Megatrends: which technology will enable the next decade?

Technology is not one trend, but many. The common thread is that it acts as a catalyst for change. It is disruptive, reshaping individual industries, improving productivity, enhancing human know-how, while also potentially holding the solution to some of the world’s most intractable problems, from energy transition to shifting demographics.

Understanding the reach and power of technology is vital to understanding any investment opportunity. It can help lead investors to compelling growth stories or steer them away from sectors that are subject to disruption. Technology is becoming a vital part of more and more industries and of the broader global economy.

The disruptive influence of technology has been seen across multiple sectors.

No sector is immune to the disruptive influence of technology – and those who believe their business is untouchable may see the greatest shock. For businesses on the right side of technological change, either as a user or creator of technology, it can be transformative.

The term AI typically refers to computer systems that are built to perform functions usually carried out by humans. It has been around for a long time but to build effective insights, data is required. It has taken time to find ways to record and interpret this data. But today there is an abundance of data – internet users generate about 2.5 quintillion bytes each day[1]. Both the computing power and the analytical methods are now available to analyse that enormous data effectively. Consequently, the usage of AI is exploding.

For example, AI can:

• Predict climate patterns[3]. Sensors within the soil collect data on rainfall and temperature. This can provide an early warning system for floods or heatwaves
• Help monitor carbon emissions and identify sources of concern
• Develop greener transport systems, monitoring traffic patterns and highlighting pressure points
• Help companies build granular insights into sales trends, allowing them to understand their customers better
• Interpret medical data, looking for patterns in symptoms and disease. It was put to good use during the pandemic, for example, when apps were used to monitor the spread of the virus and identify hotspots. It can even interpret medical results: according to the American Cancer Society, a high proportion of mammograms yield false results. AI enables the review and translation of mammograms 30 times faster with 99% accuracy, reducing the need for unnecessary biopsies[4].

There is big money in big data. The data analytics market is set to reach $656 billion by 2029, for example. Data is the new oil – companies cannot run without it.

Digital transformation is the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements[6]. This can take multiple forms. For a hospitality group, it could involve automating check-in and payments. For others, it is about employing tools to enable remote collaboration, or automating time-consuming manual processes. It may incorporate many aspects of technology, including AI, the Internet of Things (IoT), cloud computing and software-as-a-service (SaaS).

Evolving education

Toda is a small city in Japan, just outside Tokyo. In a bid to improve educational outcomes, the city’s Education Board trialled the use of AI robots to teach English in elementary schools. The programme aimed to explore new ways of learning before the Japanese government made English a compulsory subject. This could well have implications for how languages are taught globally.

China’s super-apps are leading the way

Now, companies are looking at how payment functionality can be embedded in chat apps. China has led the way with its super-apps – WeChat, for example, is used by 1.2 billion people and incorporates gaming, bill payments, ride-hailing, medical appointment booking and more. Also, 2.5 million companies are now using WeChat Work, the group’s business communication service[7]. To date, these have been a phenomenon in Asia rather than the US or Europe, but Elon Musk has said he hopes to create a super-app with Twitter.

Cloud computing is a vital enabler of these changes

Cloud computing is the delivery of computing services over the internet instead of using physical data centres and servers. This means that companies can move data storage to the cloud rather than having to maintain large servers on premises. Not only does this allow them to be more flexible in their use of technology but they can maintain more data. They also circumvent a costly hardware upgrade cycle.

The war with Ukraine has further highlighted the vulnerability of Western institutions to cyber attacks from unfriendly foreign powers. Russia started its assault on Ukraine by hacking the country’s commercial communications company Viasat[8]. President Joe Biden has identified cybercrime as a "core national security challenge"[9] and is clear that hackers are growing in ambition and sophistication. In May, cyber criminals took a major US pipeline offline, demanding a multi-million-dollar ransom[10].

The value of cybercrime is currently $6 trillion, with predictions that it will rise to $10.5 trillion by 2025[11]. If it were an economy, it would be the third largest in the world and, at 15% a year, it is growing far faster than the US or China. Against this backdrop, cybercrime is becoming a focus for governments and the corporate sector alike, who are pouring billions of dollars into addressing the problem.

In May 2022, the Oak Ridge National Laboratory system officially became the world's fastest supercomputer. It was the first to break the symbolic exascale barrier, meaning it is capable of at least a billion billion floating-point operations per second[12]. It is thought that China also has a number of exascale systems but has chosen to keep them under wraps.

The Tennessee-based Oak Ridge system consists of 74 cabinets, each weighing in at 8,000 pounds. It is at the vanguard of the technical arms race between China and the US to build ‘super-computers’, high-performance computers that can store and process vast quantities of data. Super-computers are used to run sophisticated AI programmes and to process complex calculations.

Most countries now have access to supercomputers. Europe has Leonardo, located in Bologna, and LUMI, located in Finland; Japan has Fugaku. The majority of these super-computers have come into operation within the last five years and support technical innovation across the global economy.

The technological revolution will undoubtedly collide with the other megatrends. Robotics, for example, may be able to plug the gap in the Japanese labour market and are even being used to take care of its elderly population. Big data is a vital tool in the energy transition, while technology is a central part of the power dynamics between the US and China. Technology is expanding into new industries all the time, becoming an increasingly important part of the world economy.

Sources:

[1] 25+ Impressive Big Data Statistics for 2022, Techjury.net, 26 November 2022

[2] Artificial Intelligence Index Report 2022, Stanford University, March 2022

[3] 4 Ways Big Data can Help Fight Climate Change in 2023, research.aimultiple.com, 21 December 2022

[4] https://www.pwc.com/gx/en/industries/healthcare/publications/ai-robotics-new-health/transforming-healthcare.html

[5] Big Data Analytics Market Size, Share and Covid-19 Analysis, Fortune Business Insights, July 2022

[6] Salesforce

[7] THE TOP 6 SUPER APPS IN ASIA – AND WHAT THEY REVEAL ABOUT THE GLOBAL TREND, rapyd.net/blog, 4 March 2021 (Updated 30 September 2022

[8] Russia behind cyber-attack with Europe-wide impact an hour before Ukraine invasion, GOV.uk, 10 May 2022

[9] Protect and survive: act now on cybersecurity, I by IMD Magazine, 22 September 2022

[10] US fuel pipeline hackers 'didn't mean to create problems', BBC News, 10 May 2022

[11] Cybercrime To Cost The World $10.5 Trillion Annually By 2025, CyberCrime Magazine, 13 November 2020

[12] Oak Ridge's exascale 'Frontier' system named world's most powerful supercomputer on Top500, Data Center Dynamics, 30 May 2022