The trillion-dollar opportunity for the industrial sector: How to extract full value from technology (2022)

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With profitable growth in the industrial sector flatlining in recent years, 1 companies have been striving to innovate faster, get much closer to customers, and achieve a step change in operational efficiency. Having exhausted the potential of traditional levers—capital-productivity programs, operational-cost reduction, footprint optimization, and the like—they urgently need to find new ways to grow their margins and their business. But how?

In our view, the explosion in data, connectivity, and cheap processing power and storage means that industrial companies should be looking to technology-enabled transformations for their next horizon of performance improvement and growth. To take just one trend, connected devices in use are expected to more than double between 2017 and 2020. As new data sources multiply and enable companies to generate and act on insights in real time, a whole range of innovative products, services, and business models is opening up.

A handful of leaders are already turning these trends to advantage and reaping early rewards. Yet across the sector as a whole, success stories are few and far between. After seeing promising results from early initiatives, many companies struggle to scale up and unlock value on a broader front. Indeed, when McKinsey surveyed executives developing IoT solutions in 2017, more than half had been running pilots for one to two years, and more than a quarter for even longer. So what’s going wrong?

In our view, a piecemeal approach to tech enablement lies at the root of the problem. Many companies are adopting artificial intelligence, machine learning, cloud services, and a host of other technologies on a case-by-case basis, instead of selecting technologies to serve their strategy or meet specific business goals. We believe success depends on a holistic approach to transformation. That means defining your aspirations, linking them to sources of business value, working out which technologies will help achieve them, and then doubling down to achieve impact across the enterprise.

Below, we analyze the value that could be unlocked across the industrial sector through successful tech enablement, look at where this value can be created in the business, identify the enablers needed to capture it, and consider the steps smart leaders take to make their transformation a success.

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Sizing the prize

Our analysis shows that successful transformation across the whole industrial sector would be worth $0.8 trillion to $2 trillion in total return to shareholders, an increase of 9 to 22 percent. This value comes from two sources: an estimated $0.3 trillion to $0.9 trillion in revenue growth (an improvement of 3 to 10 percent), and $0.3 trillion to $0.7 trillion in margin expansion from efficiency gains (an improvement of 4 to 9 percent).

In turn, revenue growth is generated by a range of factors: new business models with services and features that unlock value for end users; better knowledge of customers that helps companies tailor products, develop new services, and increase customer loyalty; the broadening of channels and access to new customers via e-commerce; and the optimization of pricing across products and services. Meanwhile, the cost savings that drive margin expansion come from the use of automation, analytics, and digital tools to enhance workforce productivity across the business, coupled with the application of advanced analytics and product-customization techniques to optimize nonlabor costs.

We analyzed these sources of growth and savings both within the enterprise and at industry-segment level to determine where the value lies.

Where value can be captured

The value that could be captured from tech enablement across the industrial sector is divided among five areas of value creation within the enterprise: innovating and developing products and services; making and delivering; selling; servicing; and running the corporation (Exhibit 1).

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As part of our analysis, we identified how much additional value each of these five areas could contribute at an industry level. The results are illustrated in Exhibit 2.

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Finally, we examined how value is distributed across the four core segments in the industrial sector: automotive; commercial and other vehicles; aerospace and defense; and semiconductors and other industrial products, as shown in Exhibit 3.

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Innovating and developing products and services

As connectivity spreads, data sources proliferate, and valuable insights can be generated in real time, companies have unprecedented opportunities to innovate across the board in products, services, and business models. Successful innovation relies not only on sound data and technology but on a deep understanding of how to use them to tap into new sources of value. For industrial companies, this begins with an intimate knowledge of end users’ needs and pain points. Depending on where you sit in the value chain, this could well mean getting to know not just your customer but your customer’s customer. It’s also likely to mean expanding into unfamiliar areas outside the boundaries of your traditional business.

Manufacturers of heating, ventilation, and air conditioning (HVAC) systems, for example, are venturing beyond their core of equipment sales. By using technology to analyze data from motion, temperature, and energy-use sensors, they can take over temperature monitoring and control in the office or factory from corporations, and help them manage their energy costs. In much the same way, original-equipment manufacturers (OEMs) and suppliers selling agricultural equipment have devised sophisticated controls that automatically adjust operating parameters and settings in real time to suit external conditions. The speed and direction of, say, a harvester can be fine-tuned to crop density, enhancing productivity and reducing equipment wear and tear. Manufacturers can deliver and charge for these and many other features on demand.

Making and delivering

Businesses can capitalize on advances in automation, machine learning, and robotics to make themselves more cost-efficient, flexible, and responsive to customer needs. The new era of automated production and data exchange opens up a broad range of use cases that can cut cost, increase yield, and support new manufacturing methods. Take the autonomous guided vehicles that move materials in plants and distribution centers, like the Kiva robots (renamed to Amazon Robotics) that Amazon uses to pick and pack goods in its fulfillment hubs. Automation can cut storage, picking, and sorting costs by 10 to 30 percent—a hefty savings given that these activities typically account for up to 40 percent of costs in a distribution center.

In manufacturing, one of the many activities that lend themselves to automation is welding, a highly manual and error-prone process at most plants. Welding can account for 20 to 30 percent of the cost of manufacturing automotive equipment and large energy pipelines, for instance, and bad welds can be responsible for up to 5 percent of welding costs. Using robotic welding with intelligent controls, and monitoring quality during the process rather than afterward, can reduce bad welds by up to 80 percent, adding up to 0.5 percent to manufacturers’ margins.

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Selling

Today’s industrial companies sell their equipment through a complex set of channels that have evolved over decades. However, as industrial buyers and end users become more digitally savvy, they are increasingly doing their product research and order tracking online, often via tablets or smartphones. Meanwhile, traditional channels and sales models are being disrupted by innovators using technology to carve out new roles in the value chain.

To catch up, industrial companies should first gain a clear understanding of how their customers are buying and then work back along each customer decision journey to assess which digital tools and channels will add most value to the sales process and how to reinvent their selling platform. The options to consider range from e-commerce through an analytics engine that informs pricing and proposes the next product to buy, and from microsegmentation to digital customer-experience tools. When applied throughout the business, tools like these can improve productivity, margins, and customer stickiness, boosting profitability for first movers in a given sector.

Servicing

In aerospace, automotive, commercial vehicles, and other advanced sectors, aftermarket sales have grown more quickly than other areas of the business as capital investment in new equipment has slowed. Accordingly, aftermarket services—the provision of parts, repairs, maintenance, and digital services for the equipment a manufacturer sells—are the new focus of attention for leading industrial companies. These services provide more stable revenues than sales of new equipment and, often, higher margins as well. One McKinsey analysis across 30 industries showed that the average EBIT (earnings before interest and taxes) margin was 25 percent for aftermarket services, compared with 10 percent for new equipment. 2

The aftermarket service process is ripe for disruption. As innovative solutions such as predictive maintenance mature, manufacturers can use them to create stronger links with end customers, form a clearer view of how these customers use their products (and how the products perform), and capture increasing revenues from services. At the same time, tech enablement can be applied to field-force management, scheduling, and parts management to reduce costs and improve productivity.

Running the corporation

The many industrial companies that have pursued growth via acquisition end up running their business on multiple enterprise resource-planning (ERP) and legacy systems. Not surprisingly, across the advanced industrial sector, the median spend on general and administrative expenses accounts for 4 to 8 percent of revenue. Automating manual processes via robotic process automation (RPA) can significantly reduce these costs. Other measures to cut costs and improve cash flow include building data lakes to centralize data sets across ERPs, automating financial reporting and invoice generation, and using advanced analytics to improve cash management.

Pulling it all together

To maximize value creation in a tech-enabled transformation, smart companies start by establishing a sound set of use cases across all five of these business elements. That’s a critical step in setting aspirations, capturing value, and tracking value capture over time. Whether a company focuses on two or three of the business elements or looks to create value from all five through tech enablement, like the example in Exhibit 4, will depend on the nature of its business and its position in the value chain. But to avoid leaving value on the table, leaders would be well-advised to examine all the elements in detail before deciding on the best approach.

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The other imperative in starting out on a transformation journey is to check that your organization has all the supporting elements it needs, as described below.

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Ensuring the right enablers are in place

In considering the capabilities, structures, and practices that industrial companies need for a successful transformation, we find it helpful to define three sets of prerequisites that executives can use as a checklist in prioritizing initiatives and allocating resources.

Foundation: Data strategy, cybersecurity, cloud infrastructure, and analytics

A comprehensive data strategy involves identifying the data sets you need to drive insights across your priority use cases, understanding the sources of those data sets, and forming partnerships to access those that you need but don’t own. For instance, a manufacturer seeking to reduce downtime for its mining equipment will need to combine its own data with a host of maintenance and usage data from the mining operators that use the equipment. Establishing which data sets you need and then building productive partnerships with OEMs and component manufacturers to access them will be critical in maximizing value capture.

As companies connect enormous numbers of devices and develop ever-more-complex data structures, cybersecurity becomes increasingly important. Once, cyberrisk was mainly confined to IT functions, but as businesses hook up their production systems to the Internet, operating technology comes under threat as well. 3 Seventy-five percent of the experts who took part in a recent McKinsey survey said that IoT security was important or very important, yet only 16 percent felt their organization was well-prepared. Building resilience will involve prioritizing assets and risks, improving controls and processes, and establishing effective governance.

Establishing the right cloud infrastructure involves creating flexible environments and sound application programming interfaces. Companies also need to think through which data should be in the cloud and which on the “edge”—on the devices themselves. Such decisions will largely depend on how much real-time processing is required. For instance, autonomous driving lends itself to an edge architecture, whereas analyzing consumption trends by aggregating data from connected appliances can be handled in the cloud.

Equipping your organization with data analytics capabilities to drive insights will be critical in capturing value. Whether you build the capabilities in house or outsource them will depend on your circumstances and needs. Often it makes sense to do both in the early stages, building capabilities over the long term while using outsourcing to accelerate short-term impact. Regardless of which route you take, data analytics and insight generation must be linked to actions that you can take to generate impact. For instance, if you are introducing analytics-driven dynamic deal scoring to improve margins, your reps will need a quoting tool that shows them the recommended prices, and leaders will need a performance-management system that tracks improvements across the whole sales team over time.

Organization: Agile operating model and culture

The ability to respond quickly to changes in the business environment relies on an agile operating model with small, flexible teams and clear processes that allow timely decision making on issues relating to governance, funding mechanisms, resource allocation, and so on. Old-style yearlong development cycles must give way to rapid iterations in which teams repeatedly test and refine concepts and products with customers.

Such an approach requires corresponding changes in an organization’s culture. Successful companies take great care to foster a mind-set that embraces change, is comfortable taking risks, and views failure as a springboard for learning.

Accelerators: Design thinking and ecosystem

Using customer insights to rapidly innovate on products, services, and offers calls for new capabilities and tight linkages between a company’s sales channel and its product organization. Design thinking uses closed-loop processes to generate customer insights, translate them into product features and services, rapidly deploy these elements with the customer, test the impact, and repeat as necessary until the desired impact is achieved.

Building an ecosystem is the final enabler and involves establishing a set of technology and go-to-market partnerships. The complexity of a tech-enabled transformation requires partners to share data, insights, and the value created in a mutually satisfactory and sustainable manner.

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Getting started

  • Though tech-enabled transformations in the industrial sector are still in the early stages, companies have no time to lose. An early mover with the right strategy could not only grow profitably across the board, but also leapfrog over competitors and capture disproportionate value by gaining market share from peers or being the first to respond to radical shifts in customer behavior.
  • Every company’s approach to transformation will reflect its individual starting point and business priorities, but any leader would do well to follow a few basic steps:
    • Analyze every aspect of the business. When embarking on a tech-enabled transformation, the best way to start is by taking a step back and considering exactly what you want to achieve. Obvious though that might sound, it’s not so easy to act on. Some companies are so overwhelmed by, say, the promise of the Internet of Things that they jump straight into working out how to introduce IoT applications into their products and operations. Instead, evaluate your whole business to see where technology could unlock the greatest value. If you are an industrial distributor, for instance, you may be able to improve your margins much faster by adopting analytics-based pricing or digitizing your selling process than by creating IoT-enabled services. Implementing and scaling basic technologies is a quick way to learn and capture value before venturing into more sophisticated territory such as remote diagnostics and maintenance.
    • Reimagine your business model and aspirations. Don’t use technology to make your current model marginally more efficient. Set a bold aspiration to ensure the changes you make don’t just reinforce the status quo. Define metrics and operational performance indicators to track improvement, and ensure you have leadership support. Treat your program as a transformation, not an incremental initiative.
    • Understand how new technologies affect working processes. To succeed, new technologies need to operate in conjunction with legacy systems and existing workflows. Consider an OEM adopting IoT-enabled solutions to offer predictive maintenance. When a client’s system detects an equipment problem, it automatically notifies the OEM to send a service rep to carry out unscheduled repairs. But for this to work, the OEM has to integrate these notifications into its service-dispatch processes so that reps are sent out promptly. Closing the loop on workflows in this way is a critical step in capturing value.
    • Understand where you are and build your transformation roadmap. Too often, companies deploy solutions without first taking care to understand their current situation. Set a baseline and be realistic about your starting point and digital maturity—which will partly determine how much value you can expect to capture. Then, work out where the value lies, assess your capabilities, and build a roadmap that prioritizes and sequences the key elements in your transformation. Develop a clear view of the value-chain elements your business touches, your competitive environment, and the ways technology could disrupt it: for instance, through customer-service apps. Think in terms of three-to-five-year horizons to ensure you keep pace with the evolving technology and business landscapes.

Though the industrial sector has been slower to digitize than many other sectors, advanced technologies now allow companies to reshape all their activities from product development to sales and servicing. Our experience indicates that taking a bold, strategy-led approach and identifying opportunities systematically across the entire business is the best route to a successful outcome

We believe success depends on a holistic approach to transformation.. Below, we analyze the value that could be unlocked across the industrial sector through successful tech enablement, look at where this value can be created in the business, identify the enablers needed to capture it, and consider the steps smart leaders take to make their transformation a success.. In turn, revenue growth is generated by a range of factors: new business models with services and features that unlock value for end users; better knowledge of customers that helps companies tailor products, develop new services, and increase customer loyalty; the broadening of channels and access to new customers via e-commerce; and the optimization of pricing across products and services.. Would you like to learn more about Digital McKinsey ?. The value that could be captured from tech enablement across the industrial sector is divided among five areas of value creation within the enterprise: innovating and developing products and services; making and delivering; selling; servicing; and running the corporation (Exhibit 1).. These services provide more stable revenues than sales of new equipment and, often, higher margins as well.. A comprehensive data strategy involves identifying the data sets you need to drive insights across your priority use cases, understanding the sources of those data sets, and forming partnerships to access those that you need but don’t own.. Equipping your organization with data analytics capabilities to drive insights will be critical in capturing value.. Understand how new technologies affect working processes.. Though the industrial sector has been slower to digitize than many other sectors, advanced technologies now allow companies to reshape all their activities from product development to sales and servicing.

By 2020, millennials will account for 50 percent of the US workforce, rising to 75 percent globally by 2025.. If these tasks were automated, the controller could evolve to become a strategic thought partner for the business.. At the same time, automation, data, and connectivity are changing the nature of work: McKinsey research found that a significant amount of retail activity can be automated using technology.. To date, industrials have lagged behind other sectors , such as retail and banking, in their ability to integrate digital technologies into operations.. This trend increases the urgency for industrial companies to pursue a tech-enabled transformation.. Companies that implement a comprehensive approach will be well positioned to substantially increase revenues, margins, and profit (Exhibit 2).

Digital levers across different set of technologies can help companies realize gains across revenue uplift, margin improvements and total share capital.. From a traditional lens these benefits can be broadly aligned with five elements of the business value chain – product development and innovation, manufacturing and delivery, selling, servicing and the administrative (G&A) activities.. Other aspects include leveraging IoT wave and the data generated by the product themselves and uncovering hidden insights to innovate better products.. The main sources of value involve connected products and services, optimized R&D and data backed business models.. Industrial IoT and robotics has begun a new age of manufacturing commonly referred to as Industry 4.0.. Transforming customers’ journeys from consideration to repurchase, enhancing pre-sales and discovery phase by incorporating digital marketing, enabling IoT and technology at the customers’ physical touch points like dealer stores etc and real time dynamic price optimizations plays a big role in transforming customer experience and create stickiness for customers.. Digital channels of sales are also increasing coverage for many as they are now able to reach customers that were earlier not serviceable by traditional channels.. So, it is of foremost priority for these industries to reinvent this space.. Trends like technology platforms as-a service, workforce as a service, dynamic dispatching and reactive to proactive service further accentuates this process.. are already a reality and reaping in benefits for many of the organizations operating in these sectors.. The primary reasons for many to fail is not taking a holistic approach to digital reinvention.. It can be churn management for a B2B company versus user acquisition for a retail company, the onus falls on the organization to effectively prioritize these opportunities and start creating a road map for it.

$100 Billion.. In 2019, individual donors donated $309 billion dollars.. [2] If Charity Navigator influenced 10% of individual giving, that’s $31 billion dollars.. We’re a third of the way to $100 billion!. Charity Navigator influences these individual decisions at a scale that truly creates shifts in market behavior and social outcome results.

In its 2016 meeting, the B20 (a coalition of international business leaders that develop policy recommendations for G20 leaders) assembled an infrastructure taskforce to identify what should be done to reinvigorate private investments in public infrastructure and close the infrastructure gap.. PIMAC, an independent and professional entity, vets proposed infrastructure projects, assesses return on investment, and provides advice on improving project design.. The Development Bank of South Africa (DBSA), for example, created a specific advisory business to assist project owners in de-bottlenecking high-priority infrastructure projects.. Private investors are keenly interested in brownfield assets, and governments can sell brownfield projects in order to fund greenfield projects.. Selling brownfield projects to fund greenfield projects is a clear win-win for governments and investors.

Many other companies are starting to apply advanced analytics (AA) and digital tools to derive instantaneous insights into field operations and use them to optimize deployment in real time through techniques such as dynamic field dispatching and remote servicing.. This value comes from four main sources: a 1 to 3 percent revenue uplift from cross-selling, upselling, and new business models; a 3 to 10 percent increase in service revenue from smarter pricing of aftermarket parts and services; and a 20 to 30 percent reduction in field-service personnel costs from optimizing demand and labor management.. With a successful tech-enabled service strategy, a company can not only gain a deeper understanding of how customers use its products but also increase the number of customer touchpoints, giving it more opportunities to explore and respond to customer needs.. Our experience of working with dozens of industrial companies on technology transformations shows that new value can be created from all parts of the servicing process: managing customer demand, optimizing field labor, managing parts, and delivering superior customer experience (Exhibit 4).. After identifying issues through remote monitoring, companies can use digital and analytic tools to automate delivery and support services, dispatching field technicians promptly to jobs when they are needed and reducing service-delivery costs and inefficiencies.. Few companies codify knowledge effectively, and a customer’s service experience often depends more on the technician than the company.. When a part required for a repair or service isn’t available, repair time increases, the customer’s experience is poor, and future revenue from that customer may be jeopardized.. One industrial company aggregated data from contract, sales, product, and customer records into a data lake, mined it using advanced techniques, and then applied predictive analytics to estimate churn and evaluate the effectiveness of personalized customer offers.

By improving their approach to aftermarket services, companies can capitalize on their existing portfolio and installed base , along with existing account data, to segment customers and focus resources on the most attractive leads.. But to succeed, industrial manufacturers must understand their customer base and target them based on their propensity to buy aftermarket services.. Industrial companies that understand their customer base, adequately prioritize aftermarket sales, and relentlessly focus on execution can boost their services revenue by 30 to 60 percent within three to five years—without requiring large investments in capex, new-product development, or cost-reduction programs.. For large, rotating equipment, such as turbines and engines—which have complex servicing, relatively high failure rates, and longstanding customer relationships—lifetime revenue from services can exceed that from the original equipment sale, and EBIT margins can be four times as high (Exhibit 2).. Other manufacturers may believe that success in aftermarket services requires a strategic reboot, or that companies need to create a dedicated services organization.. To that end, industrial companies need to analyze their installed base in order to understand a customer’s propensity to buy—i.e., its likelihood of purchasing aftermarket services.. Many manufacturers that apply sophisticated targeting and prioritization programs to customers for equipment sales do not apply a similar approach to aftermarket services.. Segmenting potential services customers in this way should be easy, given that companies have far more information about them—through existing account information—than they would for a typical sales lead.. By aggregating this data and supplementing it with external public information on customers and markets, companies can run analytics to group customers into three categories: 1) high propensity-to-buy; 2) low propensity-to-buy; and 3) those in the middle, or on the fence (Exhibit 3).. The company offers long-term services contracts along with one-off services to its installed customer base—but it was struggling to prioritize promising leads.. whether the service opportunity was associated with a power outage the type of sale (parts, service, upgrades, repairs) product-specific information, including the age of the current equipment the length of relationship recent sales behavior such as their price-sensitivity and brand loyalty size of the customer and location. The analysis pointed to 39 percent of the customer base that should be prioritized by the sales team—those with a high propensity to buy (these leads should be allocated in relatively short time) followed by those with a medium propensity to buy (particularly with a potential sale).

3rd March 2020 Omnisperience , the leading provider of B2B service provider industry insights and market strategies, has identified an emerging nanobusiness opportunity for ICT firms.. Introducing the nanobusiness The business market is traditionally divided into large enterprise, SME and microbusiness segments; but over the last few years the digital capabilities provided by ICT companies has resulted in the emergence of a new type of small business, which Omnisperience has termed the ‘nanobusiness’.. The nanobusiness opportunity for ICT companies The nanobusiness sector is an important one for ICT companies for two reasons:. They also need a host of other ICT services to enable them to create, deliver their services and run their businesses bigger businesses that want to utilise the services of nanobusinesses require communications, collaboration and cloud-based solutions to acquire and manage the skills they need, distribute work, and organise workers from anywhere in the world.. Omnisperience believes that instead of selling technology such as 5G, ICT firms should take a more customer-centric approach and focus on what customers do with this technology, building profitable, configurable solutions that address the needs of nanobusinesses.. “Nanobusinesses are breaking down the barriers between work and play, liberating labour and services from location, and driving new forms of flexible working that allow people to work when it suits them.. The nanobusiness market encompasses all skill levels – from people working as delivery drivers, couriers and taxi drivers, to micro-retailers and those providing highly skilled IT services.. More people are working in microbusinesses than ever before, with 96% of businesses (5.6 million) in the UK having less than 10 employees (the EU definition of a microbusiness) and with 7 million+ working in the nanobusiness sector with the advent of more automation and technologies such as robotics and AI, the number of people a business employs is not a reliable way of understanding businesses’ needs – particularly when it comes to ICT they are failing to address the changes in the business market and assemble solutions aimed at the different types of nanobusiness.. About Omnisperience Omnisperience is an analyst and consultancy firm that specialises in the telecoms, media and technology (TMT) sector, focusing on helping B2B digital service providers deliver better services to their customers.

This highlights the importance of having someone in the organization asking, constantly, what are our competitors doing to disrupt our business and our business model.. Change that occurs when new digital technology & business model affect the value proposition of an existing goods & service, doing business, social interaction & more generally “ WAY OF THINKING ”.. Technology giants like Facebook,Google,Netflix,Amazon make a major damage to their business model. In India, JAM (Jan Dhan, Aadhaar, Mobile)Enroute to the digital payments gaining the proportions of a mass movement.Majorly due to the technology Innovation, New Business Model, Demographics,customer experience, mobile, it will disrupt the many verticals of Banking,Insurance,stock broking,payment,wealth management & many more financial services.Established technology firms are developing new products that enable the creation of new business models with enormous existing customer bases.. ✔️Electronic trading now makes up almost 70% of all volume on the New York Stock Exchange and half of that is algorithmic trading.✔️Electronic clearing of cheque (ECS) like IMPS,NEFT,RTGS,International Remittance make ease of customer experience and also disrupt the traditional money transfers like checks and money orders.✔️Starting of new payment bank (Airtel,Birla), small banks & mobile wallet(Paytm,Mobikwik),UPI (BHIM,PhonePe) help to reach the financial services to large audience.✔️Introduction of plastic money (Debit,Credit cards) Digital currency (Bitcoin, blockchain) promotes the cashless economy.✔️️Unbinding banking service from financial technology provide seamless experience in online/mobile banking, P2P Payments (Paypal,RuPay),Bill Payments.. Digitization is profoundly changing the competitive boundaries of the telecom industry.Core voice and messaging businesses have continued to shrink, in part because of regulatory pressures, but also because social media has opened new communications channels beyond traditional voice service.. Traditional industries such as automotive, fossil fuels, medical, insurance and real estate will be massively disrupted.IBMs Watson,Google deepmind computer is a perfect illustration of this computing power and it is set to disrupt traditional industries.. All the above example, there is one thing that is common thatBusiness model moves from the traditional pipeline model to the Platform model.. Platform business models !!. Our education system is a pipe where teachers push out their ‘ knowledge ’ to children.Had the internet not come up, we would never have seen the emergence of platform business models.. At the business layer, users (producers) can create value on the platform for other users (consumers) to consume.. Platform business models gives a lot of flexible in User acquisition, Product Design,Monetization.

• Accenture analyzed 20 countries to identify their NACs and how NACs affect IIoT economic potential • Economic modeling revealed US$10.6 trillion in additional GDP by 2030 for the 20 nations as a result of the IIoT • …and that’s just based on today’s investment and policy trends With additional investment and intervention… • US$3.6 trillion could be added to that total!. 4 In the shift from an industrial to a digital economy, countries are targeting the Industrial Internet of Things as a means to deliver faster growth David Cameron, 2014 The UK and Germany could find themselves on the forefront of a new industrial revolution.” IoT has the potential to enhance Europe's competitiveness and will be an important driver for the development of an information based economy and society.” European Research Cluster on the IoT, 2013 The Internet of Things can lead to a rebirth of manufacturing in the US.” Michael Mandel, Progressive Policy Institute, 2013 2/3 Accenture survey, 2014 business leaders believe the IIoT will lead to long-term job growth.. 7 Current Conditions Improved Conditions Our analysis shows that the IIoT could be worth US$14.2 trillion in the next 15 years Forecasts show sizeable potential gains We evaluated 20 leading mature and emerging economies…….. 1.5% 0.2% US$10.6 tn 50% Improvement in enabling factors US$3.6 tn Lift in GDP in mature markets in 2030 Lift in GDP in emerging markets in 2030 Increase in IIoT investment Value of cumulative GDP uplift by 2030 …….and calculated the impact of additional measures …….. Value of cumulative GDP uplift by 2030 Copyright © 2015 Accenture All rights reserved.. NAC INDEX Business Commons How technological and institutional foundations are facilitating the IIoT Take-off Factors How rapidly IIoT technologies are being scaled and spread across the wider society Transfer Factors How firms, consumers and society are embracing IIoT technologies Innovation Dynamo How the IIoT is creating self-sustaining innovation and development Copyright © 2015 Accenture All rights reserved.. 14 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Country spotlights Cumulative GDP Impact of IIoT US$ billion United States - 100 200 300 400 500 600 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 US$ billion United Kingdom - 100 200 300 400 500 600 700 800 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030US$ billion Germany - 250 500 750 1,000 1,250 1,500 1,750 2,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 US$ billion China Source: Accenture and Frontier Economics With additional measuresUnder current conditions Copyright © 2015 Accenture All rights reserved.. 16 Five Ways to Win Five ways to win Make IIoT investments that work with the grain of the economy Play to the country’s strengths Create a chain reaction across industries Combat resource deficiencies Shorten the investment lag Join the dots to connect and collaborate Create new ecosystems that cut across traditional industry boundaries and value chains—look to product-service hybrids Connect various stakeholders together Turn strategy into reality by promoting experimental, pilot and demonstration projects in IIoT applications Decide whether to “make-or-buy” resources including skills, capital and technology 51 2 3 4 Copyright © 2015 Accenture All rights reserved.. Here’s a preview of what we’ll be discussing: kind of growth impact the IIoT is likely to deliver to nations the ways IIoT will impact economies How countries are positioned for IIoT growth Then, we’ll look into the more theoretical and historical aspects of the IIoT’s expansion, drawing on an idea we’ve called “Economic Diffusion”. UK government is directing nearly US$125 million to IIoT research Germany’s “Industry 4.0” initiative is geared toward increasing the productivity of its manufacturing sectors by 30% Other initiatives and public-private partnerships looking to the IIoT as a key way to increase their competitiveness in a world defined by ubiquitous IIoT connectivity E.g. “Smart Manufacturing Leadership Coalition” in the US “Digital India” Business leaders also agree that the IIoT can deliver benefits for their companies Nearly two-thirds of the business leaders we surveyed said the IIoT would offer emerging markets the ability to leapfrog developed economies, while 63 percent said it would close the competitive gaps between companies in emerging and mature markets Why such optimism over the IIoT?. New market opportunities IIoT offers new market opportunities to innovative firms able to capitalize on the demand for IIoT-related products and services New markets will present themselves as companies increasingly seek to “servitize” the IIoT economy “Servitization" of the IIoT economy—creating service ecosystems around IoT products rather than one-off IoT devices—will benefit forward-looking companies More opportunities for long-term revenue streams based on continuous upgrades and service offerings E.g.. Faster cycles of innovation With IIoT tech getting cheaper, more accessible, and more modifiable, grassroots “makers” are creating innovative IIoT solutions for their homes, cars, appliances, and devices These makers tend to be well-informed of developments in the tech sector Will be a driving force for innovation Availability of cheap, modifiable IoT technology has democratized the innovation process The "maker movement" is a growing community of technology-oriented DIY inventors who work to improve existing products by assigning them connectivity capabilities through devices such as Raspberry Pi Makers as “entrepreneur-consumers” of IIoT technology will provide grassroots source of innovation. Leaders can assess a nation’s economic diffusion potential from the national absorptive capacity index, which shows the potential for economic diffusion of the IIoT in a given country Nations in higher positions on the index are more likely to reap the rewards of IIoT diffusion A country with a NAC score of 100 would be the top performer on each of the 55 indicators compared to the other study countries Our model shows that while there are certainly leaders, every country has room for improvement United States, Switzerland and three Nordic countries furthest ahead in terms of their NACs if each of the 20 countries invested the same amount of capital in the IIoT, countries higher on the NAC index will gain more economic benefit from the investment, ceteris paribus. To illustrate how the NACs affect the economic potential of the IIoT, we compared the results of two different scenarios: “Economic impact of the IIoT under current conditions” Based on a country’s current position on the NAC index and projected investment levels Under these conditions, the IIoT would add around US$10.6 trillion to cumulative GDP by 2030 for our 20 selected countries. ”Economic impact of the IIoT with additional measures” Extrapolated an IIoT development trajectory by assigning a country a higher score on the NAC index and increasing investment in IIoT technologies, products and services by 50% Here, we found that the value would jump to US$14.2 trillion during the same period. Create a chain reaction across industries Building product-service ecosystems rather than one-off IIoT products will be a key growth area in the IIoT But only 13% of business leaders we surveyed see the IIoT as a means to generate new revenue streams through new products and services Encourage businesses to look beyond their own industries and build new partnerships Create new business models New products and services from the IIoT

What is convergence?. This content can then be consumed on different devices, via different networks.. Convergence must be driven by customer needs, not Technology. It’s easy to become mesmerized by the myriad potential convergent products and services that could be devised, while losing sight of the real reason a business exists – namely, to satisfy customer needs.. For example, online music stores represent a successful converged service offering, using broadband connectivity to deliver digital music to the consumer.. A mobile network?

Whereas the advanced economies currently generate two-thirds of global GDP, developing and emerging economies will contribute an outsized share of the growth in the future.. Nearly every company will need to invest in soft innovations and the marketing, customer service and other soft skills that create them.. As a result, advanced economies will still account for 40 percent of the growth in consumer spending power.. Global infrastructure demand impacts both advanced and developing markets. Increased consumption of oil, food, water and ores is a function of population growth but has been amplified by the industrialization of emerging economies.. Per capita levels of healthcare spending in advanced economies will remain far higher than in developing economies

The original vision for Chainlink was to provide external data onto the blockchain as a decentralized oracle solution.. Chainlink does not compete with any blockchain, it improves all of them.. One of the breakthroughs for Chainlink 2.0 is the ability to create Hybrid Smart Contracts, which is significantly superior to the current smart contract infrastructure we have.. So what exactly are hybrid smart contracts and what makes them so powerful?. Hybrid smart contracts essentially have two parts, the on-chain smart contract that interacts with a decentralized blockchain and the off-chain section that connects to external resources such as web services, data, other blockchains, and decentralized storage.. DONs are a group of oracle nodes that are financially incentivized to provide external data in an accurate manner.. This would make Chainlink the global middle layer for the entire crypto ecosystem.. This makes transaction submissions more decentralized and fair.. I will analyze the Link tokenomics using the supply & demand of Link tokens in relation to the three main stakeholders of Link: the corporations, the investors, and the oracle node operators.. The corporations and investors will stake their coins in order to receive passive income on their Link tokens, which increases demand for the tokens.. I’ll quickly run through a couple of the various applications and services that are possible with hybrid smart contracts.

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