What is happening in regards of technological development and digitisation, how does it affect our company and is automatisation and disruption something I should worry about now? This is a question I’ve gotten several times.
At current adoption rates, tech giant Cisco expects that by the turn of the decade three out of each four companies will have become fully digitalised. A study from the John M. Olin School of Business at Washington University estimates that forty per cent of today’s Fortune 500 companies on the S&P 500 Index will no longer exist in 10 years. You guessed it: they will have been corporate victims to digital disrupters starting up or growing at full speed today.
Consider now the size of the economic impact of linking the physical and digital worlds through the IoT, and the periods over which such impact is expected:
- McKinsey calculates an economic value of between US$3.9 and US$11.1 trillion will be generated each year by 2025
- General Electric estimates US$10 to US$15 trillion to be added to global annual GDP from 2016 and over the following 20 years
- Cisco projects US$8 trillion of new IoT net profits will be generated worldwide by 2025. Approximately 80% of these will benefit enterprises
- Business Insider Intelligence sees IoT asset inflows (industrial and otherwise) of US$6 trillion, which will return to investors US$13 trillion
- BII also predicts that by 2018, IoT-connected devices will reach 9 billion, equal to all smartphones, smart TVs, tablets, wearables, and PCs combined today
“… the potential for the Internet of Things to drive
efficiencies, increase productivity and promote economic
growth is becoming reality.”
— Chris Buddin
Global Head of the Clean Technologies and
Renewables Group and the Internet of Things, Goldman Sachs
The sheer size of these macro figures makes it difficult to get our heads around how, if at all, this new wave of disruption would impact us at the micro level. Pundits will argue that there are significant challenges facing the IoT — security, privacy, investment required, regulation, technology standard, and so on. It would hardly come to your corporate doorstep any time soon.
What is undisputed is the following:
- The IoT is already being allocated large amounts of capital expenditure at companies and public funds from government;
- These resources are already having far-reaching effects in businesses, public services and people; and
- The speed at which change is happening makes it almost certain that your organisation will be affected — positively, but potentially also
adversely — sooner than any of us would predict.
Global titans such as GE and Cisco themselves; Amazon, Apple, Google and Intel are a sample of a much larger group of companies already offering next generation
IoT-related services. These include machine-to-machine connectivity, industrial cloud solutions, software-as-a-service and big data analytics, to name but a few. The
number of supply chain companies already reaping benefits from their relationships with these pioneers is also significant.
What can you do to be as prepared as possible?
- Start the digitisation today, better many small steps and a flexible speed boat than a huge turn around of the tank ship in 3 – 5 years when it’s likely that all your competitors are ahead of you
- Transparent communication and engagement is key; people must buy into your new brave world and want to be an active part of it
- Co-creation internally across your organization as well as externally in your industry or across industries
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