Kathy Gibson is at Satnac in Hermanus – While optimists look forward to the benefits to be brought by the 4th industrial revolution, pessimists believe it might deepen divides and create more inequality than ever.

“There have been so many tech waves, that many people think the talk of the 4th industrial revolution is just another one; and we will move on as before,” says Dr Brian Armstrong, WBS chair at University of the Witwatersrand.

“The believers think it will bring fundamental change, and bring it quickly.”

Depending on where you sit in the digital vortex colours people’s ideas about this, Dr Armstrong tells delegates at the Satnac conference.

Businesses in media and entertainment, and technology products and services are in the middle of the vortex; while retail and financial services are on the cusp.

Meanwhile, telecoms, education, hospitality and travel, professional services, consumer packaged goods and manufacturing are starting to see disruption in their markets.

He says the 4th industrial revolution is the coming together of three forces. They are technology, society and business.

“We all talk about platform business models, peer to peer, business to business, business to consumer, about design thinking. New companies are more about the business model than the technology.”

The intersection of these forces is where the fourth industrial revolution happens, he adds.

But the revolution has to be about business value, Dr Armstrong says. “But the accountants haven’t yet figured out how to reflect the value of things like data.

“This is why people get sceptical about the value and reality of the 4th industrial revolution.”

There are ways to measure the value, Dr Armstrong has found – but it is difficult to pinpoint it. On a national level, digital readiness doesn’t necessarily translate to better GDP.

On an industry and individual company level, however, there is a significant correlation.

Those companies that haven’t transformed show poor shareholder returns, while those they have transformed show a CAGR of 9%. The true digital native players are seeing 40% CAGR.

In the technology sector, there is no question that those that have transformed sow significant shareholder value.”

There is also a correlation between the digital readiness of the market and financial performance. “There is an astonishing degree of correlation between the digital readiness of markets and the companies operating in them – there is tremendous value opportunity.”

Further, company value improves with ICT transformation. Studies show that increasing levels of ICT transformation lead to material wealth creation.

“So there is compelling evidence that, in a true economic sense, increasing levels of digital transformation improves shareholder value and increases the value of the business.”

However, it is true that technology can help to increase inequality, Dr Armstrong adds.

In South Africa, one-quarter of the population earns three-quarters of the household income, lives in formal urban areas and is well-connected.

On the other end of economic and digital divide are three-quarters of the population. The question is whether the divide is getting shallower or deeper.

“If we want to address inequality we need to look at concentration,” Dr Armstrong adds.

We are seeing significant evidence that concentration is increasing, with higher markups and increased profits demonstrating that it is happening.

Possible cause are superstar companies, mergers and acquisitions, anti-competitive regulation, the network effect, and big data-enabled price discrimination.

“But we are seeing the biggest evidence of concentration in the technology or digital sector,” Dr Armstrong adds.

“The more dematerialised the product or service becomes, the greater potential for concentration you see.”

The real issue is how we think about concentration in the digital world, he says. And this mean a redistribution from the digital centres of the world to other areas.

The 4th industrial revolution will mainly be felt in the area of jobs.

Automating core processes is less about making things cheaper and more about eliminating human subjectivity and weaknesses; achieving scalability; decreasing compute time; and eliminating errors.

Human beings, on the other hand, are still adaptable and resilient.

The optimists say about the future of work that technology will grow the economy, machines and workers will co-exist, technology creates new jobs; and technology democratises work. The pessimist view is that technology and automation will put humans out of work.

“What is different in the 4th industrial revolution is the speed of change, he adds. “In previous industrial revolutions we had a generation or more to adapt. Now we don’t have that time.”

He believes that, when it comes to work, people will still be at the top of the pile. “But routine work, that is fact or analysis heavy, will be automated.”

Functions that are high in genuinely creative or relationship intelligence, and unstructured dexterity will still be dominated by humans. But structured physical work will be automated.

“How do we prepare ourselves for this?” Dr Armstrong asks. “Anything from 10% to 17% of jobs will be impacted, and the situation in developing nations will be worse.”

Education is still be most pressing issue, with South Africa facing a massive skills deficit.

Critical infrastructure has to be in place to enable digitalisation, and this must embrace the technology fabric, physical fabric, financial fabric and innovation fabric.