KPMG’s publication series, The Changing Landscape of Disruptive Technologies, now in its fifth year, provides perspectives about technology innovation trends and top barriers to adopt and commercialize innovation.
Technology has enabled revolutions before, from the Industrial Revolution of the prior two centuries to the Information Age to today’s Fourth Industrial Revolution, a term coined for a convergence of cutting-edge technologies led by artificial intelligence, the Internet of Things, robotics, biotech, and many other explosive advances. Consider the following trends:
- The Internet of Things (IoT) is massive in terms of data and continues to grow exponentially. These connected devices are becoming intelligent things.
- Robotics is enabling enhanced dexterity, intelligence and sensors. Robots are changing the limitations of what humans can do including people with impaired mobility.
- The next wave of artificial intelligence is designed to simulate how a human brain learns, reasons, understands, and makes a decision that results in an action.
- Computational power growth, in the next five years, is creating unprecedented improvements in data processing power.
Emerging technology trends
The rewards for embracing new technologies run deep. From market leadership, quicker innovation cycles and increased customer value to productivity gains and cost efficiencies. In KPMG’s tech innovation survey of more than 800 global technology industry leaders including startup entrepreneurs and Fortune 500 executives, we asked “What are the top technologies that will drive business transformation over the next three years?”
IoT is the #1 game changer – This top status for IoT was reinforced as networks of low-cost sensors are converting physical goods into virtual goods. These sensors are becoming intelligent things with mini-computing capabilities that will enable more innovation and monetization opportunities. IoT is unleashing innovation opportunities to create new business models in a number of industries including healthcare, banking, and agriculture.
In KPMG’s survey IoT ranked the highest in India (30 percent), Korea (25 percent) and Germany (23 percent), as the top technology to drive business transformation in the next three years. In India, mobile and IoT connectivity are enabling a variety of new use cases specific to the country such as payments for the unbanked and digital health for people in remote locations. There are a broad range of new IoT capabilities that will have a big impact, given the size of the population and growing number of millennials in India.
Top benefits for those who adopt IoT as indicated in KPMG’s tech innovation survey
Companies that can deliver clear IoT use case benefits are leading the way on improving efficiencies and developing new products and service models. In the survey, tech industry leaders continue to be bullish on IoT monetization opportunities in the tech sector. Software is touching everything, from healthcare to agriculture. As IoT connected devices become intelligent things, value creation will continue to shift to the tech sector. In consumer markets, IoT is enabling ubiquitous understanding of customer behavior; in healthcare many advances in digital heath are driven by IoT use cases; and in transportation IoT connectivity is transforming the industry with new products and services such as “mobility as a service.”
Robotics placed second – robots are changing the limitations of what humans can do. Open source robotics and new innovations such as AI-empowered robotics are factors in this ranking. In KPMG’s tech innovation survey this positive outlook for robotics in enterprise markets was led by the United States and Japan tied at 15 percent each; Germany and Israel at 13 percent each; and China (12 percent). A contributor has been the aggressive move, in these countries, into innovation and factory automation.
In addition to a growing industrial robotics market in the United States, companies in the service industry want to automate tasks that can be done by robots so employees can spend more time on improving the customer experience. Robots are already making room service deliveries in hotels and high rises and beginning to deliver packages to homes.
Robotics has reached a tipping point where the demand from the non-industrial segments (including consumer robots and Unmanned Aerial Vehicles) now generate the majority of revenues. As scale grows further, and functionality continues to improve, a global mass-market for robotics products and services is emerging that will impact the lives of millions in the decade ahead. The convergence of IoT, robotics, and AI is unlocking new business paradigms and faster innovation cycles.
AI and the cognitive revolution ranked third
Most industries will be transformed by the growth of cognitive systems that can predict, infer, think, and learn by experience much like humans do. In the last ten years significant increase in data and computational power have spurred AI innovation. In looking at enterprise markets, tech industry leaders identified AI as a key disruptor.
In KPMG’s tech innovation survey, top rankings were led by Singapore (15 percent), followed by South Africa (14 percent), Australia and Israel (13 percent each), Japan (12 percent), India and the United Kingdom (11 percent each) and the United States, Korea, and China (10 percent each).
AI is embedded in platforms, chips, software, intelligent products and devices, and is becoming a leading change agent in business models. The progression of AI use cases in specific industries will drive profound changes in the next three years. As our idea of intelligence changes and is refined, the definition of AI will evolve.
Emerging technologies – barriers to commercialization
In KPMG’s survey technology complexity, funding, and risk management were named by more than one-third of respondents, and all showed big increases from the previous year. In a distinct trend, regulatory compliance, privacy, and government policies were seen as more prominent barriers in this year’s survey, almost doubling in importance. We expect this trend to continue.
There is a change in philosophy on how companies approach cyber. The reality is that with the adoption of IoT and other technologies, and a mobile workforce, the perimeter is gone. Companies are starting with an assumption that the attackers are already inside. There is an evolution in how organizations can expand their own intelligence by sharing information about their own security threats with peers and competitors. Customer trust is nonnegotiable. Market leaders are constantly balancing their investments, evaluating their governance protocols, and assessing collaboration opportunities inside and outside their companies to reduce risk.
The business implications of disruptive technologies
Whether it is in creating new ways to serve and derive value from customers, driving operational innovations to lower cost and improve agility, or transforming entire industries and business models, the pace of change is only going to accelerate.
Growth opportunities exist for companies that can successfully integrate these disruptive technologies to create unique customer value propositions and new ways to compete. For technology companies, whether they are creators of these disruptive technologies, solution providers who use these technologies, or suppliers to companies who create or integrate these technologies, innovation and business agility are key.
Profit pools and competitive advantages that exist now are going to be short-lived if boards and C-suites do not address – with increasing speed and agility – disruptive trends that both threaten their existing business models and provide sources of opportunity. Taking action to harness the opportunity and minimize the threat will be essential to be a market leader.
Forward-thinking executives constantly reevaluate and optimize their business. Are you:
- Revisiting your company strategy to understand how disruptive technologies are impacting your suppliers, partners and customers, their value propositions, and how you can monetize incremental value.
- Rethinking your innovation and business models to harness these disruptive technologies and the ecosystems around them for new value propositions and competitive advantage.
- Reconsidering capital allocation to optimize and balance your funding on current vs. new.
- Revising your M&A strategy to take advantage of disruptive technology opportunities, fill technology and capability gaps, and accelerate time-to-value.
- Reinvigorating and transforming your operating model to capture incremental profits to fund the change, and to improve organization agility to capture new opportunities.
Discover more insights in KPMG’s publication, The Changing Landscape of Disruptive Technologies, about emerging technology trends and how the tech industry leaders are on a journey to redefine the 21st century enterprise.