Smarter use of digital skills, tech, could boost global economy by $2 Trillion: Accenture
BUSINESS| Jan. 21, 2016, 11:42 a.m.
Optimizing the use of digital skills and technologies could generate $2 trillion of additional global economic output by 2020, according to a new study by Accenture. The study also reveals the vast role digital plays in economic activity, with more than one-fifth of the world’s gross domestic product (GDP) attributed to some form of digital skills, capital and goods and services.
The Accenture Strategy report, Digital Disruption: the Growth Multiplier, provides a new and comprehensive measure of the scale of the digital economy in 11 major countries. It estimates the value added to GDP by hardware, software and related technologies and by workers who need these digital assets to do their jobs. It also calculates the value of intermediate digital goods and services used in production.
A little more than one-fifth (22 percent) of world output is linked to this digital economy of skills and capital. The US is the world’s most digital economy, with existing digital investments accounting for 33 percent of its output. Forty-three percent of the U.S. labour force and 26 percent of its accumulated capital are capable of supporting digital related activity. The digital economy in other markets varies from more than 30 percent in the UK and Australia to 13 percent in China.
Digital share of GDP
“Businesses and governments are turning to digital to secure faster growth amid an uncertain global economic outlook, but the size of the digital economy is no guarantee of growth,” said Mark Knickrehm, group chief executive, Accenture Strategy. “Organizations need to act aggressively in shifting the focus of their digital talent and technology from making efficiencies to creating entirely new business models. That requires not just greater digital investments, but broader organizational and cultural transformation in order to yield the greatest returns.”
The report states that in order to generate higher rates of growth, companies will need to improve their Accenture Strategy Digital Density score, which tracks the extent to which digital penetrates a country’s businesses and economy. This includes digital skills and technology, as well as broader enabling factors such as the ease of access to finance and the openness of a country’s regulatory environment.
For example, a 10 point increase in the overall digital density of the U.S. economy would result in a $368 billion uplift to 2020 GDP, 1.8 percent higher than current forecasts. But Accenture Strategy calculates that an optimal combination of improvements to digital skills, capital and other accelerators could lift U.S. GDP by an even greater $421 billion by 2020, representing a 2.1 percent boost. The countries with the greatest opportunity for improving their overall digital performance are Brazil (6.6 percent), Italy, (4.2 percent), China (3.7 percent) and Japan (3.3 percent).
Digital impact on GDP
The study shows how each national economy could best prioritize its extra efforts to achieve the greatest boost to revenues and economic output. For example, 70 percent of Brazil’s extra digital efforts should be focused on the improved application of technology, such as cloud and analytics, whereas greater efforts in digital skills would generate less of an economic return. In the US, however, just 10 percent of extra digital efforts need to be injected into technology, while a greater return will be gained from boosting digital skills and broader enabling factors.
Platform based models are the key to growth
According to the report, platform business models represent one of the greatest opportunities for digitally driven growth. These models allow organizations to create new markets and uncover value by bringing partners and customers together across a common digital platform. In many cases, platform players can enjoy strong growth without having to own or manage assets, helping them expand with low marginal costs.
While ‘born digital companies’ dominate the platform economy today, the Accenture Strategy report suggests that traditional industry incumbents could be among the greatest beneficiaries of platform strategies by combining their customer reach and product portfolios with the networking power of the platform.
“The high growth rates experienced by many digital companies can now be enjoyed by traditional industry incumbents if they apply platform models to create an ecosystem of partners and customers in which they can offer new value added services,” said Bruno Berthon, managing director, Accenture Strategy. “Companies need to shape their platform strategies and define their role as platform leaders or participants before aggressively forming partnerships that can deliver new value.”
The report recommends three broad actions that can improve the application of digital business models to drive higher levels of productivity and growth:
· Prioritize digital investments based on value opportunities: Assess carefully the balance of digital investments so that an optimal combination of improvements to skills and technology can maximize returns on digital investments
· Compete using an industry-specific digital strategy: Be clear on which platform, what roles, and which data are fundamental to compete successfully in your industry.
· Create the right environment for digital transformation: Improve your “digital IQ,” teaming with government to open up cross-industry relationships and change the rules of competition.
MORE BUSINESS NEWS
Kris Senanu to lead Telkom Kenya Enterprise DivisionTelkom Kenya has announced the appointment of Mr. Kris Senanu as the MD of its Enterprise Division. Read More
Liquid Telecom, RBH to acquire NeotelLiquid Telecom, a privately owned pan-African telecoms group majority owned by Econet Global, has entered into an agreement to acquire South African communications network operator Neotel. Read More
MTN Nigeria gets indigenous Chief Financial OfficerMTN Nigeria has announced the appointment of Adekunle Awobodu as its new Chief Financial Officer (CFO). Read More
Networks Unlimited partners with RubrikNetworks Unlimited has been named as sole distributor of Rubrik converged data management solutions in Africa. Read More
Payroll fraud: a serious threat to your business’s sustainabilityPayroll is one of the largest expenses for Small & Medium Businesses and larger enterprises in West Africa, yet many organisations are neglecting the importance of managing the risk of fraud in this area of the business. Read More
Nigeria goes live with Bsystems Collateral Registry SystemNigeria has become the fourth country to roll onto the Collateral Registry System developed by Ghanaian technology solution firm Bsystems. Read More
Arbitration to support justice, says GlobacomGlobacom Nigeria says its support of the International Chamber of Commerce, (ICC) Africa Regional Arbitration Conference in Lagos is a demonstration of its belief that arbitration would further enhance the cause of justice in the country. Read More
Dimension Data names new group CEODimension Data has announced the appointment of Jason Goodall as Group Chief Executive Officer, as Brett Dawson, current CEO, steps down after 12 years. Read More
Solar developer Phanes Group opens African head office in SAInternational solar energy developer, investment manager and asset manager Phanes Group has launched an office in Johannesburg, South Africa – its first African office. Read More
We’re insulated from Nigeria’s forex problem, says IHSIHS Towers says it has not been hard hit by ongoing foreign exchange (forex) squeeze in Nigeria because it is a foreign direct investment (FDI) vehicle into the country. Read More
FEATURED STORYGovernment should encourage youths in ICT early
Youths should be given more encouragement to develop their ICT skills, an 11-year-old app developer told Kokumo Goodie.
BEST READ NEWS
IN DEPTHIBM Opens First Cloud Data Centre in South Africa
IBM is opening a new IBM Cloud Data Centre in Johannesburg, South Africa. The new cloud center is the result of a close collaboration with Gijima and Vodacom and is designed to support cloud adoption and customer demand across the continent.
COMPANY NEWSTigo, JI and GES equip teachers on child online protection initiative
Tigo, in partnership with J Initiative (JI), a youth focused non-governmental organisation in Ghana, have committed to protecting children online through policy advocacy, awareness creation, public education ...