Six Industries That Are Most Vulnerable to Digital Disruption
Almost all industry sectors have experienced digital disruption from the digital age. New tech start-ups have swept across many markets and eroded the profits of many major enterprise companies.
This new and modern world we live in can be scary to many with business leaders fearing to take the plunge into the age of digital disruption. Major enterprise industries are seeing their profits plummet because they are not adapting fast enough to new technologies.
Companies like Airbnb and Uber which embrace the sharing economy and have aided the growth of peer-to-peer platforms have cut massive holes in the profits of both the hospitality and transport industries with a number of large companies blaming them for the loss in profits. HVS estimated that hotels are now losing around $450 million a year in revenue to Airbnb.
Startups are often the key to driving innovation, with small budgets and often little funding, they have a ‘hustle’ mentality that allows them to develop technology in the cheapest and most efficient way.
Enterprise companies are not taking it lying down
Whilst startups are definitely making a splash in many industries that does not mean that industry leaders are happy to just roll over and let them take their place. Many large enterprises companies are now acknowledging the challenges that digital disruption is bringing to their industry and addressing it.
Enterprise companies have an abundance of resources over smaller start-ups and are starting to use them to get ahead whilst adopting the new platforms start-ups are bringing into their industries. The wave of digital disruption through many industries has dramatically changed the views of many enterprises. Executives who see that their dominance will be short-lived if they do not adapt and invest in new technologies.
Oil & Gas
After years of having plenty of capital to invest in the industry over the past few years, oil and gas have been navigating some choppy waters.
In the past five years, oil and gas have become an IT-dependent industry investing $700 million in high-performance computers in 2014 according to IDC. A number of large technology firms like Microsoft are driving higher efficiencies within the industry through developing new technologies but ins not just big names in the race, some smaller start-ups are showing their worth too.
Start-ups are becoming increasingly more important to the big players in oil and gas, particularly through big data analysis. These companies are looking for ways to improve efficacies and maximize profits. Having better data analysis allows these companies to meet the ever-growing demand for energy that the world has, leveraging the information they gather companies can reduce downtime and have confidence in making decisions on their operations. Startups like Seven Lakes Technologies have been making waves in the press for producing smart solutions to stop operations inefficiencies with the oil industry.
Digital disruption has brought new and greater opportunities for the Healthcare industry to provide a more reliable and personalized service. Suppliers are now recognizing the need to innovate and improve the current systems they have in place.
Tech-savvy start-ups are a key driver of these innovations. Mobile devices are a key part of the disruption to the industry, they allow remote-monitoring and remote check-ups with patients. As patient behavior changes and people are happier to be treated from home rather than in a hospital setting these technologies are only expected to grow. It was predicted that last year 1.7 billion people, almost a quarter of the world’s population would download a health app in 2017.
The implications for mobile health treatments are endless and they are causing a massive shakeup in the wold healthcare industry by providing a cheaper and easier alternative to expensive hospital visits and medication. Startups like MySugar, based in Australia are already helping over 1 million people manage their diabetes through their mobile device. It helps users make decisions between doctor’s visits by showing their treatment data in an easy and accessible manner and helping them calculate their insulin.
Public transportation in many parts of the world can be a tedious affair with disorganized timetables and unhappy commuters. We spend a huge amount of our lives in transit, getting from work to home, to dinners out with friends, visiting families, in fact, it is estimated that Londoners alone spend 107 hours a year commuting to and from work!
Electrical vehicles, car sharing networks like Uber and BlaBlaCar are freeing up time and money for many passengers and creating massive shifts in the way commuters get from A to B
By harnessing the power of big data tech start-ups are transforming the way public transport operates. Startups like Swiftly (which is funded by transpiration giants such as Ford) are using big data to create more efficient networks and are disrupting the current systems used.
Old and outdated computers systems are used in much of the public transportation networks across the world which is why many areas are embracing the new innovations companies like Swiftly are coming up with. They help predict accurate schedules, improving customer satisfaction and through data analysis can establish why there are inefficiencies with each system, to allow networks to address and fix them. This means companies can make cost savings whilst also keeping and improving customer satisfaction.
The logistics industry is one that is ripe for digital disruption, which is why so many start-ups are focusing on improving its efficiencies, to generate companies more income and saving resources. 50% of transports are not carrying cargo on them after delivery. This is a massive waste of resources such as fuel time and labor, by embracing digital technologies from start-ups companies can have the data they need to dramatically reduce such inefficiencies.
Transmetrics is a Bulgarian based start-up aiming to decrease these exact inefficiencies, with the slogan ‘Stop Shipping Air’ they use data to make predictions in where demand will be and shipping volumes from big data and analytics to help reduce delivery times and allow logistics companies to utilize their transport capacities and minimize empty cargos. This increased efficiency will boost income and reduce business overheads helping streamline the whole transportation process.
Digital disruptions have been affecting even this incredibly stable industry. Technologies such as new smart materials, VR, and 3D printing has caused massive disruption to the industry over the past few years, allowing for a more creative, efficient and stable construction process.
Engineering and Architecture firms are embracing start-ups 3D printing technologies to create detailed and accurate scale models of buildings as well as creating life-size parts on 3D printers that are difficult to produce, saving time and money. In Russian, an innovative individual built themselves a house in just 24 hours with a 3D printer. The house is expected to last over 150 years and was very cheap to produce, these types of innovations can have massive implications within many parts of not only poorer nations but the west as well that are experiencing a housing crisis due to exploding populations and construction workers being unable to meet this demand.
Innovations in inventory management and tracking area also making construction a more efficient industry with new systems using data analysis to forecast and alert when stocks are low as well as GPS tracking that can locate inventory to an exact location and help reconcile materials.
E-commerce & Retail
The online retail industry has changed dramatically over the past 10 years, many companies this time a decade ago would not have been selling their products online. Mobile shopping has probably been one of the biggest disruptions to retail in the industries history. 82% of consumers consult their phone for research before making a purchase, brands now need to have an active and positive online presence as well as providing a good product or service to ensure that they are converting customers.
Brands have had to adapt to the fact that consumers now want to be able to shop from the convenience of their living room, avoiding large crowds and being able to access stores 24 hours of the day, 7 days a week.
The market has also changed dramatically, millennials have the biggest spending power of any generation and are more interested in experience over accumulation things. They are focused on the trust of brands and as such brands have had to adapt creating content and building relationships with their customer base. As E-commerce has changed the market share of last mile delivery to B2C instead of B2B retailers are having to accommodate the need to be able to easily deliver to urban areas. Technology like droids and drones and the innovation of bike messengers are changing how the retail world operates and how much consumers expect out of brands.
Start-ups often understand their audience and their needs better than long-term enterprise businesses which are why we have seen so many big-name retailers go out of business in favor of smaller more innovative and connected companies that have recently emerged.
Digital disruption is an inevitability of the future. New tech is emerging at an ever more rapid pace, companies now must decide if they are going to be disrupted or start doing the disrupting themselves. Those that don’t start to innovate with new technologies will be left behind by those who chose to adapt and bring greater efficiencies to their work processes. Up until now many have chosen not to put the time and work in but are starting to notice the change that startups across a number of nations are making. They are beginning to see that they must embrace these technologies to survive and invest in start-ups to give them an edge over competitors.