Digital fragmentation a threat to global growth of businesses

Vantage point: Insights from cutting-edge research

A new report from Accenture warns that “digital fragmentation” — the rise in restrictions on the free flow of data, IT products, IT services and IT talent across borders — is disrupting the global business environment and could inhibit companies’ strategies for growth and innovation. The report argues that national policies causing “digital fragmentation” are often created with good intentions, such as improving data privacy and cyber security. Greater collaboration between companies and governments can help such policies meet their objectives while stimulating, rather than inhibiting, innovation and use of technologies.

The report reveals 74 per cent of chief information officers and chief technology officers surveyed expect to exit a geographic market, delay their market-entry plans or abandon market-entry plans in the next three years as a result of increased barriers to globalisation.

The number of restrictive trade measures adopted by G20 members has quadrupled from 324 in 2010 to 1,263 in 2016. As a result, the trend of “digital globalisation”, powered by the free flow of data, is giving way to “digital fragmentation”. More than half the business leaders surveyed believe the increasing barriers to globalisation will compromise their ability to: use or provide cloud-based services (54 per cent); use or provide data and analytics services across national markets (54 per cent); and operate effectively across different national IT standards (58 per cent).

“Moves against globalisation are forcing companies to make fundamental changes to key strategic and operational plans across global IT architectures, the recruitment of IT talent, the physical location of IT and cybersecurity,” said Omar Abbosh, Accenture’s chief strategy officer.

Consumers want privacy from artificial intelligence

Despite massive corporate investments in artificial intelligence (AI), nearly three-quarters of consumers are concerned about AI infringing on their privacy, says a new study from Genpact. The survey also reveals that 59 per cent respondents think their government should do more to protect personal data from AI.

Consumers’ wariness of AI contrasts significantly with optimism expressed by corporate management. According to a previous Genpact study conducted earlier this year, 88 per cent senior executives at companies that are leaders in AI expect the technology will drive better customer experiences within three years.

In the recent consumer research, only 12 per cent of the people surveyed said they would prefer to be served by a chatbot, even if the service they receive is faster and more accurate than that of a human. Yet over three times more executives (38 per cent) think their customers will prefer service by a chatbot in three years, according to Genpact’s senior management study. Companies need to lay the groundwork now to address the disconnect and pave the way for AI adoption. “AI is a game-changer to improve the customer experience, yet real challenges remain regarding trust and privacy,” said Sanjay Srivastava, chief digital officer, Genpact.

“To encourage adoption, the key is to have visibility into AI decisions and be able to track and explain the logic behind them. Companies need to break through the ‘black box’ to drive better insights for their business and give consumers the assurance they need.”