By Mark Skilton, Professor of Practice, Information Systems Management, Warwick Business School
Does digital technologies raise quality and improve efficiencies but at the same time drive higher costs of service as more advanced solutions and capabilities become available demanding higher entry investment and maintenance costs?
Many new digital technologies introduce step change in performance that would have been cost prohibitive in the previous technology generations. But in some industries the technology cost per outcome have be steadily rising in some industries.
In the healthcare market the cost per treatment of health care technology was highlighted in a MIT Technology Review article (1). In areas such as new drugs for treating depression, left-ventricular assistance devices, or implantable defibrillators may be raising the overall cost of health, yet how do we value this if patient quality of life is improving and life extending. While lower cost drugs and vaccines may be enabling better overall patient outcomes
In the smart city a similar story is unfolding where governments and organizations are seeking paths to use digitization to drive improvements in jobs productivity, better lifestyles and support of environmental sustainability. While there are several opportunities to reduce energy bills, improve transport and office spaces exist with savings of 40% to 60% consumption and efficiencies complexity costs of connecting different residential, corporate offices, transport and other living spaces requires digital initiatives that are coordinated and managed. (U-city experience in South Korea (2)).
These digital paradoxes represent the digital ecosystem challenge to maximise what these new digital technologies can do to augment every objects, services, places and spaces while taking account of the size and addressable market that all these solutions can serve.
What we see is that technology can be both a driver of the physical and digital economy through lowering of price per function in computer storage, compute, access and application technology and creating new value; conversely the issues around driving new value is having different degrees of success in industries.
Creating value in the digital economy
The digital economy is at a tipping point, a growing 30% of business is shifting online to search and engage with consumers, markets and transactions taking account of retail , mobile and impact on supply channels (3); 80% of transport, real estate and hotelier activity is processed through websites (4); over 70% of companies and consumers are experiencing cyber-privacy challenges (5), (6) yet the digital media in social, networks, mobile devices, sensors and the explosion of big data and cloud computing networks is interconnecting potentially everything everywhere – amounting to a new digital “ecosystem.
Disruptive business models across industries and new consumer innovation are increasingly built around new digital technologies such as social media, mobility, big data, cloud computing and the emerging internet of things sensors, networks and machine intelligence. (MISQ Digital Strategy Special Issue (7)).
These trends have significantly enhanced the relevance and significance of IT in its role and impact on business and market value at local, regional and global scale.
With IT budgets increasing shifting more towards the marketing functions and business users of these digital services from traditional IT, there is a growing role for technology to be able to work together in new connected ways.
Driving better digital design outcomes
The age of new digital technologies are combining in new ways to drive new value for individuals, enterprise, communities and societies. The key is in understanding the value that each of these technologies can bring individually and in the mechanisms to creating additive value when used appropriately and cost effectively to drive brand, manage cyber risk, and build consumer engagement and economic growth.
Value-in-use, value in contextualization
Each digital technology has the potential to enable better contextualization of the consumer experience and the value added by providers. Each industry market has emerging combinations of technologies that can be developed to enable focused value.
Examples of these include.
o Creating enhanced co-presence
o Providing uniqueness profiling , targeting advice and preferences in context
o Creating location context services and awareness
o Enabling access to resources and services
o Creating real time feedback responsiveness
o Enabling insight and higher decision quality
Together these digital technologies can build generative effects that when in context can enable higher value outcomes in digital workspaces.
Value in Contextualization
The value is not in whether these technologies, objects, consumers or provider inside or outside the enterprise or market. These distinctions are out-of-context from relating them to the situation and the consumer needs and wants. The issue is how to apply and put into context the user experience and enterprise and social environment to best use and maximise the outcomes in a specific setting context rom the role perspective.
With the medical roles of patient and clinician, the aim in digitization is how mobile devices, wearable monitoring can be used most efficiently and effectively to raise patient outcome quality and manage health service costs. Especially in the developing countries and remote areas where infrastructure and investment costs, how can technologies reach and improve the quality of health and at an effective cost price point.
This phenomena is wide spread and growing across all industry sectors such as: the connected automobile with in-car entertainment, route planning services; to tele-health that offers remote patient care monitoring and personalized responses; to smart buildings and smart cities that are optimizing energy consumption and work environments; to smart retail where interactive product tags for instant customer mobile information feedback and in-store promotions and automated supply chains. The convergence of these technologies requires a response from all businesses.
These issues are not going to go away, the statistics from analysts describe a new era of a digital industrial economy (8). What is common is the prediction in the next twenty to fifty years suggest double or triple growth in demand for new digital technologies and their adoption.
Platforming and designing better digital outcomes
Developing efective digital workspaces will be fundamental to the value and use of these technologies. There will be not absolute winners and losers as a result of the digital paradox. What is at state is in how the cost and inovation of these technologies can be leveraged to fit specific outcomes.
Understanding the architecting practices will be essentuial in realizing the digitel enterprise. Central to this is how to develop ways to contextualize digital technologies to enable this value for consumers and customers (Value and Worth – creating new markets in the digital economy (9)).Platforming will be a central IT strategy that we see already emerging in early generations of digital marketplaces, mobile app ecosystems and emerging cross connecting services in health, automotive, retail and others seeking to create joined up value.
Digital technologies will enable new forms of digital workspaces to support new outcomes. By driving contextualized offers that meet and stimulate consumer behaviors and demand , a richer and more effective value experience and growth potential is possible.
The challenge ahead
The evolution of digital technologies will enable many new types of architect and platforms. How these are constructed into meaningful solutions is both the opportunity and the task ahead.
The challenge for both business and IT practitioners is how to understand the practical use and advantages as well as the pitfalls and challenges from these digital technologies
- What can be done using digital technologies to enhance customer experience, employee productivity and sell more products and services
- Where to position in a digital market, create generative reinforcing positive behavior and feedback for better market branding
- Who are the beneficiaries of the digital economy and the impact on the roles and jobs of business and IT professionals
- Why do enterprises and industry marketplaces need to understand the disruptive effects of these digital technologies and how to leverage these for competitive advantage.
- How to architect and design robust digital solutions that support the enterprise, its supply chain and extended consumers, customers and providers
As the cost of health care, the increasing aging population and the rise of medical advances enable people to live longer and improved quality of life; the health sector together with governments and private industry are increasingly using digital technologies to manage the rising costs of health care while improve patient survival and quality outcomes.
Digital Health Technologies
mHealth, TeleHealth and Translation-to-Bench Health services are just some of the innovative medical technology practices creating new Connected Health Digital Ecosystems.
These systems connect Mobile phones, wearable health monitoring devices, remote emergency alerts to clinician respond and back to big data research for new generation health care.
The case for digital change
UN Department of Economic and Social Affairs
“World population projected to reach 8.92 billion for 2050 and 9.22 Million in 2075. Life expectance is expected to range from 66 to 97 years by 2100.”
OECD Organization for Economic Cooperation and Development
The cost of Health care in developing countries is 8 to 17% of GDP in developed countries. But overall Health car e spending is falling while population growth and life expectancy and aging is increasing.
The desire to improve buildings, reduce pollution and crime, improve transport, create employment, better education and ways to launch new business start-ups through the use of digital technologies are at the core of important outcomes to drive city growth from “Smart Cities” digital Ecosystem.
Smart city digital technologies
Embedded sensors in building energy management, smart ID badges, and mobile apps for location based advice and services supporting social media communities, enabling improved traffic planning and citizen service response are just some of the ways digital technologies are changing the physical city in the new digital metropolis hubs of tomorrow.
The case for digital change
WHO World Health Organization
“By the middle of the 21st century, the urban population will almost double globally, By 2030, 6 out of every 10 people will live in a city, and by 2050, this proportion will increase to 7 out of 10 people.”
UN Inter-governmental Panel on Climate Change IPCC
“In 2010, the building sector accounted for around 32% final energy use with energy demand projected to approximately double and CO2 emissions to increase by 50–150% by mid-century”
IATA International Air Transport Association
“Airline Industry Forecast 2013-2017 show that airlines expect to see a 31% increase in passenger numbers between 2012 and 2017. By 2017 total passenger numbers are expected to rise to 3.91 billion—an increase of 930 million passengers over the 2.98 billion carried in 2012.”
Professor Mark Skilton, Professor of Practice in Information Systems Management , Warwick Business School has over twenty years’ experience in Information Technology and Business consulting to many of the top fortune 1000 companies across many industry sectors and working in over 25 countries at C level board level to transform their operations and IT value. Mark’s career has included CIO, CTO Director roles for several FMCG, Telecoms Media and Engineering organizations and recently working in Global Strategic Office roles in the big 5 consulting organizations focusing on digital strategy and new multi-sourcing innovation models for public and private sectors. He is currently a part-time Professor of practice at Warwick Business School, UK where he teaches outsourcing and the intervention of new digital business models and CIO Excellence practices with leading Industry practitioners.
Mark’s current research and industry leadership engagement interests are in Digital Ecosystems and the convergence of social media networks, big data, mobility, cloud computing and M2M Internet of things to enable digital workspaces. This has focused on define new value models digitizing products, workplaces, transport and consumer and provider contextual services. He has spoken and published internationally on these subjects and is currently writing a book on the Digital Economy Series.
Since 2010 Mark has held International standards body roles in The Open Group co-chair of Cloud Computing and leading Open Platform 3.0™ initiatives and standards publications. Mark is active in the ISO JC38 distributed architecture standards and in the Hubs-of-all-things HAT a multi-disciplinary project funded by the Research Council’s UK Digital Economy Programme. Mark is also active in Cyber security forums at Warwick University, Ovum Security Summits and INFOSEC. He has spoken at the EU Commission on Digital Ecosystems Agenda and is currently an EU Commission Competition Judge on Smart Outsourcing Innovation.