Leslie Willcocks

Professor Emeritus

London School of Economics and Political Science

“What is the future of automation and digital technologies?”

First, here are some figures, then we will provide some comments. There are many estimates of the combined market for RPA, Intelligent Automation and ‘AI’. Statista suggest that the market is expected to show strong growth in the coming decade. The 2022 market value of nearly US$100 billion is expected to grow twentyfold by 2030, up to nearly US$2 trillion. On a Research and Markets estimate the global artificial intelligence market size was US$136.55 billion in 2022 and expected to reach US$1,812 billion by 2030, expanding at a CAGR of 37.3 percent from 2023 to 2030.

If these estimates seem high, then be aware that the AI market is being defined as covering a huge number of industries. Everything from supply chains, marketing, product making, research, analysis, and more are fields that will in some aspect adopt artificial intelligence within their business structures. Chatbots, image generating AI, mobile applications, massive increases in processing power and memory are all among the major trends improving AI in the coming years. According to these reports, the advent of big data is expected to be the cause of AI market growth, as a large volume of data is needed to be captured, stored, and analysed. The increasing demand for image processing and identification is also expected to drive industry growth.

Looking more broadly, Grand View Research evaluated the global digital transformation market size at US$731.13 billion in 2022 and anticipated a CAGR of 26.7 percent from 2023 to 2030. They attribute market growth to the growing adoption of cutting-edge technologies such as cloud, big data analytics, and Artificial Intelligence (AI), among others, which has caused in the exponential growth of all size of businesses across the globe.

Our commentary on these stats is a little less starry-eyed. Predicting the future about technologies, even to five years, is a really risky business! That does not mean that it cannot be informative, especially if you put forward possible futures, rather than THE future. It’s probably best to look at trends and where they can lead to and what can upset them. Undoubtedly, these reports are right to suggest a continuing exponential data explosion, fuelled by, and also accelerating the development and application of these automation and digital technologies. Major driving forces will be the productivity shortfalls, skills shortages and economic growth needs that will be increasingly experienced across organisations, sectors and economies to various degrees.

However, accepting these as major trends, how is this all going to happen?
Firstly, technology spend does not equate with value. All organisations have been spending on automation and digital technologies. However, just looking at businesses, we are finding that roughly about 90 percent of the value is going to around 20 percent of the organisations, depending on sector, but even those are securing on average around 68 percent of the value available to the organisation. On a global scale, despite the US$2 trillion expenditure by 2030, many trillions of dollars could be left on the table.

Secondly, we consistently find organisational ability and readiness to develop, deploy and drive value from these technologies is assumed, and so widely overestimated. In practice organisational capability for technological change is not unlimited, and in many cases may well have been eroding over the last few years. This is very likely to continue as a trend. Skills shortages will contribute; likewise, the technologies accelerating at a faster pace than organisations can adopt them. Also factor in legacy systems, siloes in organisations, the challenges of change management and moving to digital cultures, and the fact that many organisations may have limited ‘absorptive capacity’ for digital transformation. All this suggests a slower, more evolutionary path than the digital technology ‘tsunami’ so often predicted.

Thirdly, we need to take account of other ‘drag’ factors. Firstly, as data and technologies become more ubiquitous, they also impact more widely—for good or ill. We cannot afford to underestimate the role of misleading data, poor design, bad actors, and unanticipated ethical and social responsibility challenges. With these technologies, ‘can’ does not automatically equate with should’. Such ‘drag’ factors may well inhibit adoption, and prompt a further ‘drag’, namely more audit and regulation—already almost a decade behind where accelerating technologies have taken us.

But fourthly, none of this is a gospel of despair, more one of realism. Organisations can learn from digital leaders, who are making headway. As we have consistently found over 35 years of working in research, management does make a significant difference, but the primary objective has to be not to drive automation, but to drive value with automation, and likewise with the other digital technologies coming on stream. As Peter Drucker once said: “The best way to predict your future is to create it.”