Published: 20. 9. 2017 in Blog

Serbia and the fourth industrial revolution

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In digital economy, the most important resources are data and information.  They diminish the necessary investments in material assets, which definitely benefits countries with less wealth at their disposal. In the past, 90% of value in USA's 500 biggest companies was comprised of material resources, whereas today Google, Amazon, Apple and Uber create value in a new way.

Article from magazine "NIN"

Growth based on knowledge

In digital economy, the most important resources are data and information.  They diminish the necessary investments in material assets, which definitely benefits countries with less wealth at their disposal. In the past, 90% of value in USA's 500 biggest companies was comprised of material resources, whereas today Google, Amazon, Apple and Uber create value in a new way.

Serbian prime minister Ana Brnabić has dedicated almost 13 out of 102 pages of her exposé to digitalization and various considerations on how Serbia could benefit from the possibilities of the fourth, digital industrial revolution. "Our lives will fundamentally change, and we will see an increase in efficiency, reduction of costs, and creation of new value in almost every aspect of life and business." As an illustration of this, it has been stated that the IT industry has a 10% share of the GDP, grows faster than any other industry branch, and "the profit of an average IT company is 560 times larger than that of an average traditional company with the same number of employees."

The necessary prerequisites and actions have been defined, such as the development of the telecommunication infrastructure (enabling fast Internet connections in all households by 2020.), the use of cloud technology for Public Authority, the development of the e-Government portal with the usage of e-documentation and e-payments. The digital revolution will influence all industry branches, and Serbia will encourage the digitalization of agricultural, food and automobile industries... The new legal framework will support innovation and enable the use of modern sources of funding.  The tax policies will be changed so as to support investments and digitalization through tax reliefs and tax cuts. Entrepreneurial capital funds will be opened, to enable micro and mass financing.

Why is this one of the focal points of development for Serbia?

Reason number one is that, in the digital economy, the most important resources are data and information (intangible assets), and they enable the processes of dematerialization, economic growth, division, automatization and globalization. This reduces the necessary investments in tangible assets, which definitely benefits countries with less wealth at their disposal. Forty years ago, 90% of value of USA's 500 largest companies was comprised of material resources, and today the value is contained in intangible assets - Google, Amazon, Apple and Uber create value in a new way.

Changes are already all around us, and people with smartphones in hand can be seen everywhere. Communication has moved to e-mail, Viber, WhatsApp, we follow our friends on Facebook, and get business news on LinkedIn. Vinyl records, VHS tapes, CDs and DVDs have all gone extinct and streaming is the basic source of music and video content. The number of Netflix uses is on the rise, Encyclopedia Britannica has stopped publishing printed editions, and Wikipedia is an excellent free source of encyclopedic information. In the past, we used to purchase airplane tickets in agencies or directly from airlines, we have patiently waited in line and negotiated with airport employees to give us the aisle seat we wanted. Today, in most cases, we take these airline employee duties onto ourselves. Digital economy has, in addition to physical points of contact with clients, also introduced Internet and mobile platforms, and social networks. The opening of these channels requires significantly smaller investments, and they also enable a global access to the market.

Data is gathered from classic internal sources (company employees), but also from digital channels, which significantly increases the amount of data, and by processing this data, valuable information is generated for both the customer and the company - from guiding the user from point A to point B (by using the location data of the user and the destination, value is created by guiding the user along the optimal route to the destination), to complex analysis of data on airplane engine efficiency, which optimizes fuel consumption, all the way to personalizing the offers for clients based on their behavior and activities in the previous period.

Automatization and robotization of business processes decrease expenses and enable immediate or very fast execution of tasks in banking, eGovernment portal requests or Internet shopping. Automatization is achieved through software solutions and algorithms, which again reduces the costs, and increases speed and accuracy.

These fundamental changes will increase value, reduce expenses and accelerate progress if regulations do indeed change, and then are applied properly, thus encouraging entrepreneurship and secures the further development of infrastructure and platform.

Branislav Vujinović, New Frontier Group Director.

In Serbia, the IT industry already contributes more than 10% to the GDP, grows faster than any other industry branch, and the profit of an average IT company is 560 times larger than that of a traditional company with the same number of employees.

Branislav Vujovic

Branislav Vujovic

President New Frontier Group
Strive to become better

Branislav Vujovic is founder and also president of New Frontier Group and has overall responsibility for the New Frontier Group, with special focus on Innovation, M&A strategy, group strategy and investor relationship.

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