What is the metaverse?
The metaverse is an all-encompassing term for a virtual universe in which humans use extended reality (XR) technologies—augmented reality (AR), virtual reality (VR), and mixed reality (MR)—to interact virtually with one another. The metaverse does not refer to any one specific type of technology, but rather a new way of interacting with technology. Essentially, the metaverse is a 3D version of the internet—a digital world that exists in parallel with the physical world.
The metaverse is tough to explain for one reason: It is still in its infancy. It’s partly a vision for the future of the internet and partly a catch-all term for the world of immersive online gaming and 3D virtual worlds.
Many technologists say it will be virtual reality on another level, a fully immersive digital world—you’ll be able to buy land, attend concerts, get married, host parties—just about anything you can do in the real world. Every individual who participates in the metaverse will have a digital avatar which they can use to interact with other players’ avatars and explore the digital world.
Here are set of attributes that are associated with the metaverse:
- Real-time 3D computer graphics and personalized avatars
- Person-to-person social interactions that are more immersive and casual than stereotypical games
- Support for users creating their own virtual items and environments
- Transactions take place in a virtual digital economy where companies produce virtual goods and services that consumers can purchase
- Interfaces with virtual and augmented reality headsets
How will the metaverse be different than the internet?
The metaverse is not in direct competition with the internet—it is simply an extension of the internet. With the internet, you can be online without necessarily interacting with other people, but the foundation of the metaverse is about digital human interaction. The metaverse includes a whole array of emerging technologies—blockchain, NFTs, and more—to facilitate peer-to-peer transactions and decentralize the virtual economy.
Self-sovereignty of identity management
Currently, a central organization, such as Amazon or Google, manages users’ identity on the internet and gives them access to third-party sites and applications. That is expected to change in the metaverse. The identity management concept in Web 3.0, is reversing and decentralizing the present way that users manage their identity on the internet. The Web 3.0 concept allows for the users to take ownership of their identity. This is accomplished through the use of a cryptocurrency wallet with signing functionality, which becomes the user’s identity in the virtual space.
Decentralized finance (DeFi)
Decentralized finance refers to a new, internet native financial system, built on blockchain technology. DeFi uses blockchain technology to facilitate transactions without the need for financial intermediaries, such as a bank or a broker. This happens on the basis of so-called smart contracts, which are programmed in the blockchain as a means of exchanging value in a trustless environment. This concept has disruptive potential, not only for the financial services industry, but also for many other industries as the global financial system decentralizes over time.
Industry-leading blockchain solutions
NFT
The NFT (non-fungible token) is a uniquely identifiable token representing a physical or digital object on a blockchain, thanks to its identifiable and indivisible properties. These properties open up possibilities to use NFTs as digital certificates, proof of ownership, and as a basis for value exchanges in digital and virtual environments. NFTs have gained massive popularity in recent years, with many companies launching their own NFT projects and several pieces of NFT-based electronic art selling for millions of dollars in online auctions. Businesses looking to compete in the metaverse need to embrace blockchain technology as they develop plans for capturing this growth market.
What are the origins of the metaverse?
The term “metaverse” was coined in the 1990s by author Neal Stephenson in his sci-fi novel Snow Crash. Stephenson described the metaverse as a futuristic, fully immersive digital world that exists in opposition to the physical world. The term “metaverse” is a made-up word that combines the prefix “meta” and the word “universe.”
The metaverse has become synonymous with Web 3.0, a concept for a future iteration of the internet that will be more decentralized.
How do you access the metaverse?
“At this point, you have multiple platforms that offer experiences in virtual reality, augmented reality, and extended reality, which are like the different apps you could download from the App Store,” says Ibrahim Baggili, a cybersecurity expert and the founding director of the Connecticut Institute of Technology at the University of New Haven. “But there isn’t a single portal that people can use to access it, kind of like how Yahoo created a portal to use the internet in its early days.”
Which companies are building the metaverse?
The term “metaverse” made nary a blip on search engines until October 2021, when it peaked dramatically following Facebook’s announcement that it was changing its name to Meta. Everyone, it seemed, wanted to know what it was. Definitions abound, largely based on the offerings of companies, such as Epic Games (creators of Fortnite), Microsoft (which owns Minecraft), Roblox (creators of other user-created immersive content), and, of course, Meta.
Regardless of who you ask, all discussions of the metaverse describe an immersive experience that relies on virtual and/or augmented reality to transport users into a digital world that feels “real.” Right now, that largely happens in online gaming, but other use cases are cropping up within gaming environments: a live concert or sporting event where users can “attend” using VR headsets; educational experiences in which students can interact with lab items, instructors, and each other; and a fashion boutique where users can buy outfits and accessories for their avatars. The metaverse can also enter the real world using augmented reality: think of Pokémon Go all the way up to hologram TV screens in living rooms visible with AR glasses.
What is the business opportunity for the metaverse?
It is difficult to predict the size of the market opportunity for the metaverse. Goldman Sachs estimated that the global opportunity could range from $2.6 trillion to $12.5 trillion in the next few years.
Even the low end of that range represents billions of transactions and terabytes of data to manage. The speed at which IT infrastructure has developed in the last twenty years leaves no doubt that infrastructure providers will be ready to handle the workload—but when it comes to enterprise management and enterprise resource planning software, not all systems that are currently in place will be ready to monetize the opportunity.
How do ERP systems need to evolve to handle it all?
The ability to provide immersive user experiences opens entirely new opportunities for businesses, starting with the entertainment industry. Studios, networks, and even independent producers could add elements of virtual reality to their movies or TV shows, then offer them as subscription services (think Disney+ in 3D) or one-off transactions, such as pay-per-view.
Virtual goods are already being bought and sold online. Take, for example, the fashion company Gucci, which partnered with Roblox to create a virtual space that included a store, museum, and restaurant. One virtual handbag even sold for more than its $3,400 real-life counterpart. Chipotle, Vans, and Nike created similar experiences on Roblox. The best approach to the metaverse, however, might be an incremental one, starting with augmented reality or 2D online experiences before diving into fully immersive, 3D experiences.
How can businesses compete in the metaverse?
Cloud ERP systems can provide the commercial backbone of an organization’s foray into the metaverse—if they have the flexibility and scalability to evolve along with the metaverse itself. They can succeed where legacy on-premises solutions either completely block the path, or need costly extensions and integration projects to add essential functionality.
Capabilities of metaverse-ready ERP systems will have to include:
Flexibility—A monolithic ERP system updated on an annual cadence will not suffice for the rapid change that the metaverse will bring. Organizations must be free to innovate without worrying that their financial systems won’t be able to keep up. Any solution will need the ability to rapidly add new capabilities as the need arises. In addition, the early years are likely to see a great deal of M&A activity. The best ERP systems will be those that can connect with and merge disparate systems as seamlessly as possible.
Scalability and performance—The metaverse represents a scale that only a small number of global organizations can currently achieve. Any ERP solution would have to be able to handle large transaction volumes in real time, without lag or delay.
Subscription support—Subscriptions represent a huge opportunity for recurring revenue, but they also create unique administrative challenges. Your ERP should be able to manage subscription billing at scale without difficulty, and account for the revenue recognition guidelines that apply to recurring revenue.
Cryptocurrency—It’s likely that cryptocurrency and other blockchain technologies will become ubiquitous in the metaverse, so any ERP system used to support commerce must support these technologies.
Security—Greater complexity and scale mean greater risk. The security of an end-to-end ERP system will be of paramount importance, especially when it comes to building trust with consumers with an unfamiliar technology.
The metaverse may be virtual, but the business opportunities it represents are very real. Enterprises need a highly flexible and scalable ERP backbone to free up innovation as they stake their claim in the latest technological frontier.