Digital reality: The focus shifts from technology to opportunity has been saved
As the ways in which we interact with technology evolve, the AR/VR revolution has reached a tipping point, with enterprise adoption outpacing the consumer world. Market leaders are shifting their focus from pilots and niche offerings to strategies anchored in prototypes designed for industrialization.
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Over the next decade, advances in digital reality—an amalgamation of augmented reality (AR), virtual reality (VR), mixed reality, 360°, and immersive technologies—will lead to more natural and intuitive ways for technology to better our lives. Indeed, our means of interfacing with digital information will likely no longer be screens and hardware but gestures, emotions, and gazes.
This represents a leap forward comparable to historic transitions from client-server to the web, and web to mobile. And it may already be under way. International Data Corp. (IDC) projects that total spending on AR/VR products and services will soar from $9.1 billion in 2017 to nearly $160 billion in 2021, representing a compound annual growth rate of 113.2 percent.1
What accounts for such explosive growth? Increasingly, companies are shifting their focus from experimenting with “shiny object” AR and VR devices to building mission-critical applications in the enterprise. Consumer-oriented investments in gaming and entertainment continue, but increasingly the real action is happening in the workplace. IDC estimates that industry AR/VR use cases that will attract the largest investments in 2017 are onsite assembly and safety ($339 million), retail showcasing ($250 million), and process manufacturing training ($248 million).2
During the next 18 to 24 months, the digital reality trend will likely gain momentum as more companies pilot use cases and accelerate into production. Some early adopters are now in their second or third iteration of product or service design. Others have taken use cases all the way to industrialization. For example, BMW has incorporated virtual reality into its automobile design process,3 while Air France has deployed “immersive entertainment systems” on some flights that allow passengers wearing VR headsets to watch movies in 3D.4
This trend may accelerate as three promising design breakthroughs are integrated into digital reality systems:
Development of these game-changing capabilities may not happen overnight. Designing user experiences for immersive environments is a fundamentally different process than creating experiences for flat screens. Indeed, it utilizes entirely new languages and patterns. Some design techniques will have to be invented by a new generation of programmers whose skills fit more naturally in Hollywood than in a traditional IT department. Already, we are seeing CIOs enlist film and videogame design veterans with computer-generated image (CGI) expertise to help design VR experiences.5 Meanwhile, the major Hollywood studios are ramping up their own VR content development programs.6
As with any development initiative, there are real IT ecosystem issues to consider, including core integration, cloud deployment, connectivity, and access. What’s more, digital reality’s component parts are still evolving, as are standards and governance strategies. Yet even with these headwinds, digital reality initiatives march steadily forward.
Welcome to the Metaverse.7 It’s time to get to work.
In previous editions of Tech Trends, we examined AR/VR technologies and early use cases through a future-perfect lens, recognizing that broader adoption and commercialization would not happen overnight.8 Well, the future has arrived. The digital reality trend shifts the focus away from technology and firmly toward their development and deployment. As you explore digital reality’s potential for your organization, consider the following opportunity areas:
Many questions about the impact that digital reality technologies could have on IT ecosystems remain unanswered. However, we are far enough along in the immersive journey to know that CIOs should start thinking now about their company’s DR strategies and the computing power required to support them fully.
Storage. The amount of data required to render DR experiences is staggeringly large—and will grow even larger as technologies evolve and new functionality emerges. Consider this: Providing 360° views in VR requires storing each video viewpoint so that users can turn their heads while the video continues to run behind them. Translated, this means that designers need 10 to 20 times the storage capacity that they would need to play a standard HD video file.14 Cloud can likely meet increased storage requirements in a cost-efficient way, but it is not the only option. Perhaps digital reality could also be a forcing function to modernize your approach to data management, governance, and architecture (see Tech Trends 2018: Enterprise data sovereignty for more details).
Core integration. Headgear manufacturers are designing APIs that tie core technologies and business processes into DR experiences. Imagine, for instance, being able to present customer, facility, or product content in a virtual environment. Likewise, imagine being able to use this content in transactions initiated in digital reality. In the near future, deep hooks into ERP/CRM/CMS systems will be a critical component of DR system design.
Analytics. What is the intent behind a gaze? It is currently possible to track the gaze of an individual wearing an augmented reality headset and then, to discern user intent, analyze the data this tracking generates. Eventually it may be possible to use tracking analysis to drive advertising. For example, when an individual gazes at the refrigerator, a pop-up discount to a neighborhood restaurant could appear in that person’s field of vision. But what if it were possible to track an individual’s gaze for 12 hours at a time? The amount of storage needed to support tracking on this scale would be immense. What’s more, analyzing this volume of data in real time would require immersive analytics capabilities far more powerful than those many companies currently deploy.
Bandwidth and networking. At present, few network operators can deliver the bandwidth speeds that AR/VR streaming and 360° experiences require. For example, the kind of low-resolution experience available with many VR displays requires at least 25Mbit/s for streaming; for HD resolutions, the requirement jumps to roughly 80Mbit/s.15 Recent research finds that only 7.1 percent of global connect speeds are above 25Mbit/s.16 Though nascent efforts to develop the intelligent traffic management solutions, compression algorithms, and low-latency/high-throughput capabilities needed for AR/VR are under way, in the short term, bandwidth and networking could slow progress in digital reality initiatives.
Google is no stranger to digital reality: Over the last few years, it has launched Cardboard, Tango, Daydream, and most recently, ARCore. Like many companies operating in the space, it is studying possible use cases, testing ideas, and designing roadmaps. But while some firms aim to make a quick impact with a one-shot device, Google is preparing to launch a series of developmental “chess moves” over the next three to five years that it believes will deliver a powerful virtual experience. These deliberate initiatives are driven by the company’s belief in AR/VR’s long-term potential.
“AR/VR works as a platform not because of portability or personalization but because of its increased intuitiveness,” says Steven Kan, Google’s head of AR/VR global strategy. “The primitives of computer science are input and output. On the output front, display technology has been improving for years, but the claims of ‘immersion’ from bigger screens and higher resolution haven’t fundamentally changed what’s possible. On the input side, we have gone from punch cards to keyboards to touching and swiping. Now we’re able to reach out and touch something. Put those together, and you have the next computing platform. What could be more intuitive than manipulating real or virtual objects that aren’t being viewed on a device but appear right in front of you?”
Google’s AR/VR strategy team is looking to build a full-stack platform—hardware, operating system, and end-user applications. Each layer of the stack has its own trajectory: Hardware, software, and components will have 18-month to three-year development cycles; displays can take five years to develop; and applications can be built in just weeks, months, or quarters. Kan’s team maps out each journey to extrapolate where they will converge, a process he likens to playing a game of chess.
To date, most of Google’s forays into digital reality have targeted the consumer market, but Kan sees the enterprise market playing a key part in the technology’s future. There are use cases delivering hard ROI with today’s technologies to spur business and government investment, even though the timing and trajectory of broader mass adoption remain uncertain. Google has identified four enterprise scenarios that show promise:
Developers are still working on some of the elements needed to expand beyond these use cases, Kan notes. For example, it is still difficult to access 3D models and digital assets: CAD programs were not built with AR and VR in mind, which can lead to rendering problems. Likewise, existing policy management, device management, and enterprise controls for access and entitlements also present challenges. “The initial round of devices were not designed with manageability in mind, though we are able to address this retroactively, much like enterprises did in the early days of smartphones and tablets,” Kan says. That said, competition for already-scarce design and development talent has become fierce as the entertainment and gaming industries ramp up digital reality initiatives.
Even at this early stage, Kan is optimistic about digital reality’s enterprise potential. “We see evidence of positive ROI for these use cases—for example, R&D design times are being shortened by up to 20 percent. The potential for positive ROI is the bedrock of my faith in AR/VR’s enterprise possibilities,” he says, adding, “As long as that potential exists, we’ll figure out how to bring the other puzzle piece together.”
The investments Google has made over the last three years in ARCore, Tango, and Cardboard, among others, have already enhanced the enterprise ecosystem. “When adoption of this technology eventually accelerates, we are confident Google will be able to continue adding value to the ecosystem,” Kan says. “People underestimate how big of an impact this shift will have once it happens.”20
Facebook has set a goal of reaching 1 billion users through virtual reality with Oculus, the VR headset and platform maker it acquired in 2014. Although Facebook is primarily a consumer-focused platform, in the past couple of years it has seen large-scale enterprises adopt its Oculus technology, including the Oculus Rift headset, to assist in training, sales, marketing, and collaboration.
“Our virtual reality products originally were targeted at consumers, but by addressing the social aspect and presence, VR can remove barriers that transcend distance and time in ways that can benefit the enterprise,” says Ash Jhaveri, VP of business development at Facebook and Oculus. “We found people using Oculus headsets to create experiences we wouldn’t have imagined ourselves. They were doing things within their organizations such as finding efficiencies, reducing costs, and improving sales and operations, all with virtual reality. Our new Oculus for Business program is a direct response to this growing interest from business-to-business customers. We’ll be able to better serve demand with a dedicated focus and interest in evolving VR in the workplace.”21
Companies across industries have found rich and varied applications for VR technology:
Oculus is also adding core features to its products to support the enterprise. One upcoming new feature is virtual desktop, which unlocks the PC to turn a user’s desktop screen into a 720-degree command center that provides better access to information to do her job. There are still challenges to address before it becomes ubiquitous, such as the costly price point for screens and panels, rendering clarity, tweaking optics for prolonged use, and developing interfaces that don’t require constant movement of limbs to be effective, but Jhaveri is convinced there will be demand for a virtually immersive workspace.
“As great as we think phones and tablets are, there’s just something magical about unbounded screen space,” he says. “Truly immersive VR experiences trigger emotional responses, which is important for consumer and enterprise adoption. Ultimately, those responses will help you tell stories better, translate relationships, and help grow your business.”
Unity Technologies is a leading game development platform, known for its Unity creation engine, which reaches more than 2 billion devices worldwide.22 With many of the initial forays into virtual and augmented realities being videogames, it’s probably unsurprising that Unity created a development platform for 2D, 3D, VR, and AR experiences. However, Unity’s leadership team is also turning its attention to the enterprise, where the automotive, architecture, aerospace, and creative fields, among others, are looking to digital reality to create rich user experiences for customers and employees.
“Immersive technology is the next computing platform, after mobile,” says Tony Parisi, Unity’s global head of AR/VR strategy. “It will just be a part of daily life, like the mobile phone is today, although form factors and costs will have to evolve before we’ll see mass consumer adoption. We believe most of the interesting activity will be in the enterprise over the next few years.”23
Unity is working with industries far beyond gaming looking to derive value from digital reality tools. For example, the auto industry has taken an interest in using digital reality for tasks as varied as designing vehicles, training operators and service technicians, performing simulations for autonomous vehicle training, and creating compelling marketing and sales experiences. Unity is extending its platform by adding tools that can assist in automobile design. While automakers have used CAD software for years, most continue to use physical prototypes made of clay—which can be a costly and time-consuming proposition. But with 3D environments and digital reality, auto designers can take simple physical mockups and augment them with design geometry, paint and material finishes, and even interactive capabilities in digital prototype equivalents. This can reduce the time to iterate, provide a more realistic experience, enable new ways to collaborate, be cost-effective, and ultimately improve product quality.
Of course, there are challenges ahead in creating digital reality solutions for the enterprise—data integration, enterprise licensing, the logistics of software deployment, and producing product lifecycle management tools to move 3D data around an organization. However, companies are forging ahead, and Unity’s teams continue to evolve its digital reality platform to support their clients’ use cases, including home furniture shopping, equipment-failure diagnosis applications for both industrial and office equipment, and training, merchandising, and store planning for retail.
“The next two to three years will be all about understanding and mastering the medium, with new classes of content creators who can master real-time 3D,” Parisi says. “We can provide platforms, and we will see independents and production studios creating digital reality content to deploy over them. There are tremendous opportunities across many industries.”
How people live, work, and shop is changing rapidly—and so is Walmart. By combining technology and innovation with a commitment to training, skill development, and lifelong learning, we are reinventing our store experience and empowering our people to deliver for customers, grow in their jobs, and have the opportunity for advancement and success.
Our journey began by reviewing how work was getting done in our stores with an eye toward simplification. The result was a complete rewrite of nearly every process used to manage our day-to-day business. We also saw an opportunity to equip our people with mobile technology and a suite of custom-built apps that provide real-time data on everything from sales to availability to customer satisfaction, helping our associates know where they can make the biggest difference. Today, thanks to data and technology, our people are able to manage their stores directly from a tablet on the sales floor.
At the same time, we set out to reinvent our training programs to support the new way of working and skill development our people would need for their future. Our existing online and job-shadowing training programs were replaced with a hands-on classroom experience called Walmart Academy, which will have trained approximately 220,000 associates in 200 sites across the country by the end of the year.
When you do something at that scale, you need to think about how you will teach as well as what you will teach. From the start, we wanted to enhance the training experience with technology. In the academies, the coursework doesn’t require printed or written materials—just tablets, screens, and facilitators. We designed the curriculum to be 25 percent in the classroom and 75 percent on the sales floor, so our people could gain hands-on experience using technology in real-life scenarios.
But not every situation can be easily created on the sales floor—like a spill or the holiday rush. So we began looking for new ways to bring those experiences to life. Around that time, one of our associates saw football players at the University of Arkansas training with virtual reality. While we were exploring ways we might use VR, we hadn’t yet considered it as a way to teach.
We started with one VR headset in one Walmart Academy, with a single-use case: We placed an associate in a virtual store environment and asked her to look for potential problems such as litter on the floor, a spill, or a sign hanging incorrectly. The other trainees observed, in real time, the associate’s interaction with the environment on screens in the classroom. The trainees were fully engaged in the experience, able to clearly visualize the surroundings and the corresponding behaviors. It worked so well that we’re now expanding VR-based training and a wide variety of use cases to all 200 academy locations.
Looking at engagement and recall of the material, the power of virtual reality as a training tool became clear. I’m not sure VR will ever be a 100 percent replacement for real-life sales floor situations, though there is value in being able to experience situations that are difficult to recreate, and using cutting-edge technology makes the experience fun and engaging for our associates.
There is undoubtedly a lasting impact on our associates’ overall experience when they learn from this technology. More than a how-to manual that spells out routine actions and responses, the immersive experience helps build confidence and prepare our people to run great stores.
Technology is reshaping the future of retail, and in order to compete, we must always lean into innovation and try new things. Some will work; some will not. We test, learn, and move on. At one time, in-store Wi-Fi was a novelty—now it’s a table stake. In the same way, we weren’t sure whether VR training would work or if it was just an intriguing idea. Now we know VR is a powerful and effective way to empower our associates and teach them new skills. Combined with our academy training program and handheld technology, it will help drive the transformation of what it means to work (and shop) at Walmart.
With digital reality changing how people interact with data, the environment, and each other, the cyber risk implications of technology systems become even more complex. While no organization is immune to a cyber breach, organizations are expected to secure virtual as well as physical worlds, at a time when the technology is being deployed in critical situations, such as surgical procedures or military training. Rather than viewing these issues as obstacles, meeting them head-on early in the development process can help mitigate cyber risks, enable faster deployment and innovation, and minimize brand and reputational risks.
The risks associated with digital reality are varied, becoming more nuanced and serious as applications are ported onto DR platforms. They can include physical harm, property damage, public safety, and operational disruption. Organizations should view risk management as an expected standard of care, taking into account customer well-being, contractual obligations, and stakeholder expectations. Start with the fundamentals: Issues such as identity and authentication in the virtual world will differ from logging into a laptop with a user name and password. Embedding risk management into the organizational construct—throughout the conceptual, delivery, and run phases of development—is a crucial step in digital transformation.
One aspect to consider is protecting user identity and data. Users upload and generate their own content, then interact with other users. The challenge is protecting that data without sacrificing a rich user experience. This requires a thorough inventory of the data you are extracting and how you are accessing, using, and storing it. The same data privacy and security controls that you implement throughout the rest of your organization should be in place for DR applications. Additionally, determine your internal and customer-facing privacy and data protection policies (including jurisdictions) for DR activities, and communicate those within the organization and to customers.
Another dimension is third-party access to your platform and network. If you use third parties or open-source software to build your platform, you should mitigate the risk of exposing code or sensitive data due to poor or malicious design. Build in security from the start of development, and extend it throughout your technology ecosystem. With today’s pressure around speed to market and first-mover advantage, developers may not consider risk implications until after the fact. Understand the components that enable your DR experience; review the policies and processes of your developers, third-party vendors, and partners; and promote resilience and have them follow your organization’s security protocols.
VR equipment can also pose risks. With users relying on VR headsets and the content served to guide their actions and responses, it is critical to maintain the integrity of the data, device, and infrastructure to minimize physical harm, disorientation, and action triggered by erroneous information. Your technology stack should be monitored and managed on a real-time basis, and assess devices and interfaces to identify points of vulnerability. Enterprise security protocols—including third-party oversight protocols—should be extended or adapted to the DR platform. Thus far, there are few standards regulating VR experiences, and regulations likely will continue to lag behind technological development. However, it is essential to integrate robust controls into the product or platform. Customers expect it, as do regulators and shareholders.
Virtual reality can play an important role in planning for and responding to both physical and cyber threats. It can simulate disasters for response training without putting employees or the organization’s infrastructure in harm’s way. Also, it makes an effective threat-modeling tool for physical and logical threats. In the very near future, VR could allow security professionals to visualize the paths that an adversary might take through a network, building, city block, or industrial facility. It could also provide penetration testers with three-dimensional virtual threat models of applications, software, and solution blueprints.
There’s a global excitement around digital reality’s potential to transform many industries. However, the expected timeframe for adoption is a bit further out than most of the other trends, based on findings from a survey of Deloitte leaders across 10 regions. The opportunities to drive organizational efficiency, make dangerous occupations safer, and augment worker skillsets through virtual and augmented realities are being explored in Africa, Australia, and Latin America, in particular.
In Africa and Latin America, mining companies and other high-risk industries are beginning to experiment with the technology to help mitigate safety risks.24 However, the high costs of initial investment will likely stave off widespread adoption of the technology in those regions for another two to five years.
Australia is already deploying digital reality in the entertainment and retail sectors,25 while real estate, financial services, and education are exploring opportunities as well.26 Leading organizations in the region are integrating multidimensional layers of experience architecture across strategic, digital, and spatial initiatives and are measuring these against key performance indicators. On the European front, organizations are piloting the technology in a variety of contexts, including infrastructure maintenance and retail, but the main barrier to widespread adoption is the low adoption rate of ultra-broadband networks.
Australia is already seeing widespread impact from digital reality while other regions are moving toward large-scale adoption in approximately one to five years. In addition to cost concerns, Deloitte leaders cite the dramatic cultural shift required to work in virtual worlds—specifically in Africa and the Middle East—and a need to reskill the workforce, particularly in Southern Europe and Latin America, as barriers to widespread deployment.
Few companies have fully commercialized their digital reality deployments. Many are just beginning their journeys by learning more about these solutions and surveying the growing AR/VR market. Because DR components are still being tested in enterprise environments, diving headfirst into an ambitious AR/VR initiative could be risky. Consider, instead, taking the following preliminary steps to lay the foundation for larger projects to come:
As more DR use cases accelerate into full production, the idea that immersive technologies could become the “next big platform” seems less like science fiction and more like a reasonable vision of the future. To be sure, challenges remain on digital reality’s path to full commercialization. But these challenges do little to diminish its long-term disruptive potential. Digital reality is poised to transform the way we interact with data and experience the world around us. Are you ready?