Industry Transformation in the IT Industry

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00:02 Information technology spurs innovation,

00:05 creates jobs,

00:06 and boosts economic prosperity.

00:08 As a result,

00:09 the IT industry has grown rapidly over the last 75 years.

00:14 Today,

00:14 IT is being used in a diverse range of applications

00:18 and is even embedded into devices for everyday use

00:21 by both consumers and businesses.

00:24 This digitalization has led to an explosion in the amount of data being produced,

00:28 a phenomenon known as big data.

00:31 Now,

00:31 IT companies are struggling to process more data faster than ever.

00:36 Advanced IT companies are racing to develop

00:39 solutions that address these challenges in computation

00:42 using computer science,

00:43 mathematics,

00:44 engineering,

00:45 physics,

00:46 and even neuroscience.

00:48 For example,

00:49 some researchers are using subatomic particles like electrons

00:52 or photons to enhance performance through quantum computing.

00:56 Such IT solutions that push the frontier of

00:58 scientific knowledge are known as deep tech.

01:02 Beyond merely processing big data in mechanical ways,

01:05 deep tech is being used to interpret the data for real life functions.

01:09 This has led to the successive development of

01:12 artificial intelligence,

01:13 which uses code to make decisions by following a set of explicit rules.

01:18 Machine learning,

01:19 in which computers use sophisticated mathematical models

01:22 to make decisions without further instructions,

01:25 and deep learning,

01:26 which mimics the way the human brain

01:28 arrives at decisions without explicit guidance.

01:31 These new data processing and interpretation capabilities

01:35 are behind recent technological developments like self-driving cars.

01:40 The next generation of IT

01:42 will increasingly rely on these kinds of advances.

01:45 But these innovations require large investments and lengthy

01:49 research and development programs to achieve commercial success.

01:53 The underlying intellectual property is usually

01:56 well protected and hard to reproduce,

01:59 making it a strong competitive advantage.

02:02 Taking a broader view of today's IT market,

02:04 some companies focus on meeting the demand for deep tech,

02:08 including artificial intelligence,

02:10 machine learning and deep learning,

02:12 while others focus on meeting the demand for software

02:15 that addresses specific business to business

02:17 or business to consumer user needs,

02:19 such as in healthcare,

02:21 social or financial applications.

02:24 In terms of supply,

02:26 certain types of IT companies focus on supplying

02:29 customized solutions for specific clients on demand,

02:32 while others supply packaged products that may be sold to many customers.

02:37 Each combination of demand and supply identifies a segment.

02:41 Each segment has different barriers to entry,

02:44 which affect competition in that segment.

02:47 The traditional IT outsourcing segment

02:49 is focused on supplying custom development to meet a user need.

02:53 This segment is crowded with intense competition.

02:56 By contrast,

02:58 companies making packaged products to solve user

03:00 needs often benefit from first comer advantage

03:03 and will race to gain near monopolistic market share

03:06 in order to reap the benefits of their dominance.

03:09 While such companies provide a number

03:11 of useful platforms and downloadable software,

03:14 they are coming under increasing scrutiny for unfair competition practices.

03:19 However,

03:20 firms using newer scientific approaches to IT

03:22 can find a source of long-lasting competitive advantage

03:26 that will allow them to compete on their merits.

03:29 As the frontiers of deep tech increasingly merge IT with adjacent fields,

03:33 countries will need to update their curricula

03:36 to gain a competitive edge in this fast changing market.

03:39 To harness talent,

03:41 governments will also have to ensure that

03:43 their countries have vibrant startup ecosystems.

03:46 Publicly supported financing for innovation and a strong support

03:50 network for entrepreneurs can encourage such new ventures.

03:54 Private venture capital firms will also be

03:56 needed to scale up promising IT startups.

04:00 These startups are fraught with commercial risk.

04:03 Venture capitalists can provide not only risk tolerant financing,

04:06 but also consulting services that mitigate this risk.

04:10 But

04:11 in the most novel deep tech applications,

04:13 where the scale of capital investments combined with

04:16 the risk of market failure are too large,

04:18 even advanced venture capital investors may not find the risks acceptable.

04:23 In such cases,

04:24 government co-financing may be essential for catching that competitive edge.

04:29 As the industry continues to evolve,

04:32 both the private sector and governments must

04:34 anticipate future developments through conducting careful strategic analysis

04:39 and designing smart policies.

04:41 Facilitating collaboration between the private sector and public entities

04:45 can help countries gain a competitive advantage

04:48 in this rapidly evolving global market.

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transcript

Information technology spurs innovation, creates jobs, and boosts economic prosperity. As a result, the IT industry has grown rapidly over the last 75 years. Today, IT is being used in a diverse range of applications and is even embedded into devices for everyday use by both consumers and businesses. This digitalization has led to an explosion in the amount of data being produced, a phenomenon known as big data. Now, IT companies are struggling to process more data faster than ever. Advanced IT companies are racing to develop solutions that address these challenges in computation using computer science, mathematics, engineering, physics, and even neuroscience. For example, some researchers are using subatomic particles like electrons or photons to enhance performance through quantum computing. Such IT solutions that push the frontier of scientific knowledge are known as deep tech. Beyond merely processing big data in mechanical ways, deep tech is being used to interpret the data for real life functions. This has led to the successive development of artificial intelligence, which uses code to make decisions by following a set of explicit rules. Machine learning, in which computers use sophisticated mathematical models to make decisions without further instructions, and deep learning, which mimics the way the human brain arrives at decisions without explicit guidance. These new data processing and interpretation capabilities are behind recent technological developments like self-driving cars. The next generation of IT will increasingly rely on these kinds of advances. But these innovations require large investments and lengthy research and development programs to achieve commercial success. The underlying intellectual property is usually well protected and hard to reproduce, making it a strong competitive advantage. Taking a broader view of today's IT market, some companies focus on meeting the demand for deep tech, including artificial intelligence, machine learning and deep learning, while others focus on meeting the demand for software that addresses specific business to business or business to consumer user needs, such as in healthcare, social or financial applications. In terms of supply, certain types of IT companies focus on supplying customized solutions for specific clients on demand, while others supply packaged products that may be sold to many customers. Each combination of demand and supply identifies a segment. Each segment has different barriers to entry, which affect competition in that segment. The traditional IT outsourcing segment is focused on supplying custom development to meet a user need. This segment is crowded with intense competition. By contrast, companies making packaged products to solve user needs often benefit from first comer advantage and will race to gain near monopolistic market share in order to reap the benefits of their dominance. While such companies provide a number of useful platforms and downloadable software, they are coming under increasing scrutiny for unfair competition practices. However, firms using newer scientific approaches to IT can find a source of long-lasting competitive advantage that will allow them to compete on their merits. As the frontiers of deep tech increasingly merge IT with adjacent fields, countries will need to update their curricula to gain a competitive edge in this fast changing market. To harness talent, governments will also have to ensure that their countries have vibrant startup ecosystems. Publicly supported financing for innovation and a strong support network for entrepreneurs can encourage such new ventures. Private venture capital firms will also be needed to scale up promising IT startups. These startups are fraught with commercial risk. Venture capitalists can provide not only risk tolerant financing, but also consulting services that mitigate this risk. But in the most novel deep tech applications, where the scale of capital investments combined with the risk of market failure are too large, even advanced venture capital investors may not find the risks acceptable. In such cases, government co-financing may be essential for catching that competitive edge. As the industry continues to evolve, both the private sector and governments must anticipate future developments through conducting careful strategic analysis and designing smart policies. Facilitating collaboration between the private sector and public entities can help countries gain a competitive advantage in this rapidly evolving global market.

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