So, we are all playing, talking or listening about Pokémon Go. The unprecedented success of this Augmented Reality (AR) based gaming app reaffirms that the lines separating our physical and digital spheres are increasingly getting blurred. Convergence has well and truly arrived. What we call MOSAIC (Mobility, Social Media, Analytics, IoT and Cloud) at LTI, are the technologies changing the way we shop, read, watch movies, listen to music, and interact with each other.
A similar script is playing out in the world of business too. Gartner estimates the number of connected devices – wearable, smart meters & appliances, cars, RFID, etc. – will increase from about 3.8 billion in 2014 to 25 billion by 2020. Proliferation of sensors, cameras and omnipresent wireless networks has given rise to the Internet of Things (IoT). All these connected devices are generating an unprecedented volume of data. Companies have begun using Big Data, Machine Learning, Artificial Intelligence and other advanced analytics technologies aggressively to derive actionable insights from the deluge of information emanating from their physical and digital infrastructure.
These trends have a major implication for companies: they need to effectively realign with their customers, who have fused their physical and digital worlds. The business case for embracing convergence is compelling. Bridging the physical-digital divide could yield up to $11.1 trillion a year in economic value by 2025, according to McKinsey.
Companies can reimagine business models by leveraging connected people, infrastructure and data streams – to diversify revenue streams, while substantially reducing capital and operating expenditure. Across industries, the next wave of efficiency gains will come from the ability to connect physical assets with enterprise systems. Let us look at some examples from across industries:
Media & Entertainment
Next Generation Experience, a project launched by Disney in 2009 to deliver a more immersive and personalized experience to the guests visiting its Disneyland theme parks, has enhanced customer experience significantly. The project’s first release, the MyMagic+ system, integrated various digital technologies with Disney’s three-dimensional theme park, while My Disney Experience–a new website and mobile app – enabled vacation planning and reservations for the company’s various attractions. Meanwhile, Disney’s MagicBands double up as tickets, credit cards and hotel room keys. The RFID wristbands also transmit information on guest behavior, by collecting relevant data from sensors installed across parks. These initiatives have helped Disney gather real-time data on visitors’ behavior and personal preferences, and accordingly customize guest experience, as well as optimize future investment spending.
In order to compete with e-commerce leaders, brick-and-mortar retailers are increasingly embedding digital capabilities into their stores, embracing interactive displays, mobile apps and payment systems. Interestingly, the growing interaction between brands and consumers across both physical and digital spheres is manifesting itself in another way, with online retailers such as Warby Parker and Bonobos launching outlets. Retailers will fundamentally rethink the value of stores to their customers. They will not be used just for product distribution, but for delivering compelling brand experiences. In fact, it is possible to envisage a scenario where retailers start monetizing in-store customer experiences by charging a “media” fee, just to showcase products!
Aviation companies are using data to enhance equipment safety, reduce flight delays, minimize cancellations, and slash fuel consumption. For instance, General Electric has developed proprietary algorithms to track data aggregated from airline systems and aircraft equipment–across the ‘Industrial IoT’ – to forecast, prevent, and respond to operational disruptions. The US conglomerate has used these algorithms to proactively identify and flag issues not detected by conventional diagnostics tools, thereby averting operational outages and lost revenue. Similarly, ThyssenKrupp, which makes and maintains elevators in buildings worldwide, has been relying on networked sensors for a predictive maintenance setup that helps reduce downtime and unnecessary elevator repair trips by service personnel.
Physical-digital convergence can play a major role in helping Life Sciences and Healthcare firms bring down treatment costs, and improve the speed, quality, accountability and safety of care. As consumers increasingly demand – personalized care, intuitive self-service across multiple devices, and on-demand order fulfillment – providers could leverage IoT, mobility, cloud computing and data analytics to deliver better patient outcomes. For instance, physicians and caregivers are diligently tracking patient data gathered from wearable devices and tweaking prescriptions on an ongoing basis. Apart from fostering better care and reduced costs, this could enable cheaper remote monitoring of patients. Providers could also minimize wait times, efficiently utilize beds and equipment, and provide high-quality care throughout a patient’s stay, by integrating bed assignment, patient flow, departmental workflow, and equipment management.
The convergence of physical and digital worlds across both the consumer and enterprise landscapes is only going to accelerate. While this irreversible transition will pose significant challenges to your existing business model, it also offers major opportunities for you to reimagine your value proposition for sustained relevance.
How is it playing out in your sector? What interesting examples of physical-digital convergence have you come across?
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