In a previous post we asked ‘What is Productivity?’ and shared how the first wave of IT productivity related to cloud computing, customer relationship management (CRM) systems and enterprise resource planning (ERP) was only taken up by the top 5% frontier companies.
We explained how IoT, 4IR and AI machine learning will improve productivity but again, likely only for frontier companies. The difference this time is that the newer technologies will have more far reaching consequences. The frontier companies will further extend their reach over the laggards. The majority of the 5% are large companies with large budgets who are able to engage consultances such as IBM, Deloitte, Atos, PwC, WiPro, Accenture and KPMG. But what of the small to medium enterprises (SMEs)? Can they compete?
In most countries, a large proportion of companies are small to medium size. For example, in the UK, the Office for National Statistics says 98.6% of manufacturers are (SMEs). These organisations are more price sensitive and usually don’t have the luxury of significant financial resources for engaging the top consultancies and implementing their expensive solutions. Small and medium sized organisations have previously found it difficult to digitise due to the lack of availability of reasonably priced solutions.
However, solutions doesn’t have to be expensive. Low cost sensors such as Bluetoooth beacons, motion cameras, consumer AR can be combined with affordable cloud services to create solutions on a ‘shoestring’ budget. This is the aim of the University of Cambridge and University of Nottingham’s ‘Digital Manufacturing on a Shoestring’ initiative. The Institute for Manufacturing (IfM) is helping manufacturers benefit from digitalisation without excessive cost and risk. View the project’s latest news and communicate with them via Twitter.
Read about Beacons in Industry and the 4th Industrial Revolution (4IR)
Our article on the Benefits of Beacons mentions that the data from beacons can enhance productivity. However, what does this mean? ‘Productivity’ seems like a nebulous term that means nothing. Can beacons, and indeed IT in general, increase productivity? Has there been any evidence for this in the past? Will things such as IoT, 4IR and AI machine learning actually improve productivity?
A great place to start quantifying productivity is the France-based Organisation for Economic Co-operation and Development (OECD). They have lots of open data that shows recent productivity gains have been small for most countries. This is a puzzle.
Why hasn’t technology improved productivity significantly? There’s a great post at Focus Economics on 23 economic experts weigh in: Why is productivity growth so low? There’s also speech on Productivity puzzles (pdf) given by Andrew G Haldane, Chief Economist, Bank of England with lots of charts. The UK’s ‘Be the Business’ organisation tasked with driving better productivity also has a useful paper (pdf) on How good is your business really?
The key theme is that not many businesses have adopted earlier productivity improving tools such as cloud computing, customer relationship management (CRM) systems and enterprise resource planning (ERP). There are sectoral patterns of productivity improvement that tend to delineate ‘frontier’ and ‘laggard’ companies. There’s a very long tail of laggard companies that weights the numbers. There’s a fear of technology brought about by inertia and poor management.
Some countries such as Germany have slightly higher productivity but that’s considered to be due to better vocational education rather than technology.
There have been recent improvements in productivity but only for the top 5% frontier companies. These companies have embraced technology as part of improving operational efficiency, future planning, employee engagement, leadership and commercial excellence.
We anticipate IoT, 4IR and AI machine learning will improve productivity but again, only for frontier companies. The difference this time is that the newer technologies will have more far reaching consequences. The frontier companies will further extend their reach over the laggards. This might have existential consequences for many of the laggards.