Internet of things spending in 2015 is expected to exceed $1.7 trillion. A networked economy is a business opportunity and a call for change.
Everything we touch, say, and do generates data – and our digital fingerprints are all over it. On any given day, over 1.3 billion of us are interacting with each other on social networks. More than nine billion sensors are tracking much of what is created, sold, and delivered. And all of this activity generates data – a lot of it.
However, each piece of data is not created by itself. Rather, it’s a representation of many complex connections among people, devices and businesses. We already see these connections at work with the introduction of ‘smart’ cars, buildings, homes, industrial equipment, wearables and more.
The Internet of Things: Where Data Gets Connected
As we continue to use technology and contribute to this ocean of data, the internet of things (IoT) begins to take a more central role in the evolution of commerce and society. Gartner projects that the number of connected devices in the IoT will increase nearly 30-fold in just over a decade, growing from about 900m connected devices in 2009 to more than 26 billion by 2020. As a result, everything – companies, processes, data, and things – is connected in a network.
Companies in all industries are well-aware of the opportunities that abound from this data. According to the report IDC Predictions 2015: Accelerating Innovation – and Growth – on the 3rd Platform, IoT spending in 2015 is expected to exceed $1.7 trillion. This is a 14% jump from 2014 that is driven by nearly 15 billion devices. By 2020, this will rise to $3 trillion and nearly 30 billion devices.
This trend will drastically change our lives. The IoT will revolutionize how we work, live, and play while transforming how businesses run and compete. Embedded intelligence in a growing network of connected devices will increasingly connect people and businesses to everything else – and become the very fabric of a networked economy.
The Networked Economy: A Promise of a Better Life for Consumers
This digitization of fast-growing, multi-layered, highly interactive, real-time connections among people, devices, and businesses is the landscape that will see the emergence of a new kind of economic environment – the networked economy.
For ordinary citizens, this means an opportunity to lead safer, simpler lives. For example, connected cars are designed to make driving safer and reduce commute times thanks to connected devices, real-time vehicle-to-vehicle communication, and historical route preferences.
We also have an opportunity to share resources in a more responsible way. This type of global sharing of stuff is gaining popularity thanks to startups such as Zipcar, Uber and Airbnb. In addition, we are better able to balance our life and professional demands for our time. By working with business networks that allow businesses to conduct commerce between buyers and sellers that is as easy to use as personal shopping networks like Amazon or Alibaba, we can help ensure the business continues to operate without disruption while we’re meeting our personal commitments.
We are even beginning to reinvent traditional value chains that were thought to be fixed. For example, crowdsourcing is lessening consumer reliance on banks for credit and loans. Some of us are generating our own power by using solar panels and building up power grids with surplus energy. Entertainment channels – such as Hulu, Netflix, Amazon and Sony – are changing the rules of traditional media by distributing shows refused by cable providers and now gaining worldwide popularity on our nearest iPads.
Even businesses are realizing the value of business networks for managing spend such as procurement, contingent labor management, complex services, travel and everything else in between. In response to this trend, my company (SAP) has created the world’s largest business network for managing 100% of this spend. How large is the network? It’s 75% larger than Amazon, eBay, and Alibaba combined and touches over 74% of the world’s transaction revenue.
The Networked Economy: Business Opportunity and a Call for Change
In the networked economy, companies can unleash unprecedented insight, innovation, and alignment. Talent can be deployed more flexibly, and decision makers can find the tools and information they need to better service customers and drive desired business outcomes. Machine networks link sensors, components, equipment, and activities that enable companies to capture market inputs, reduce operational risk, achieve nimble supply chains and deliver unsurpassed customer experience. By automating data collection and operations, companies can manage remote processes, monitor trends and gain new levels of competitive advantage.
However, if a company chooses to ignore these changes, the result can be downright damning. “The imperative for business leaders is clear: falling behind in creating internal and external networks could be a critical mistake,” research from McKinsey & Company concluded. The key to taking full advantage of the networked economy is speed in gaining the right insights at the right moment. This era of unprecedented hyper-connectivity demands a real-time enterprise.
The Secret to Succeeding in the Networked Economy: Speed
There’s a small window of opportunity for companies to develop sustainable competitive advantages with the data that is now coming online. By applying the power of real-time computing, the SAP HANA platform is the key to delivering real-time insights. As a result, decision makers are better equipped to sift through every piece of data within their reach – no matter the volume, complexity, and degree of access needed. However, organisations can only really extract transformational value if these insights are connected to the core of their business.
- Re-imagine your business model by simplifying business collaboration to connect people, devices and business networks in real time. Embrace high-precision targeting and social marketing, demand-driven supply chains with downstream demand visibility, smarter business planning with real-time scheduling and simulations, and proactive risk management with powerful pattern recognition.
- Re-imagine decision making by getting insight on any data from anywhere in real time to accelerate and intensify business impacts. Connect contextual data and business users at the point of decision.
- Re-imagine your business processes by focusing on essential tasks in real time – with the flexibility to adapt quickly. SAP S/4HANA offers a single data foundation where both transactional and analytical workloads can be executed and the gap between insights and action is closed.
- Re-imagine the user experience by completing the job across lines of business with a personalized, simple user experience on any device. Embed data mining and predictive tools in front-end applications. This empowers employees to make better, more informed decisions and respond to today’s real-time business challenges – even if they do not have a PhD in data science.
We’re all experiencing a revolutionary time in the world’s economic history. Companies that embrace this change by using data and networks to connect and collaborate with their suppliers, peers, and customers will succeed in the networked economy. For more perspectives on the networked economy and its impact on our world, check out Conversations on the Networked Economy or to learn more about SAP S/4HANA.