Tieto Future Perspectives Report

Public
Future Perspectives
How digital disruption is shaping the Nordic business landscape
and what business possibilities are emerging?
A Nordics study
2017

© Tieto Corporation
Public
In 2016, Tieto conducted the Foresight 2020 study to understand the
cross-industry business opportunities projected to shape the future of business
into the year 2020.
In 2016 and 2017, Tieto conducted the Future Perspectives study to deepen the insights of
Foresight 2020 in particular. The Future Perspectives study provides expert thoughts and
expectations about how technology-driven opportunities will unfold in the coming half-decade —
specifically, how business models and value chains will be affected and what kinds of business
possibilities will arise now and in the future.
Tieto’s Future Perspectives study was conducted via interviews and a questionnaire survey of 500
executives from a wide variety of industries in three Nordic countries. Data was collected and
analysed by the research company Kairos Future.
Future Perspectives: Nordic
insights on the effects and
possibilities of digital disruption
2

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53%
23%
15%
9%
Sweden
Finland
Norway
Others
500 Nordic respondents
representing a variety of industries
Wide
industry
coverage
25%
15%
12%
10%
9%
9%
5%
5%
5%
4%
2%
Other industries
Financial services
Public services
Energy & utilities
Manufacturing
Healthcare and welfare
Media
Telecom
Retail and wholesale
Forestry
Logistics
0%to30%
Future Perspectives: The scope of the study
Source: Tieto Future Perspectives Research 2017

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Future Perspectives: Key findings
• 40% of senior executives are not worried about disruption
driven by industry innovation coming from insiders and
outsiders
• Nordic executives are not investing in some technology areas,
even though they identified them as containing opportunities.
• Digital disruptions create a Valley of Opportunity — which
makes becoming a pioneer and early adopter the best approach
for success.
• Digital possibilities for the future are opening up faster
than ever.
Future Perspectives:
Key insights
Traditional industries are merging together to forge
new opportunities

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Executive summary
THE CAUSE:
The speed of digital disruption hits a
new gear in the Nordics
Nordic executives expect more radical digital disruption in the
coming five years compared to the past five years.
72% of these executives foresee disruption coming from
outside their own industry.
Retail & wholesale, financial services and media industries are
seen as the industries most heavily disrupted by new tech
players.
THE EFFECT:
We are in the next wave of
business model innovation
82% of Nordic executives believe their value chain will
change drastically over the coming years.
72% of executives believe their current business models
will be obsolete within the next 5 years.
Current business models are anticipated to have shorter
lifespans.

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Executive summary
THE ENABLER:
Culture and leadership are key
to new business possibilities
The digital possibilities in the
Valley of Opportunity can offer
huge business potential.
The best approach is to be
a pioneer or an early adopter.
Culture and leadership are the greatest barriers to
opportunity domains.
WHAT WILL TOMORROW LOOK
LIKE?
Future digital possibilities for Nordic
businesses
In the short term, digital surveillance
and cyber security look to mature into important
Automation in everything — including production of goods, energy and
services — may become a central part of the mid-21st century economy.

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The speed of digital
disruption hits a new gear
in the Nordics

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Key insights
1. The speed of digital disruption hits
a new gear in the Nordics
Digital disruption is getting faster
• Nordic executives expect more radical digital disruption in the
coming five years compared to the past five years.
Digital disruption comes mostly from outside
• 74% of executives foresee disruption coming from
outside their own industry.
New tech players are shaking up traditional industries
• Retail & wholesale, financial services and media industries are
seen as the industries most heavily disrupted
by new tech players.

PublicPublic
We are in a new era
of digital disruption

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Degree of past disruption perceived by executives compared to degree of
disruption that they expect in the future
More radical disruption
expected in the next five years
Past five yearsComing five years
22%
31%
25%
15%
1 2 3 4 5 6 7
0
5
10
20
30
4%
2%
10%
3% 8%
9%
16%
8%
Nonexistent or almost so
Very high, rapidly transforming
industry logic and competition
18%
29%

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Rate of increase in the degree of disruption as perceived by executives
according to their country
Finland
Sweden
Norway
21%
20%
17%
Digital disruption is the new reality
in the Nordics
11

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Rate of increase in the degree of disruption as perceived by
executives in various industries
Digital disruption in most industries
will accelerate
12 Source: Tieto Future Perspectives Research 2017
6%
10%
12%
18%
19%
23%
25%
26%
Media
Public services
Logistics
Healthcare & welfare
Retail & wholesale
Energy & utilities
Financial services
Manufacturing

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of Nordic executives state that the new technology
based start-ups will be the most important drivers
of change for their industry.
44%

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74% foresee disruption coming
from outside their own industry
Actors that executives expect to be key drivers of domains of disruption within their industry
Established markets leaders from
within the industry
Established companies coming
from other industries
New technology based start-ups
Others
44%
28%
26%
3%
Percentages are rounded off

Public
Global insights from the Tieto Foresight 2020 study:
Digital disruption breaks traditional industry boundaries

© Tieto
Corporation
Confidential
Digital disruption breaks industry boundaries
Ecosystems will drive future competitiveness
E-Learning
Digital health
management
Smart health monitoring
homes
Cyber
security
Digital
payments
Real time Retail
On demand
manufacturing
Digital supply
networks
Factory of
the future
Virtual Reality
Smart Home
Smart Traffic
Smart
Grids
Distributed
Generation
Digital public
services
Autonomous
logisticsFinanci
al
Services
Digital
trust
Optimization
through IT
Retail &
Wholesale
New
entrants
Growing
importance of
customer
experience
Knowledge
management
Mass
customization
Manufac-
turing
On demand
economy
(incl. 3D printing)
Sustainable
production
Optimization
Competition
from East
Forest
Structural
changes in
demand
Increasing
consumer
influence
3D printing
On demand
economy M2M /
Industrial
internet
Consolidation
and optimization
Media
Personalization &
Customer Experience
Rise of On
Demand
Informed
patient
customers
Healthcare &
Welfare
Aging
population
Internet of
everything
Public
sector
Stronger citizen
influence
Open public
data uptake
Digital
identification
Shrinking tax
payer base
Energy &
UtilitiesRegulation &
subsidies
Changing customer
demand (control)
Telecoms
Logistics
Next generation
retail
Domotics / Home
Automation
Value added
services
Customer
Experience
Entry to new
industries
Source: Industry Foresight 2020, Tieto 2016

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Actors expected to be key drivers of domains of disruption, according to their industry
Tech start-ups are the main drivers of
digital disruption
22%
22%
6%
32%
10%
22%
31%
34%
Media
Public services
Logistics
Retail & wholesale
Energy & utilities
Financial services
Manufacturing
50%
42%
56%
44%
56%
36%
41%
36%
Established markets
leaders from within the
industry
Established
companies coming
17

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Major changes to value chains broken down by country
38%
34%
51%
24%
32%
27%
Established companies coming
New technology based start-ups
Sweden
Finland
Norway
Disruption by tech-startups is
most evident in Sweden

Public
2
We are in the next wave of
business model innovation
Digital disruption is the new normal in the Nordics
— but what happens now?

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Key insights
2. We are in the next wave of business
model innovation
Many business models will become extinct
• 72% of the executives believe that their current business
models will be obsolescent within the next 5 years.
Value chains will transform
• 82% of Nordic executives believe their value chain
will change drastically over the coming years.
Current business models are anticipated to have
shorter lifespans.

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Value chains will merge across industries, putting
an increasing emphasis on continuous innovation

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of executives believe their value chain will
change drastically over the coming years.
82%

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Traditional value chains will
experience structural changes
Expected structural change in the future of value chains
The industry value chain will be
redefined
The industry value chain will merge
with another industry
The industry value chain will remain
unchanged
Other
58%
23%
18%
1%

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2424
Value chains across
all industries will be affected
Major changes to the value chain, broken down by industry
23%
21%
21%
22%
21%
28%
21%
15%
Media
Public services
Logistics
Retail & wholesale
Energy & utilities
Financial services
Manufacturing
44%
58%
68%
53%
67%
60%
37%
65%
The industry value chain merges
redefined

Public
Watches
OTT content
on tablet
Records a
video blog
25
An example: how the value chain of the media
industry is evolving
The map below illustrates the flow of money between actors in the value chain for a person setting up a business, and it
highlights the potential of different activities in the future.
LowMediumHigh
Estimated level
of disurption
New payment, monetization
models
Automated production,
distribution and marketing
Increase in visual / video
communication
Self-service re-bundling
Person
wakes up
Reads a subscribed
to newspaper
Arrives at
work
Drives to work
listening to
radio
Has several
phone calls
during the day
Collects
advertising
from post box
Buys product on sale, as seen
in newspaper advertising
Watches
linear TV
Writes a
blog post
Media house funded
by advertising and
subscription
Reads a
book
Retailer investing in
TV and Print
advertising
Listens to (and watches)
personalized media
content via car
infotainment system
Video-conferencing,
via same device but
different providers
Digital signage and beacon
technology delivers
targeted ads based on big
data analytics
Video-conferencing,
via same device but
different providers
Generates
revenue from
ads
Produces
novel
content
Targeted
marketing
distributed
digitally
Accesses a media content
aggregators’ platform for
personalized selection of
sources and content
Investing in e.g.
affiliate promotion
model
Watches
customized
personal content
Content selected
automatically
through big data
analytics
Primarily re-
distributes
automatically
collected content
Funded by advertising
and a freemium content
model

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Major changes to value chains broken down by country
58%
60%
64%
24%
22%
21%
The industry value chain merges
redefined
Sweden
Finland
Norway
Almost 2/3 of all executives expect their
value chain to be redefined

Public
Most of today’s
successful
business models
will have shorter
lifespans.

Public
of Nordic executives state that their business model of
today will be obsolete within the next five years.
72%

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29
Media
Logistics
Retail & wholesales
Energy & Utilities
Financial services
Manufacturing
3.1
3.5
5
3.7
4.8
3.5
3.1
4.3
Public Services
The lifespan of a business model
is shrinking further
Years

Public
3
Culture and leadership are the
key to new business possibilities
Digital disruptions create a “Valley of
Opportunity” — domains with huge potential
for companies who recognise these
possibilities.

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31
Key insights
3. Culture and leadership are the key to
new business possibilities
The Valley of Opportunity presents uncharted business
possibilities
• The digital possibilities in the “Valley of Opportunity” can offer huge
potential.
• Leaders acknowledge the opportunities, but do not invest in them.
Leadership and culture needs to develop — or innovation
can falter
• Nordic executives identify culture (51%) and leadership (50%)
as the greatest barriers to seizing opportunities.
The Nordics are early adopters of disruptive technologies.

Public
Estimated
time horizon for
significant impact
2015
2025+
2020
Estimated time
horizon for
significant impact2015 2025+2020
Digital payments On-demand
manufacturing
Autonomous
logistics
Digital supply networks
Real time retail
Digital Identification
Cyber
security
Digital public
services
Smart
Traffic
Factory of
the future
VirtualR
eality
E-Learning
Digital health
management
Smart health
monitoring homes
Distributed
Generation
Smart
Grid
EUR 10–20 billion
EUR 50–100 billion
EUR 100–200 billion
Estimated global market value*
EUR 20–50 billion
* The majority of the opportunities identified in this report
comprise a mix of separate markets and technologies, and
thus exact market values are therefore difficult to specify.
The market value bands identified have been calculated by
adding together market sizes for separate components
belonging to each of the domains.
EUR >200 billion
Foresight 2020 excerpt:
16 previously identified opportunity domains

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New business possibilities are born from digital disruptions
• Under-utilized opportunity domains with huge potential
— especially as businesses and whole industries
continue to digitalize.
• Companies who can seize opportunity domains in the
Valley of opportunity at an early stage are
likely to be big winners.
• Companies should be ready to invest as soon
as a valuable opportunity presents itself.
What is the Valley of
Opportunity?

Public
Nordic executives are
increasingly willing to invest in
the opportunity domains
32%
30%
23%
23%20%
20%
18%
10%
11%
Media
Logistics
Retail & wholesale
Energy & utilities
Financial services
Manufacturing
Public services
Telecom
34

Public
35
Nordic leaders are missing out
in the “Valley of Opportunity”
• Telco enabled
ecosystems
• Factory of the Future
• Smart grids
• Distributed generation
• Virtual reality
• Smart health monitoring systems
• On-demand manufacturing
• Real-time retail
• Smart traffic
• Autonomous logistics
• Digital health management
• E-learning
• Digital supply networks
• Digital public services
• Digital payments
• Cyber security
Valley Of Opportunity
Industry-Specific Society-encompassing
High
investment
readiness
Low
investment
readiness

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Percentage of executives ready to make significant investments in their
chosen opportunity domains, according to country
Finland
Sweden
Norway
24%
17%
18%
Finnish executives pursue competitive
advantages from opportunity domains

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of those who stated that digital public services would be
relevant for their industry in the future showed a high
willingness to invest in this opportunity domain.
However, only 18% of those interested in smart health monitoring
showed a high interest in investing.
52%

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Percentage of executives that cite various factors are essential for exploiting new disruptive
opportunity domains
Culture and leadership are essential for
utilizing new business opportunities
Technology
Leadership
51%
50%
23%
22%14%
13%
Culture
ProcessesAmbition
Ownership
0% - 60%

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Culture and leadership
can also be the greatest
barriers to opportunity
domains.

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of executives consider culture as the
most important barrier to exploring technology-driven
51%

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Being a pioneer
is the best approach to
utilizing these opportunity
domains and building
competitive advantages.

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of executives aged 30–39 preferred to be early adopters
or pioneers.
And 61% stated that their business had taken
this strategic posture.
67%

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A forward-leaning strategy is preferred in order to deliver future success
The wide gap between reality
and desired state as a pioneer
State that their own organization is
a pioneer or early adopter
Believe being a pioneer or early
adopter is the ideal strategic posture
40%
31%
20%
40%
26%
32%
47%
28%
Media
Logistics
Public services
Retail & wholesale
Energy & utilities
Healthcare and welfare
Manufacturing
58%
48%
68%
73%
65%
56%
50%
53%
Financial services
43

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of pioneers considered culture the most important
barrier to change.
Conversely, only 38%of late followers listed this
as a key challenge.
62%

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4
Future digital possibilities for
Nordic businesses
How will the business models of the future look
and what possibilities will emerge?

Public
Telecom companies have
more detailed data about
the citizens of the Nordic
countries than their
government do.
More than half of all
companies employ cyber
security firms to protect
their data.
Digitally monitoring supply
chains at least 12 months
in advance is the industry
norm, which ensures on-
time and appropriate
deliveries.
Digital disruptions on the horizon
2020 2025
30% of the top 50 retail
chains feature virtual
reality stores, allowing
customers to try products
via VR.
50% of customer service
in Europe (call center
activities by voice or text)
are performed by
software.
It becomes possible for
industries to custom-order
a computer component
from a factory and receive
the first shipment the
following day.
MOOCs (massive online
open courses) completely
replace conventional
corporate training for most
major companies.
More than half of senior
citizens (over 65) use a
digital health monitoring
device on at least a daily
basis.
More than 10% of Nordic
households produce and
sell excess energy to the
grid.
How do Nordic executives see the future unfolding?
46

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Fleets of autonomous
taxis will be cruising the
streets to pick up
passengers in the Nordic
countries.
Digital disruptions on the horizon
2030 2035
30% of all home-based
elderly care is supported
by smart homes
monitoring the status and
activities of individuals.
Energy loss due to
transmission and
distribution of energy falls
to less than 1%.
The official land registry of
a Nordic country is stored
in a block chain for the
first time.
3D printers outnumber
humans in most modern
factories.
Traffic lights become
obsolete in at least one of
the Nordic capitals.
Beyond 20 years from now
A Nordic state adopts
Bitcoin or a similar
cryptocurrency as its
official national currency.
How do Nordic executives see the future unfolding?

PublicPublic
What is your next move? Will you be the one defining
tomorrow’s business opportunities or following the pioneers.
The choice is yours.

Public
Ahmad Qureshi
Head of Tieto Digitalization and Strategic Development
Ahmad.Qureshi@tieto.com
Raghunath Koduvayur
Head of Strategic Marketing
Raghunath.Koduvayur@tieto.com
Päivi Huuhtanen
Head of Digital Communications and External Affairs
paivi.huuhtanen@tieto.com

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