Jan 25, 2016: Davos
The combined value of digital transformation — for society and the industry — could be greater than $100 trillion over the next 10 years, according to a new research by the World Economic Forum (WEF).
The research, which is part of the Forum’s Digital Transformation of Industries (DTI) project, focuses on the “combinatorial” effect of digital technologies — mobile, cloud, artificial intelligence, sensors and analytics, among others.
Examples of societal value generated by digitisation include mass adoption of autonomous vehicles and usage-based car insurance, which could save up to 1 million lives a year worldwide by 2025.
In the electricity sector, a cumulative reduction in carbon emissions worth $867 billion by 2025 could be achieved through adoption of digital technologies.
“Society and environment stand to gain the greatest share of the rewards from digitisation through improvements in welfare, health and other means,” Mark Spelman, co-head, Future of the Internet Initiative, World Economic Forum, said.
He noted that there is a win-win for business and society if we can look beyond immediate commercial gain in favour of long-term value creation.
“To capitalize fully, however, policy-makers must put in place an agile regulatory environment and incentive mechanism that unlock investment while businesses must fully embrace sustainable business practices,” Spelman said.
The research noted that the pace of innovation can be illustrated by the fact that, while it used to take Fortune 500 companies an average of 20 years to reach a billion-dollar valuation, digital start-ups are reaching the same milestone in just four years.
“Once limitations preventing mass market commercialisation of enabling technologies such as battery storage and wireless charging are overcome, the pace of change could accelerate,” it said.
However, according to the research, the digital transformation of industries comes with its own share of risks. One such risk is inequality, which could aggravate if access to digital skills is not made available to all. Another is trust, which has been eroded by growing concerns over data privacy and security.