As we close out 2019 and head into a new decade, I’ve been thinking a lot about the progress the technology industry has made over the past 10 years, and what that means for the next 10. I want to take a moment to reflect on one of the key technology trends I’ve seen over the last decade, and how it will impact innovation across industries in the next decade.
At the beginning of the 2010s, cloud computing was just beginning to gain momentum as small and large organizations discovered the advantages of on-demand computing power – particularly the ability to scale up or down to meet changing business requirements. Early on, cost was a big factor in the move to the cloud because it provided such an economical way to store large sets of data.
Now that cloud storage is ubiquitous and the volume of digital information has increased from terabytes to petabytes to zetabytes, data has become every company’s most valuable asset. Today, at the end of the decade, the focus has moved from using the cloud to gain economies of scale to extracting insights from the data deluge that can empower innovation and create competitive advantage.
But to truly harness the power of data over the next decade, that relevant data will need to flow freely, securely and in a structured way within organizations, and externally to and from trusted partners. We’re just now beginning to see steps to make that possible, with the establishment of new interoperability standards and initiatives in various industries, as well as the rise of technology to drive data transparency, such as blockchain.
Within the health care industry, for example, the Fast Healthcare Interoperability Resources (FHIR) standard establishes data formats that allow electronic health records to be exchanged regardless of the provider and system being used.
To address new regulations, new solutions and efforts have accelerated. Earlier this year, Microsoft announced Azure API for FHIR to enable health system interop and sharing data in the cloud. In July, leading cloud providers, including Microsoft, came together for the second year, to reaffirm their collective commitment to enable the frictionless exchange of health care data for patients and the industry.
And in November, to accelerate the ability to integrate health care data from medical devices, Microsoft released an open source software (OSS) tool for the Internet of Medical Things (IoMT) called IoMT FHIR Connector for Azure. This new tool empowers those working with data from medical devices to securely ingest and transform that data into the FHIR standard – enabling frictionless data flow from medical devices.
The Open Manufacturing Platform (OMP) is an initiative to drive open industrial IoT development and share smart factory solutions across the manufacturing industry to significantly accelerate industrial IoT developments. OMP helps manufacturers work together to break down data silos and overcome the challenges of complex, propriety systems. Leveraging existing solutions, manufacturers can unlock the potential of their data, integrate industrial solutions more quickly and securely, and benefit from contributions of other community members while maintaining ownership of their own IP and data.
These are just a few examples of how we’re helping our customers leverage data to gain better business insights and, ultimately, a competitive edge.
The importance of tech intensity in the decade ahead
We spent the past few months surveying and speaking with U.S. executives from large organizations across nearly every industry for our State of Tech Intensity 2019 Study. What we found was widespread agreement that the primary catalyst for progress and disruption in the 2020s will be the explosive growth in data, and the emergence of powerful AI and machine learning tools that can reveal correlations and unlock insights in all that data.
The ability to unlock data is foundational to an organization’s digital transformation, and once they’re able to do that they can more easily innovate across how they engage with customers, empower their employees and optimize their operations. And the savviest organizations will also use that data to identify opportunities to transform their products and services.
We also found that across industries, organizations achieving the greatest success are doing more than just implementing existing tech – they are developing their own digital capabilities and proprietary solutions that use data and AI to address the challenges they face and seize new opportunities. In essence, they are becoming technology organizations and, in the process, placing themselves at the forefront of technology innovation in their industries. We refer to this approach as “tech intensity,” and it’s something we’ve been talking about for some time.
As an example, New York-based Mastercard is a leading technology company in the payments space, processing about $20 billion in transactions a day across more than 210 countries or territories. And Microsoft is one of the top e-commerce merchants in the world, with online sales from the Microsoft Store, Xbox, Azure, Office 365 and more.
The two companies walked a mile in each other’s shoes – or in an update on the old adage, spent three days hacking together – and came up with a new service to make shopping online easier and more secure around the world, not only for shoppers, but also retailers and banks. The tech-intensity inspired collaborative experience kicked off a new way of thinking about innovation that promises to lead to even more developments to help e-commerce thrive.
Even in the world of health and life sciences, we’re seeing a similar evolution and blurring of lines. This October, Novartis announced it would establish an AI innovation lab to empower its associates to use AI across the business – using Microsoft AI technologies to enable this effort. The company said it is positioning itself as a leading medicines company powered by advanced therapies and data science/AI.
Going big on data and digital is a key strategic pillar that is helping Novartis realize that ambition. Data science and digital technologies allow the company to reimagine how it innovates in R&D, engages with patients and customers, and increases operational efficiencies.
According to our survey, the vast majority of leaders believe tech intensity is essential to their survival: 75 percent of those surveyed said it’s the most effective way to build a competitive advantage today and 83 percent agreed it is critical to future success.
The automotive industry is a great example of how businesses are rethinking their whole organizational structure and collaboration culture to build digital capabilities: The Volkswagen Automotive Cloud will be one of the largest dedicated clouds of its kind in the automotive industry and will provide all future digital services and mobility offerings across its entire fleet. From 2020 onwards, more than 5 million new Volkswagen-specific brand vehicles will be fully connected on Microsoft’s Azure cloud and edge platform each year.
Volkswagen intends to group more than 5,000 digital experts together in its new “Car.Software” unit with a group-wide responsibility for software in the vehicle by 2025, and it has established a new development center in Seattle to learn from Microsoft’s highly developed culture of agile collaboration and digital leadership, and to transfer this culture to the center’s own organization.
How real is the concept of tech intensity? Three out of four leaders who participated in our study reported that their organizations are already creating new digital capabilities that incorporate advanced digital technologies such as machine learning and IoT.
Unilever, one of the world’s largest makers of consumer products, is another great example. The company is building digital twins of its factories to analyze processes and uncover new insights to improve production capacity, quality and safety.
The digital models take in massive amounts of data about nearly every aspect of how machines and equipment perform in their physical counterparts and then use advanced analytics and machine learning to predict how changes affect production. In one early result, after analyzing data on the production of liquid shampoo and detergent, the digital model predicted a more efficient order for the process that shortens the time it takes to create a full batch, enabling the factory to improve capacity without investing in new equipment.
We also found that leaders expect tech intensity to not only drive commercial success, but to also create global societal benefits – more than 90 percent believe tech intensity will have a positive impact on communities around the world through things like the creation of better public services, improved connectivity in rural areas, reduced corporate waste, and higher-quality and more accessible health care. And just over one-third expect that tech intensity will help level the global economic playing field.
Among other key findings, nearly half of those we surveyed told us that established organizations will face disruption as other organizations from their industry and beyond harness tech intensity to establish new business models and stretch into new areas of opportunity.
Earlier this year, we partnered with Walgreens Boots Alliance (WBA), a traditional retailer, to reimagine the delivery of health care services by delivering innovative platforms that enable next-generation health networks, integrated digital and physical health care experiences and new care management solutions. Among other intended outcomes, Walgreens has a vision to become the healthcare provider for its customers by offering new in-store personalized health care services, as well as virtual care whenever and wherever their customers need it.
There is also broad agreement that tech intensity will have a significant impact on organizational culture: 92 percent of respondents believe it’s important for their organizations to stay on top of the latest trends in software and applications, highlighting a strong correlation between how organizations are empowering their employees with technology and overall retention and loyalty.
Airbus is a strong example of a company embracing tech intensity to provide new digital capabilities for its employees to more efficiently and safely do their jobs. The company is creating mixed-reality solutions that combine the physical and digital worlds in aircraft design and manufacturing, allowing its employees to access information while their hands are occupied and manipulate holograms the same way they handle physical objects.
So far, in trials and early deployments, Airbus has found that enabling designers to test their plans using holograms can reduce the amount of time it takes to get designs ready for manufacturing by up to 80 percent. And for production workers, the ability to see a diagram overlaid on a real piece of machinery to help with complicated manufacturing tasks has cut production time by one-third while improving quality.
Airbus is also building mixed-reality programs for its customers, including a 3D holographic environment to train maintenance and cabin crews, and a program that allows defense and aerospace planners to work together using mixed-reality maps to share data and prepare for missions.
This is just the start. From grocery store chains and life sciences and financial services organizations to clothing manufacturers and film studios, organizations worldwide are embracing tech intensity and creating innovative digital solutions that will not only help drive their own success, but that will help create stronger more prosperous communities around the globe.
I think of our mission as a company to empower every person and every organization on the planet to achieve more is fundamentally centered on how we increase the tech intensity of every organization that we work with. At Microsoft, as the 2010s give way to a new decade, we are honored to be a partner in this exciting transformation.
Top photo by Sompong Rattanakunchon, Getty Images.