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DIGITALISATION OF INDUSTRY: DISRUPT OR DIE? Koen De Backer The Future of Industry in Europe – CIP and Business Europe Lisbon, 1 July 2016
DIGITALISATION OF INDUSTRY:
DISRUPT OR DIE?
Koen De Backer
The Future of Industry in Europe – CIP and Business Europe
Lisbon, 1 July 2016
REALITY CHECK VS TECHNO-OPTIMISM
2
A new industrial revolution…
3
Source: Fraunhofer IAO in Buhr (2015)
4
… driven by digital technologies…
Autonomous machines and
systems
Artificial Intelligence
Cloud computing
Human-Machine
integration
System integration
Internet of Things
Big data
Simulations
Additive manufacturing(3D printing)
COST OF SENSORS
2X
PAST 10 YEARS
COST OF BANDWIDTH
40X
PAST 10 YEARS
COST OF PROCESSING
60X
PAST 10 YEARS
5
Monthly global IP traffic, 2005-16
In exabytes (billions of gigabytes)
Average data storage cost, 1998-2012
In USD per gigabyte (log scale)
Source: OECD based on Pingdom (2011) Source: OECD based on Cisco (2012)
…with data as the enabling factor
The digital productivity paradox
6
Growth in multi-factor productivity growth
Source: OECD calculations based on the Conference Board Total Economy Database.
The hype cycle for emerging technologies
7 Source: Gartner (2014)
BUSINESS AS USUAL OR DISRUPTION?
8
1990s
Top-3 US Automakers
• Revenues: 250B$
• Market cap: 36B$
• Employees: 1.2m
9
A new type of firm (1)
2014
Top-3 US Tech
• Revenues: 247B$
• Market cap: 1T$
• Employees: 137k
Source: McKinsey Insights, Competition at the digital edge: ‘Hyperscale’ businesses, March 2015
• Whatsapp, 300M active users, 20B message/day,
45 employees
• Netflix, 40M customers, 30% peak Internet traffic,
2000 employees, USD3.5B revenue
• Snapchat, 350M photos per day, 30 employees;
• Dropbox, 175M users, 250 employees
A new type of firm (2)
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Knowledge
Educating
Shopping
Travelling
Sharing
Industries that have been established over a century, are now re-architected in under a decade
Communicating
Entertaining
to
to
to
to
to
to
to
Restructuring of industries….
Source: M. Curley in presentation at OECD TIP Working Group 2016
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Construction Smart Cities Smart Grid
… and completely new industries
Agriculture Education
Healthcare
Transportation
Home
to
to
to
to
to
to
to
London,
Dublin,
San Jose
New industries will emerge that we can’t imagine right now.
Source: M. Curley in presentation at OECD TIP Working Group 2016
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• New business models: intangible services instead of tangible goods
• Trade of services and data
• More customised products with products offering more flexible, more variable, more timely, and typically on-demand (e.g. 3D printing)
• ‘Factories of the future’, which will overall smaller, more flexible, more automated, and located closer to end customers
• Changing topography of GVCs with more localised production
A complete overhaul of industry?
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The end of offshoring – ’it is about
reshoring now, stupid!’
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WHERE DOES EUROPE STAND IN THIS DIGITAL (R)EVOLUTION?
15
R² = 0.9758
0
50
100
150
200
250
300
350
400
450
0 200 400 600 800 1 000 1 200 1 400
Number of top sites hosted
Tho
usa
nd
s
Number of co-location data centres
USA
GBR
DEU
FRA
R² = 0.9758
0
50
100
150
200
250
300
350
400
450
0 200 400 600 800 1 000 1 200 1 400
Number of top sites hosted
Tho
usa
nd
s
Number of co-location data centres
USA
GBR
DEU
FRA
DEU
CHN GBRFRAJPN NLD
CANAUS IND
R² = 0.5737
0 10 20 30 40 50 60 70 80
0 50 100 150 200
Magnified
RUS
A global business with strong players…
Top Locations by number of colocation data centres and top sites hosted
Source: OECD (2015), Data-driven Innovation: Big Data for Growth and Well-Being, OECD Publishing
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It is not only about US and EU
17
Global sales of industrial robots
Source: OECD based on International Robot Association
18
Share of IP5 patent families at USPTO and EPO, 2005-2007 and 2010-2012
Leaders in IoT, big data and quantum
computing technologies
Source: OECD STI Scoreboard (2015)
Digital use and diffusion…
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Diffusion of selected ICT tools and activities in enterprises, 2014
(As a percentage of enterprises with ten or more persons employed)
Source: OECD STI Scoreboard (2015)
… in smaller firms
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Enterprises using cloud computing services, by size, 2014 (As a percentage of enterprises in each employment size class)
Source: OECD STI Scoreboard (2015)
REBOOTING POLICY FROM ANALOGUE TO DIGITAL
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Tension (1): digital industry and national
borders
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Tension (2): Digital industry and change
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http://www.thetimes.co.uk/tto/news/world/europe/article4479820.ece;
http://technofaq.org/posts/2016/05/protecting-your-company-from-the-threat-of-viruses-and-malware/
1. Access to data and infrastructure in the digital economy
2. Balance between the benefits of openness and legitimate
concerns over privacy and intellectual property rights
3. Reducing barriers to diffusion
4. Focus on SMEs which face severe barriers to the adoption of
digital technologies
5. Regulatory incumbency and political economy of reform
6. Address shortages of data specialist skills, which point to
missed opportunities for job creation
7. Resolving issues of liability, transparency and ownership
8. Tax, competition, labour policies, etc.
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Policies and digitalisation of industry
1. Digitalisation and jobs
2. Skills and education for the future
3. Digital divides: access and inclusion
4. Ensuring trust
5. Social and environmental challenges
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Policies and digital society
