Skip to Content

Digital Revolution Drives the Convergence of Industries

A few weeks ago, Amazon released its first smart phone and this technology world has been watching since.  The telecommunication industry has been competitive enough with the intense competitive smartphone war between Apple and Samsung, and now entering the battlefield,  Amazon the world’s leading e-retailer.  However, Amazon treats this new innovation less of a communication device but more as a way of servicing their customers better through effective data gathering.

Amazon, the world’s leading ecommerce site owns the most impressive distribution system and has branched out into Cloud computing, e-book, music and more. Moving into the Telco industry, Amazon has created another level of disruption in the business industries.    It disrupted the industry verticals from Retail, Finance to Telco and we no longer tell if Amazon is in the High Tech industry or a Retailer or moving into Telco — the industry lines are blurring.  It is
absolutely amazing when we look back and see how this chapter of revolution is like no others.  It happened faster and changed every way we look at business today. 

Let’s take a look at the history for a moment; the 18th – 19th century brought us to industrial revolution where the movement of energy in which machines changed people’s way of life and the way they manufactured. The 20th century saw a major shift in the way that vast numbers of people lived, as a result of changes in politics, economics, culture, science, technology, and medicine. It has been theorized that the 20th century saw more technological and scientific progress than all the other centuries combined since the dawn of civilization.  However, it’s in early 21st century that we saw the real explosion of digital revolution in which mobile technology, the power of big data and cloud computing connected the world.  It is when we learned and heard terms like ‘crowd-sourcing’, ‘networked economy’ and ‘the future of work’… In a short span of time, just like Amazon, many business industries converged
beyond boundaries.   How ready are we in managing the Omni-channel world?

Changes that led to yet another revolution

To answer this question is not simple. Let’s pick another great industry; tourism.   It’s only a few decades ago, the advancement in transportation sector created the boom in travel and tourism. Airlines, travel agencies, tourism bureaus and lodgings have been working together hand in hand to offer a more seamless customer experience. This was also made possible with the power of internet.  This opportunity created a new trend by the convergence of two emerging industries:  tourism and healthcare. The medical tourism is becoming mainstream as customers are seeking a more reliable and financially sustainable healthcare system.

With the rising cost of healthcare in the western & modern world, the trend of medical tourism in emerging destinations is likely to continue because price is a core demand driver.  The market size for medical tourism was estimated around USD 38.5-55 billion*, based on approximately eleven million cross-border
patients worldwide.  Customers expect personalized medicine, predictive health check (not just looking at curing illness but ensuring perfect health for the future).

The growth of technology is blurring the boundaries between services, healthcare and transportation providers.    Here’s the benefit such as big data comes in, in which by using scale-up, scale-down computing resources and advanced analytics software, the industry practitioners are able make sense of rapidly growing volumes of data. The industry experts are now beginning to analyze big data to obtain insights. They hope to collectively help the industry address problems related to variability in healthcare quality and escalating healthcare spend by creating seamless customer experience –  from selecting destination, logistics of travel, to receiving the medical care. All, if possible, in a few clicks on your smart phones or tablets.

One size does not fit all

The above example just shows one of many industries that have converged into one networked of business.  To name a few other emerging trends:

  • Telecommunication companies and IT service providers which leverage technology to provide additional services to businesses like virtual private networks, hosting and cloud computing.

  • Retail and Financial Services through virtual shopping experience and mobile payment.
  • Sport, Entertainment and Retail which work seamlessly with predictive analytics application that enhances fan experience and customer buying behavior, etc.

SAP has led the position as the industry focused enterprise software providers for more than 40 years.  It’s with our industry knowledge and expertise, we help our customers to step in the era where the impossible is made possible today.  There’s no one solution that fits all industry needs, just as how we all see the world differently.

One last thought, as the new trend of converging industries expand, will it lead to more revolutionary growth or to a monopolistic environment? Weigh in and give your opinions at @dvubroady or kindly respond to this blog.

Source: * Patients beyond Borders.

You must be Logged on to comment or reply to a post.
  • Really great post Denise. 

    The lines are blurring very fast between industries, driven by mutations that are occurring through changing customer demands and the addressing of unmet needs.  To address your question, I would see major defragmentation occurring in industries where the barriers to entry were previously high, but now dropping thanks to technology.    The marketplace in 5-10 years will look drastically different compared to where we are today (large players dominating nearly everything you consume in your home, etc. )  

    The new environment will be full of smaller players who can now achieve massive scale and growth through non-traditional means and channels (eg: Social Media).   We're already seeing some early proof of that with the meteoric rise of companies like AirBNB, Uber, Kickstarter and Etsy where the future will belong to the smaller players who blur the traditional industry boundaries and truly focus on co-creating value with the customer.   

    As for large players, they have a choice:   Either compete hard (which is ultimately a losing battle since they will be competing against multiple, more agile players who are frankly not playing by the same rules), or becomes large platforms for that co-create value for the customer in cooperation with the smaller companies.   

    Obviously not every industry will undergo the change at the same pace due to regulations, high(er) barriers to entry, etc. but eventually structural change will impact every industry as consumers and businesses will realize better alternatives to get things done.

  • It disrupted the industry verticals from Retail, Finance to Telco

    I don't think Amazon has moved into the Telco industry, mobile devices (like the Fire phone) are consumer goods. Telco is Verizon and AT&T.

    And to say they have disrupted the vertical industry of Telco, even if you consider they got into it by releasing the Fire, is a bit of a stretch no?

    And how did they disrupt Finance?

    • To your question of:

      • How does Amazon converge into Telco?


      Today the traditional telcos are paving their way to the Cloud, focusing on a broad set of Cloud offerings.  On a surface, Amazon may look like a normal retail company, however, the "big" play is Amazon Web Services (AWS), which sells storage, computing and other platform and infrastructure services. Where does telecom fit into this? When nearly everything is in the cloud, IP-VPNs will largely replace the demand for some of the largest business telecom services. VPNs are
      the "connectivity" (the circuits) of the cloud business.
        If the majority of businesses and business services move their platforms to the
      cloud, Amazon could become the single largest telecom operator.

      • On Finance ?


      Amazon is recently taking direct aim at mobile payment systems such as Square by introducing the Amazon  Local Register, a credit-card processing device and mobile app designed to help small business owners accept payments through their smartphones and tablets. Amazon's technology includes a card reader that attaches to a smartphone, Kindle or tablet.

      The reader processes credit or debit card payments via a secure Amazon network, the same one that processes purchases (similar to how we ‘pay’ for our ebook  today). The service is designed to serve on-the-go small business owners who might otherwise only accept cash or checks. The app works on most smartphones and tablets, including the Kindle Fire.

      For your reference only :

      Check out this article : Is Amazon a Telco Operator ? & Amazon debuts mobile payment.

      • How does amazon become the largest telecom operator without a communication infrastructure?

        In a IP world people still need pipes to reach the cloud. The cellular tower I connect to get LTE, the fiber optic in my home, the backbone Tier 1 network that connects continents.

        How do I reach amazons cloud services without that (which is the main service Telcos provide)?

  • Denise, great insight and examples of converging industries.  I have noticed similar trends in the Engineering, Construction, & Operations (EC&O) space and blogged on this topic myself.  SAP gives their customers the agility they need to quickly enter new markets and expand into new markets as their customers' demands shift.  I personally think this will lead to more revolutionary growth as completely new products, services, and sales channels evolve as a result of the convergence (additional supply) compounded by higher expectations of customers (additional demand).