Digital Transformation Initiative - In collaboration with Accenture Unlocking $100 Trillion for Business and Society from Digital Transformation
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Digital Transformation Initiative In collaboration with Accenture Unlocking $100 Trillion for Business and Society from Digital Transformation EXECUTIVE SUMMARY JANUARY 2017
FOREWORD
The world is being transformed by new technologies, which are redefining customer expectations, enabling businesses to meet these new expectations, and changing
the way people live and work. Digital transformation, as this is commonly called, has immense potential to change consumer lives, create value for business and unlock
broader societal benefits.
The World Economic Forum launched the Digital Transformation Initiative in 2015, in collaboration with Accenture, to serve as the focal point for new opportunities and
themes arising from the latest developments in the digitalization of business and society. It supports the Forum’s broader activity around the theme of the Fourth
Industrial Revolution. Since its inception, the Initiative has analysed the impact of digital transformation across 13 industries and five cross-industry topics, to identify the
key themes that enable the value generated by digitalization to be captured for business and wider society. Drawing on these themes, we have developed a series of
imperatives for business and policy leaders that look to maximize the benefits of digitalization. We have engaged with more than 300 executives (both from leading
global firms and newer technology disruptors), government and policy leaders, and academics.
Every industry has its nuances and contextual differences, but they all share certain inhibitors to change. These include the innovator’s dilemma (the fear of
cannibalizing existing revenue models), low technology adoption rates across organizations, conservative organizational cultures, and regulatory issues. Business and
government leaders should continue to work towards addressing these challenges.
A notable outcome of this work is the development of our distinctive economic framework, which quantifies the impact of digitalization on industry and society. It can be
applied consistently at all levels of business and government to help unlock the estimated $100 trillion of value that digitalization could create over the next decade. We
have already started to leverage this framework for region-specific discussions with some governments.
We are confident that the findings from the Initiative will contribute to improving the state of the world through digital transformation, both for business and wider society.
Cheryl Martin Jim Hageman Snabe Pierre Nanterme
Head of Industries, Chairman Chairman and Chief Executive
Member of the Managing Board World Economic Forum, USA Officer
World Economic Forum Accenture
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 2
GRATITUDE GOES TO OUR CEO CHAMPIONS
FOR THEIR SUPPORT
Jonas Prising Jean-Yves Charlier Arne Sorenson T.V. Narendran Bob Dudley
CEO CEO CEO CEO CEO
ManpowerGroup VimpelCom Marriott International Tata Steel BP
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 3
CONTENTS
1 Introduction to the Digital
Transformation Initiative 2 Cross-Industry
Themes 3 In-Depth Industry
Reviews: Key Insights
4 Opportunities to Improve
the State of the World 5 Acknowledgements
4
1. INTRODUCTION TO THE
DIGITAL TRANSFORMATION INITIATIVE (DTI)
In a world where game- The past 12 months have brought a series of exciting technological
breakthroughs. Self-driving Tesla cars can now be seen on the road;
changing innovation Uber is testing autonomous taxis in Pittsburgh; Google DeepMind’s
has become the norm, Alpha Go demonstrated a leap forward in artificial intelligence with a
famous victory at the board game Go; and augmented reality hit the
the DTI provides a mainstream with the success of Pokémon Go. Game-changing
unique insight into the innovation has become the norm.
impact of technology on Digital innovation is reshaping industries by disrupting existing
business and society business and operating models. But it is also having a profound impact
over the next decade. on society, presenting a series of opportunities and challenges for
businesses and policy-makers.
This executive summary introduces the approach taken to unlocking
the value of digitalization. Over the past two years, the DTI has
developed a unique value-at-stake framework to support a consistent
way of measuring technology's impact on business and wider society.
This is covered in the section on Unlocking Digital Value to Society: A
New Framework for Growth. Bruce Weinelt
Head of Digital Transformation,
The goal is for this framework to provide a base of evidence and a World Economic Forum
common language for public-private collaboration focused on ensuring
that the benefits of digital transformation are fairly and widely shared.
Mark Knickrehm
Group Chief Executive,
Accenture Strategy
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 5
THE COMBINATORIAL EFFECTS OF
TECHNOLOGY ARE ACCELERATING CHANGE
The falling cost of Cheaper and better technology is creating a more connected world: 8
billion devices are now connected to the internet; by 2030, that number IoT and
advanced technologies is forecast to grow to 1 trillion.
smart machine
is a defining As the cost of advanced technologies continues to fall, new Big Data, analytics,
visualization
characteristic of the applications will be opened for them, as well as opportunities to
combine them in innovative ways. This unleashes "combinatorial"
digital revolution. It is Web 2.0, cloud, mobile
Cumulative capability
effects, where the capability of technologies working in tandem far
playing a major role in exceed their capabilities when deployed separately.
Web 1.0 eCommerce
accelerating innovation. Take, for example, continuous liquid interface production (CLIP): it can
produce isotropic parts with mechanical properties and surface finish
Client-server
similar to injection-moulded plastics. Carbon, a Technology Pioneer of and PCs
the World Economic Forum, is using CLIP, the cloud and analytics in a
Artificial
platform-based business model to significantly advance what used to Mainframe
intelligence
be a prototype technology into high-quality, scalable and low-cost
manufacturing.
The combinatorial effects of base technologies, such as mobile, cloud, 1950 1960 1970 1980 1990 2000 2010 2020 Time
sensors, analytics and the Internet of Things (IoT), are accelerating
progress exponentially. Technology is the multiplier. Source: World Economic Forum/Accenture analysis
Examples of the falling cost of key technologies
Drones Cost per unit DNA Sequencing Cost per unit Solar Cost per kWh*
2000 $2.7 billion
2007 $100,000 1984 $30
2007 $10 million
2013 $700 2014 $1,000
2014 $0.16
* kilowatt hour To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 6
SEVEN TECHNOLOGIES ARE TRANSFORMING THE
INDUSTRIES COVERED BY DTI RESEARCH
DTI research to date
has identified seven key
technologies that are
expected to have the
most impact among the
industries analysed.
Note: This list is not Artificial intelligence Autonomous Big data analytics Custom manufacturing
comprehensive and does not vehicles and cloud and 3D printing
include all the emerging
technologies (e.g. blockchain)
that were identified in only one
or two use cases across DTI
industries to date.
Internet of Things (IoT) Robots and drones Social media
and connected devices and platforms
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 7
NAVIGATING THE EXECUTIVE SUMMARY
The sections that follow Over the past two years, DTI research has focused on
understanding the impact of digital transformation in 13
offer a summary of the industries and drawing insights from the cross-industry themes
research into the impact that came out of that analysis.
of digitalization on In section two of this summary, five cross-industry themes
industry and wider are introduced. Digital Consumption explains how the rapidly
changing expectations of digital customers are forcing
society. enterprises to reinvent themselves. Digital Enterprise looks at
how companies can respond by rethinking every aspect of their
businesses. Platform Economy focuses on the immense
impact of one type of digitally enabled business model –
business-to-business (B2B) platforms. The adoption of new
digital business and operating models is having a profound
impact on society, a theme analysed in Societal Implications. A
quantitative analysis of the impact of digitalization on business
and wider society is then introduced in the final cross-industry
theme, Unlocking Digital Value to Society.
In section three, in-depth industry reviews are presented.
Thirteen industries were analysed: Aviation, Travel and
Tourism; Chemistry and Advanced Materials; Mining and
Metals; Oil and Gas; Professional Services; Retail;
Telecommunications; Automotive; Consumer; Electricity;
Healthcare; Logistics; and Media.
Finally, drawing on these cross-industry themes and industry
reviews, section four proposes a set of Opportunities to
Improve the State of the World.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 8
2. Cross-Industry Themes
DIGITAL CONSUMPTION: THREE BATTLEGROUNDS
FOR THE DIGITAL CUSTOMER
Enterprises need to Products and services Hyper- Ownership
constantly reinvent their to experiences personalization to access
offerings to keep up Offering products and services Customers expect and value Enabled by digital platforms,
with the rapidly evolving is no longer enough: successful increasingly personalized customers are substituting
expectations of digital companies will be the ones interactions at all points of their ownership of goods with
customers. focused on delivering the most journey, and digital technology access-based models. The
compelling experiences. In fact, is enabling companies to deliver global market for shared
56% of business leaders believe personalization economically at goods and services across
that customer experience is their scale. The challenge five key sectors is expected to
top digital transformation priority. companies face, however, is to grow to $335 billion by 2025.
understand how much Companies should evaluate
personalization customers opportunities to cater to
want, as 90% of consumers say customer preferences for
they would limit access to access-based models, before
certain types of personal data. competitors or start-ups
sweep in.
Click to Selected
download case
(Magic Bands)
studies:
White Paper
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 10DIGITAL CONSUMPTION:
PRODUCTS AND SERVICES TO EXPERIENCES
Companies are recognizing that digital customers increasingly demand high-quality experiences and guaranteed outcomes,
rather than just products and services. This development is leading to new, outcome-based business models.
A Focus on Outcomes
Why outcomes matter
The low cost and easy availability of
connected sensors, coupled with
AUTOMOTIVE BANKING CONNECTED HOMES breakthroughs in data analytics, have
enabled outcome-based services to become
The connected car is enabling outcome- Self-checking, greater security, predictive Managing energy, shopping, security, a reality. In many instances, companies are
oriented experiences, such as personalized services to enhance wealth creation, and environment, entertainment, our diaries and using digital technologies to identify and
apps to help electric-car drivers minimize payment platforms are likely to be key budgeting are all becoming possible with
their electricity bills. emerging themes in personal finance. new advances in the connected home. target the outcomes that customers care
about, giving them powerful tools to improve
customer satisfaction and enhance customer
lives.
This trend becomes highly relevant in
EDUCATION HEALTHCARE RETAIL
today’s world where customers tend to adopt
Personalized, automated learning services Digital is expected to have a profound products and services that deliver real value
Personalized services and more interactive
will help deliver a tailored, individual impact on health and wellness, enabling a
in-store digital experiences could help to them, but also use these experiences to
approach based on unique needs, with the shift from population-based diagnostics and
ability to monitor how much a student has prescriptions to those centred on
companies provide a more integrated define their expectations across all other
approach to managing customer journeys.
learnt more effectively. individuals. industries.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 11DIGITAL CONSUMPTION:
HYPER-PERSONALIZATION
The hyper-personalization spectrum
Customers increasingly
Digitalization has enabled two main forms of hyper-personalization:
expected relevant,
personalized GIVING CUSTOMERS CONTROL TO PROVIDING MORE RELEVANT
interactions through 1 CUSTOMIZE THEIR PRODUCT /
EXPERIENCE
2 INTERACTIONS BY ANALYZING
CUSTOMER DATA
every engagement
channel. Advances in AI Create your own suit Personalized in-store
and other technologies shopping recommendations
are opening up new
Customized shoes Mobile app using machine
possibilities for hyper- learning to monitor mental-
EXAMPLES
personalization. health patients
100+ drink choices and
customization options Music tailored in real time to
mood and location
• Lower requirement for access to customer • Requires (repeat) access to customer data
data
• Usage data can be captured without direct
• Requires more direct engagement from the customer intervention
IMPLICATIONS
customer (opt-in) at point of sale
• Analytical capabilities to tailor personalized
• Robust and agile supply chains to provide offers and services
convenience and choice
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformationDIGITAL CONSUMPTION:
OWNERSHIP TO ACCESS
The concept of ownership to access has emerged Which sectors are most likely to be disrupted by
across a wide set of markets access-based models (grouped by net asset value)?
Factors determining the extent of access-based business models include:
A preference for access rather than ownership is now mainstream, with
more than 110 million people in North America already participating in
Underutilized Shareability Regulatory
the collaborative economy. This shift towards access-based Net asset value
capacity quotient environment
consumption patterns holds important implications for businesses,
especially for traditional revenue models.
Accommodation
Ownership to access can also generate value for society. It does so by Automotive
creating an economic system of marketplaces and platforms that unlock
High
the value of underused assets and improve resource efficiency. Construction
Luxury Apparel
Medical Equipment
Cohealo, a US-based technology company,
Medium
allows hospitals to share equipment, reducing Energy
the need to buy assets and boosting utilization Sports Equipment
rates. Cohealo says that its service has saved
hospitals $1 million to $2 million each.
Personal Care Products
Low
Food and Beverage
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 13Aireen Omar
Chief Executive Officer,
AirAsia, Malaysia
“Do not reinvent the
wheel. Partner with
experts who have
a competitive edge –
a team effort across
industry is necessary.”
14DIGITAL ENTERPRISE: HOW TO SURVIVE
DISRUPTION AND THRIVE IN THE DIGITAL AGE
Disruption may not be bankrupting incumbents, but to succeed in the digital era, they will need to become
digital enterprises, rethinking every aspect of their business.
Digital business Digital operating Digital talent Digital metrics
models models and skills for success
Companies need to Digital leaders follow a lean To attract, retain and develop Traditional key performance
fundamentally change the way approach to both core and talent, enterprises will need to indicators are no longer
they identify, develop and launch support functions. With this in embrace cultural change, focus effective at measuring the
new business ventures. A recent mind, 90% of companies have on recruiting millennials and performance of a business in
study forecast that 30% of significantly adjusted operations adapt to new ways of working. the digital age. Leading
industry revenues will come from in the past two years. Companies need to prepare for enterprises track the metrics
new business models by 2020. greater automation, with 81% of that matter, and react to them in
managers believing that real time. Companies that
machines will make workers understand digital
more effective. transformation earn 26% more
profit than others.
Selected
case
studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 15DIGITAL ENTERPRISE:
DIGITAL BUSINESS MODELS
Traditional approaches Additional approaches
Companies can choose
from several options Build
Invest
Might be the best route:
when implementing a
• When the opportunity is related to the • Allows an established company to connect with
digital business model. company’s core business the right skills and capabilities
The following factors • If there is still time until the market's inflection • Avoids hindering entrepreneurial forces with a
point set-up focused on internal governance and
are likely to determine • If the company can hire the necessary talent reporting, which would undermine the start-
the path selected. up’s agility
Buy
Usually most appropriate:
Incubate/Accelerate
• When it is strategically imperative to “own” a • Allows for a close relationship to the funding
market company, enabling internal capabilities,
• If the market inflection point is close, and hiring infrastructure and resources to be deployed to
the right talent is not possible help the start-up
• If the new opportunity bears little relation to the • Benefits companies via increased deal flow in
company’s current business model business models and technologies
Partner
When there is no strategic need to own:
Click to • Learn more from a “digital native” about the
download market and the partner’s model
• Useful when deeper partnerships or future
White Paper acquisitions are required Source: World Economic Forum/Accenture Analysis
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 16DIGITAL ENTERPRISE:
DIGITAL OPERATING MODELS
Digital disruption is encouraging companies to re-examine their operating models. DTI research has identified five operating
models for the digital age.
ORGANIIZATION PROCESS PEOPLE CULTURE KPI
CUSTOMER-CENTRIC
Front-line Net present
Makes customer lives easier and Decentralized Front Office Client first
emphasizes front-office processes. empowerment value
EXTRA FRUGAL Supply and
Process
Thrives on a ’less is more’ culture and a Standardized manufacturing; Less is more Cost
standardized organizational structure. optimization
support functions
DATA-POWERED Centre of Supported by
Agile test and Return on
Builds intelligence around prowess in excellence / deep analytics Serendipity
analytics and software intelligence. learn investment
hub and spoke capabilities
SKYNET
Full-time
Uses machines intensively to increase Standardized Manufacturing Automation ‘Engineer’
productivity and flexibility in production. employee ratio
OPEN AND LIQUID Constant
Collaboration / Net present
Creates an ecosystem built around the Local dialogue with Sharing
‘sharing customer’. crowdsourcing value
outside world
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 17DIGITAL ENTERPRISE:
DIGITAL TALENT AND SKILLS
To stay relevant, companies should consider how their talent requirements need to evolve, to meet the skills and workforce
challenges created by rapid digitalization.
Attract, retain and Bring leadership Adapt to different
develop talent into the digital age ways of working
• Be a great place to work for • Leaders should hire • Create environments where The skills crunch
millennials. Formulate a multi- people with digital humans and robots can work
year engagement strategy. mindsets and a willingness together successfully.
Empower and incentivize the to change the status quo. Evaluate the value of
workforce through Accept failure, and move automation, establish the
development opportunities. away from the risk-averse
mindset. Finally, embrace
extent to which automation
will form the core of your 81%
say they are looking for a
• Create a workforce with digital flatter structures and move business, and invest in wider mix of skills when
skills. Whether it’s developing away from hierarchies. developing internal hiring
73%
training programs to obtain automation capabilities.
necessary skills or hiring • Foster a digital culture
digital natives, companies from the top through • Prepare for the rise of the of CEOs cite skills
need to be aware of where communication, journey on-demand workforce but shortages as a threat
to their businesses
talent is headed and how they management, visible ensure that there is enough
can help. changes, and continuous of a balance to maintain
change monitoring. corporate culture.
Source: PwC, People Strategy for the
Digital Age
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 18DIGITAL ENTERPRISE:
DIGITAL METRICS FOR SUCCESS
Many companies have discovered that traditional financial key performance indicators (KPIs) are no longer effective at
measuring the success of a business. Digital traction metrics provide invaluable insights that complement financial reporting.
Why is digital traction important?
DIGITAL TRACTION
Being able to measure digital traction – and
= find ways to boost it – is important for both
digital disruptors and established
businesses for two key reasons.
x x
1. In some scenarios, strong digital
SCALE ACTIVE USAGE ENGAGEMENT traction (e.g. a high NPS) means that
the cost of marketing falls to zero and,
• Unique visitors • Number of active users • Time on site
• Number of visitors • Monthly active users (MAU) • Net Promoter Score (NPS) in the case of a peer-to-peer business
• Number of registered users • Ratio of new users to repeat • Customer satisfaction index model, service costs could also
• MOM (month-on-month) growth users / customers • Downloads approach zero.
in registrations • Conversion rate • Cohort retention on metrics that
• Organic user acquisition • Abandon rates matter for that business 2. Strong digital traction can boost
• Bounce rate company valuations as digital
• Sources of traffic
• Customer concentration risk
enterprises have more scalable, highly
• Churn / exit rate engaged customers than traditional
• Posts contributed companies. In a down market, these
• Photos / videos uploaded and scale effects become more
shared, and views completed
• Number of likes and shares
pronounced in investor valuations.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 19PLATFORM ECONOMY: DIGITAL B2B PLATFORMS
ENABLE THE FOURTH INDUSTRIAL REVOLUTION
Driving transformed Helping ecosystems Creating a win-win
In a platform-driven business models expand for industry and
world, enterprises and society
policy-makers need to Interactions drive scale Digital B2B platforms are blurring Platform-driven interactions
collaborate on new through network effects in industry lines and reshaping are expected to enable
initiatives to unlock the digital B2B platform business industries into complex, approximately two-thirds of
models. Emergent innovation interconnected systems. In a the $100 trillion value at
potential of B2B and outcome-based strategies survey of 2,000 business and stake from digitalization by
platforms to deliver across platform participants information technology 2025. In contrast to other
value for society. support these models. executives, 81% believe industry technologies, society is
boundaries will become expected to gain as much
dramatically less distinct. as industry through digital
B2B platforms.
Incumbents and disruptors are creating new platform business models across industries and geographies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 20NEW STRATEGIES AND OPERATIONAL CAPABILITIES
FOR SUCCESS IN THE PLATFORM ECONOMY
Platform strategies shape operational capabilities to deliver desired
outcomes within a platform ecosystem.
• The traditional pricing New digital • To unlock value, existing
approach will Effective
metrics Platform-
organizational structures
driven
progress to outcome- collaboration
Ecosystem innovation must adjust by adopting
based rewards governance
Platform a "platform mindset"
sharing across Reward sharing
talent
ecosystem Sponsorship
• Enterprises will need to
ACCELERATING
participants New business ECOSYSTEM
OPEN
Organization
foster a "collaboration-
models ACTIVATION alignment
INNOVATION
STRATEGIES first" culture to
• Performance FOR A
TALENT AND
cooperate both
BEYOND
monitoring will need Ecosystem
PLATFORM 3 4 Data
capabilities internally (across
WORLD
to transition to role
different business units)
relevant new digital 2 5 Foundational
platform
technologies
and externally (with
metrics (e.g. Value VISION DATA AND
other enterprises and
proposition AND TECHNICAL
interactions) from AMBITION 1 6 ELEMENTS Emerging
technologies policy-makers)
traditional ones (e.g.
customer
conversions) Strategic ENTERPRISE CAPABILITIES Operational
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 21SOCIETAL IMPLICATIONS: THREE MAJOR
IMPACTS OF DIGITAL TRANSFORMATION
Digital transformation is Employment Sustainability Trust
generating a fierce debate
among policy-makers, Current estimates of global job It has not yet been possible to Social media, user-generated
economists and industry losses due to digitalization decouple economic growth from websites and other innovations
range widely, from 2 million to an increase in emissions and have been instrumental in
leaders about its societal
as high as 2 billion by 2030. use of resources. Current increasing transparency and
impact. This analysis suggests that business practices will overcoming information
digitalization can be a net job contribute to a global gap of 8 asymmetries. However, trust in
creator in some industries. But, billion metric tons between the all technology-based sectors
with both winners and losers supply of and demand for declined in 2015. Beyond
resulting from digital natural resources by 2030, privacy and security concerns,
transformation, a huge premium translating to $4.5 trillion of lost broader ethical questions about
rests on the near-term ability of economic growth. The analysis the way organizations use
businesses to upskill suggests that digitalization digital technology threaten to
employees and shape the next could make a positive erode trust in those institutions.
generation of talent. contribution to this challenge.
Click to
download
White Paper
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 22INTRODUCING VALUE AT STAKE AND DIGITAL
VALUE TO SOCIETY (DVS)
Value at stake The components of value at stake and DVS
The DTI value-at-stake
The value-at-stake analysis assesses the impact of digital initiatives
framework and DVS on industries, customers, society and the environment over the next
metric developed here decade (2016 to 2025). Over the past two years, more than 130 Example metrics
digital initiatives covering innovations as diverse as driverless cars,
offer a distinctive predictive analytics, remote healthcare and drones have been • Lives saved DVS
Society and
approach to analysed.
Environment • Carbon emissions
• Life expectancy
understanding – and Notes on methodology: Value at stake integrates all segments of
unlocking – the value an industry's value chain, capturing about 80% of revenues and Consumer • Time savings
profits. It considers the total addressable market and Benefits • Cost saving on consumption
of digitalization for adoption/penetration rates over the next 10 years, and is based on
business and society. research, industry reports, existing use cases and interviews with • Net job creation
experts. Value-driver trees are used to assess key drivers against
areas of impact for industry and society.
Labour • Median income growth
• Income disparity
Digital value to society (DVS) • Value addition (from new
A new framework, digital value to society (DVS), was created by products / services)
aggregating the key performance indicators that relate to the impact Industry • Value migration (from
of digitalization on health and safety, employment, the environment
shifting profit pools)
and customers. The graphic on the right illustrates how DVS maps to
value at stake.
VALUE AT STAKE
Value at stake and DVS are intended to provide an evidence-based
framework to encourage collaboration between enterprises and
policy-makers, and to unlock the societal benefits of digitalization.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 23UNLOCKING DIGITAL VALUE TO SOCIETY: A NEW
FRAMEWORK FOR PUBLIC-PRIVATE COLLABORATION
ILLUSTRATIVE
This distinctive economic (tailored to each industry)
framework helps INDUSTRY
Value Drivers
business leaders, IMPACT
Revenues
regulators and policy- Value Migration and
Free Cash Flows/Operating Margins
makers to unlock the Value Addition Costs
estimated $100 trillion of Allocated Capital
value that digitalization VALUE IMPACT SOCIETAL
Value Drivers
OF DIGITAL IMPACT
could generate over the TRANSFORMATION
next decade. Society and Environment
CO 2 Emissions
Lives Saved/Security
Cost Savings
Consumer Benefits
Time Savings
Net Job Creation
Labour
Injuries/Accidents Avoided
• The economic framework developed aims to quantify the impact • It provides a consistent base of evidence and set of definitions for
of digital transformation on industry and broader society. digital concepts, supporting a global, multistakeholder dialogue
• The framework is new and will be iterated further over the next about digitalization and its implications.
Click to
year, but it can already be applied at all levels of government and • Proof of concept of the framework for 11 industries was achieved
download business, helping stakeholders to make the right decisions to and its application successfully piloted on a national/state level (in the
White Paper deliver the full potential of digital transformation. United Kingdom, Denmark, India, and the Indian state of Telangana).
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 24FOCUS ON DIGITAL DENMARK: UNLOCKING MORE
THAN $50 BILLION OF VALUE OVER THE NEXT DECADE
Work has started with the Value at stake from digital transformation initiatives in Denmark (cumulative 2016-2025)
Initiatives are in the process of being assessed against converging industry systems
Danish Ministry of
Business and Digitization Total Value Trapped Productivity Emissions
Council to identify and at Stake Value 1 Gains Reduction
prioritize initiatives (approx.)
across major industry $34 billion $33 billion $16 billion --
33.4 0.4
systems, including E-commerce 13% of Denmark’s
GDP in 2015
97% of total
manufacturing, health,
mobility, electricity and e- Connected Travel $11 billion $8 billion $1 billion 0.3 million
9.9 1.6 4% of Denmark’s 73% of total
commerce. Services tonnes
GDP in 2015
The next step is to $6 billion $4 billion $1 billion --
Sharing Economy 5.4 1.1 2% of Denmark’s 66% of total
capitalize on public- GDP in 2015
private collaboration to
unlock the trapped value $3 billion $2 billion -- 0.5 million
Assisted Driving 2.4 0.3 1% of Denmark’s 75% of total tonnes
of digital transformation, GDP in 2015
a focus for DTI in 2017.
Denmark Societal Industry
1Trapped value is the difference between societal value and business value, where societal value is greater than business value. It does not reflect any
multiplier effects to either society or business, which are a factor of individual initiatives within each industry and market.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 253. In-Depth Industry Reviews: Key Insights
AVIATION, TRAVEL AND TOURISM:
DIGITAL THEMES AND INITIATIVES
The industry has been at the forefront of digital disruption in recent years, changing the way people travel. However, the
sector should brace itself for another wave of digital transformation.
Living Travel Enabling Travel Digital Enterprise Safety and Security
Experience Ecosystem
Travellers will experience Digital platforms enabling Innovations such as 3D As identity management
seamless journeys tailored ecosystem alliances will printing, artificial intelligence, transitions to digital, a
to their habits and continue to emerge, as IoT, virtual reality and digital collaborative effort to boost
preferences, and travel will asset- and information- platforms will transform cybersecurity and protect
blend seamlessly with other sharing become operations and the traveller data privacy will be
everyday activities. increasingly important from workforce. Key initiatives crucial to maintain customer
Important initiatives are a B2B perspective. Key include Smart Manufacturing, trust and public safety.
Travel Centricity, Seamless initiatives are Ecosystem Intelligent Assets and Next Major initiatives are Data
Customer Journey and End- Convergence, Battle for Generation Workforce. Dilemma, Modern Security
to-End Propositions Customer Mindshare and Environment and
Diffusion of Ownership. Ubiquitous Tourist Safety.
Case studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 27AVIATION, TRAVEL AND TOURISM:
UNLOCKING VALUE
The digitalization of AVIATION, TRAVEL AND TOURISM:
aviation, travel and Value at stake for industry and wider society, by digital theme (cumulative 2016-2025)
tourism could unlock
Potential Potential Total Value Emissions Net Impact
$1 trillion of value for Business Impact Societal Impact at Stake Reduction on Jobs
the industry and society ($ billion) ($ billion) ($ billion) (million tonnes CO2) (000s)
over the next decade. Living Travel
100 165 265 -- 270
Societal benefits include Experiences
cost and time savings Enabling Travel
105 380 485 107 (940)
for consumers and Ecosystem
reduced environmental
Digital Enterprise 190 20 210 143 (100)
footprints.
Safety and Security 10 140 150 -- (10)
Total 405 705 1,110 250 (780)
Unlocking Societal Value: End-to-End Propositions
End-to-end propositions are starting to overhaul traditional methods of booking elements of a journey separately. Fully integrated and
Click to personalized travel experiences can be booked more quickly and easily. It could even be possible to create a push model for booking
download travel, where travellers are sent a proposition, based on events in their calendar and past travel preferences, before even starting to
White Paper search for airfares or accommodation. All operational tasks would be handled in a smart machine-learning environment, with feedback
loops continuously improving the service.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 28CHEMISTRY AND ADVANCED MATERIALS:
DIGITAL THEMES AND INITIATIVES
Digitalize the Go Beyond the Collaborate in
The industry’s contributions Enterprise Molecule Ecosystems
allow other sectors to turn
innovations into sophisticated Advanced digital technologies, Digitalization presents the Accelerated innovation cycles
products that enable such as the Industrial Internet of industry with opportunities to will drive the industry to build
Things, automation, analytics and launch new digitally enabled flexible and interconnected
digitalization. Three themes
artificial intelligence, will take core offerings, create outcome- innovation ecosystems. Intense
are central to the sector’s own operational functions to the next oriented business models and collaboration and data sharing
efforts to capture the value level (e.g. research and improve customer interaction. along the value chain will help
of digital transformation. development [R&D], Major initiatives are Digitally to better address customer
manufacturing and supply chain), Enabled Offerings and requirements and manage
and will augment workforce Business Models, Advanced volatility. Key initiatives include
capabilities. Key initiatives are Customer Interaction, and Innovation Ecosystem and
Digital R&D, Digital Supply Accelerated Circular Economy. Value Chain Collaboration.
Chain, Digital Plant and
Augmented Workforce.
Case studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 29CHEMISTRY AND ADVANCED MATERIALS:
UNLOCKING VALUE
Digitalization CHEMISTRY AND ADVANCED MATERIALS:
could unlock about Value at stake for industry and wider society, by digital initiative (cumulative 2016-2025)
$550 billion of value for Societal
the industry and wider Industry $ billion
society over the next
Digital R&D 28-31 Unlocking Societal Value:
decade. Positive
societal impacts include Digital Plant
Digital Plant 2-4 35-60
reduced emissions and Further digitalizing assets and equipment
with, for example, smarter sensors, allows
lower injury rates in the companies to monitor asset condition and
industry workforce. Digital Supply Chain 40-70 continuously process quality, throughput
However, these were and emissions. Assets can send signals on
their status and performance which, in
the smallest societal Augmented Workforce 85-120 combination with real-time analytics and
gains from the in-memory computing, enable immediate
intervention to prevent equipment failures
industries analysed. Digitally Enabled Offerings and 110-250 and breakdowns. Combining real-time asset
Business Models condition information with predictive
analytics allows companies to predict
Advanced Customer Interaction 10-20 the likelihood of asset failures and plan
maintenance accordingly. This initiative
Click to can generate significant societal benefits,
download Total
2-4 308-551 including reducing CO2 emissions by
up to 100 million tonnes.
White Paper
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 30MINING AND METALS:
DIGITAL THEMES AND INITIATIVES
The industry is embracing the opportunities of digital transformation and facing up to its challenges. Four themes will help
players to capture value for the industry and wider society.
Automation, Robotics Digitally Enabled Integrated Enterprise, Next-Generation
and Operational Workforce Platforms and Analytics and
Hardware Ecosystems Decision Support
Digitally enabled hardware Connected mobility, as well This theme concerns Algorithms and artificial
tools are going to perform as virtual and augmented linking operations, IT intelligence can process
or improve activities reality, can empower field, layers, and devices or data from sources within
traditionally carried out remote and centralized systems that are currently and beyond the traditional
manually or with human- workers in real time. Key separate. Important value chain to provide real-
controlled machinery. initiatives are Connected initiatives are IT/OT time decision support and
Major initiatives include Worker and Remote Convergence, Asset future projections. Key
Autonomous Operations Operations Centre. Cybersecurity and initiatives are Advanced
and Robotics, 3D Printing Integrated Sourcing, Data Analytics and Simulation
and Smart Sensors. Exchange, Commerce. Modelling and Artificial
Intelligence.
Case studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 31MINING AND METALS:
UNLOCKING VALUE
Digitalization could MINING AND METALS:
unlock more than $400 Value at stake for industry and wider society, by digital initiative (cumulative 2016-2025)
billion of value in Potential Potential Total Value Emissions Net Impact
industry and societal Business Impact Societal Impact at Stake Reduction on Jobs
($ billion) ($ billion) ($ billion) (million tonnes CO2) (000s)
benefits, which include
Smart Sensors 34 8 42 161 (40)
lives saved, fewer
Autonomous Operations & Robotics 56 19 75 396 (60)
injuries and lower
emissions. 3D Printing -- 3 3 35 --
Connected Worker 85 -- 85 -- (201)
Remote Operations Centre 77 7 84 16 (12)
Asset Cybersecurity 21 -- 21 -- --
Integrated Platforms 37 69 106 -- (5)
Advanced Analytics 11 -- 11 -- (13)
Total 321 106 427 608 (330)
Unlocking Societal Value: Connected Worker
Connected worker technologies have numerous applications in the industry. For instance, equipping workers with connected, intelligent
Click to wearables and mobile devices allows mine and plant management to capture critical information in real time. This also enables
download seamless communication; immediate, remote expert assistance, diagnosis and real-time guidance; and "follow-complete-document"
workflows that can be carried out directly in the field. Through better tracking of individuals, especially in dangerous events, it is
White Paper estimated that up to 500 lives could be saved and more than 20,000 injuries prevented over the next decade.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 32Duncan Wanblad
Chief Executive Officer,
Base Metals and
Minerals, Anglo
American, South Africa
“Our ageing workers
know the mines and our
young guys know
digital. When we have
been able to have
a cohesive cross-
generational team,
it has been stellar.”
33OIL AND GAS:
DIGITAL THEMES AND INITIATIVES
The industry has a chance to move from incremental, digitally driven operational improvements to a broader embrace
of digital technologies. Four themes will play a leading role in this transformation.
Digital Asset Life Circular Collaborative Beyond the Barrel Energizing New
Cycle Management Ecosystem Energies
Connecting end-to-end Digitalization will help with Digital technologies open Digitalization promotes new
operations across the value advanced and innovative new avenues for customer energy sources and carriers,
stream can ensure that all collaboration models between engagement and provide and innovative models for the
systems, equipment, sensors and producers, suppliers and society, additional services that help optimization and marketing of
data are communicating and as well as making operations create new and innovative energy. The Oil and Gas
learning from actions. This will transparent and driving out business models. Important industry must understand the
lead to increasing efficiency, inefficient practices. Major initiatives are Digital full impact of this, and stay
productivity and compliance with initiatives are 3D Printing and Customer Services and connected with millennials.
health, safety and environmental Blockchain / Smart Contracts. Omnichannel Retail and Key initiatives include
standards. Key initiatives are New Experience-based Services. Consumer Energy Choices.
Era of Automation, Advanced
Analytics and Modelling and
Connected Worker.
Case studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 34OIL AND GAS:
UNLOCKING VALUE
Digitalization could OIL AND GAS:
unlock up to $2.5 trillion Value at stake for industry and wider society, by digital theme (cumulative 2016-2025)
of industry and societal
Potential Potential Total Value Emissions Net Impact
value. Societal benefits Business Impact Societal Impact at Stake Reduction on Jobs
include reduced ($ billion) ($ billion) ($ billion) (million tonnes of CO2e) (000s)
emissions and $170 Digital Asset Life
745 110 855 370 (114)
billion in cost savings Cycle Management
for customers. Circular Collaborative
Ecosystem
30 0.5 31 2 --
Beyond the Barrel 100 27 126 12 21
Energizing New
Energies
70 500 570 900 35
Total 945 637 1,582 1,284 (57)
Unlocking Societal Value: Consumer Energy Choices
Click to The shift to new energy sources could reduce CO2e emissions by 900 million tonnes. This initiative could also
download add about 35,000 jobs, as generation from renewables, rather than fossil fuels, tends to be more people-
White Paper intensive. Several super majors are already taking steps to mitigate this trend's impact on their businesses by
investing in green or alternative energy (but this has been excluded from our value-at-stake analysis).
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 35PROFESSIONAL SERVICES:
DIGITAL THEMES AND INITIATIVES
Disruptive technologies are fundamentally changing the economics of Professional Services. Four themes will be central to
capturing digital value for the industry and wider society.
Business Model Intelligent Digital Agility Talent
Transformation Automation Empowerment
Digitalization empowers firms Emerging technologies such as Companies with an agile In a digitalized world, there is
to change every facet of how blockchain, artificial intelligence work culture and smart a need to reimagine what it
they go to market, including and deep learning are infrastructure can react means to be an employee
their services, value augmenting professionals’ quickly and adapt strategies and revisit the employee
proposition, target customers abilities to “do”, “think”, “learn” and processes to disruptive value proposition for the
and prices. Key initiatives are and “feel”. Major initiatives events. Important initiatives workforce. Key initiatives
Enhancing Go-to-Market include Modularizing Work and are Developing a Flexible include Reimagining Hiring,
Strategy and Fostering a Augmenting Human Intelligence. Workforce, Nurturing an Training Talent and Designing
Digital Environment. Agile Culture and Investing the Employee Experience.
in Smart Infrastructure.
Case studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 36PROFESSIONAL SERVICES: AUGMENTING HUMAN
CAPABILITIES THROUGH NEW TECHNOLOGIES
Expertise is the TECHNOLOGIES ARE AUGMENTING PROFESSIONALS’ ABILITIES TO “DO”, “THINK”, “LEARN” AND
primary product of “FEEL”
Professional Services.
THINK DO
Machines are
augmenting key human Insight Generation Communication
Kensho Quill (Narrative Science), Amelia
capabilities so that
expertise can be Creativity Presentation
provided to clients Project Dreamcatcher, BeamPro, Magic Leap
Rembrandt
more efficiently, using Organization
combinations of humans Cognition Amy Ingram (x.ai)
and machines. Watson, DeepMind
FEEL
Memory
Robo Brain Relationship Building
Crystal, LinkedIn
LEARN
Empathy
Pepper
Instinct
Click to Uniquely human
download Note: The degree to which human capabilities are
being augmented by technology is indicated by the Appearance
White Paper ideograms next to each capability.
Sophia
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 37RETAIL:
DIGITAL THEMES AND INITIATIVES
Technology will transform retail’s end-to-end value chain. The level of change in the next 10 years will far surpass what has
been seen in the past 40 years.
Maintain Engagement Rapidly Adopt Evolve Business Manage Societal
with the Empowered Disruptive Models and Key Impacts
Customer Technologies Capabilities
Empowered consumers Eight emerging technologies* Emerging business models Transformation in the retail
demand to be actively involved will be particularly disruptive will fundamentally alter the sector has implications for
at every stage of their decision- over the next decade. Though retail landscape, impacting labour, the environment and
making journey and expect the pace of their development subcategories to varying local communities, which
increasing levels of choice, will vary, all will impact the degrees. The right capabilities will need to be managed.
control and convenience. value chain, and rapid will be needed to compete in
adoption will be critical. this evolving environment.
Case studies:
go
* The eight technologies are the IoT, autonomous vehicles/drones, robotics, 3D printing, artificial intelligence (AI), augmented reality / virtual reality, digital traceability and blockchain.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 38RETAIL:
FRAMEWORK FOR ANALYSING TRANSFORMATION
Empowered Consumers
• The consumer equation of Cost + Choice + Convenience is becoming more complex thanks
4 1 to the additional dimensions of Control + Experience.
• Incumbents must open up their value chain to consumers, enabling them to participate and
control a greater span of their experience.
Disruptive Technologies
• Based on their widespread application, resulting efficiencies and impact on labour, AI /
Empowered machine learning, autonomous vehicles / drones, IoT and robotics will be the four most
Societal Impacts transformational technologies to the industry (among the eight assessed).
Consumer
Transformative Business Models
Future of Retail • If current year-on-year growth is sustained, e-commerce could reach penetration rates of
for Consumer more than 40% in 2026 (in digitally developed markets), which will drive $600 billion in value
Industries for business.
• Four key business models will proliferate: Sharing Economy, Smart Replenishment, Curated
Subscription, and Do It for Me. Sharing Economy will drive the highest value at stake, with
2 $1.7 trillion of value for society.
3
Key Capabilities
• Intra- and extra-industry partnerships will be critical for developing ecosystems to remain
competitive in the future.
• Last-mile delivery infrastructure currently comprises 25% of the total cost of delivery and
must become more efficient.
Disruptive
Business Models and
Technologies Societal Impacts
Key Capabilities
• Public-private partnerships will be critical for managing the impacts on the workforce, the
environment and local communities.
Direct Impact
Indirect Impact
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 39Noreena Hertz
Author and Visiting
Professor, University
College London
“They (13-21 year olds,
a generation I call
generation K) do not
know any different.
This is their world – this
digital ecosystem is their
normality.”
40TELECOMMUNICATIONS:
DIGITAL THEMES AND INITIATIVES
The industry is a key enabler of digital transformation across industries, but the value of digitalization has so far eluded
telecommunications operators. Four themes will be central to capturing it.
Networks Beyond the Pipe Redefining Customer Bridging the Gap
of the Future Engagement on Innovation
Amid rising demands on Digitalization offers important To win customer mindshare The need to rapidly
networks and associated opportunities to extend in a digital world, operators accelerate innovation cycles
cost pressures, operators revenue streams beyond just must change their approach is forcing industry participants
are accelerating the connectivity. Important to identifying and exceeding to look beyond in-house R&D
development of "smart initiatives are Integrated on B2B and B2C customer and transform company
pipes" and new models of IoT, Digital Services, Winning expectations, while culture to attract the best
extending internet access. the Battle of Ecosystems, and rethinking customer service. digital talent. A major initiative
Key initiatives are Software- Reimagining Communication. A key initiative is Delighting is Outside 'In-novation’.
Differentiated Networks, the Digital Customers.
Autonomous Networks,
Cyber-resilience and
Extending Connectivity.
Case studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 41TELECOMMUNICATIONS:
UNLOCKING VALUE
The digitalization of TELECOMMUNICATIONS:
telecommunications Value at stake for industry and wider society, by digital theme (cumulative 2016-2025)
could unlock $2 trillion
Potential Potential Total Value Emissions
of value for the industry Business Impact Societal Impact at Stake Reduction
and wider society over ($ billion) ($ billion) ($ billion) (million tonnes CO2)
the next decade. By
enabling the digital Networks of the Future 440 580 1,020 183
transformation of other
industries, the sector Beyond the Pipe 650 290 940 106
also generates societal
Redefining Customer
benefits. Engagement
30 2 32 --
Bridging the Gap on
Innovation
160 1 161 --
Total 1,280 873 2,153 289
Unlocking Societal Value: Extending Connectivity
Click to Technologies such as drones, satellites and balloons are extending affordable internet access in regions with low population densities.
For telecom operators, these innovations can overcome significant cost barriers in reaching remote areas across developed and
download developing markets. The potential value to society of the Extending Connectivity initiative is $400 billion over the next decade, or
White Paper almost half of the sector's potential overall societal impact, but concerted public-private action will be needed to capture this value fairly
and at scale. Considerations include affordability, regulations that ensure fair competition, digital skills, cultural acceptance and
accountable institutions. To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation
42AUTOMOTIVE:
DIGITAL THEMES AND INITIATIVES
Connected Autonomous Digital
The car – the pre-eminent Traveller Driving Enterprise
consumer product of the
Industrial Revolution – is The car is becoming a digital Digitalization will usher in the Digital initiatives could drive
facing what may be its hub for real-time two-way era of autonomous vehicles. substantial improvements to
wireless data transfer. The Manufacturers already offer the value chain. They include
greatest moment of change.
human and the vehicle are Assisted Driving technologies, Connected Supply Chains,
Three digital themes will be moving towards total such as lane-warning crash Digital Manufacturing,
central to this transformation. connectivity across devices, avoidance and automatic Disrupted Retail, Connected
databases and objects. Key parking assistance. These Service and Maintenance,
initiatives are Infotainment, technologies could eventually Transformed Aftermarkets,
Usage-based Insurance and transform the industry with Self- Automotive Data Marketplaces
Multimodal Integration. Driving vehicles. and Connected Infrastructure.
Case studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 43AUTOMOTIVE:
UNLOCKING VALUE
Digitalization could AUTOMOTIVE:
unlock $2 trillion of Value at stake for industry and wider society, by digital initiative (cumulative 2016-2025)
value for the industry Value at stake for society1
$ billion Autonomous Driving
and society over the 1,400
next decade. Positive 1,300
Multimodal
Connected Traveller
societal impacts 1,200 Integration
Digital Enterprise
include efficient traffic 1,100
Assisted
Note:
management, reduced 1,000 Driving 1Bubble size indicates the combined industry and societal value at stake
in 2025. Total societal value at stake includes impacts on consumers,
congestion and fewer society and the environment. The impact on external industries has not
400 Usage-based been considered, and the impact on lives saved has not been quantified.
crashes. Insurance
The Connected Infrastructure initiative has not been valued.
300
Source:
200 Transformed World Economic Forum/Accenture analysis
Predictive Aftermarkets
100 Data Infotainment
Maintenance
Marketplace Multichannel Retail
0 Self Driving 3D Printing Connected Service
Digital Dealership
Smart Factories and Maintenance
-100 Value at stake for industry
-10 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 $ billion
Unlocking Societal Value: Multimodal Integration
Multimodal integration seamlessly links all forms of road, rail and ferry travel (including automobile driving and public transit), as well as
Click to walking and cycling. Full-scale integration could create more than $270 billion of societal and environmental benefits in the form of time
download savings from more efficient traffic management, reduced congestion, fewer crashes and lower emissions. It could also deliver
consumer benefits worth nearly $1 trillion through lowering the cost of car ownership. Realizing these benefits requires concerted
White Paper public-private collaborations bringing together original equipment manufacturers (OEMs), suppliers, regulators, and government
planning and tax authorities.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 44You can also read
