The scope of disruption
Viewed by industry, IT spending is at various stages of maturity.
Worldwide IT spending will reach $3.7 trillion in 2018, an increase of 6.2 percent from 2017, according to the research firm Gartner. Much of that spending will be focused on communications services (forecast is about $1.4 billion worldwide) followed by IT services ($1 billion). Gartner expects the highest percentage of growth (just over 11 percent) in enterprise software. Spending for devices such as PCs, tablets and mobile phones in 2018 is expected to grow worldwide, but at a somewhat slower pace than in 2017.
Depending on the industry, IT spending is at different stages of maturity:
The rising costs of health care can be attributable in large part to technology, according to analysis by The New York Times. The publication notes that technology innovation accounts for at least one-third—and as much as two-thirds—of per capita health care growth. Telemedicine—the telecommunications technology that allows for the remote diagnosis and treatment of patients—could help drive down the cost of health care as well as provide services to underserved areas. Interoperability, the ability of different computer systems to communicate with each other, allows health care providers to share medical records. Blockchain technology is one approach being considered to enable this type of communication.
In 2017, IT spending across state and local governments was estimated to top off at $101.3 billion, a 1.4 percent increase over 2016. In particular, tax dollars for technology expenditures were in the double digits for health and human services ($26.4 billion) and education ($23 billion).
As a glimpse at the future, retailers should note that an estimated 71 percent of digital purchases were mobile-based in 2017 in China. In 2016, consumers around the world spent more through card payments than with cash for the first time, setting the stage for an increase in more digital device-based payments. As inventory and supply chain management become increasingly important, retailers are turning to technology to look beyond historical analysis to anticipate changes in demand before they happen.
Automotive suppliers and OEMs are actively assessing acquisitions, driven primarily by the need to gain technologies. As technology converges with the car, the Silicon Valley solutions serving the infotainment and telematics market are expected to multiply. In-vehicle infotainment and connectivity standards are now the norm, rather than the exception, in automobile production.
On the other hand, the 2017 RSM Manufacturing Monitor noted that only about one-third of manufacturers will use technology to increase profitability; only a quarter plan to use new technologies to grow sales. But that may change. Distributed manufacturing—a form of decentralized manufacturing enabled by technology—could set the standard for production in the future. By using a network of designers, manufacturers and distributors, quality is prioritized over location for the entire life cycle of a product. In addition, 3D printing technologies help lower product development time, enhance design opportunities and reduce the costs of distribution.
Real estate companies are leveraging real-time data by combining internet of things and artificial intelligence technologies to develop sophisticated interconnected systems. Sensors are available to read utility usages in items from smart HVAC systems, elevators and lights—even down to the faucet level. These smart buildings allow for predictive analysis, leading to better preventative maintenance, and thereby reducing costs and increasing tenant satisfaction. Real estate investors are using machine learning to expedite the initial deal due diligence period. When their algorithms find a deal that is favorable, it gets flagged for the analysts. The ability to leverage machine learning allows investors to evaluate many more deals than they could previously in their search for the hidden gems.
Hedge funds and private equity
Data innovators are considering the development of a standardized machine “language” intended to enable machines to communicate more quickly than current methods requiring human language translation. This would allow hedge fund traders, for example, to develop analysis and formulate market-driven conclusions or trading strategies more quickly. Additionally, data collected from nontraditional sources such as navigation apps and weather services may provide alternative sources to supplement traditional data culled from public filers and industry surveys. This alternative data can enhance research for private equity and hedge fund companies by incorporating, for example, demographic information such as number of cars, foot traffic and the like to enable more accurate sales forecasts.
In the construction industry, new technologies such as building information modeling, radio-frequency identification, virtual design and construction, and cloud-based communications are transforming the jobsite. Yet the industry overall has been rather slow to adopt new technology—more than half of construction managers spend only 2 percent or less of their revenue on IT.