Commentary: The future economy has arrived. It’s mostly digital and contact-free
The coronavirus pandemic has accelerated trends in the Fourth Industrial Revolution, says Orange Business’ Nick Lambert.
SINGAPORE: COVID-19 has reminded me of my university days studying Stephen Jay Gould’s evolutionary biology theory of “punctuated equilibrium”.
The concept refers to long periods of stability in nature that are upset and disrupted by short periods of rapid change.
For example, a species of sea animal that has existed for thousands of years, but is suddenly forced to adapt when sea levels suddenly change. Its body develops to accommodate this environmental change, and from that point on it is evolutionarily different from its ancestors.
Its world has forced a change in behaviour by default, and that becomes the new normal.
COVID-19 OUR HUGE DISRUPTION
Punctuated equilibrium has parallels in the technology world. Throughout history computer systems have often demonstrated extended periods of stasis followed by disruptive change.
We have moved from transistors to vacuum tubes to massive mainframe computers to minicomputers to PCs and laptops. Today, we have incredibly powerful computers in our pockets that we refer to as phones.
In the technology world‚ we often cite Moore’s Law as an example of constantly increasing change, but that isn’t strictly correct. New chips come along every couple of years, but the big, industry-transforming events have tended to appear more like every decade.
So, considering the theory of punctuated equilibrium, COVID-19 is our next huge disruption that we have to manage. Among the various possible scenarios, one thing is certain: New trends will emerge.
Enterprises will need to focus more than ever on building new customer relationships through effective digital experiences, since physical interaction with them will be far less. With so many end-users and customers quarantined in their homes, these digital experiences will matter more than ever.
Companies must be robust. Those that will thrive will be those able to retain customer trust during the COVID-19 pandemic and subsequently lead those customers out of it.
Governments must also take part to support companies and businesses to adapt seamlessly to these new trends.
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There is strong momentum to achieve rapid digital transformation in Singapore. The Singapore Government recently announced that about S$500 million of the Fortitude Budget will be allocated to support the digital transformation of businesses.
Highlighting the sharp rise in e-payment by businesses with 50,000 more businesses adopting PayNow Corporate since April, Deputy Prime Minister Heng Swee Keat emphasised that more help will be given to boost the use of digital solutions for enterprises that have not been able to implement such tools yet.
THE RISE OF THE CONTACTLESS ECONOMY
There is a high likelihood that APAC will morph into being what will effectively be a contact-free economy. Online shopping was already proving increasingly popular with consumers in the Asia-Pacific (APAC) before COVID-19, but lockdowns and stringent restrictions have sent it through the roof.
China has seen consumers begin to shop online in much bigger numbers, while 13 per cent of Europeans said in April that they were planning to investigate e-tailers for the first time.
Italy, one of the hardest-hit nations in the world during COVID-19, reported an 81 per cent increase in e-commerce transactions since the end of February.
I expect APAC consumers to follow suit. E-commerce in APAC was forecast to be worth US$3.5 trillion by 2021, according to the eMarketer 2019 Global E-commerce Forecast.
While the emergence of the contact-free economy is likely to see this number revised upwards, APAC ecommerce platforms like Lazada, Shopee, ShopBack and Zalora are helping brands and consumers during COVID-19. According to research by Ipsos, Vietnam has seen 57 per cent of shoppers shifting their purchasing online, with India at 57 per cent and China at 50 per cent not far behind.
On top of e-commerce, we can expect e-health to see big increases in use in the post COVID-19 world. Digital solutions like telemedicine and online crowdsourced health monitoring are moving from an initially slow adoption path to a record uptake pace.
Solutions like the new Bluetooth-powered app for contact tracing launched by the Singapore government, TraceTogether, show great potential.
Data will be central to all the advances we make in e-health and e-commerce, as companies use customer experience and feedback to build insights that help make offerings better and relationships with end-users stronger.
TECHNOLOGY WILL POWER THE NEW NORMAL
Other digital technologies will play vital roles in our new future in APAC and beyond. It is a lesser known fact that an AI epidemiologist raised the first alarm bells on the COVID-19 pandemic in December 2019.
In the future, automation and AI adoption will play a critical role for early detection and timely response to such pandemics. Drones are already being utilised during the COVID-19 lockdown, and the pandemic is likely to drive longer-term adoption of autonomous vehicles and robotics.
Autonomous vehicles are being used in the US to deliver COVID-19 tests to laboratories, while in China, delivery app Meituan Dianping is using autonomous vehicles to deliver grocery and food orders to customers as part of a “contactless delivery” initiative.
In general, autonomous vehicles could help ease the strain on existing delivery services and supply chains, while reducing the risk of exposure for citizens.
Companies that want to thrive during and after the pandemic will need robust infrastructure. Cloud connectivity on demand will ensure remote workers have sufficient bandwidth, split tunnelling will optimise networks and remote gateways will help companies add numbers to remote working teams quickly without losing performance.
In terms of autonomous vehicles and drones, Internet of Things (IoT) spending in APAC has typically been smaller than other world regions. But expect that to change as distancing drives decisions and the contact-free economy becomes more commonplace.
Data analytics company GlobalData has stated:
The pandemic will only accelerate the demand for digital transformation, and IT vendors in APAC will do well to prepare for the impending explosion in opportunities around digital transformation.
Kitty Fok, Managing Director of market intelligence firm IDC China, agrees:
Digital-first will be at the core of business transformation as the digital economy progresses, and companies will face new, more daunting challenges from huge changes taking place in the global macro environment due to the COVID-19 pandemic. Companies can deliver more value by adopting digital-first business models that enable ‘ultra-fast speed, ultra-high scale and ultra-wide connections.
The post-COVID-19 future will need companies to be resilient and sustainable and that will mean innovation powered by digital technologies and data.
Nick Lambert is Senior Vice President APAC at Orange Business Service.