Disruptive Technologies: Deflationary Power in an Inflationary World

Businesses and organizations are increasingly embracing digital technologies and the benefits they can bring, especially in the face of inflation.

“Digital is a deflationary force in an inflationary economy,” Microsoft CEO Satya Nadella briefly reminded us during the Redmond-based company’s latest earnings announcement. Regardless of their size, companies can increase their productivity and the profitability of their products and services by increasing technology intensity.

Inflation is becoming a hot topic as some of the factors that have held it back for years are disappearing. Decades of continued globalization have led to longer supply chains and lower manufacturing costs. On the other hand, these trends have begun to change with the emergence of tensions between some of the major economies and with the disruption to trade flows caused by the coronavirus. At the same time, weakness in commodity prices caused by previous periods of over-investment is also coming to an end as mining and oil companies have listened to their shareholders and are now prioritizing return on equity over capacity development. Consequently, the system has very limited room to maneuver during periods marked by exogenous events such as pandemics or wars. In this environment, the role of technological innovation is essential to increase productivity, minimize resource wastage and reduce costs.

We regularly cite Moore’s Law, which states that the number of transistors in an integrated circuit doubles every two years, and Metcalfe’s Law, which states that the utility of a network grows exponentially with each new user. laws have helped drive down the cost of computing power, leading to a wave of disruptive innovation around the world.

Source: BCG analysis. NASSCOM Report: AI, Beyond the Myth & the Hype, analysis by McKinsey Global Institute. (AI Beyond Myth and Fad, analysis by McKinsey Global Institute) SaaS Trends 2019, Blissfuly.com. The views expressed are those of the principal and are subject to change. For illustration purposes only.

The virtuous circle of technology

Source: Piper Sandler. For illustration purposes only.

With these elements in mind, we would like to highlight a few examples where these disruptions have helped ease pressures on spending in various business sectors.

Many health services in the United States have suffered from a shortage of personnel. Omnicell is seeing increased demand for pharmacy automation solutions. This allows nurses and pharmacists to free up time to devote to other tasks. Its automated intravenous infusion system dispenses drugs more accurately and quickly, and reduces costs by about 66%. In the United States, a hospital using this solution saves $2.5 million annually. Intuitive’s DaVinci Robotic Surgical Systems enable less invasive procedures, resulting in faster recovery times and shorter hospital stays. During robotic prostate removal, the patient usually leaves the hospital after one or two days. With an open method of operation, this time will be from three to seven days. Thus, these solutions free up beds and resources in hospital departments that are already understaffed.

In the industrial arena, computer services and software company PTC is helping its customers, such as the Bosch Group and Volvo, make the digital transition with products that range from computer-aided design (CAD) to product lifecycle management, including the Internet of Things. (IoT) and augmented reality (AR). Target? Optimize your processes, minimize waste and increase efficiency. The impact of these products varies by solution, but for example, ThingWorx, the connected work cell, helps manage the flow of information across all processes and increases productivity by up to 40%, reducing wastage by 25% and training time by 65%.

The agricultural and construction sectors are fragmented and labour-intensive. They have been slow to implement this technology, but due to staff shortages and rising resource costs, companies are looking for new solutions. Both industries can benefit from Trimble’s services. The connected farm platform helps streamline farming workflows, resulting in increased yields and profitability. This technology maximizes yields by providing soil data to help you plan planting times efficiently, as well as providing real-time yield information. Its technology also allows tractors to be remotely controlled, and the equipment enables precise watering and irrigation. For a highly detailed construction project, such as a bridge or an airport, Trimble can build an exact digital replica of the original, modeled to the highest precision, allowing for perfect control of heavy equipment. This increased accuracy can save millions of dollars by preventing budget overruns, rework, and general delivery delays.

Other sectors, such as transportation, coffee chains and fast food, are using cloud-based mobile apps, self-checkout technologies, and payment enhancements to reduce the need for face-to-face interactions between employees and customers and increase loyalty through ease of use and loyalty programs. . Starbucks was one of the pioneers in this area with its mobile app, followed by McDonald’s and its offline ordering kiosks, and the London Underground, which abolished ticket counters by adopting contactless payment. All these solutions have reduced the need for staff and simplified the work with clients, as well as reduced time costs.

It is clear that the adoption of digital technologies is becoming cheaper and easier, and the benefits are becoming more obvious in the face of inflation.