A Strategic Perspective on Transforming Industries...

Blog date: 
9 Jul 2011 - 8:35pm

This past week saw the Technology Strategy Board (TSB) host an over-subscribed industry workshop in London, to explore the viability of establishing a Technology & Innovation Centre (TIC) under the banner of a 'Future Internet Systems TIC'. Mike Short of Telefonica, Nick Wainwright of HP Labs and TSB's Nick Appleyard presented perspectives of the 'Future Internet' enabling other industry sectors - a vision of transforming the energy, healthcare, transport and other industries. Such an evolution, previously explored in some of VCE's past papers and presentations, is not simple and certainly involves more than just technology & innovation. The impact however promises to be momentous, if such a vision could be realised.

Issues of Change
Let us consider recent and ongoing change in one of these sectors, as an example...
* Regulation & Markets - driven by the need to reduce CO2 emissions, regulation is demanding a move from selling more, to selling more intelligently, portending some major market shifts
* Customers - moving from a passive charging relationship with end users, to a dynamic customer interaction, to influence consumer behaviour & reduce energy demand
* Technology - moving from manual meter inspections every 3-6 months to automated electronic measurement daily and, in the future, by the second, with network-wide smart metering supporting integration and optimisation of usage & supply
* Timescales  - an industry accustomed to slow methodical evolution is adapting to faster timescales
* Culture - internally, bridging the distribution and generation cultures, and externally when working with ICT partners

Such issues may resonate with those who lived through the transitions of the 1980/90s, when similar change hit the telecoms industry, initally in Europe and then in the rest of the world...
* Regulation & Markets - the advent of liberalisation resulted in a rapid transition from operator monopolies and national vendor oligopolies, to a truly dynamic, competitive & globalised marketplace
* Customers - moving from a passive charging relationship with end users, to a dynamic customer interaction, needed to ensure customer retention in this new world & to drive the adoption of new services
* Technology - standardisation, development & implementation of radical new disruptive technologies - digital switching, wireless, packed data & the Internet - displacing the status quo of mechanical Strowger switches, which had been in place for decades
* Timescales - the pace of innovation has accelerated enormously, as has the industry structure; today's telecom industry is unrecognisable today from 10 years ago, let alone 20, in terms of scale, revenues and players
* Culture - many telecom companies found it hard to accept the new - it took more a decade to integrate wireless and mobile into wireline activities, and some are still coming to terms with mobile Internet. Developing globally-accepted standards - necessary to deliver competitive, non-monopoly, markets - remains a slower process than developing proprietary approaches for over-the-top applications, yet even the pace of this activity has greatly accelerated.

Evaluating the Impact 
The impact to date has been huge - most fundamentally driving a massive growth in global telecomms availability, which has enabled a highly-correlated and well-documented economic growth. Most of the planet now has a phone and in a few years will be online, predominantly via a wireless connection. The arrival of the 'Third Wave of Wireless' - combining realtime, individualised, context for individual people and objects with the ubiquitous wireless-connected Internet - will accelerate economic growth even more in the coming days.

It is no coincidence that China's rise to the world stage has been over a period when its teledensity has evolved so significantly and so rapidly - from 0.5% (1990), to 18% (2000), and latterly to 80% (2010). This change did not happen by chance, but was fostered by Government recognition of the potential and active policy interventions.

Is it possible that adoption of standardised Information, Communication & Context technology enablers could transform other industries to the same degree ?  My personal belief is that this is so. Just as the mobile and Internet revolutions did not come without pain and hard lessons, the same will be true of this next phase; just as in the past, change will challenge vested interests, and there will be industrial pioneers and laggards, winners and losers.

To deliver the economies of scale to transform the many, currently-silo'ed, industries (such as energy, health and transport) will require common global standards for service enablers - technologies such as privacy, security, identity, payments, location, communication etc. Some of these exist or are emerging, whilst others are a high priority for development.

Just as with the emergence of global standards for communication - GSM, 3G, IPv4/v6 - the potential to disrupt and dislocate is profound. Some players - in the ICT industries as well as in the application industries - will perceive the creation, development, deployment and adoption of such standards as a threat to their established business models and not wish to change.  Without such standards, bespoke solutions are de rigeur, economies of scale are absent, motivations to prioritise privacy over profit are missing. For some, such change represents threat, whilst others acknowledge and embrace the opportunity.

Will It Happen ?
With such huge potential there is no doubt that it will happen - the only questions are where, and when. The opportunity, the need, the industry players and market are all global and many countries recognise the potential. There are however good reasons why the UK could play a key role, as has happened in the past in similar situations, specifically:
* a world-leading academic research base in Information and Communications, which continues to attract and interact with R&D centres of many or most of the world's leading industrial players
* a track record in the diplomacy needed to broker international agreement
* a country large enough to be a significant market, yet small enough to have a realistic prospect of coordinating all the key players in Government, Industry & Academia

* a keen focus on creating and enabling markets and competition, accompanied by a justifiable reputation as a market pioneer, cf telecom deregulation/liberalisation
The climate at the present time is ripe to make things happen - with the role of technology in creating jobs, markets and growth recognised far more by Government than in  the past. If the mood of industry at last week's TSB meeting can be used as a measure, there is indeed a real chance of moving such an initiative forward. 
As a not-for-profit organisation, owned by the global industry, and with no physical centre to 'sell' into the process, VCE has the benefit of independance -  we simply desire to facilitate a positive outcome that will benefit the industry and, in the process, the UK. From this perspective VCE is keen to engage with industry players from around the world, both member companies and non-members, as well as others locally, who share such perspectives and wish to make such a vision of industry transformation a reality.

A rather longer blog than normal today, but it's hard to condense such matters into just two paragraphs...

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