January 30, 2019

Digital Disruption Part II: Emerging Technologies

Dennis Jolluck

Dennis Jolluck
Vice President - Applications Development & Field Product Management - Latin America Division/Oracle

Share This Post

As the age of digitization progresses, “early adopter” enterprises are already outperforming companies who continue to operate traditionally, according to a global survey performed by McKinsey (How digital reinventors are pulling away from the pack – June 2017). Clearly, companies competing in traditional ways have seen lower rates of revenue and earnings growth than companies competing and leveraging digitization.  These companies are investing in technology, analytics and digital talent; they are not only innovating their existing business models, but also creating entirely new business models. Also, nearly 20% of the C–Level respondents reported negative revenue growth during the past three years. When asked how much revenue would be at risk during the next three years, the response was approximately one-third could be lost or product lines cannibalized due to digital pressures. 

What are Digital Leaders and Enterprises doing differently?

 There are three critical areas where the Digital Leaders are separating themselves from the incumbents:

  • Innovating their Business Models: This is not just minor modifications but significant changes to their strategy and their core businesses – launching new businesses leveraging digital technology.
  • Leveraging Digital Technology at Scale: This is more than a “proof of concept”, where you are just kicking the tires. This is scaling entirely across the organization and across business units. 
  • Aggressive Leadership and Investment: Strategic enterprises are consuming digital technology at a rate of more than three times as high as traditional incumbents. In fact, some enterprises are divesting their “incumbent” business lines (due to digital obsolescence) even before the pain is felt!

 Enterprises embarked upon the digital transformation journey approximately 10 years ago, by leveraging the following technologies:

  • Cloud Computing (IaaS, PaaS, SaaS). Enough has been stated about the cloud.  Update:  We are only at the “end of the beginning” for the initial cloud migration phase.
  • Mobility: How can anyone live without a smartphone today? For the enterprise, application consumption and access is the norm. 50% of internet searches are conducted through a cell phone. 
  • Social Capabilities: Created the foundation of “Big Data”. Two billion active users on Facebook. Unstructured social data such as groups, conversations, blogs, tagging, ratings, recommendations answered the “why” questions to searching and purchasing products/services. 
  • Big Data Analytics: For over 50 years, enterprises have been focused on “structured” data (e.g. Financial Statements). Over the last two years alone – 90% of the data in the world has been generated. With the introduction of “semi-structured and unstructured” data, producing intelligence and insight into customer behavior has risen to predict their buying experience. And we have only just scratched the surface. 
  • Transformation of IT ‘grunt’ work: Historically, IT teams invested 80% of their efforts to mundane standard maintenance (e.g. backups, applying patches to numerous and dissimilar configurations, fighting virus & cyber attacks). By moving to the cloud and essentially outsourcing these tasks, companies can now focus on more high-value tasks, like “innovation”. 

 As a result, the foundation has been established through Cloud Computing, Processing Power, Big Data and Digital Transformation…..and this is only the tipping point into the next wave of technologies! 

 Machine Learning and AI

There has been an exponential growth of computational power and data recently. Also, advancements in image and video processing and natural language processing has evolved and matured (Siri, Alexa). Then by applying algorithms to data has resulted in improved decision making. For example, look at how Waze has evolved over the last 3 years. With the transformation to the cloud, the ability to efficiently run the machine learning algorithms and the vast wealth of data being generated it’s easy to see why the convergence is happening now.

"Internet of Things (IoT)"

 Over 13B devices are IoT enabled today. By 2020, 50B devices and 8 zeta bytes of data will be in use to reinvent, digitize or eliminate 80% of business processes and products from a decade earlier. McKinsey believes consumers will average 4 IoT devices to communicate with the cloud and the annual economic impact will be anywhere from $3.9T USD to $11.1T USD by 2025. Some of the most common use cases today are improving operations, increasing visibility throughout the supply chain and creating new business models. 

Blockchain

According to Marc Andersson, Blockchain will be the most fundamental invention in the history of computer science, even greater than the creation of the “internet”. Gartner predicts that 10% of the Global GDP will be stored in Blockchain technology by 2027 and $176B USD will be “business value added” by 2025. 

Blockchain is the enabler technology that will transform double-entry bookkeeping to single-entry with encrypted messaging and verifiable, mutual agreement between yourself and your business partners. You can only add data to the blockchain, there is no deletion (unless approved by all parties).     

 In the past, trying to trace tainted food (for example) would take 7 – 14 days. And the most effective approach would be to centralize data.  So imagine a supermarket to ask every farm, every supplier or warehouse to integrate with its system. Of course, data would be centralized and easily accessible. But imagine every other retailer to ask every one of their supply chain partners to do the same thing….not very realistic!

 Blockchain opportunities and immediate benefits on the horizon:

  • Reduce costs: No need for intermediaries; eliminates third-party validation which decreases transaction costs and processes transactions faster. Administrative and compliance record checking eliminated.
  • Increase Traceability: A digital passport is created for every part created and the completion of the finished goods journey. Safety and welfare standards are met throughout every point of the supply chain.
  • Verifying Ownership: Keeping track of property rights, IP, image rights (photo, music), and seek payment across the internet when permission was not granted. CV/Resume verification for degrees, qualifications, experience. 
  • Enhancing Security: Usage of encryption and the storing of data across various computers and data centers, which can only be reconstructed by someone with a private key. Potentially, large scale data breaches could be a thing of the past.  

Conclusion

Over the last 10 years, 50% of the Fortune 500 have disappeared. Last year’s Fortune.com survey predicts this figure will increase to 75% by the year 2027. Today’s enterprises have to be data-driven, customer-obsessed/multi-channel aware and data-driven. Assuming you are moving and have moved to the cloud, and removed the bulk of your IT maintenance costs to your vendor, you now have the opportunity to focus on real innovation and create some disruption and competitive differentiation in your industry.  The infrastructure, tools and applications available today has never been better. 

Comments? You can contact me directly via my ExecRanks profile.

Share This Post