Wednesday, 19 August 2015 17:45

Convergence, digital transformation the ‘road to disruption’ for industry

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The growing convergence and connectivity of technology is transforming the way we work, relax, learn, and manage our health, while disrupting, transforming and collapsing industries.

That’s according to a newly published research report by Frost &Sullivan which also says convergence and connectivity is redefining the future of business and how executives will manage companies in the future.

According to the global research firm, the interplay between cloud computing, mobile technology, big data and the Internet of Things is driving the surge in digital transformation and rapidly accelerating the pace of connectivity and convergence across all industries, “radically changing lives, transforming the way we work, relax, learn, and manage our health”.

“Customers are no longer interested in silo based apps or services. They demand holistic, end-to end solutions for their connected lives and companies understand the importance of convergence for those solutions to materialise, thus incentivising partnerships between energy, security, IT, healthcare, automotive, and other sectors,” said Andrew Milroy, Frost & Sullivan senior vice president for ICT, Asia Pacific.

Milroy notes that connectivity is enabled by the proliferation of connected devices and technology enablers create disruptions in various sectors, forcing convergence and thereby creating possibilities to build solutions for emerging demand. “Identifying new convergence areas will stimulate the development of new business models and new product development.”

“An integral factor for growth for companies is to understand the landscape of new convergence areas and subsequent opportunities that could be generated in the future.”

According to Milroy, digital technology is allowing industries to radically improve their effectiveness and to transform themselves to meet stakeholder requirements much more than before and, he says, “with a culture of innovation, companies can turn the disruptions into opportunities if they are able to respond appropriately with the right tools and strategies”.

“Conversely, companies are likely to put their business at risk if they do not look at changes in other industries and innovate their products and services. As established and global as Apple and Samsung are, they are also constantly challenged to keep innovating to meet customers’ expectations.”

“Healthcare, energy, retail and financial services are all transforming rapidly. The music and media industries have already experienced the digital transformation and have radically changed the way we listen to music and watch videos and movies. We are increasingly using mobile devices to manage aspects of our lives from banking to booking flights.

“Digital disruptors such as Google and Yahoo have driven the transformation of the advertising industry. Amazon has driven the digital transformation of the retail industry and has recently played a pivotal role in the digital transformation of the IT industry.”

Frost & Sullivan’s report finds that the manufacturing industry’s adoption of digital technology has completely transformed manufacturing processes, and that by harnessing a combination of cloud computing, mobility, big data and the Internet of Things, factories can make changes to production instantly - allowing manufacturers to make large numbers of small customised batches, rather than small numbers of large batches, “signalling the end of the mass manufacturing era”.

“We are entering the era of the software defined factory and moving toward a state of autonomous factories which do not require people to work in them,” Milroy says.

The automotive industry has also experienced rapid digital transformation, resulting in cars that Frost &Sullivan says are much more intelligent and autonomous than before.

“Cars can learn and customise the driving experience for individual drivers. Cars can learn preferred/typical routes and use them when driving, taking shortcuts where necessary, if for example, there are roadworks,” Milroy notes.

“It can adjust its route and driving based on weather conditions, it can anticipate danger and eliminate accidents. While the concept of self-driving car a few years ago seemed far-fetched, today, digital technology has made self-driving cars are a reality and has transformed the driving experience as well as the entire automotive industry.”

Milroy also observes that telecoms players are well positioned to provide solutions beyond the physical home environment including enabling connected work and connected cities.

“Social trends, like ageing societies, demand specific solutions around assisted living - an area that a lot of telecoms players are actively looking at. As the cost of healthcare rises and countries grapple with the challenges posed by aging populations, greater focus will be placed on
preventive care and providing care in the home and aging-in-place.

“This new healthcare paradigm will see the hospital is coming to you rather than you going to the hospital, and there are huge new opportunities for ICT suppliers whose technology will enable and drive this transformation.

“Telecom players such as AT&T and Deutsche Telekom have used the power of convergence in their connected home platforms called “Digital Life” and “QIVICON” respectively. Google has moved away from their traditional business area to form new partnerships and new solutions.”

And, Frost & Sullivan says that several smart cities and companies already have evolved business models incorporating aspects of convergence. “Many smart cities have adopted integrated urban solutions as a part of their smart city framework, an example being The Amsterdam Smart City Consortium’s rebuild of its smart city framework integrating various sectors and industries within the city,” Milroy says.

Milroy also makes the point that Technology firms are being forced to change the way they look at the world and engage with their customers.

“For example telecoms companies traditionally report their activities in terms of broad product categories such as mobile or fixed line. This will change and in a few years telecoms and ICT companies will report their activities in terms of the vertical markets that they are serving. You will see revenues primarily segmented by healthcare, financial services and so on.

“All industries will be transformed by digital technology and these transformations will have a huge impact not only on the industries themselves but also on societies and economies. It will affect the way we interact with each other, with our employers and with the organisations that serve us. It will change the way we serve our stakeholders and we manage our businesses.”

Milroy concludes that connectivity and convergence will have a “massive bearing on business, society and personal lives” and the future of all industries would be defined by the influence and adoption of connectivity.

“As connectivity continues to drive convergence, companies need to identify adjacent, periphery products and services that can be added as a part of their portfolio in the future. This will define new solutions, new customers, new partnerships and new competition.”

Milroy will presenting his insights on industry convergence at the 2015 GIL (Growth, Innovation and Leadership) New Zealand congress to be staged in Auckland on 27 August.

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Peter Dinham

Peter Dinham - retired and is a "volunteer" writer for iTWire. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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