Key questions for global companies
- Are you developing innovations faster than your competitors? If not, how serious is the risk of losing your competitive advantage if a competitor provides a disruptive offering?
- Are you satisfied with your ability to leverage newer technologies such as social media and cloud-based services, analytics, security and privacy and virtualization solutions?
- Are you confident you have the right level of investment in intelligent data-mining capabilities, such as business and behavioral analytics? Do you have a strategy for gaining competitive advantage through better data use?
- Are you developing products and services for multiple mobile platforms? If so, are your stakeholders aware of the added financial and operational costs involved?
- Have you reassessed your training tools and requirements to make sure that your people understand how technology affects operations, marketing and strategy?
“Ten to 20 years from now, we may look back on the present as the dawn of the Smart Era: a time when rapid and continuous innovation changed almost everything about the way we live.”Patrick A. Hyek, Global Technology Sector Leader, Ernst & Young
Summary: Smart technology offers the promise of remote access to health care and education, while blurring boundaries between industries. The power of the individual will grow and new competitors will emerge, disrupting industries and creating new business models.
Over the past 25 years, the digital revolution has changed the way we work and play almost beyond recognition. Yet the smart, interconnected world we live in now is still neither as smart, nor as connected, as we would like it to be.
Consumers want more powerful devices and applications, while businesses seek more cost-effective technology to cope with increasingly complex challenges.
Satisfying these demands will lead to explosive growth in data and analytics, to new competition in almost every field, and to the disruption and realignment of many industries.
Specifically, we expect to see the following changes:
Businesses will compete on analytics to differentiate themselves
The growing number of embedded sensors collecting information about the world, and the rise of social networks that store the data people share, will generate immense quantities of information. IDC, a market research firm, suggests that the amount of digital information created each year will increase to 35 trillion gigabytes by 2020, requiring 44 times more data storage than in 2009.
For example, telematics applications, similar to global positioning systems, will allow organizations to send, receive and store information via telecommunications devices while controlling remote objects.
Although commonly associated with the automotive industry, telematics applications are being developed for use in medical informatics, health care and other fields. Despite these advances in technology, simply collecting and managing the massive volumes of data will provide minimal value.
The real payback comes when business intelligence is applied to enable companies to make better strategic decisions.
Business intelligence, which enables organizations to gather quantifiable data on each area of the organization and analyze it in a way that yields information they can act on — helping them enhance decision making, improve performance, mitigate risk and sometimes even create new business models —; is growing in importance.
Smart mobility will change the way people interact
Increasingly, smart devices — portable tools that connect to the internet — have become a part of our lives. In the last quarter of 2010, sales of smartphones outpaced those of PCs for the first time, according to data from IDC.
By 2014, more smart devices could be used to access the internet than traditional computers. The move to an increasingly mobile world will create new players and new opportunities for a variety of industries.
We expect that new emerging market companies will be significant competitors, growing rapidly in part because a lack of legacy systems will enable them to profit more quickly from new technology as it becomes available.
Emerging markets will create plenty of opportunities related to smart technology, and they will not be limited to for-profit enterprises
In Kenya, for example, mobile phones are being used to collect data and report on disease-specific issues from more than 175 health centers serving over 1 million people. This technology has reduced the cost of the country’s health information system by 25% and cut the time needed to report the information from four weeks to one week.
Smart mobility: technology-enabled options driving transformation
Technology blurs boundaries
Many industries will be disrupted by the consequences of technology innovation. The "blur" created by digital technologies will intertwine geographies, economies, industries, products and even private and business lives. Technology insiders have long spoken of "true convergence," and this is it.
As smart devices become increasingly accepted, companies will move into adjacent markets to exploit new revenue models such as mobile commerce and mobile payment systems. Already, a number of data and tech giants are jockeying for position.
As these waves of disruption continue, whole new markets will be created even as long-established businesses are destroyed. In this changing environment, network providers, for example, will be faced with a choice: either evolve into the role of innovation provider, or be content simply to serve as a utility.
Over the long term, the ultimate blurring of boundaries might take the form of Web 3.0 — often called the "semantic web" — a term that refers to functions and activities involving the integration of machines, the web and human beings. Currently the stuff of science fiction, the semantic web is nevertheless an area to watch.
Cloud computing takes off — finally
Analysts have been talking about cloud computing for years, but cloud-based services are finally starting to take off.
By 2016, Gartner, a consultancy, expects all Forbes’ Global 2000 companies to use public cloud services, transforming much of the current IT hardware, software and database markets into infinitely flexible utilities.
When cloud computing becomes widespread, it will transform businesses and business models, potentially reducing both initial and recurring costs for IT buyers, increasing their flexibility and lowering their risks. What’s not to like about an infinitely scalable, pay-as-you-go business model?
Despite concerns related to data security, privacy and business continuity, its value proposition makes the success of cloud computing inevitable. Over time, cloud-based services will grow increasingly sophisticated and evolve into full-scale business processes as a service.
The power of the individual will spur innovation
Google, Facebook, Twitter, smartphones, tablets and e-readers — technologies that originated in the consumer space — are now reshaping the way companies communicate and collaborate with employees, partners and customers.
Through the new possibilities for "social listening," businesses are able to better understand what their customers and employees need and want.
More change can be expected when the generation that has grown up with new technologies and instant information gratification joins the workforce.
For example, by 2014, Gartner forecasts that social networks will become the main form of business communication for 20% of employees worldwide.
Government’s role in innovation grows
Governments will increasingly become involved in technology, investing in a broad range of applications — from home-grown innovation incubators to local manufacturing sites that create jobs and manage geopolitical risk.
In cloud computing, for example, governments are taking the lead, much as the US did in the development of the internet.
In China, the Beijing Academy of Science and Technology has built the country’s largest industrial cloud-computing platform, designed to serve small- and medium-sized enterprises in government-supported industries, including biotech, pharmaceuticals, new energy and knowledge-intensive manufacturing.
At the same time, governments haven’t forgotten their regulatory role. As citizens share more personal data on websites such as Facebook, many governments are considering regulations to protect citizens’ privacy and corporations’ data.
The EU is developing stricter privacy rules, including an "online right to be forgotten," which would require websites to delete data permanently at an individual’s request.
However, the public pressure to strengthen privacy protection through legislative means is likely to vary by region. Consumers in regions such as North America, for example, seem willing to trade some privacy in return for customized service.
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