In addition to the areas mentioned in the previous part, there are several prominent areas that have achieved significant growth through breakthroughs in technology and business models, and they have been important drivers of global economic change between 2005 and 2020 through continuous R&D investment and model innovation.
1. Software: SaaS leads the innovation of business models
The revolution in the software space began with the rise of the SaaS (Software as a Service) model. For example, Microsoft officially launched Office 365 in 2013 (testing began back in 2010), and Adobe transformed its Creative Suite into Creative Cloud. In order to improve customer lifetime value, major software companies have increased R&D investment, focusing on user experience and feature optimization.
Customer relationship management (CRM) software companies such as Salesforce and enterprise resource planning (ERP) software providers such as Oracle and SAP are accelerating their transformation in this trend. Salesforce, for example, invested $9.8 million in R&D in fiscal 2005 and grew to $2.8 billion in 2020. Oracle's R&D investment increased from $1.5 billion to $6.1 billion over the same period, while SAP increased from €1.1 billion to €4.5 billion.
At the same time, the enhancement of cloud computing capabilities, the improvement of Internet speeds, and the continuous expansion of use scenarios have made SaaS more popular. The revenue of the entire software industry increased from $64 billion in 2005 to $341 billion in 2020, with an average annual growth rate of 12%.
2. Information-driven business services: from outsourcing to intelligence
With the development of outsourcing and offshoring services, the information-driven service industry has undergone a major transformation, covering the transformation and upgrading of business process outsourcing, IT services and knowledge-based services. Digital technologies, increased computing power, and advances in communication technologies have enabled companies to combine technology assets to provide services instead of relying solely on human resources.
In order to expand their technical capabilities and data resources, industry giants have achieved rapid expansion through mergers and acquisitions. For example, ADP completed 28 acquisitions between 2005 and 2020, while the credit triumvirate of Equifax, Experian and TransUnion combined for about 150 acquisitions. The sector has grown rapidly in the context of globalization and the development of the knowledge economy, with revenues increasing from $53 billion to $154 billion, with an average annual growth rate of 7%.
Fig: Continuous R&D and investment in the industry have become an important driving force for economic change
3. Payment: Digitalization has promoted the leap forward of the payment system
The payments industry has taken a leap forward with the help of digital technology, making online payments faster, cheaper, and more convenient than traditional payment methods. Enterprises invest heavily in marketing to win over merchants and users, forming a strong network effect, while increasing technology research and development in security, fraud detection, and user experience to enhance the overall value proposition.
From 2005 to 2020, the global revenue of the payment industry rose from $493 billion to $1.6 trillion, with an average annual growth rate of 8%. The Asia-Pacific region, especially China, contributed the main growth, with the Asia-Pacific region accounting for more than half of the world's payment revenue by 2020.
4. Cloud services: The pay-as-you-go model subverts IT infrastructure
The advent of cloud services has revolutionized the way enterprises build and operate their IT infrastructure. Compared with traditional "buyout" hardware investments, the pay-as-you-go model of cloud services greatly lowers the threshold for enterprise IT spending and brings greater flexibility.
Thanks to the popularization of the Internet, cloud computing has become rapidly popular. Service providers are investing heavily in data centers to optimize economies of scale, improve cost-effectiveness, and provide localized and energy-efficient services. At the same time, they continue to ramp up their research and development to introduce more value-added services, such as advanced security options, data analysis tools, and easy-to-integrate APIs.
In 2005, almost all of enterprise IT spending was focused on on-premise solutions; In 2020, $370 billion of the $1.1 trillion in global IT spending was spent on cloud services, accounting for more than one-third.
5. Electric vehicles: technological breakthroughs lead industrial transformation
The development of the electric vehicle industry depends on the rapid improvement of battery and electric drive system technology, as well as the continuous optimization of vehicle integration technology. Companies are increasing their R&D efforts to reduce costs, improve performance, and promote software updates similar to the "Car App Store" to improve the vehicle experience.
At the same time, companies are also increasing marketing investment to convey product competitiveness to consumers. The electric vehicle market is gradually eating into the market share of traditional internal combustion engine vehicles. In 2005, the global revenue of the traditional automotive industry was $1.7 trillion, which increased to $2.4 trillion in 2020, and the revenue of electric vehicles has also reached $100 billion, accounting for nearly 5% of the revenue of the traditional automotive industry.
6. Other industries: lack of technology or investment mechanism is difficult to become an "arena"
Although the apparel and luxury goods industry has also achieved some growth over the past 15 years, the industry is still dominated by a few established players due to the lack of major changes in technology or business models, and lacks the "arena" style of competition. In contrast, the oil and gas industry has achieved technological breakthroughs such as horizontal drilling and hydraulic fracturing in shale oil, but it has mostly invested in sunk costs and a lack of sustainable investment upgrades, so growth is more affected by global events and supply and demand fluctuations than by its own continuous innovation.
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18 Potential Arenas of the Future That Could Reshape the Global Economy (1)
18 Potential Arenas of the Future That Could Reshape the Global Economy (2)
18 Potential Arenas of the Future That Could Reshape the Global Economy (3)
18 Potential Arenas of the Future That Could Reshape the Global Economy (4)
18 Potential Arenas of the Future That Could Reshape the Global Economy (5)
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18 Potential Arenas of the Future That Could Reshape the Global Economy (13) 18 Potential Arenas of the Future That Could Reshape the Global Economy (14)
