Progress in information technology is transformative. Every year brings faster processing speeds, greater storage capacity, bigger data sets, and more advanced software. Ways of connecting, sharing, collaborating, and doing business become richer, more varied, and more powerful, enabled to a large extent by expanding IT capabilities.
Understanding how these capabilities are evolving is critically important for companies. The IT-enabled business trends we discuss here provide fresh opportunities for companies to create new sources of value—new products, new ways of touching customers, and new tools for improving operating efficiency. They also have the potential to shift profit pools, disrupt markets and commercial relationships, undermine existing market leaders, and shift value to consumers or among producers.
This white paper builds on and updates previous work by McKinsey experts that has appeared in The McKinsey Quarterly.1 Some of the trends that were just surfacing in 2007 or 2010 are now gathering greater momentum. For example, one of the major ideas we explored in 2010 was finding ways to get more value from interactions—the knowledge sharing, negotiations, conversations, and independent judgments that define the jobs of professionals and other knowledge workers. These employees are the highest paid and most high-impact workers in most organizations, but they have not benefited fully from the productivity gains that technology affords. Three years later, in this paper we highlight the new software tools that can automate tasks that were once thought to be beyond machines, including some of the work that interaction workers perform.
What was the Internet of Things in 2010 has morphed into the Internet of All Things in this paper, reflecting how rapidly this trend is spreading. This technology involves using sensors and actuators to track and manage machinery and other physical assets across a network. The earliest approach in this trend, using radio-frequency identification (RFID) tags, was a highlight of our 2007 report. That the Internet of Things continues to evolve should not be a surprise; technology adoption can take a decade or more, depending on the complexity and the hurdles. Thanks to the mobile Internet and advances in sensors, we believe that Internet of Things adoption rates will soon accelerate.
Big data is another technology that merited attention in 2010 and does so again. It, too, is experiencing accelerating growth, thanks to advances in processing capabilities. Moreover, new types of data analytics enable more real-time analysis, as well as closed-loop systems that, based on big data flows, can make autonomous decisions—for example, to release inventory into the distribution system based on shelf-level retail data.