Two trillion dollars. That’s more than the annual GDP of most countries. And it’s how much cloud services could add to the U.S. economy over the next decade—if today’s organizations take steps to grasp the opportunity in front of them.
Dr. Michael Mandel, senior fellow at the Mack Institute for Innovation Management at Wharton, unveiled his new research today at Modern Finance Experience 2018. In Intelligent Finance: How CFOs Can Lead the Coming Productivity Boom, Dr. Mandel calculates that U.S. gross domestic product could increase by a cumulative $2 trillion in the next 10 years. Exciting new technologies like the Internet of Things, blockchain, predictive analytics, and artificial intelligence are driving this productivity boom—along with the cloud services that make these technologies available to organizations large and small.
The findings shed light on the powerful impact of cloud-enabled digitization on productivity—a primary factor in the health and resilience of national economies and economic sectors, and the organizations and industries that comprise them.
The research study, which Oracle commissioned, aims to help CFOs become successful leaders in the coming decade by building intelligent finance functions that can support increased productivity.
The $2 trillion GDP finding has obvious implications for economic prosperity, considering that output per worker in the United States and other developed countries overall has slowed in the past decade. Investment in cloud services—and the best practices and emerging technologies that the cloud delivers—would improve competitiveness for industries as well as organizations.
A clear conclusion from the research is that high-productivity industries invest more in software than low-productivity industries.
On average, high-productivity industries have more than triple the value added per full-time worker of low-productivity ones.
Of particular concern to finance leaders: the productivity gap has been widening. High-productivity industries had an additional gain in productivity of 14% from 2006 to 2017, while low-productivity industries had a decline of 1% during the same decade.
Cloud services offer a way to narrow the gap. During the same 10 years, annual software spending per worker increased 61% in high-productivity industries but only 28% in low-productivity ones.
And improved productivity isn’t the only reason to invest in cloud services. The greater achievement would be cross-industry transformation to efficient, agile, and future-focused organizations that deliver more value to all stakeholders.
Such a transformation would mean that higher education (for example) gets to use the same type of data-driven apps as Silicon Valley startups. Manufacturers would be able to offer low-capital, high-profit digital services to augment their portfolios of capital-intensive goods. The price-challenged healthcare industry could deliver more patient-focused care with better outcomes, at a lower cost.
“Our cost of health care is about $14.5 billion a year,” explains Michael Murray, senior vice president and CFO of Blue Shield of California, one of the organizations highlighted in the research. “Through population health management and predictive analytics, I think we could reduce that significantly. It’s a huge opportunity from both an economic perspective, and from a clinical quality and customer service perspective.”
Where does your industry fit into these findings? Find out in the complete report, which includes sector analysis on seven industries, as well as case studies.