Ovum has recently completed a major research program focusing on the future, specifically a 10-year view on the main themes that will impact the telecoms, media and technology (TMT) sector.
Ovum’s Digital Economy 2025series concludes that a fresh wave of digital transformation, the Second Digital Revolution, is coming because of cheap and readily available hardware, processing, and connectivity as well as new, disruptive technologies.
It will be more all-encompassing than the first wave, with more verticals and processes impacted and automated by digitalization. Its impact will be felt across value chains, supply chains, consumption, and monetization.
Those companies providing technology and connectivity, the Digital Enablers, will be able to leverage the $4.8 trillion opportunity to support this transformation, with the greatest spending in the enterprise technology segment. However, certain players – which we term SMART players – will be able to leverage a disproportionate share of this opportunity.
Yet the Digital Enabler opportunity will be fraught with challenges. Increased competition, attracted by revenue growth and facilitated by more open ecosystems, will mean that Digital Enablers must place the needs of customers at the heart of their decisions and processes. Innovation, partnerships, scale, agility, and service bundling will all be vital to support this new outlook on the market.
Ovum’s key conclusions on the digital economy in 2025 include:
- The Second Digital Revolution is coming. Cost-effective connectivity, combined with greater computing capacity afforded by the cloud and improved capabilities from such technologies as predictive analytics and artificial intelligence, will enable the automation, analysis, and optimization of more elements of business processes.
- The Digital Enabler opportunity will be worth $4.8 trillion in 2025. Those players providing hardware, software, connectivity, platforms, and services to the digital economy have a huge opportunity to enable organizations’ transformations. Spending on such digital enablement will grow globally at a CAGR of 2.5% from 2015 to 2025.
- Enterprise technology spending will attract competition, but connectivity will remain valuable. Enterprise technology spending will claim 32% of the total digital enablement market in 2025 after growing at a 4.3% CAGR from 2015 to 2025. Consequently, competition in this space is set to intensify as CSPs, Internet platform providers, and network enablers move in.
- The enterprise context will be more important than the consumer context. The First Digital Revolution (1995–2015) impacted key processes (for example enterprise resource planning – ERP) and sectors (such as media and online retail), which in turn had an enormous consumer impact. However, the Second Digital Revolution will affect a far greater range of processes and industries, thereby expanding the opportunity to support their transformation, but with less direct consumer impact than before.
- Disruption cycles will intensify across value chains, supply chains, consumption, and monetization. The frequency and intensity of disruption cycles wrought by technology change will intensify. Ecosystems will become more open, increasing competition and complexity. Processes will become increasingly automated. Business models will have to change as customers demand greater personalization. Consumers will be defined by how they interact with the digital world.
· Some Digital Enablers – the SMART players – will be more equal than others. SMART players will provide Service, Management, Application, Relationship, and Technology platforms through which customers and third parties are able to access and distribute applications and content. The breadth of reach required to be such a player means they will be active across many digital enablement segments and capture a significant proportion of the total value.
· Consumers of the future will be defined by rate of adoption and privacy. Although the digital economy will be pervasive in 2025, users will be defined by the extent of their interaction with technology and their attitude to personal privacy. The largest group will be the Digital Citizens, who will rely on SMART players to provide their digital experience. However, segmentation will be fluid, dependent on the particular technology or service being discussed.
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Steven Hartley is practice leader for service provider and markets at Ovum. For more information, visit www.ovum.com/