Technology
Overview
One Minute Read
Global megatrends are prompting structural shifts in many industries and changing the drivers of corporate earnings. The pace of technological change, particularly in information, communication, and bio-technologies, is unprecedented. Cycles of technology-induced societal and economic change have accelerated in past decades, and are likely to accelerate further (especially after COVID-19). These megatrends translate into specific drivers for each sector and industry.
Digitisation
Cloud-driven transformation
Accelerating technological innovation is fuelled by the widespread digitalisation of economies and societies worldwide. In 2018, McKinsey estimated that an additional $13 trillion could be added to global GDP by 2030 from today through digitization [1].
Digitisation has been fueled by the exponential increase in computing power and more recently by the scale, flexibility and agility of the cloud. In 2006, Amazon launched Amazon Web Services, and since then the market has grown to be $500 billion. It is expected to triple in size by 2030 [2].
Built out of cloud infrastructure are the large global digital platforms —including the US big four of Google, Amazon, Facebook and Apple, and China’s three digital giants Alibaba, Baidu, and Tencent. These platforms have extensive reach to more than 4.6 billion consumers and businesses [3]. Net margins in data centric business are typically 15-25% compared with single-digit margins in asset-heavy industries [4].
Digital business models are challenging traditional industry sectors and McKinsey forecast that within about a decade 12 large ecosystems will emerge in retail and institutional spaces representing more than $60 trillion in 2025—about 30% of world revenue pools [5].
The most advanced industries for digtial adoption are Technology, Media & Telecommunications and Financial Services. These are followed by Retail & Consumer Goods and Industrial Goods. The laggards are Energy & Resources, Healthcare, Insurance and Public Sector [6].
With digital comes a new risk with cyber security.
Most impacted industries: All industries are impacted by digtisation.
Communications
The mobile internet of everything
Digitisation is crucially enabled by communications. The access to this digital world is increasingly mobile with a majority of the global population now using mobile services. In 2021, the number of mobile internet subscribers reached 4.2 billion people globally [1]. In 2021, mobile technologies and services generated $4.5 trillion of
economic value added, or 5% of GDP, globally. This figure will grow by more than $400 billion by 2025 to nearly
$5 trillion [2]. The industry is in the midst of the rollout of both 4G (58% of connections) and 5G (8% of connections but will grow to 25% by 2025) [3].
Digitisation is also being fueled by an Internet of Things which connects 15 billion devices in 2021 and will grow to 23.3 billion in 2025 [4]. These enable a myriad of new business models by explotiing real-world data, such as connected cars, smart homes, smart products, health trackers etc. The Internet of Things has a total potential economic impact of $3.9 trillion to $11.1 trillion per year in 2025 [5].
Most impacted industries: All industries are impacted by communications but especially Retail & Consumer Goods, Transportation, Financial Services, Healthcare and Technology, Media and Telecommunications.
Artifical Intelligence
The data-driven cognitive world
Artificial intelligence leverages computers and machines to mimic the problem-solving and decision-making capabilities of the human mind. At its simplest form, artificial intelligence is a field, which combines computer science and robust datasets, to enable problem-solving. AI doesn’t need human-attributed rules. It generates them itself, hence it can be considered cognitive.
Cognitive technologies fall into three main categories: product, process, or insight. Product applications embed the technology in a product or service to provide end-customer benefits. Process applications embed the technology in an organization’s workflow to automate or improve operations. And insight applications use cognitive technologies—specifically advanced analytical capabilities such as machine learning—to uncover insights that can inform operational and strategic decisions across an organization. As such it can deliver benefits into many different use cases helping to power; automation, big data, robotics, IoT, smart devices, autonomous vehicles, customer engagement and cybersecurity.
Many businesses are accesing AI tools via the hyperscale cloud providers.
Most impacted industries: All industries are impacted.
Biotechnologies
The future of Healthcare
Over the next two decades, five major revolutions will transform how medicine is practised and how healthcare is delivered. These are:
- Personalised medicine – based on personal DNA analysis and electronic health data collected from individual patients
- Stem-cell medicine – the use of stem cells to repair/regrow tissue and organs
- Nano-scale medicine – drug delivery and development at sub-microscopic levels
- Gene-editing – altering human DNA to improve health
- Digital health – using AI and digital technology to diagnose and to monitor patient health
Each of these five revolutions would individually transform the prospects for human health and longevity. But, taken together, they will produce an entirely new paradigm for healthcare – one in which consumers will collect their own health data, geneticists will remove hereditary diseases from the population, artificial intelligence (AI) systems will routinely aid diagnosis and treatments will be tailored and personalised for individual patients.
The impact is not only on human science but extends into food and animal ecosystems.
Most impacted industries: Healthcare, Agriculture & Food, Technology & Financial Services (health insurance).
Green Technologies
Powering the path to net-zero
Green tech–or green technology–is an umbrella term that describes the use of technology and science to reduce human impacts on the natural environment. Many green technologies aim to reduce emissions of carbon dioxide and other greenhouse gases in order to prevent climate change. Green technology encompasses a wide area of scientific research, including energy, atmospheric science, agriculture, material science, and hydrology. Types of technology include:
- Alternative/Renewable Energy - Solar and wind energy are already but mainstream but other examples are green hydrogen, sustainable aviation fuel (SAF), tidal or geothermal energy.
- Sustainable Transportation - Electric Vehicles (EV) are growing in scale but other forms of transportation need to be de-carbonised through either electric, hydrogen or SAF fuels
- Sustainable Agriculture - Recuding the land and water impacts of farming as well as the reduction in emissions. This might include vertical farming, plant-based food and cell-grown meat.
- Carbon Capture - Carbon capture refers to a group of experimental technologies that seek to remove and sequester greenhouse gases, either at the point of combustion or from the atmosphere. These are being considered for hard to de-carbonise processes such as steel or cement manufacture.
Most impacted industries: Technology, Media & Telecommunications, Energy & Resources, Transportation, Agriculture and Construction.