Emerging technologies like virtual reality (VR) and augmented reality (AR) have become important tools for companies of all sizes, and many CFOs are exploring the possibilities from technology, growth, and marketing standpoints.
The transformative potential of these technologies will touch every industry, from entertainment and health care to retail and manufacturing. In fact, VR, AR, and mixed reality (MR) are projected to become a $150 billion market by 2020, according to a recent report from BofA Merrill Lynch Global Research. The report predicts that the technologies will have 250 million to 300 million users by the early 2020s and have long-term potential to capture two-thirds of our leisure time and 50% of our leisure dollars.
Therefore, CFOs will — or should — want to get ahead of the trend by investing in these emerging technologies for their businesses, whether for purposes of business development, sales, or marketing. As new technologies come to market and become affordable for businesses, CFOs are being pressured to adapt their budgets, strategies, and campaigns to incorporate the technologies and meet changing demands from consumers.
Emerging technologies have created abundant opportunities for both the creation of new products and services and as the enhancement of existing ones. Experts anticipate mass-market VR adoption will happen first in gaming and entertainment, due to existing industry expertise and high consumer demand for quality content, but other applications will quickly advance as well.
Here are four ways VR/AR is disrupting companies. CFOs: take note.
Virtual Showrooms Expand Consumer Options
Companies are keeping a close eye on brands such as Jeep and BMW, which are investing in VR and AR capabilities to create virtual showrooms to enhance the customer experience. Car dealerships are developing VR headsets that will allow customers to test drive their dream car on a virtual racetrack, or winding country road, in the comfort of their own homes.
Other companies and brands are exploring innovative ways to connect with consumers and meet changing demands. Demos and interactive tools enhanced by AR/VR promise to significantly improve employee and customer interactions with products and services.
Previews Aren’t Just for the Movies
The ways consumers purchase big-ticket items and improve their property are changing due to these new technologies. AR, for example, is rapidly improving home renovations and remodelings by giving customers a sneak preview into their finished product before they commit, whether by seeing new lighting fixtures or comparing tiles.
This trend reflects how brands and consumers are adapting to an “on-demand” society with consumers looking for instant satisfaction. Hunter Douglas, a window treatment company, already offers an AR app that lets consumers preview how a window treatment will look in their home, before purchase.
Contractors now have the technology to create a 3D walkthrough of what a house will look like before it’s built. The same concept applies to architectural firms that are working on larger-scale residential or commercial buildings, or engineers looking to design bridges and infrastructure in urban areas.
Training for Safety First and Greater Precision
VR/AR technologies are useful in high-risk situations such as surgeries conducted by medical professionals, and technical jobs such as manufacturing and infrastructure. In addition, combat-training exercises, space exploration, and surgical training can all be done with the assistance of VR/AR simulations to reduce cost and danger to human life.
For example, with the use of AR goggles, while performing a complex surgery a surgeon might be able to “see through” a patient’s spine to enable greater surgical precision, or aid a construction worker conducting repairs on a bridge or landmark.
Foundationally speaking, these types of technologies are helpful during on-the-job training in scenarios that would typically be high-risk, expensive, or complex to execute. By investing in these new technologies, CFOs can efficiently train their workforces and invest in the company’s future.
Work Smarter, Not Harder
While budget cuts continue to be an imperative for companies of all sizes, CFOs should be open to exploring the growth opportunities that VR and AR present. Many enterprises and smaller businesses are looking for solutions that will drive long-term efficiencies in logistics.
In a recent pilot project, DHL found that warehouse workers equipped with AR smart glasses could pick objects with 25% greater efficiency and fewer errors. The smart glasses present relevant data and information that is viewable by the user, while freeing both hands to do the actual work. Similarly, Boeing factory trainees assembling a mock airplane wing were 30% faster and 90% more accurate using AR-animated instructions vs. PDF documents.
These uses of VR and AR are a testament to the cost-savings and business opportunities that CFOs should be keeping in mind. Advancements in the technologies continue to provide improvements in productivity, product development, and even supply-chain advancements for businesses, whether through saving time on project management by utilizing VR for data analytics or by driving increased cost savings from a more efficient workforce.
In short, the future is virtually here. Together with other innovation accelerators, AR/VR/MR can help drive efficiencies, increase productivity, change how products are created and delivered, transform established sectors, and create new business opportunities.
As pressure mounts on CFOs and budgets shrink, exploring these new technologies can have long-term effects that help drive bottom-line results. Companies will thrive as this disruption is well underway, thanks to these exciting developments in AR/VR/MR, fueled by VC investment in relevant technologies and mass-market adoption of industry applications by consumers and businesses alike.
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John Todd is executive vice president of global commercial banking for Bank of America Merrill Lynch.