Just eight years ago it cost $10 million to sequence human DNA: now the same application costs just $1000. This is a classic example of how the explosion in computing computer is driving down costs and enabling companies to reinvent themselves, says futurist Gerd Leonhard. Speaking at Orange Business Services’ customer event Hello World 2015 in Italy, Leonard insisted that digital transformation is inevitable.
He took the example of the music industry and how digital transformation has turned the business on its head. “Software is eating the world. Everything that used to be hardware is now software. People are no longer buying physical music and because the music business was slow to react they lost 70% of their revenue.”
And of course it isn’t just the music industry that is undergoing change – transformation affects virtually everyone. “Just like publishers are transcending the idea of selling content, digital transformation forces every leading incumbent to transcend the products and services that are certain to become a commodity,” said Leonhard.
Think what the future will be and how you can embrace it. “Even the oil industry will have to change because the fossils fuels are clearly not the future, and it is not a question of if, rather when they will make the switch to renewables.” Tesla for example should be viewed as a technology company not as a car company.
Leonhard said that VUCA –volatility, uncertainty, complexity and ambiguity – represents the challenges facing businesses. The solution is to flip it and embrace velocity, unorthodoxy, collaboration and agility.
Whatever the solution, connectivity will be a key part of it. Networks in the future will be connecting all devices to the Internet – some predict as many as 227 billion devices connected by 2027. The key concern and opportunity in this environment is security. “We need a social contract, because when everything is connected, security, standards, rules and enforcement becomes critical,” says Leonhard.
CEOs looking for digital business opportunities
Also at Hello World we heard from two CEOs, one in pharmaceuticals and the other in the aerospace industry, about the challenges and opportunities they face in their business.
The CEO of pharmecueticals business spoke of how digital technologies were powering the development of wrap-around services to traditional treatments for conditions like diabetes. By offering complementary services such as meal planners, patients are able to control their blood sugar more effectively, leading to better treatment. This could be considered a “digital drug”.
The aerospace CEO spoke of how the massive amounts of data that is generated by aircraft could spawn new business opportunities. Aircraft used to monitor 20,000 parameters on a flight – now they monitor 450,000. When the plane lands, all this data needs to be downloaded – and it can amount to 650GB per flight! The CEO also spoke of the potential of entirely autonomous operation entering the aerospace world. The intelligence gleaned from the data might just make that more possible.
Changing role of the CIO
In the final section of the plenary session, a number of CIOs came to the stage to discuss how the IT department can play a pivotal role in driving transformation. All of them agreed that they needed a rock-solid technology foundation in place in order to be able to support the business in their digital transformation.
Ingvil Hovig, CIO at the Norway Ministry of Foreign Affairs, said that they were constantly investigating emerging technologies looking for new developments that could help deliver the services they provide. For example they have become keen users of social media with all their ambassadors actively tweeting – “digital diplomats”, as Ingvil described them!
Maarten Buikhuisen, CIO at Heineken says that IT needs to play a leading role in supporting innovation for the business, otherwise they risk being disintermediated by shadow IT, which offers no business value whatsoever. He also said that to support the changing role of the CIO, outsourcers like Orange Business Services also needed to evolve to become strategic partners rather than just service providers.
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After a Masters in Computer Science, I decided that I preferred writing about IT rather than programming. My 20-year writing career has taken me to Hong Kong and London where I've edited and written for IT, business and electronics publications. In 2002 I co-founded Futurity Media with Stewart Baines where I continue to write about a range of topics such as unified communications, cloud computing and enterprise applications.