Five Insights on the Hyperconnected Econonomy
We all know that connections matter. A new expression is emerging, “it’s not what you know, and no longer only who you know, but what knows what.” Today, with the power of the Internet and mobile technology, it is easier than ever before to make connections, whether they are personal (P2P), business (B2B), or machine-to-machine/Internet of Things (M2M/IoT). In a recent study sponsored by SAP, the Economist Intelligence Unit (EUI) calls this the Hyperconnected Economy.
The data is limited, but hyperconnectivity has massive implications for businesses and individuals. The backbone of connectivity is the Internet and as the world builds out infrastructure, increases bandwidth and mobile adoption accelerates, the connectivity equation has the opportunity to go exponential and improve standards of living where it is needed most.
In this report, the EIU gives us plenty of data, information, insights, and benefits of the hyperconnected economy. It is chock full of details that help paint a picture of our emerging Internet enabled, interconnected world. The main thesis examines the impact of hyperconnectivity on businesses and individuals.
After reading the report, here are my top five takeaways.
Number 1: Hyperconnection Leads to Economic Growth
The report makes it clear that the hyperconnected economy has a positive effect on productivity and economic growth. The report cites McKinsey data indicating that the Internet is worth 3.4% of GDP for the G8 plus emerging countries like Brazil, India and China. What is even more impressive is that the Internet accounted for more than 20% of their GDP growth in 2004-09. It’s not wild speculation to expect these percentages to increase as Internet connectivity expands in emerging countries.
Number 2: Productivity Increases will be Most Staggering in Developing Countries
The report points to research from Deloitte suggesting that increased Internet adoption in Africa, Latin America, and Asia, could have a profound impact on those regions. Deloitte speculates that if Internet adoption was raised to the levels as those in developed countries, long-term productivity would increase by 25%, GDP growth would increase by 72%, and 140 million new jobs would be created! In addition, Deloitte predicts that average incomes would increase by $600, lifting 160M people out of poverty and improving education for 640M children. Is this staggering or what?
Number 3: IoT is Already Making the Connections, But When Will it Improve Manufacturing?
We all hear about the potential for connected “things” or IoT. Gartner estimates that IoT devices will surge from 900M in 2009 to 26B in 2020. One application of IoT is “smart manufacturing”, or the integration of connectivity into production machinery. However, smart manufacturing still has a long way to go. Research from the American Society for Quality (ASQ) indicates that only 13% of US manufacturers currently use any smart manufacturing and 73% of respondents cite costs as the key challenge to further adoption.
Number 4: Brick and Mortar is Here to Stay in Some Market Segments
In June, a report from Kantar Worldwide predicted that the e-commerce market for fast moving consumer goods (also known as consumer packaged goods) will account for 5.3% of the global market in 2016, though that is up from 3.7% today. This infers your local grocery and drug stores are here for the long haul. Interestingly enough, the report does not mention the impact of e-commerce on more durable consumer goods like HD TVs, appliances and electronics.
Number 5: Only 15 Years of Data Can’t Tell the Whole Story
So can’t we measure the overall impact of hyperconnectivity? Quoting from the first page of the report, “It is still difficult to quantify the overall impact of hyperconnectivity at this stage.” Evaluating the full impact of the Internet “is too early to measure” according to Rudolf van der Berg, Economist and policy analyst at OECD, “there are few historical data to work with.” This is an interesting perspective on the Internet, which might stir some debate with Millennials. But the point is valid. The Internet is still relatively “new” – its 15 year existence is just a blink of the eye in time.
These snippets are only part of the story. I encourage you to download the EIU report and other Hyperconnected Economy content on the EIU Web Page.
If you are interested in more content on personal networks, business networks, and IoT, check out this SAP sponsored site.