Use of Digital Technologies Determines Economic Success

In 2025, machines will complete more work stages than people. This is the prediction made by the World Economic Forum in its new report “Future of Jobs 2018”. According to the report, the rapid development of machines and algorithms could create 133 million new tasks in the workplace. At the same time, a redistribution of work between people, machines and algorithms will displace 75 million functions by 2022.

“Companies will need to invest in their human capital to ensure they remain dynamic, differentiated and competitive in the age of machines. Without proactive approaches, businesses and employees could allow the economic potential of the fourth industrial revolution to pass them by,” says Saadia Zahidi, Head of the Centre for the New Economy and Society at the World Economic Forum. The report shows that all industries will have to grapple with their employees’ considerable skills gaps in the course of the digital transformation. According to the report, the aviation, travel and tourism industries will have the greatest need for professional development and training between 2018 and 2022, as new technologies are implemented on a significant scale. These include the internet of things, app and web-based marketplaces, big data analyses, machine learning and cloud computing in particular.

“First movers” in the Field of Robotization

Adoption among companies by 2022

%

Humanoid Robots

%

Stationary Robots

%

Aerial and Underwater Robots

%

Non-humanoid Land Robots

First movers

%

Financial Services and Investors

%

Automotive, Aerospace, Supply Chain

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Oil and Gas

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Automotive, Aerospace, Supply Chain

In the near future, the economic success of a company will therefore depend on how quickly it can successfully implement new technologies. Management consultants PwC have come to this conclusion, too. They reported that the German economy could grow by more than eleven percent by 2030 thanks to artificial intelligence (AI) alone. In total, this would amount to around 430 billion euros. This is the result of a detailed analysis of the situation in German as part of the PwC study “Sizing the prize. What‘s the real value of AI for your business and how can you capitalise?”. According to this study, new, innovative and more user-oriented products will stimulate demand and thereby constitute up to 60 percent of the AI-related economic growth. Improvements in efficiency achieved using AI technologies will also have an effect, albeit somewhat weaker.

Artificial Intelligence has the Potential to be a Game Changer

To analyze the effects of artificial intelligence on the products and services of different industries, PwC worked with market representatives and the Fraunhofer Society to create the “Artificial Intelligence Impact Index”. This was based on an analysis of credible examples of potential AI applications in a variety of industries, which were evaluated qualitatively by market and technology experts. According to this analysis, the car industry and healthcare sector will be the most severely affected, with 3.7 points each on a scale of 1 to 5. Next in line are the finance industry (3.3) and the transport and logistics sector (3.2). “Artificial intelligence will have a disruptive effect on numerous industries,” says Christian Kirschniak, Head of Data & Analytics Advisory PwC Europe. Companies which do not adjust quickly enough and adapt to new technologies run the risk of being overtaken by more agile and innovative competitors.”

What’s the potential impact for your sector?

PwC’s Impact Index (5 = biggest Impact, 1 = smallest Impact)

Healthcare 3.7

  • Adoption maturity – Near term (0-3 yr) 38% 38%
  • Adoption maturity – Mid term (3-7 yr) 23% 23%
  • Adoption maturity – Long term (7+ yr) 40% 40%

Automotive 3.7

  • Adoption maturity – Near term (0-3 yr) 35% 35%
  • Adoption maturity – Mid term (3-7 yr) 47% 47%
  • Adoption maturity – Long term (7+ yr) 18% 18%

Financial Services 3.3

  • Adoption maturity – Near term (0-3 yr) 41% 41%
  • Adoption maturity – Mid term (3-7 yr) 59% 59%
  • Adoption maturity – Long term (7+ yr) 0% 0%

Transportation and Logistics 3.2

  • Adoption maturity – Near term (0-3 yr) 42% 42%
  • Adoption maturity – Mid term (3-7 yr) 42% 42%
  • Adoption maturity – Long term (7+ yr) 17% 17%

Technology, Communications and Entertainment 3.1

  • Adoption maturity – Near term (0-3 yr) 48% 48%
  • Adoption maturity – Mid term (3-7 yr) 36% 36%
  • Adoption maturity – Long term (7+ yr) 17% 17%

Retail 3.0

  • Adoption maturity – Near term (0-3 yr) 54% 54%
  • Adoption maturity – Mid term (3-7 yr) 38% 38%
  • Adoption maturity – Long term (7+ yr) 8% 8%

Energy 2.2

  • Adoption maturity – Near term (0-3 yr) 39% 39%
  • Adoption maturity – Mid term (3-7 yr) 44% 44%
  • Adoption maturity – Long term (7+ yr) 17% 17%

Manufacturing 2.2

  • Adoption maturity – Near term (0-3 yr) 14% 14%
  • Adoption maturity – Mid term (3-7 yr) 83% 83%
  • Adoption maturity – Long term (7+ yr) 3% 3%
Having recognized that artificial intelligence is not only a key technology, but also a driver for economic development, the German government has decided on the main points of a national strategy. This strategy should raise the research, development and application of artificial intelligence in Germany to a world-leading level. “Artificial intelligence is not just any new technology – it is a basic innovation which will completely transform and improve our economy and our lives overall,” explains Federal Minister of Economics and Technology, Peter Altmaier. “This is why we want artificial intelligence applications to be developed and implemented here in Germany and Europe, not just anywhere in the world.”

Bitkom: Established Businesses Should Cooperate with Start-ups

“We welcome the German government’s plans to make artificial intelligence a main focus of its technological and economic policies. Now it is important that it happens quickly, that programs are developed rapidly and that policies are then put into practice immediately,” says Achim Berg, President of the Federal Association for Digital Technology Bitkom. Introducing revolutionary technologies like AI, however, is not easy for many established businesses. Structures developed over years and decades often stand in the way. In these cases, cooperating with start-ups could be helpful. Berg says: “They bring in innovative technologies and new ideas – and can help breathe new life into these businesses.” According to a current Bitkom survey, 4 out of 10 German start-ups are already using artificial intelligence. Without AI and data analysis, 96 percent of start-ups think the economic success of German companies is under threat. “Established businesses, as well as politicians, would also be well advised to take this estimate to heart,” says the Bitkom President.

Text by Benjamin Klare
Symbol photo: Pixabay
Infografics: World Economic Forum, PwC

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