During the Gilded Age and the second industrial revolution, the world saw rapid adoption of life-altering technologies electricity, rail transport, the automobile, telegraph communications and then the telephone. Thanks to these innovations, companies were able to create and sell products they could not before to people they had not previously been able to reach, in ways they never could have envisioned.

That young United States saw unprecedented growth, with total national wealth increasing from $16 billion in 1860 to $88 billion by 1900.

Todays evolution looks set to be just as transformative. Disruptive technologies like augmented reality, artificial intelligence (AI) and the internet of things (IoT) are already having an impact. On offshore oil rigs, for instance, we see our customers using a type of reverse augmented reality that allows humans to view the status of equipment remotely through the eyes of a mobile inspection robot. This reduces the time that people spend on platforms in the open ocean away from their families.

Over the coming years, I believe we will see a nexus of forces that enable companies to do business in ways that we probably have a hard time comprehending today.

Business and technology

Historically, we used technology to make business processes more efficient in predictable ways (reduced manhours, inventory or order turn time, etc.). Now, technology itself is the enabler for new business processes and new business models.

A retail chain without an effective web presence will face gradual decline, while an intuitive and sticky web storefront with superior cross-selling opportunities and engaging content is a strategic tool for exponential growth. A food processing machinery company with the technology to sell not just a capital asset but the output in terms of units sold through outcomes-based contracts will be well-placed to disrupt its market and capitalize on new monetization models.

With technology as the business model enabler, efficiency gains will be determined by market forces and upside rather than savings in time, inventory or dollars.

People and experiences

Technology has changed our expectations. In the business-to-business setting, we need to catch up. Tools we use in our private lives are often more powerful and intuitive than the ones we use at work. In business-to-business transactions, the customer experience also lags. The results might be an inability to recruit millennials and to compete with customer experience.

As consumers, our expectations are changing, and we increasingly value access and outcomes over ownership, Vala Afshar writes in a recent ZDNet article. We want the freedom to access services and use them anytime, anywhere. We want the latest technology or product model available at our fingertips at all times. We demand choice in how we pay, flexibility to pause and resume services, and the ability to tailor them to meet our specific needs. And thanks to the subscription economy, all of this is now easily possible.

We need to bring this line of thinking into our business software as well. Were all accustomed to logging onto a website and doing what we need to with engaging and relevant content; it's easy, it offers intuitive navigation and there's instant confirmation. Business software should be the same.

Automation and efficiency

While technology is a key factor in how humans experience business, I believe humans will become less of a factor in business operations. Ever since enterprise resource planning (ERP) was invented, it's been about efficiency. Business process automation means that some of these human tasks will be eliminated. As a result, the scope of business efficiency will no longer be constrained by human capacities, costs can drop dramatically and productivity per employee can rise.

According to Gartner, there will be 20.4 billion connected devices by 2020. North American organizations are already well on their way to reaching that number by implementing disruptive technologies such as AI. In fact, 20% or more have already implemented robotic process automation, machine learning and conversational interfaces.

Once data enters the system through IoT, AI algorithms can optimize the tasks and processes based on unfolding events. Communication from AI is already becoming indistinguishable from a human in some settings. We are moving toward a world where out-of-the-box software will deliver an integrated IoT-AI process flow, resulting in autonomous enterprises.

An outcomes-based future?

Businesses used to be structured around sales transactions. Today, intelligent businesses can easily target revenue or margin over a customer life cycle. We see software today designed to manage subscription-based product models, where humans can specify the service level and, based on predictive analytics, compute the total cost to support a product. Uber's technology can do what no human taxi dispatcher ever could. Industrial companies must engage with similar disruptive technologies that might compute the actual cost of operating each of their products, for each customer, and then price subscriptions accordingly. We will likely see new types of contract vehicles, new business models and innovative product and service offerings.

While servitization of product businesses is happening, it wont happen all at once. Caterpillar, for example, with its Cat Connect Services is using servitization to drive revenue and customer intimacy. The company has even opened its connected equipment to dealers who can create value-added offerings like remote expert solutions. And NCR aggressively sells equipment as a service to its installed base.

For every Cat or NCR, there are other giants too hidebound to change. A growing company with a strong, digital-first business model can easily outflank them.

Seize the opportunity

Vast rewards await executive teams bold enough to take advantage. When the transcontinental railroad was built in the Gilded Age, financing construction was a challenge because to most Americans, the West was as remote as the moon, its terrain as alien and forbidding. Situations like this are challenging for risk-averse institutions unaccustomed to planning around ambiguity and non-tangibles.

The other side of this digital divide is hard to see, but we predict the result will be a net positive for numerous companies across several industries.

Originally posted here:

Technology Prepares Us For Massive Gains In The On-Demand Economy - Forbes