Unlocking Digital Value to Society: building a digital future to serve us all
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Digital innovation can both generate value for business and unlock benefits for society, by creating jobs, saving lives and reducing emissions. But these gains are not guaranteed – they depend on the decisions we make today.
The world appears to be at a crossroads. New technologies are opening up opportunities to boost economic growth, reduce inequality and promote inclusiveness. But we also see the world de-globalizing, with civil wars and political populism driving uncertainty about international relations. We have an important choice to make: between a more open, inclusive and interconnected world and one that is closed, siloed and unequal.
Digitalization is inextricably linked to the societal and economic forces fuelling these conflicting world views. Our research at the Digital Transformation Initiative (DTI) has focused on understanding and quantifying the impact of digital transformation on both business and wider society. We found that digitalization has immense potential to generate value for society (e.g. lives saved from improved safety, savings for customers and reduced emissions).
Digital innovations can, for example, drive progress towards realizing the UN Sustainable Development Goals, and shore up the three pillars on which they are built: improving people’s quality of life, fostering equitable growth and protecting the environment. Inhibitors such as de-globalization and rising protectionism, inadequate regulation, a lack of innovation and uneven technology adoption all limit our ability to grasp the opportunities that digital transformation presents.
In a world facing the challenges of closing borders and widening gaps (in terms of distribution of income, wealth, technological adoption just to name a few), we have an important opportunity to shape digital transformation so that it serves us all.
Unlocking value for society
Our value-at-stake framework and Digital Value to Society
Our value-at-stake analysis assesses the impact of digital transformation initiatives on industries, customers, society and the environment over the next decade (2016 to 2025). Over the past two years, we have analysed the potential for digital innovations as diverse as 3D printing, autonomous vehicles, predictive maintenance, remote healthcare and drones to create value for different industries and society more broadly.
We have also created a new metric – Digital Value to Society (DVS) – by aggregating the key performance indicators (KPIs) that relate to the impact of digitalization on health and safety, employment, the environment and consumers. DVS offers a consistent approach to understanding how digital transformation creates value for business and wider society.
The DTI value-at-stake framework and Digital Value to Society
Source: Accenture / World Economic Forum
The building blocks of our value-at-stake analysis are digital initiatives, which are bundles of (digital) technologies – such as sensors, the cloud and big data analytics – in which we see the potential to deliver significant value for industry and wider society. We have quantified business and societal benefits at an initiative level in 11 industries, encompassing around 135 digital initiatives. The potential benefits of these initiatives vary because of differing levels of industry adoption, which are driven by factors such as the maturity of the technologies being used or the presence of regulatory barriers.
The potential impact of digital initiatives by industry⁶
How value at stake and Digital Value to Society can help
Our value-at-stake framework takes a pioneering approach, which we believe provides a solid baseline for assessing the impact of digitalization. It offers a foundation and common language for a private-public dialogue about unlocking the value of digital transformation.
- For business. Digital enables transparency and speed. The world has a front-row seat to business decisions and operations; no company can make decisions that are unacceptable to public opinion without scrutiny, severe penalty or – in the most extreme cases – extinction. Our framework helps companies account for their potential impact on wider society and reduce the risk of creating a public backlash.
- For government. Our framework can provide guidance in identifying and prioritizing the most effective digital initiatives and investments, by incorporating the appropriate KPIs and offering a consistent way to calculate return on investment (ROI).
Regional findings on Digital Value to Society
In 2016, the DTI team analysed how DVS can be unlocked in a large developed economy (the United Kingdom), a smaller developed economy (Denmark) and a large emerging economy (India), as well as in the Indian state of Telangana. We focused on initiatives with the potential to create significant value for society.
United Kingdom
Thanks to its fast-growing digital industry,¹ the United Kingdom is one of the most digitally ready countries in the world.² Despite these advantages, barriers to further increasing the adoption rates of digital technologies exist. These include connectivity challenges, a digital skills gap and an unclear ROI in technology.³ A significant opportunity remains to maximize DVS. We estimate that the cumulative value of digital transformation to the UK economy, combining benefits to both industry and wider society, will be more than $1 trillion (£800 billion) over the next decade. Our analysis suggests that just six digital initiatives could unlock $335 billion (£270 billion) of value for industry and society in the same period. This represents approximately 13% of national GDP in 2015.
Denmark
Denmark is a highly advanced digital economy and scores well in comparison to other EU nations across a range of metrics. It is ranked first in the EU on the Digital Economy Index, with a high proportion (93%) of the Danish population online regularly. We analysed four digital initiatives, which could unlock $54 billion for business and wider society over the next decade, equivalent to around 20% of the country’s GDP in 2015.
India
Expanding at an annual rate of 7.6%,⁴ India has emerged as one the fastest-growing major economies in the world. Despite this strong growth, around half of the rural population do not have access to basic connectivity.⁵ We estimate that broader access to digital technologies has the potential to generate approximately $5 trillion of value for India over the next 10 years. Our analysis focused on four digital initiatives, which could generate as much as $1.2 trillion of value for industry and society over the next decade, representing about 40% of national GDP in 2015.
Telangana
Formed just two years ago, Telangana is India’s newest state. Its Digital Telangana programme aims to enhance digital connectivity, improve digital literacy, digitalize government processes, and promote innovation and support growth in start-ups. Our research in Telangana is ongoing and we are only sharing preliminary findings at this point.
Recommendations
For business
Business leaders need to consider the growing importance of DVS. It is a helpful metric for measuring, creating, optimizing and communicating the societal impact of their digital investments. Companies that focus only on generating value for industry are falling short, as they generate only asymmetrical benefits and risk attracting a public backlash. We plan to develop an innovative framework and tool set collaboratively with governments and business leaders to advance the use of non-financial metrics, valuation and the reporting of digital benefits to society.
For government
The indicators of societal value used in our analysis capture several objectives that have traditionally been the concern of government leaders, regulators and civil servants: reducing carbon emissions, enhancing productivity and saving lives. Our value-at-stake framework potentially gives policy-makers an additional tool to track progress in tackling perennial challenges and to measure ROI from digital investments at a national level. The analysis also lifts the lid on the huge societal benefits that digital transformation can deliver, putting the focus on how policy-makers can create the conditions for new digital initiatives to flourish. Policy-makers may also need to rethink how they measure economic growth (particularly as GDP often fails to capture the benefits of digitalization); convene stakeholders to overcome disincentives blocking societal benefits; and address the concerns of citizens about emerging technologies.
The path forward
As we look ahead to 2017, the third and final year of the DTI programme, we intend to build on our analysis so far to maximize the future impact of the initiative. Testing our value-at-stake framework and putting it into practice will be at the heart of our work this year. Our priorities will be to broaden the geographic scope of the initiative; empower policy-makers to run their own analysis; and identify and share best practices.
The ultimate objective of the DTI programme has never been to produce more research. It has always been to help ensure, through new concepts and their practical application, that we, as a global community, deliver a digital revolution that unlocks new levels of prosperity for all.
Related reading
Footnotes:
1 Sullivan, Ben, “UK Tech Industry Growth Outpacing UK Economy”, Tech Nation, 11 February 2016.
2 Accenture, Guiding Digital Transformation, 2015.
3 Baldwin, Caroline, “UK businesses failing to adopt digital technologies”, Essential Retail, 21 April 2016.
4 Dhasmana, Indivjal, “At 7.6% in FY16, India is now the fastest growing economy”, Business Standard, 1 June 2016.
5 Telecom Regulatory Authority of India, Highlights of Telecom Subscription Data as of 31st July, 2016, October 2016.
6 Our work on the future of the retail industry is a deep dive based on the work completed for consumer industries. Hence, benefits are not additive but already included in the consumer industries figures.