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TheUSDigitalEconomy–
RealityinHungary
April 10, 2017
TheFourthIndustrial
Revolution:Rethinking
innovationandbusiness
Steve Hill, Global Head of Innovation & Investments, KPMG ...
2© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent mem...
3© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent mem...
4© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent mem...
5© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent mem...
6© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent mem...
PartofanewIndustrialRevolution?
1800sSteam, water, mechanical
production equipment
1900sDivision of labor,
electricity, ma...
8© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent mem...
9© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent mem...
TheevolvingDigitalLabormarketplace
Spectrum of labor automation to knowledge augmentation…
The tools used range from tradi...
Thedigitallabormarketplaceismaturingrapidly
14.9
billion
$
1.7
billion
$
The global market for robots and
artificial intel...
Business
implicationsof
digitallabor
Platform Delivery
vs. Human Labor
Depending on
business model,
ratio of technology
in...
Whynow?
Frictionless
access
Exponential
technology
Human
knowledge
shared freely
Global
demographic
shifts
to technology b...
29© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
14© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
15© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
19© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
18© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
20© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
15
0
100
200
300
400
500
600
Republic
of Korea
Japan Germany U.S. China
Number of Robots per 10,000 Manufacturing
Employee...
3© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent mem...
16© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
17© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
18© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
19© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
20© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
21© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
22© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
23© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent me...
TheUSDigitalEconomy–
RealityinHungary
April 10, 2017
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KPMG: The US Digital Economy - Reality in Hungary

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Előadó: Steve Hill, Global Head of Innovation & Investments, KPMG LLP
Az előadás a Digitális Munkaerőpiac 2017 rendezvényen hangzott el.

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KPMG: The US Digital Economy - Reality in Hungary

  1. 1. TheUSDigitalEconomy– RealityinHungary April 10, 2017
  2. 2. TheFourthIndustrial Revolution:Rethinking innovationandbusiness Steve Hill, Global Head of Innovation & Investments, KPMG LLP April 10, 2017
  3. 3. 2© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977
  4. 4. 3© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977
  5. 5. 4© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977
  6. 6. 5© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977
  7. 7. 6© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Cognitivetechnologyisthe“steam”ofthedigitalage… Cognitive systems mimic human brain functions Intelligence augmentation A new partnership between humans and machines Physician Nurse Wealth Advisor Academic Advisor Sales Advisor Legal Advisor Tax Advisor Auditor Service Advisor Insurance Advisor Machine learning Deep learning Artificial intelligence Natural language processing Predictive analytics Text analytics Image recognition Voice recognition …and will reshape the workforce of the future Perceive (interpret sensory input beyond traditional data) Reason (hypothesize, weigh supporting evidence) Learn (improve confidence levels with experience) 1 2 3
  8. 8. PartofanewIndustrialRevolution? 1800sSteam, water, mechanical production equipment 1900sDivision of labor, electricity, mass production 1960sThe Information Age - Electronics, IT, Mass Communication, Internet AI, nanotech, biotech, cyber-physical systems, digital labor Today The “4th industrial revolution” (cyber-physical systems) is beginning and its impact is profound according to the World Economic Forum founder, Klaus Schwab
  9. 9. 8© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Non-linearadoptionwillchallengeinternalclockspeed 150 Yrs 35 Yrs 15 Yrs 5 Yrs ? Cognitive systems New leverage model (“Digital Labor”) Mechanical systems Industrial productivity Production engineering Information systems Process improvement Process re-engineering Internet systems Cost arbitrage Globally integrated enterprise Cloud and the internet of things Big data & analytics Smarter enterprise Enterprise innovation
  10. 10. 9© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. DigitalLaborrepresentsaspectrumofintelligentautomation capabilitiesfromRPAthroughCognitive Examples: Data ingestion “bots” Financial statement closing “bots” “Bots” that provision new Virtual Machines in a data-center Examples: Schwab’s Intelligent Portfolio (Robo Advisor) Amazon Alexa IPSoft Ameilia BofA’s Erica virtual assistant Examples: Memorial Sloan Kettering’s Watson Oncology Advisor Autonomous vehicle decision algorithms Financial services fraud detection Cyber security Digital Labor (Intelligent Automation) Rules Learning Reasoning Robotic Process Automation (RPA) Cognitive Automation Automation based on documented process rules Recognize patterns from unstructured data; automation based on accuracy ratings Hypothesis based reasoning; automation based on confidence ratings Macro based Unstructured Data Natural Language Processing Knowledge Base Adaptive Alteration Predictive Analytics Machine Learning Reasoning Large scale Processing Big Data Analytics Macro based Unstructured Data Natural Language Processing Knowledge Base Adaptive Alteration Predictive Analytics Machine Learning Reasoning Large scale Processing Big Data Analytics Macro based Unstructured Data Natural Language Processing Knowledge Base Adaptive Alteration Predictive Analytics Machine Learning Reasoning Large scale Processing Big Data Analytics
  11. 11. TheevolvingDigitalLabormarketplace Spectrum of labor automation to knowledge augmentation… The tools used range from traditional automation software to new cognitive platforms which make automation tools intelligent and help augment and leverage human knowledge
  12. 12. Thedigitallabormarketplaceismaturingrapidly 14.9 billion $ 1.7 billion $ The global market for robots and artificial intelligence is expected to reach $152.7 billion by 2020. The adoption of these technologies could improve productivity by 30 percent. Bank of America Merrill Lynch A recent study by HfS Research and KPMG LLP reports that 55 percent of North American enterprises are looking at new opportunities available with RPA systems. MarketsandMarkets estimates that the AI, or cognitive computing marketplace, will generate revenue of According to Quid, from 2010 to 2014, private investment in AI has grown from $1.7 billion to $14.9 billion, and was on track to grow nearly 50 percent year-on-year in 2015 alone. Gartner predicts that by 2020, smart machines will be a top five investment priority for more than 30% of CIOs. McKinsey research suggests that smart robots will replace more than 100 million knowledge workers—or one-third of the world’s jobs—by 2025. billion 152.7 Recent research from London School of Economics suggests a return on investment in robotic technologies of between 600% and 800% for specific tasks. ROI 800and 600% % billion by 2019 12.5$ $ 55 % Top
  13. 13. Business implicationsof digitallabor Platform Delivery vs. Human Labor Depending on business model, ratio of technology investments will change Geographic Deployment Location criteria must consider a digital model vs a labor intensive model Risk Reduction Expected reduction in mistakes, accidents, regulatory violations and fraud Security Misuse of digital labor can extend the reach and capabilities of malicious operators Innovation Frees up human talent to innovate and create
  14. 14. Whynow? Frictionless access Exponential technology Human knowledge shared freely Global demographic shifts to technology by more than 2 billion people (mobile, cloud) improvement growing at more meaningful baselines on the internet is giving context and meaning to digital content reduction in working age population and need for talent
  15. 15. 29© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 Facialrecognitionsoftwarecannowsurpasshumans 0% 5% 10% 15% 20% 25% 2011 2012 2013 2014 2015 Error Rates on ImageNet Visual Recognition Challenge, % Human Level Source: KPMG Economics, ImageNet, Stanford Vision Lab
  16. 16. 14© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Demographicchanges There are clear areas of concern in routine cognitive jobs But the global population is aging and departing the workforce which is causing over-leverage of pensions and benefits regimes In developing countries, the source of recent growth is subject to automation
  17. 17. 15© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. WhatarethecurrentCEOplansforLabor-Capitalsubstitution? 0% 5% 10% 15% 20% 25% Sales force Technology Marketing Engineering Finance Manuf./ oper. R&D Strategy Percentage of CEOs who report moderate to significant skills gaps in these job functions CEOs see growing skills gap… 0% 25% 50% 75% Sales force Technology Marketing Engineering Finance Manuf./ oper. R&D Strategy Odds that automation/machine learning will replace at least 5% of workforce in each job function in next three years that could filled by digital labor Source: 2016 Global CEO Outlook, KPMG International
  18. 18. 19© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 EmploymentgrowthintheU.S.reflectsjobpolarization Source: KPMG Economics, Rob Valletta, San Francisco Fed, BLS -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% Non-routine Cognitive Non-routine Manual Routine Cognitive Routine Manual Annual Change in U.S. Employment by Occupation Category 1984-2000 2001-2007 2008-2015
  19. 19. 18© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 Thetraditionalwagesandsalariescharttellsadisturbingstory 151005009590858075706560 52 50 48 46 44 42 52 50 48 46 44 42 Wages and Salaries as a % of GDP Source: KPMG Economics /Haver Analytics
  20. 20. 20© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 Wheredogovernmentrevenuescomefrom? Source: KPMG Economics, Haver Analytics 85.6% 2.6% 11.7% U.S. Government Revenue by Tax Individual Income & Estate Taxes Excise Taxes Business Income Taxes
  21. 21. 15 0 100 200 300 400 500 600 Republic of Korea Japan Germany U.S. China Number of Robots per 10,000 Manufacturing Employees World Average Robotdensityinlargestdestinationsofrobotsupplies © 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 Source: KPMG Economics, IFR World Robotics, 2015
  22. 22. 3© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 AutomationAnxiety Machines would “exclude the labour of thousands of the human race, who are usefully employed . . .” Thomas Mortimer, 1772 “For the moment the very rapidity of these changes is hurting us and bringing difficult problems to solve. . . . We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment.” Maynard Keynes, 1930 “The present outlook is for the rate of displacement of labor to exceed the rate of reabsorption...” Ewan Clague, 1945 “The number of jobs lost to more efficient machines is only part of the problem. What worries many job experts is that automation may prevent the economy from creating enough new jobs…In the past, new industries hired far more people than those they put out of business. But this is not true of many of today’s new industries.” Time Magazine, February 1961 “Digitization is creating new types of economic disruption. In part, this reflects the fact that as computers get more powerful, companies have less need for some kinds of workers. Even as it races ahead, technological progress may leave some people—perhaps even a lot—behind.” Erik Brynjolfsson, 2014
  23. 23. 16© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 Humanvaluewill remainunparalleled
  24. 24. 17© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 Thenext 3years moredisruptive thanthelast50?
  25. 25. 18© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 21st CenturyEnterprise Many have pointed to a “perfect storm” of change facing firms around the world driven by a wide range of economic, social, political and technical disruptors. Given the scope of change, deeper questions must be asked:  Is the enterprise of the past century still fit for purpose in this century?  What does it take to be a frontier firm amidst these changes?  How will today’s leaders transform their business models, organizational structures and operations to thrive today and in the future? 21st Century Enterprise Inflection point 20st Century Enterprise Time Profitable growth Today
  26. 26. 19© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 World’slargestenterprises Source: Fortune Global 500, 2016 Revenue US $27.6 trillion Profits US $1.5 trillion Employees 70 million 2016 Fortune Global 500 What firms will move to the frontier globally and nationally?
  27. 27. 20© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 Problem: FirmproductivitygapisgrowingChanges in labor productivity in manufacturing and services between top “frontier” firms and the rest Percentage difference in labor productivity levels (Index, 2001 = 0) Source: Frontier Firms, Technology Diffusion and Public Policy, OECD, 2015 5% per annum 0.3% per annum 3.5% per annum 1.7% per annum
  28. 28. 21© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 Pillarsofthe21st CenturyEnterprise Given the scope of change occurring across industries and functions, we must help our clients understand and respond to four key pillars of the enterprise… Customer Engagement Changing Nature & Value of Assets Everything as a Service Workforce of the Future Personalization, Customization, Co-creation & Collaboration A 21st Century Enterprise delivers the best customer experience, leveraging data collected from customers to learn & personalize experiences. Data-as-an-Asset, Intellectual Property, Shared Assets, Networks & Alliances A 21st Century Enterprise unlocks value from non- traditional assets - data, alliances, networks, agility, and other intangibles. Services vs products, subscribing to what you need, Process-as-a- Service A 21st Century Enterprise is more nimble and scales infinitely faster by accessing services versus growing internal functions and infrastructure. Automation & augmentation, Talent gaps, contingent workforces, collaboration A 21st Century Enterprise is lean, utilizes digital labor and accesses skills on demand through platforms and alternative employment models.
  29. 29. 22© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 Time Same Clients  Same Bus Model  Same Workforce  Same IP/Services  Faster Workflow  Higher Quality Effort/ Value DIGITIZATION PLATFORMIZATIONINDUSTRIALIZATION TheJourneytobecomea21st CenturyEnterprisewillbeenabledbyDigitalTransformation  More Clients  Same Bus Model  Same Workforce  New IP/Services  Reengineered Workflow  Higher Quality  More Clients and Markets  New Bus Model(s)  Evolved Workforce/New Skills  New IP/Services/Revenue Models  Reduced Workflows  Higher Quality
  30. 30. 23© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 537977 Thankyou
  31. 31. TheUSDigitalEconomy– RealityinHungary April 10, 2017

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