After witnessing years of AR pilots and false starts, plenty of observers think the state of augmented reality is still “wait-and-see.” However, it’s getting more difficult to ignore the growing number of companies with AR implementations generating real results.
To analyze the state of AR, Cognizant’s Center for the Future of Work partnered with Oxford Economics to ask 300 senior leaders about their views on the current and expected dynamics of the AR market. We also conducted a half-day roundtable session in partnership with the Haas School of Business at UC Berkeley to gather anecdotes and lessons learned from industry practitioners and academics.
One-third of our study respondents have scaled their AR initiatives into full implementations and are already capturing substantial value and accelerating their AR future plans. This suggests that, at long last, the AR market is ready to break out of the seemingly interminable stage of pilot-only projects.
Key findings of our study include:
You may have noticed that the AR world is divided into two camps of “believers” and “non-believers.” In our study, business leaders were evenly split as to when they foresaw AR becoming a mature technology that is accepted, established and in widespread use (see figure below).
But while that might make it seem safe enough to “wait it out,” a closer look reveals the near-horizon camp has a distinct edge. Of all 300 respondents, one-third have already implemented an AR initiative at scale, a group we call the “experts.” Of that group, 80% (a total of 85) have not only implemented AR but also expect to be ahead, or far ahead, of their competitors in three years’ time. We call this group the “pioneers.” The vast majority of this latter group (75%) believe AR will be a reality sooner rather than later. For them, AR equates to real results.
Of all the ways AR will impact the workplace, substantial redesign of business processes is far and away the most notable, according to 82% of respondents. In fact, while the emphasis for AR today is business-to-consumer (B2C) in nature — and will continue to be over the next three years — our findings suggest a growing interest in internal work and business processes. While just 19% of “expert” respondents are currently targeting business processes and operations for AR, one-quarter of the full respondent base plans to in the next three years.
By reforming business processes into “AR journeys,” respondents believe workers will be empowered to take a more analytical approach to work (56%) and make better decisions (48%). Rewiring business processes as “journeys” will become a key competency for organizations in the near future.
The value of AR implementations is both quantitative and qualitative in nature. Respondents with scaled AR implementations anticipate 8.2% average top- and bottom-line growth from these initiatives by 2022 (4.3% increase in revenue and 3.9% cost savings). Even greater, however, are the gains in soft benefits.
Over the next three years, brand reputation is anticipated to be the top qualitative benefit, according to 62% of respondents. Not only does this finding correspond with the prevailing focus on B2C applications of AR, but it also underscores how companies see AR technologies as a way to ensure their brand stays up to date with emerging consumer demographics.
Other qualitative outcomes of AR are more tangible, like better equipment utilization. This finding aligns with the increased interest in applying AR to internal business functions. By retrofitting existing equipment in manufacturing plants with AR platforms, businesses can increase speed, accuracy and throughput volumes.
Respondents who’ve already scaled AR implementations (the “expert” group in our study) expressed the highest degree of concern about a range of AR challenges, especially technology readiness (a concern cited by 46% of all respondents). However, it’s important to note that these same businesses are finding ways to forge ahead anyway. While emerging, the technology is not too immature to stand in the way.
A secondary challenge (cited by 29% of respondents) is related to the gnawing concern that AR is a “solution in search of a market” or that consumers won’t be amenable to the cost-value equation. At the same time, only 40% of respondents see having a convincing business case for AR investments as being anything more than a “slight obstacle.”
Roughly 25% of our respondents said structural challenges were the biggest AR concern for their organizations over the next three years. Given the importance of rewiring today’s business processes as AR journeys, organizational change management will be essential.
For 65% of respondents, the “fun and games” aspect of AR is serious business — they believe gaming engines will be the external suppliers of choice for needed AR capabilities. For AR adoption to grow, the massive compute power of gaming engines (like Unity or Epic’s Unreal) will be a critical ingredient.
As things like the AR cloud become important building blocks, gaming engines offer an unlikely source of inspiration for building out AR journeys. These platforms promise to transpose powerful ingredients from the online gaming world to AR, bringing standardization and huge amounts of back-end computing power needed to drive beautifully rendered, immersive 3-D content.
Expert respondents in our study are clear-eyed about the technology, consumer and organizational challenges but are forging ahead anyway to make augmented reality a real reality for their customers, suppliers, employees and partners. All businesses require urgent action and assessment as to the applicability of AR — fast. Like the advent of the smartphone over a decade ago, this moment requires all of us to think differently, because with AR, the journey is the process.