Industrial Internet of Things adds 14.2 trillion to GDP

03 February 2015 Consultancy.uk

The Industrial Internet of Things has the potential to add 14 trillion to the global GDP, new research by Accenture shows. According to the firm, this could only be reached if both governments and companies step up their game and increase investments in IIoT technology and enhance the IIoT enabling factors.

Accenture recently released its ‘Winning with the Industrial Internet of Things – How to accelerate the journey to productivity and growth’ report in which it researches the potential of the Industrial Internet of Things* (IIoT) for the world economy. For the report, the firm surveyed more than 1,400 global business leaders, of whom 736 are CEOs. The overall conclusion of the report: the IIoT will boost global economic growth, but governments and businesses need to take action to fulfil the potential.

Internet of Things

Economic growth
According to the consulting firm, the IIoT helps to improve productivity and reduce operating costs and is arguably the biggest driver of productivity and growth in the next decade. The research shows that additional investment in IIoT and enhancing the enabling factors for IIoT, and the productivity gains that should follow, have the potential to increase the real GDP (adjusted for inflation) for 20 major economies with 1.5% by 2030. This translates into an additional GDP of $14.2 trillion. For the UK, the IIoT is set to lift its GDP by $303 billion between now and 2030 at today’s level of investments in IIoT.   But if the UK were to boost its current investment in IIoT technologies by 50% and improve the economy’s underlying enabling conditions, that figure could rise to $531 billion. In 2030, that would add an extra 1.8% to the UK’s GDP.

IIoT brings new economic growth by 2030

In its report, the firm argues that these potential benefits are at risk because neither governments nor companies take sufficient actions to ensure the wide adoption of new digital technologies.

The firm researched the extent to which the surveyed countries have “woven the IIoT into their economic fabric”. As a result of this, the countries are ranked according their ‘national absorptive capacity’ (NAC). A country that is ranked with a score of 100 NAC would be a top performer. The country that scored the best is the US, followed by Switzerland, the Nordic countries and the Netherlands, although none of these scored higher than 64. Russia received the lowest score of 21.3, followed by India (29.9), Italy (31.3) and Brazil (32.4). Weak enabling conditions are limited infrastructure, skills or institutional foundations required to support the widespread adoption of new technologies.

Ranking countries’ IIoT enabling factors

According to Accenture, companies are also not taking enough effort to ensure the full IIoT benefits. The research shows that while 84% of the C-suite executives say they are “ready to capitalizs on the IIoT”, 73% still has to make concrete plans for the IIoT, with only 7% having developed comprehensive Internet of Things strategy with investments to match, showing a big gap between the companies’ readiness and reality. “But its [IIoT] full economic potential will only be achieved if companies move beyond using digital technology to make efficiency gains alone and unlock the value of data to create new markets and revenue streams. That means radically changing how they do business: working with competitors, forming partnerships with other industries, redesigning organisational structures and investing in new skills and talent,” comments Paul Daugherty, Chief Technology Officer at Accenture.

There is a gap between perceived IIoT readiness and reality

Accenture concludes the report with the listing of three areas that companies need to address to accelerate the adoption of the IIoT:

  • Re-imagine industry models: redesigning organisations, partnerships and operations.
  • Capitalise on the value of data: establishing interoperability and security standards to ensure data can be shared with confidence between companies.
  • Prepare for the future of work: setting up new organisational structures to allow workers to collaborate more creatively with counterparts in partner companies.

IIoT offers three accelerators to productivity and growth

* The Industrial Internet of Things is defined as “a network of physical objects, systems platforms and applications that contain embedded technology to communicate and share intelligence with each other, the external environment and with people.”

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Project management industry adds £156 billion of value to UK economy

15 April 2019 Consultancy.uk

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.

Outlook

Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”