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sts.components.contact.mr.placeholder Sebastian Webel
Mr. Sebastian Webel

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Pictures of the Future
The Magazine for Research and Innovation
 

From Big Data to Smart Data

Facts and Forecasts: The Economic Impact of Digital Expansion

The total amount of data in 2005 was 130 exabytes. Experts expect this amount to grow until 2020 up to 14,996 exabytes.

The move toward digital technologies is thoroughly transforming the economic value chain.

According to Bitkom, a German IT association, sales of products and services from the information and communications technology (ICT) sector rose by 3.8 percent worldwide in 2013, to the record value of €2.84 trillion. “As a result, global ICT markets will probably once again grow faster than the economy as a whole,” predicts Bitkom Managing Director Dr. Bernhard Rohleder.

At 27.1 percent, the U.S. has the biggest share of the global ICT market. The EU's share is 21.3 percent. It is closely followed by the BRIC countries (18.7 percent), where the ICT market is also growing the fastest. But experts predict that in just a few years, most data will be coming from emerging markets such as China and India. According to the IDC, these markets will account for 62 percent of the digital universe in 2020.

Expanding Digital Universe

The digital transformation's importance for businesses is demonstrated by a global survey that the IBM Institute for Business Value and the University of Oxford's Saïd Business School conducted in 2012. The survey covered more than 1,000 experts from a variety of sectors. Almost two thirds of the people surveyed said that the use of data and analytical processes provides their companies with a competitive edge. In 2010 the corresponding figure was only 37 percent.

However, it's not just a question of managing the sheer mass of data, but also of controlling the speed and variety of the data. That's a huge challenge, because the digital universe is expected to consist of 40 zettabytes of data in 2020, according to a study conducted by the market research and consulting firm International Data Corporation (IDC). A zettabyte has 21 zeros. The increase would mean that the data volume would grow 50-fold within ten years. In its study, IDC also estimates that only three percent of the world's data has been tagged to date so that it can be found on the Web under the appropriate subject headings. The amount of data that is actually being analyzed is even lower. IDC calls this situation the big data gap.

More Economic Growth and Lower Unemployment

Digitization also has a huge impact on the economy and society, as demonstrated by a study conducted by the international strategy consulting firm Booz & Company for the World Economic Forum's Global Information Technology Report 2013. According to the study, a 10 percent increase in a country's digitization rate leads to a 0.75 percent higher gross domestic product (GDP) per capita and a 1.02 percent lower unemployment rate. That's why Booz & Co. has come to the conclusion that the use of digital services by consumers, companies, and governments is more than four times as efficient as the previous expansion of broadband access. Crucial factors for a country's digitization rate are the widespread use of information and communications technology and the existence of appropriate political conditions.

For developed countries, the increased use of digitization primarily benefits economic growth, while in emerging markets it is primarily used to create new jobs. Whereas the use of digital technologies resulted in the creation of almost 400,000 new jobs in North America and Western Europe in 2011, it led to the creation of nearly 3.5 million new jobs in the Asia-Pacific economic region. According to Booz & Co., there is insufficient data about the economic sectors in which the new jobs are being created. However, the situation in the U.S. and Mexico shows that many U.S. companies are tending to relocate their operations to Mexico, due to the lower wages and salaries there. The main tasks that are relocated include financial services and production and trade processes.

Precondition: A Cloud Computing Infrastructure

An important precondition for many digital services is the existence of a dynamic cloud computing infrastructure. IDC estimates that in 2020 nearly 40 percent of all data will come into contact with cloud computing at some point between its creation and use. As a result, the number of cloud servers will grow tenfold worldwide. However, the U.S. software firm Symantec found out that only 17 percent of more than 3,000 companies surveyed worldwide used cloud storage in 2013.

There is a big difference in the use figures for large companies (26 percent) and small and medium-size enterprises (7 percent). Symantec states that the main reason why companies decide not to use cloud computing is their fear of hidden costs. For European companies, the highest priority at the moment is to invest in better IT security, with more than two thirds of respondents stating that this topic is very or extremely important to them. Only two percent of respondents replied that for them investments in IT security are currently unimportant. These results were reported by BITKOM on the basis of a recent study conducted by the European Information Technology Observatory (EITO).

Another study by Booz & Company, Navigating the Digital Future, shows that companies worldwide spend an average of 8.1 percent of their research and development budgets on digital tools. The percentages were highest among the sectors for software/Internet, aerospace/defense, and healthcare. The ten most important technology trends include the modernization of infrastructure and the use of mobile devices such as smartphones and tablet computers.

$151 Billion for Apps by 2017

For 55 percent of companies, the integration of mobile solutions into work processes has a high or very high priority. The use of mobile applications for smartphones and tablet computers is correspondingly widespread; that's why Apple and Google now offer more than 700,000 apps. According to Appnation Research, apps generated around $72 billion in business in 2013, and this figure is expected to more than double to $151 billion by 2017. However, these results include all the income from the sale of products via apps. Apps alone currently generate about $25 billion in sales.

Although most apps are used today in the entertainment industry and the end consumer business, they will increasingly be employed for manufacturing as well. Advances in information and communications technology are causing factories to be increasingly connected to the Internet in order to open up new dimensions in production efficiency. The term Industry 4.0 is used to refer to the fourth industrial revolution, following those of mechanization, industrialization, and automation. This new industrial revolution is still a way off, however, as the example of Germany clearly demonstrates.

A survey of German manufacturing companies that was conducted by the Fraunhofer Institute for Industrial Engineering (IAO) showed that less than one fourth of the businesses surveyed were either highly or fully automated. According to the respondents, the main obstacles to the creation of a smart factory are the still unresolved questions concerning IT security, a lack of standards, the high qualifications needed by personnel, the as yet insufficient performance of the information and communications infrastructure, as well as high investment costs.

Gitta Rohling