- For Students
Author: Sean Epstein `04 who works for SAP’s Private Equity team and Seth Brown works for Equinix.
Credit card machines that still allow users to swipe or use the chip may be the only technology that is acceptable to be behind the times. If you don’t have a chip, which is still most of the consumers out there, you are happy about the latency or delayed upgrade. Too many businesses still do not see the absolute value of real time access to information, the cost of latency, and the inability to capitalize on the interconnected digital ecosystem. Optimizing this powerful real time networked superstructure is fundamentally changing the nature of innovation for business to consumer and business to business organizations.
Let us say you are a family of 5 driving to see relatives. The driver is using Waze to make sure their route is optimized to avoid traffic and get them there as quickly as possible. Waze has embedded advertiser content into the app so that when drivers are passing certain restaurants and stores, the logos appear in the app and allow the users to interact with these brands. That engagement may include offering a timely coupon, rerouting to their closest location, or offering loyalty benefits for sharing their location with the Waze community. If Chick-Fil-A is not able to communicate with the Waze network in time to serve me the advertisement I am at the next exit eating at their competitor. 50 million people use Waze and the average national lift in navigation to businesses who did this right is 53%. That should be alarming to those organizations who are not prioritizing their ability to connect with the broader digital marketplace in as close to real time as technically possible.
It isn’t just business to consumer models that are benefiting from this networked economy. Take a bunch of old NASA low orbit satellite photographers who decided to start taking pictures of retail parking lots for investors to use to short or long a company. Their research included comparisons of the time the cars spent in the parking lot, the value of the cars, and even the shopper’s identity; it is surprising how much you can find out from a license plate number if you cross check it with smog checks, the shops that performed the service, and the eventual discovery if the VIN #. At first the images were analyzed monthly and provided to say hedge funds for a flat fee. The cost of this information latency was that it stymied their business growth because the rear-view window research for industry comparisons isn’t that valuable for funds, and similar information, even if not as sophisticated is plentiful. Harnessing the power of real time information fundamentally changed the physics of the business. The company now enables traders to access this information on a subscription model and with add-on insights for a fee.
The benefits to the world at large are being seen on every continent every day – instantaneous tsunami warnings based on seismic activity; circulating tumor DNA analysis; or optimizing first responders time to rescue. To those slow to adopt technologies that enable them to join, grow and profit from the superhighway are already and will continue to be eclipsed by their existing and future competitors.
This is the first in a series of articles from a variety of authors on different facets of digitalization.