Ericsson: Dematerialisation is the path to profitability

Dematerialisation – the process of substituting physical products with services and digital products within the ICT sector and other sectors – will not only generate green and sustainability benefits, but is also a key step on the road to business productivity and higher profitability, says research from Ericsson.

Its report, The dematerialisation path to profitability and sustainability – the future of enterprises, says that with this shift, cellular connectivity will be a key enabler for the transition to remote working and increased profitability. Besides the savings on office maintenance, the report suggests that enterprises can now easily set up new branches, contract personnel overseas or run a worldwide cloud-based e-commerce business using the cloud.

In the first report of its Future of Enterprises series, Ericsson IndustryLab asked white-collar workers and ICT decision-makers online about the future of their enterprises. The report is based on 5,000 responses from 11 markets, representing about 175 million employees globally.

The report found that dematerialisation leads to increased value and less consumption of resources, enabling enterprises to “create more with less”. Ericsson defined the dematerialisation front-runner enterprises as the top third of all surveyed enterprises that have reported the most progress in their dematerialisation efforts.

It noted that it may not be surprising that such enterprises are more environmentally sustainable than others, but they also show higher profitability, are better at innovating and are more agile when responding to a changing world.

Of the decision-makers surveyed, just over two-thirds (68%) agreed that the willingness to transform would be very important to the success of companies by 2030. The same percentage of respondents said access to powerful data analytics and data mining capabilities would also be very important by 2030.

Nearly half of the decision-makers believed that improved productivity and profitability were key benefits of dematerialisation and about 40% said the same for sustainability. This, said Ericsson, should be seen as a win-win situation that benefits both enterprises and the environment.

Almost seven in 10 of the surveyed enterprises have reached halfway or beyond in their dematerialisation journey: this can mean moving data and applications to the cloud or switching from physical products to digital products and services. Instead of office-based, three in five businesses expect to move to extended reality (XR), more specifically augmented reality (AR) and virtual reality (VR) devices, cloud and mobile technology.

Ericsson believes that less commuting and a decrease in CO₂ emissions is also a likely result of the shift towards remote working, as seen during the Covid-19 pandemic. But most enterprises are striving to do more than this to increase their sustainability.

One approach to reducing environmental impact, including CO₂ emissions, is to decrease material usage through dematerialisation, said Ericsson. It noted that ICT solutions have the potential to lessen the need for material by substituting physical products with services and digital products.

To achieve a net-zero carbon operation, more than half of the surveyed enterprises said they already use renewable energy for most of their energy needs. The report also showed that as many as four-fifths of decision-makers expect to make significant energy savings by moving towards the cloud.

“Digitisation represents an enormous opportunity to increase enterprise productivity and sustainability,” said Anders Erlandsson, head of Ericsson IndustryLab. “Indeed, digital technology is a key enabler for tackling big challenges such as CO₂ emissions and material usage. The surveyed ICT decision-makers also agree that ICT solutions such as 5G, XR and cloud implementations will be key in their continued journey towards greater sustainability and higher profitability.”