The increased use of digital technologies could add $1.36 trillion to total global economic output in 2020, according to a recent study by Accenture and Oxford Economics.
This may be only a fraction of a percent of the total global gross world product (currently sized at about $87 trillion), but it’s a substantial contribution to growth. To put it in perspective, moving forward full-force with digital would add an economy the size of South Korea to the global market (current GDP at $1.3 trillion) , Joe McKendrick wrote for Forbes.
Accenture and Oxford define digital through a variety of initiatives, including the volume of transactions conducted online, the use of cloud or other technologies to streamline processes, the pervasiveness of technology skills in a company, or an economy’s acceptance of new digitally driven business models.
Going digital means organizations place “digital at the heart of their strategy and enterprise to transform every part of their operations, including R&D, supply chains, and the use of cloud, analytics and CRM technologies.”
Here is the progression of changes digital promises to deliver:
- Increased efficiency and energy savings, as manual, duplicated or calcified processes are replaced with software-defined and analytics-driven processes.
- Increased market responsiveness, with businesses able to respond to consumer demand through social media, and anticipate future trends through analytics.
- Higher levels of collaboration, as members of organizations are able to work together and share information with each other almost instantaneously, as well as with customers.
- Greater innovation, as businesses have greater access to pools of knowledge and resources outside their walls.
- More entrepreneurial energy and opportunity, as teams or individuals are able to take advantage of an abundance of cloud and social media resources to launch new businesses or business lines with minimal startup capital required.
Optimizing Processes
What’s key about digital is that it is far more than simply automating and optimizing processes — which is merely the first step. In its ultimate form, the digital economy means upending older, established and calcified business models.
The growth spurred by digital will occur across all countries and regions, and contribute even greater gains in emerging markets. Accenture and Oxford calculate a 10-point improvement in digital density (on a 100-point scale) over five years would lift GDP growth rates in advanced economies by 0.25 percentage points, and by 0.5 percentage point in emerging economies.
The United States alone would see a GDP uplift of at least $365 billion in 2020. Emerging economies, such as Brazil, India and China could see rises of between $97 billion and $418 billion.
