Business leaders have been urged to prepare for a digital industrial revolution as new technologies overturn traditional business models and markets.
The growth of digital technology has reached a tipping point that will lead to changes comparable to the industrial revolutions of the past, according to the latest research by management consultants Booz & Co.
But few business leaders, CEOs, CIOs and IT suppliers are ready for the impact of digitisation, as social media, mobile technology and pervasive broadband transform the way society works, Booz claims.
- The Next Wave of Digitisation - click to download the full Booz & Co report (requires registration)
"The revolution is happening now and it is happening fast. Business leaders need to take digitisation as a challenge and make it their primary agenda," said Roman Friedrich, partner at Booz & Co.
By 2020, Booz & Co predicts that digitisation will add between $12trn and $15trn to the global economy.
"You will basically see an exponential growth in technology push as new technology comes on to the market. How we work and interact together is changing because technology is changing," said Friedrich.
Organisations need to invest now in the digital technology that will differentiate them from the competition, or risk being outflanked by faster moving rivals, he said.
Any company that does not leverage digital marketing in the next 18 months, for example, will miss out on what is likely to become the dominant route for businesses to reach their customers.
As the revolution unfolds, CIOs will be under pressure from all parts of the business to digitise, but will need to choose carefully which projects to back.
Companies are going to have to respond to new disruptive technologies appearing annually, through a series of mini-revolutions. They will need to understand which are important to their business, said Friedrich.
"The priority for the CIO is to identify very quickly the mission-critical capabilities the business needs, and make sure they happen quickly," he said.
Executives usually make the mistake of looking at the past to forecast the future. They need to be looking ahead and trying to understand the changes on the way, he said.
And most IT suppliers are equally unprepared for the digital revolution, Booz warns.
"Traditional IT players are lacking in leadership, culture and talent management," said Friedrich. "It's about understanding the future and how to develop those capabilities.
"There is no time any more. It is happening now and it's happening so fast," he said.
The US and China are further ahead than Europe on the route to digitisation, the Booz research reveals. And governments in the Middle East are investing heavily in infrastructure for the digital future, including smart cities and digital content.
"European consumers are less technology friendly than those in the US and China. Our governments don't invest so readily in broadband infrastructure and we don't have as much venture capital investment," said Friedrich.
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