The world is changing, politically and socially. New structures are replacing old institutions, and the global economy is changing rapidly as well. Some governments go for free trade agreements, others, in protectionist mode, try to wall off their markets. Every country is searching for the “best way forward” as digitalisation dramatically accelerates business growth worldwide. Expert Ina Schlie is analysing the impact of digital innovation on the global economy.
Ina Schlie is SVP Digital Government and SAP’s Head of Government Relations MEE in Walldorf and Berlin. In this role, Ina is responsible for all relationships of SAP to governments and political networks in Middle & Eastern Europe.
After starting her professional career at KPMG Wirtschaftsprüfungsgesellschaft Ina joined SAP in 1997. She assumed different leadership roles and from 2001 to 2016 she served as SVP Global Tax.
Ina holds a Master Degree in Economics from the University of Heidelberg. She is a Member of the Supervisory Board at Würth Group in Künzelsau and at QSC AG in Cologne.
The next Digital Revolution has begun! With new technologies and the next Generations Y and Z the future world will be evermore virtual. The way that people interact with systems and machines will be changed by new Open Innovation Models with intelligent solutions and conversational platforms. The Internet of Things is already having a grand impact on innovation and efficiency in almost every industry. Big Data and smart Analytics facilitate expansion into new markets with new products and services for almost any kind of business. The scope of Artificial Intelligence, Augmented & Virtual Reality and Blockchain Technology will continue to expand rapidly, resulting in Intelligent Enterprises.
Most industries are still in their pilot phase, but in a short time these technologies will take off in a big way. They will redefine the interactive collaboration of human professionals with machines and lead to innovative business processes. As digitalisation expands into every corner of our personal and professional lives, our desire for individuality will drive even more innovations.
What is the Impact on the Global Economy?
In the last years, the global economy expanded by more than 3 percent. As long as there are no Black Swan events like widespread natural catastrophes, wars or other political and financial crises then the global economy has the strength to continue to grow. In the world, economic outlook update in 01/2018, the International Monetary Fund (IMF) pointed out that the “global economic activity continues to firm up. […] Global growth forecasts for 2018 and 2019 have been revised upward by 0.2 percentage point to 3.9 percent. The revision reflects increased global growth momentum and the expected impact of the recently approved U.S. tax policy changes.”
The Economic Benefit of Digital Innovations
In many industries, Digitalisation will be a game-changer both internally and in the way customers will be addressed. New markets will arise. Strategies, processes and structures will be transformed. We have to emphasise creativity, critical, systematic and interdisciplinary thinking, e. g. Design Thinking. Success depends on the ability to respond by building up fast and intelligent enterprises. The New Work movement spills over from innovative startups to all sizes of enterprise. We at SAP expect that exciting new working models such as cloud/remote or crowd-working will be standard and match young professionals’ current ideas for new flexibility and resilience, regarding working place and time.
New technologies will impact global growth: A recent analysis by Accenture of selected economies found that AI could double annual growth rates by 2035. PwC predicts that AI could potentially contribute almost $16 trillion to the global economy and boost GDP growth by up to 26% in 2030. In their newest research project “Digitalisation and The Future of Work” (04/2018), the ZEW (Centre for European Economic Research) found out that Digital Transformation has very positive effects on the German economy and “… it is creating more jobs than it is destroying, but still poses many challenges for establishments and workers alike.”
Where do Jobs Grow and How Many Jobs are at Risk?
Most studies predict that up to 15% of jobs could be automated through Artificial Intelligence (AI) in one or two decades. The German ministry of labor predicted that by 2025 the digital transformation will cost 1.5 million jobs in Germany but generate 1.5 million new jobs.
The numbers signpost the next Digital revolution: According to a McKinsey global study published in 2017, 375 million employees (14% of the global workforce) will need to transition to new occupational categories by 2030, less than 5% of these jobs can be fully automated. The majority of jobs will be partly impacted by automation which means that upskilling will get even more important. For several years Germany, has experienced a shortage of data scientists and IT specialists. Worldwide, the largest area of job opportunities will be in the IT sector.
Looking at specific industries, we can see how digitalisation will also drive an increase in jobs that require personal interaction with the customer, such as in the health or tech/ construction sector. In these expanding sectors, Digital Innovation will lead to higher employment rates, higher salaries, less working hours, and have direct effects upon individuals’ work, such as less monotonous and dangerous tasks. Demographic challenges, like ageing of some societies can be resolved by automation. Although online-learning is getting more popular, we will need a huge number of educators for the transition as well as good managers. And jobs involving genuine creativity might be safe, such as artists, actors or some scientists. But how long? The future will show.
A Simple Formula for the Future does not yet Exist
Traditional institutions like the UN, IMF, World Bank, World Trade Organisation or G20 need to be proactive and build up new rules-based systems. To ensure robust economic growth in all countries, incentive programs such as R&D tax credits should be started or expanded to foster innovations and upgrade skills. The jobs of the future will be created in countries which manage to set up an innovation-friendly framework. Public and private investments are needed to ensure life-long learning and accompany the ongoing process of disruptive change.
Last but far from least, it is essential to manage security and accessibility for everybody. We need best-in-class IT-infrastructures and a big focus on IT-Security and Data Protection. This becomes more important since cybercrime is likely to become more dangerous as digitalisation expands in the future.
Politically and economically, the world’s situation is very complex. More than ever we need a human view on the new world. We need new ideas, open-minded communication, flexible structures and plans for all groups and institutions to navigate through present and future challenges. It should socially and economically benefit all demands.
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Global Female Leaders 2017: A Thorough Look Back
To sum up this great event in a single blogpost would be nearly impossible. Fortunately, we don’t have to try this, because our dear partner Accenture provided us with an in-depth White Paper, that you can now download on our website!
Just fill out the form below and enjoy over 50 pages of insights and key takeaways from the 2017 summit. We thank Accenture for their contribution and hope you enjoy the read!