Australia to face new digital divide in the era of “smart”: IBM

Forecasts multi-billion dollar gaps to open between enterprises by 2025

Significant gaps will open up between enterprises that transform their operations for the coming digital economy and those that stick to business as usual, according to IBM.

In a new study released by IBM, in collaboration with the National Institute of Economic and Industry Research (NIEIR), Reinventing Australian Enterprises for the Digital Economy , it found that Australian enterprises will need to adapt, change and take advantage of key technologies to lead in the digital economy and compete in the era of smart technologies.

Building on its economic forecasting and modelling capability, NIEIR developed financial models for seven sectors that make up about 45 per cent of the Australian economy.

Within these sectors, it constructed two model enterprises – a ‘leader’ and a ‘follower’. The sectors were financial services, retail, mining, telecommunications, public administration, education and health.

NIEIR then mapped the future financial path for the model enterprises, based on research into how they will be affected by digital technologies and other trends from now until 2025.

The report found that retailers will move to hybrid business models that combine the strengths of online and bricks-and-mortar strategies; banks will maintain branches but they will become smaller and more specialised; and universities will embrace online technologies to reinvent the value and experience for students.

At the same time, enterprises will face new competitors, changing customer demands, a relentless need to invest to maintain relevance, and other challenges that arise directly from digitisation.

NIEIR founder and executive director, Dr Peter Brain, said the report reveals significant gaps between leaders and followers and shows that the biggest risk for enterprises is failing to develop and implement strategies that transform their operations for the digital era.

“Our research has highlighted how much the world is going to change over the next decade – in a number of sectors we are at a tipping point between an analog world and the coming digital one,” he said.

IBM A/NZ managing director, Andrew Stevens, claimed technology can dramatically shape where businesses stand by 2025 and that businesses need to explore what these trends mean for them in the next decade.

“For example, the powerful combination of Cloud and Big Data has the potential to radically improve the quality and accessibility of healthcare across urban and rural communities in Australia," he said.

“Where some people see digital technologies disrupting business, we see unparalleled opportunity for the nation’s future productivity and prosperity, even in a more competitive global market."

However, Stevens claimed it is not just about adding an online store, business models need to transform to compete in the digital economy.

“We found there will be huge differences in the performance of organisations that lead and transform their business models for the digital age and those that don’t.

“NIEIR’s modelling clearly shows that success can compound rapidly and deliver strong gains to leaders by 2025. At the same time, organisations that slip behind will find it even harder to catch up and often won’t survive as stand-alone entities,” he added.