudged.

IT Businesses Edge’s Kimachi emphasized that the Hype Cycle is there to give decision-makers insight into how new technologies may develop and answer questions, such as where a technology is on its development journey and what might help it shift to mainstream adoption.

Related Article: Digital Transformation Is an Ongoing Journey

The Bottom Line

Businesses that want to adopt new technologies without just taking a shot in the dark should give Gartner’s Hype Cycles a try.

With the right information in hand, it’s easier to decide which innovations best fit your business objectives and how much risk you’re willing to take.

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