Metaverse definitions vary as do predictions on when it will arrive. But smart CIOs should familiarize themselves with the concept and ways it might affect their company.
Welcome to the era of the next big thing — the metaverse.
At least, welcome to the age of metaverse hype.
Although that hype is currently outstripping reality, IT and business leaders should understand the ways in which the metaverse concept may affect how organizations and people engage, interact and transact.
Key concepts in this metaverse introduction for the CIO include the following:
- What is the metaverse — and are we there yet?
- What technologies are powering the metaverse?
- Why CIOs might consider putting the metaverse on their tech roadmap
- Why companies need CIOs to lead metaverse development
- 7 essential steps CIOs can take to prepare for the metaverse
- Overview of use cases
What is a metaverse?
Technology and gaming companies — including Microsoft, Apple, Amazon, Google, Meta Platforms, formerly known as Facebook, Roblox, Nvidia and Unity — are all already duking it out to grab their share of the metaverse and figure out which aspects they can realistically conquer. But they’re not the only ones. Retailers such as Nike and Walmart are pioneering into new frontiers as well.
That activity has powered a full-throttle hype as if the world is on the verge of Matrix-like capabilities. For now, The Metaverse — as in one giant, unified metaverse — isn’t a reality. Current definitions of metaverse vary wildly and so do assessments of how fully developed the concept is today.
That said, Gartner’s definition encapsulates some major characteristics of the virtual space under discussion:
- collective and shared;
- created through enhanced digital and physical reality;
- persistent and immersive;
- accessible through any device, from VR headsets to tablets; and
- powered by blockchain currency.
The metaverse can be a fully digital realm in which people interact as avatars, said Marty Resnick, vice president and analyst on Gartner’s technology innovation team.
It can also be a mix of real-world and virtual experiences, such as individuals in their home attending a real-world rock concert where they’re able to see, hear and interact with those attending in person. In either case, the metaverse includes the ability to transact so that participants can use nonfungible tokens (NFTs), cryptocurrency or some other blockchain-enabled digital currency to buy and sell products and services and offer customer experience (CX) through 3D reconstructions.
Right now, a number of companies are piloting initial versions of what the metaverse will be, Resnick said. But the fully realized metaverse will rest on major advances to three areas: ability to easily transport and conduct life in another realm, a realized 3D representation of the physical world and a Web3 economy.
„We’re already seeing these three pieces come up today, and when they all come together, that’s where we’ll see the true metaverse,“ Resnick said.
Although something resembling a unified metaverse is a decade or more into the future, a number of companies are starting to work on what will be precursors to that future vision, Resnick said.
Whether a fully connected metaverse becomes a reality remains to be seen.
Understand that any current example of „the“ metaverse is neither a single destination nor a fully realized space, said Jeff Wong, global chief innovation officer at professional services firm EY. Rather, it’s a collection of different emerging digital worlds, some of which are public and others that are not — each built for its own purposes.
In other words, rather than one metaverse, a number of metaverse-like projects are under development.
Resnick likens it to the early days of the internet.
These early days of the metaverse are akin to the advent of the commercial internet, when providers each had their own services, companies created their own World Wide Web islands and the many parts weren’t interoperable, Resnick said.
The technology is simply not ready to support a fully immersive and shared metaverse. Interoperability, computing power, software protocols, networking capacity and the degree of sophistication don’t exist to create a true metaverse today — and it may never get there. Still, many industry watchers believe that enough of the components exist that CIOs and business leaders may want to explore the business opportunities the metaverse presents. Moreover, metaverse-related concepts present a host of risks, so CIOs will partner with their security and legal colleagues and proactively communicate those risks with other areas of the business.
What technologies are powering a metaverse?
CIOs are likely already familiar with at least some of the various technologies underpinning a metaverse, and talk has especially heated up since the COVID-19 pandemic and the metaverse’s relationship to hybrid work. Here’s an at-a-glance look at some important ones:
- NFTs, blockchain and cryptocurrency. Blockchain provides a decentralized technology to buy, sell and prove ownership. NFTs are based on the same blockchain technology used by cryptocurrency but can stand in for things such as real estate, art or a song.
- Augmented reality and virtual reality. These give a metaverse its immersive digital experience, although AR and VR taken alone are not a metaverse.
- Artificial intelligence. AI will be used in a number of ways for metaverse creation, including application to nonplayer characters and to facilitate lifelike experiences with the digital reality.
- 3D reconstruction. Particularly since the pandemic hit, more companies have been working to create 3D construction of virtual environments and items. Some companies are already using digital twins for everything from improving supply chain management, such as with Google’s supply chain digital twin, to helping to make the perfect espresso.
- Internet of things. Already, IoT is in use to connect and share data of a wide array of items in the physical world. In the metaverse concept, IoT is key to connecting real-life physical places, items and other things to 3D simulations, particularly for real-time simulations.
Why CIOs might consider putting the metaverse on their tech roadmap
CIOs might want to consider how they can help their C-suite colleagues understand the technologies that power metaverse initiatives, as well as the opportunities and risks those will bring.
My recommendation for CIOs: Be ready to add that third location [the metaverse].Marty ResnickVice president and analyst, Gartner
Most retailers and other companies have a brick-and-mortar and an online presence, Resnick said.
„My recommendation for CIOs: Be ready to add that third location [the metaverse],“ he said.
The immersive reality concept has distinct use cases that companies may want to explore, in particular, applications for employees and those that target customers, he said.
The metaverse may largely be in the virtual world, but a number of companies are banking on its profit potential being real.
„[Every year] $54 billion is spent on virtual goods, almost double the amount spent buying music,“ according to „Opportunities in the metaverse: How businesses can explore the metaverse and navigate the hype vs. reality,“ a 2022 report from JPMorgan.
As part of its broader blockchain effort, JPMorgan moved into the virtual frontier in February when it opened its Onyx lounge in Decentraland, an Ethereum-powered VR platform, where users can buy virtual land as NFTs and in other ways create, sell and experience content and applications.
Early-days activity is growing and indicates that at least some businesses are giving weight to the metaverse concept.
Why companies need CIOs to lead metaverse development
Whether or not a metaverse is a particular IT leader’s top initiative will depend on the company, but chief information officers are well suited to lead in this new frontier.
CIOs have an opportunity to provide answers and direction, Wong said.
„The C-suite is looking for leadership here on how they’re going to figure this out not just from a technology perspective, but from a strategic perspective [and] a possibilities perspective,“ he said. „The CIO can establish him- or herself as a strategic thinker as it applies to this space because there is a lot of technology that underlies it.“
7 essential steps CIOs can take to prepare for the metaverse
Given that opportunity for CIOs, here’s a look at some exploratory steps to consider.
1. Shape the metaverse strategy
Organizational leaders in various industries, from higher education to event planning, are already thinking about delivering existing products and services in a metaverse, as well as devising value-adds and new offerings, Resnick said.
Given the technological underpinnings of a metaverse, CIOs are well positioned to discuss both potential upsides and pitfalls of engaging in this sphere, he said. Similarly, their role leading IT can do proper due diligence with vendors and help other business leaders within the company cut through the hype that typically accompanies new tech. CIOs are in a position to give better assessments of the capabilities and limitations of engaging in the metaverse.
„CIOs have to build a strategy to [capitalize on the metaverse] and talk about the new business model that [it] is going to offer,“ Resnick said. „You’re basically opening the doors to a new world.“
2. Address the long list of metaverse risks
No new frontier is without its dangers. And that is certainly the case for metaverse. This is just a short list:
- environmental concerns;
- cybersecurity issues;
- legal issues;
- sexual harassment and other forms of harassment;
- privacy issues;
- misinformation; and
- effects on mental health, including lowered self-esteem and increased feelings of isolation.
All point to reasons CIOs should give careful consideration to any metaverse initiatives. High on the list of CIO priorities should be to meet with compliance, finance, legal, risk and security.
Engaging and transacting in the metaverse brings opportunities but also risks, security concerns and plenty of questions, Wong said.
Consider, for example, how a company will enable transactions in the metaverse. Some of the current digital platforms use cryptocurrency, while others — notably, many gaming platforms — have their own currency that players can earn or purchase.
„What does legal and finance think of that? Can your company accept cryptocurrency? How do we own and, therefore, sell a digital object? And how does a company account for that?“ Wong asked.
Legal, finance, risk — all have to partner with the CIO on these [metaverse] decisions.Jeff WongGlobal chief innovation officer, EY
Likewise, the metaverse is creating whole new considerations around compliance issues, data privacy, risk and security requirements.
„So, all those areas — legal, finance, risk — all have to partner with the CIO on these decisions,“ Wong said.
3. Try out metaverse platforms
Even though the world is a long way from the unified metaverse depicted in Ready Player One, which helped to popularize the concept, it can be helpful to see what exists now.
„Go out and see and test out all the different platforms that are out there,“ Wong said. „CIOs need to understand the landscape because there are many different use cases.“
Analysts and market reports point to Decentraland, Somnium Space and The Sandbox as a few options to test for a metaverse experience, in addition to the gaming platforms, such as Roblox, Fortnite and Minecraft.
4. Develop use cases
CIOs should use such testing to devise potential use cases for metaverse initiatives, Wong said.
Some of these are next-level iterations of video conferencing — such as a metaverse alternative to Zoom meetings in Ukraine — and other ways of interacting that more people are now used to, as well as CX and training uses.
„You can do meetings on private sites to come together and have a brainstorming session and create a pre-loaded room with whiteboards and sticky notes, similar to if you’re sitting in a room together,“ Wong said. „There are education and training [opportunities]; you can imagine a customer trainer environment where a counter customer service person might be working with a belligerent customer, where you can see the [physical] aggression. And then, there are branding opportunities and new revenue opportunities.“
Wong said some designers are already selling digital goods.
The startup The Dematerialised is a case in point: It sells only digital apparel and accessories.
5. Expect ongoing evolution
CIOs and their organizations should expect the metaverse to start in a similar way, Resnick said. Organizations are likely to first build their presence on certain platforms that eventually will work, like „on-ramps into the metaverse,“ with navigation from one place to another working as seamlessly as the internet does today.
„There’s a lot of speculation, and there’s a lot we’re going to find out in the next couple of years, and we’ll see how it all comes together,“ Resnick said.
6. Plan for upskilling IT teams, new apps and supporting technologies
CIOs will also have purely technical work to do as they enable their organization’s move into the metaverse, said Jagjeet Gill, partner with Monitor Deloitte, the strategy practice for Deloitte.
For starters, they will have to enhance existing lead-to-cash architecture and adopt Web3 in order to support new types of transactions and digital currencies, Gill said. They’ll have to ensure seamless integration between their existing IT architecture and multiple decentralized networks. And they’ll need to make additional investments in supporting technologies, such as infrastructure cloud, 5G connectivity, AI, machine learning and data security.
As part of that effort, CIOs will need to upskill their IT workforce.
IT leaders will have to hire or train staff in new skills, such as Solidity, a programming language for writing smart contracts on blockchain platforms, Gill said.
7. Consider trying out a personal metaverse presence
CIOs can put their technical expertise to immediate use by establishing a presence now on one or more of the metaverse-style platforms, said Kyle Li, assistant professor of communication design and technology at Parsons School of Design, a college within The New School.
„Having a presence is a good first step that can help you build your business plan,“ Li said, noting that experimenting on existing platforms can help CIOs cut through the misunderstanding and miscommunications about the digital future as they work to formulate a long-term strategy.
Moreover, it can also help leaders better understand the experiences of the generation that is growing up as metaverse natives, Li said.
Overview of use cases
Below are some use cases for a metaverse that CIOs may want to consider:
- immersive entertainment
- business operations
- improved education and training
- enhanced CX
- augmented staffing
- advertising, branding and marketing opportunities
- digital locations
- new revenue streams
- more connected work experience
The CIO’s introduction to metaverse concepts is early days
An ecosystem of virtual worlds powered by cloud computing will require interoperability and partnership. And metaverse development currently looks a lot more like competition than cooperation. That the metaverse concept doesn’t even have a truly common definition is one sign that the world is not there yet.
Still, CIOs would do well to understand what — if anything — they should do today in preparing for metaverse business opportunities and be able to support their views to the rest of the business.