The Digital Transformation: From Strategy to Execution report is a wide-ranging analysis of digitalization as it spans the national, city, industry, and enterprise levels. It provides an overview of the technologies underpinning successful socioeconomic transformation, and draws on more than 100 global case studies to deliver strategic insights into how countries are executing national digital plans and transitioning their societies and economies into the intelligent, digital age.
Digitalization Empowers Economic Growth
Driven by digital technology, we’re entering the fourth industrial revolution. Incremental investment in digital transformation is growing year-on-year, positioning digitalization as a strong contributor to the digital economy and economic growth.
The pandemic has accelerated the digitalization of products and services by an average of 7 years globally, with the Asia Pacific region jumping forward a remarkable 10 years. The proportion of global digital transformation expenditure as part of total ICT expenditure is also steadily increasing, reaching an average annual growth rate of 3%.
In turn, the growth rate of the digital economy is more than twice that of GDP, and the proportion of the global digital economy in GDP will reach 40%. Higher income nations are showing a higher degree of digitalization and proportion of digital economic activity.
Digital brings change
Digitalization is bringing change for individuals, families, enterprises, industries, and even cities and countries. With the introduction of digital technologies such as AI, cloud, IoT and 5G into all aspects of society, digitalization is laying the foundation for building smart cities, driving the digital transformation of industries, improving consumer experience, creating new products and services, and promoting social progress.
Fig 1. How Digitalization is Bringing Change
For individuals, digital technology provides the availability of connections, giving people a sense of safety, connectedness, and happiness. For example, people are more able than ever before to work online, interact on social media, use digital entertainment, access education and healthcare online, and make digital payments. In home scenarios, new digital technologies are providing access to home broadband for previously unserved homes, extending better broadband coverage from buildings to homes and even rooms, and delivering a premium experience through bandwidth upgrades from megabit to gigabit, paving the way to fully intelligent homes.
In enterprise scenarios, information digitalization and process digitalization are evolving towards business digitalization, enabling enterprises to satisfy new application scenarios, improve the working experience, boost production efficiency, and innovate new business models. By consolidating digital technology and industry know-how, industrial digitalization is constantly adding value to economies, and moving from information-intensive industries to pillar industries like energy, manufacturing, oil and gas, real estate, and agriculture.
In city scenarios, the digitalization of governance, public services, and economic activities is accelerating the development of smart cities, with more than 1,000 cities implementing digitalization in stages globally. At the national level, over 170 countries have released digital strategies, including digital infrastructure build out and application digitalization, with the aim of achieving systematic digitalization.
Full landscape of digital transformation
The full landscape covers national, city, industry, and enterprise scenarios and each has specific targets for delivering social, business, industrial, and economic benefits.
Fig 2. Full Landscape of Digital Transformation
National digitalization formulates a clear digital strategic vision and objectives with specific implementation measures and plans. Nations will guide the overall strategic direction for cities and industries to develop, and give enterprises policy and capital support as well as supervision. Digitalization will create new value; empower economic growth; contribute to social value, including digital inclusion and the green economy; facilitate industrial upgrades and structural optimization; and generate new business value.
City digitalization builds people-oriented smart cities, promotes the construction of a platform for public services, and achieves efficient governance. Leading the transformation of urban governance, digitalization aims to achieve “one network for all” through the digitalization of information, processes, and businesses.
Industry digitalization: strengthens the deep integration of industry knowledge and digital technology in advantageous industries and pillar industries, selects industries with priority development, and creates an environment of constant investment
Enterprise digitalization encourages SMEs to participate in digital activities; provides support in terms of capital, technology, services, and platforms, and help enterprises realize experience, efficiency improvements, and business model innovation.
National digital transformation framework
The overall national digital transformation framework is structured with strategy, application, technology, infrastructure, and enabler.
The digital strategy is formulated with a clearly defined transformation vision and specific goals of Economic Growth, Social Inclusion, and the Potential for Sustainable Development (such as the UAE's 2031 AI strategy).
The degree of digitalization applied is the most significant factor for national development and covers three aspects of demand: digital economy, digital government, and digital society.
Industrial digitalization and digital industries are the key driving force of the development of global digital economy. Taking digital technology as the core driving force, the digitalization of industries is underway. Digital government will boost the efficiency of government affairs, public services, and city governance. Digital society will bridge the digital divide and improve social benefits.
Corresponding to application demand, the digital technologies represented by 5G, AI, and cloud computing will enable business innovation, with innovation capabilities the key driving force for national potential and sustainable development. Digital infrastructure is the foundation and supply for digitalization and includes digital platform, data infrastructure, network, and energy infrastructure. We can also see that strong organization, abundant funding, continuous talent cultivation, supportive regulatory policies, and a rich ecosystem are important enablers for the success of national digital transformation.
Digital infrastructure as the foundation
Digital infrastructure is the foundation of the digital economy, and comprises digital platforms, data and network infrastructure, and energy base.
1. Digital platforms support transactions and innovation, and facilitate the further monetization of digital data.
2. Data and network infrastructure respectively represent computing and connectivity, with connectivity density and computing accuracy determine the strength of the digital economy.
With the accelerated pace of technological innovation, digital infrastructure is having an increasingly positive impact on economic growth:
- From 2007 to 2019, a 10% increase in fixed broadband penetration rates, resulted in a 0.8%-2.3% increase in GDP.
- A 10% Increase in mobile broadband penetration rates resulted in a 1.5%- 2.8% increase in GDP.
- 5G, cloud, and AI are the three key elements of digital infrastructure, the integration of which will unleash massive power to accelerate industrial upgrades and digitalization.
- A 7% adoption of cloud resulted in a 1.1% increase in GDP.
- By 2030, 5G will bring economic growth accounting for 2%-5% of today's global GDP (US$2 trillion to US$4 trillion in absolute value). In 2035, 5G will increase economic output across industries to $12 trillion.
- By 2030, the scale of the AI industry will reach $13 trillion, accounting for 15% of today's global GDP.
National digital transformation in stages
The development of the global economy is uneven, with nations and regions at different stages and with varying demands for digital transformation. Therefore, the development of digital infrastructure also needs to be phased and adapted to meet localized needs. Through the Huawei Global Connectivity Index (GCI) report, the development level of national digital economies can be quantified based on four economic aspects and four tech enablers. These divide nations into three stages: starters, adopters and frontrunners.
Starters are currently in the primary stage of digital economic development. They should focus on strengthening the foundations of their digital infrastructures and provide ubiquitous MBB and FBB to enable more people to contribute to the digital economy.
Adopters should focus on consolidating digital technologies and industry know-how to accelerate digital transformation.
Frontrunners are mostly developed economies. The introduction of new technologies and continuous scientific and technological innovation can help evolve them into smart nations.
Fig 3. National Digital Transformation in Stages
Connectivity: Accessible, affordable, and applicable
Digital connectivity is an important cornerstone of national infrastructure and needs to be accessible, affordable, and applicable. However, nearly half of the world's population lacks access to mobile broadband services, of which 41% live in areas covered by MBB networks but don’t yet use mobile Internet and 9% lack access to mobile Internet services. There is also a very large gap in home connectivity, with 50% of households unserved.
To bridge the digital divide, more than 140 countries have launched national broadband plans to provide ubiquitous broadband services. Broadband connectivity has to be affordable in terms of provisioning network resources, terminals, and services.
In the new era, intelligent connectivity will feature ubiquitous gigabit network, the hyper-automation, and a deterministic experience. This will inspire business innovation in the 2C, 2H and 2B fields and create new economic value. To make digital connectivity available, affordable, and applicable, support from policy guidance, funding and financial means, and ecosystem construction are the key enablers to building a solid connection foundation.
Computing power: Multi-scenario co-ordination
With the rise of 5G, AI, and cloud services, the volume of new data is increasing at an astonishing rate and is predicted to reach 180 ZB by 2025, 18 times higher than 2018, making the construction of data centers crucial. Data centers have three characteristics:
1. Green for energy saving：A PUE（Power Usage Effectiveness）of less than 1.3 can meet future carbon neutrality requirements.
2. Data and network collaboration: Latency between data centers must be less than 20 ms based on high-speed network transmission, unified multi-cloud management, and the co-ordination and scheduling of computing power.
3. Multi-site and multi-live coordination for data storage, backup, computing, and remote disaster recovery.
Data center infrastructure can be deployed in multiple scenarios:
- In China, E2E planning and intensive deployment has resulted in data center hub nodes in different regions with big data generation in the east and computing in the west. The target of China’s Integrated Big Data Center is to increase the computing power ratio to 70%, average utilization to 60%, and increase computing power to more than 200 EFLOPS.
- HPC (High Performance Computing) + AI + big data clusters can provide a computing platform and resource pool for meeting different applications. This architecture has been widely used in product R&D, scientific research, and public service provisioning. For example, by implementing the HPC center, R&D on new cars can be cut from 60 months to 24 months, gene sequencing can be accelerated from 13 years to 1 day, and the accuracy of weather forecasting can be increased from 22% to 90%.
According to IDC, 70% of enterprises will process data at the edge, the edge applications will be improved by 8 times, and 50% of new infrastructure designs will be deployed at the edge. Edge Data Center Infrastructure will be designed to be simple, efficient, and intelligent.
National Digital Platform: Integration, Aggregation, Innovation
National intelligent digital platforms are key to unlocking digital transformation for economies, governments, and society. Cloud-based digital platforms will make computing ubiquitous and become the biggest driving force for the digital and intelligent transformation of nations. By providing application, data, and AI enablers, cloud-based digital platforms can power resource-sharing in governments, ecosystem aggregation, application innovation, and talent cultivation. Alongside cybersecurity and compliance, these are expected to accommodate the future-oriented and sustainable development of nations.
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