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Understanding how digitalization works

One of the things that we are persistently discussing at Ubirch is what we call: the “inner mechanics” of the digitalization. It’s obvious, that something is hitting us right now the world over: the digital revolution! And it does not only affect how we make friendships and how our political systems work, but it’s patterns can be – and will be – applied to almost any sector of our society. And for sure every sector, where we do business.

Therefore we consistently go about working on slides that help in understanding what it means for an industry, if it gets hit by that digital revolution. Because it’s much easier to prepare for it, once you understand how it works and what will happen. Fortunately not all industries get hit at the same time. There is good evidence that certain sectors, namely the Media industry and maybe also the Telco and Finance sector had to deal with it, first. The whole system how media content is consumed and gets funded has been reshaped over the last 15 years. New digital players took away what used to be the core business of publishers, newspapers and media companies. Because they understood the power of digital ad-distribution better and were more assertive in applying the new technologies. Now, you’re dealing with your bank over the internet. And your phone-calls are IP-based since quite some time, too.

So what are common patterns that we identified, and what is our core slide about at the moment. It is this:

What we are trying to relate with this is the following: The digital revolution comes on the quiet.

1: It usually starts with placing things on the internet. Often, in the beginning, for weird reasons or sometimes just for fun. With the upcoming 5G standard and new battery-friendly ways of using cellular uplinks we will see this at an increasing speed. 5G is built for IoT and it means: everything will get connected and interconnected soon. Machines, chairs, cars, traffic lights and even things in our homes and in our bodies.

2a: The next observation is that these sensors and uplinks are creating something new – a digital representation of the actual device that got connected. The more sensors you add and the quicker the uplink works (5G will offer up to 1ms of latency), the more accurately this digital shadow or digital twin is going to represent the real object. Sometimes it will even be more precise than if you would inspect the real object, think of deeply embedded sensors in a machine that are measuring the machine’s “vital signs”. Or embedded AI algorithms that can detect minimal deviations within vibration of a machine. The digital twin starts to become a new, sometimes even richer reality.

2b: Yet it doesn’t end here – you could still argue that the digital sphere is only mirroring the real world and not making any substantial difference. But the next layer comes in quickly; it’s when for the first time the arrows are pointing downwards. Changes in the digital sphere are starting to affect the real world. Think of the famous stuxnet hack to the centrifuges in Iran. These machines self-destructed because somebody was able to change some critical parameters in their digital representation (the machine controller).

3: And still the digital revolution has not yet played out its full potential. That happens, when suddenly new arrows and connections are being established inside the digital sphere only. Machines are measuring how they are being used and the data is transferred to an ERP system in the cloud to create an invoice (“machine as a service”). Energy consumption is logged into the blockchain and digital certificates are used to prove true green production vs greenwashing. Trucks are sending signals to factories in order to synchronize data driven, smart production chains. All these new business processes are then possible, because the digital sphere offers a much better way of doing things. One of the main reasons why this works so well is the drastically reduced transaction cost of a digital process, versus a process in physical reality. Think of machine maintenance: in the past someone had to drive to a factory, gain entrance, check some parameters at a machine and maybe fill in some fresh oil or exchange a part. Or maybe not, because the machine was in fact doing just fine. In the digital sphere the machine will detect upcoming errors and problems by itself, communicate with a backend and service company and not only call the service guy, but also tell him exactly what spare parts are needed. No one will do maintenance in the old way anymore once this is available; it’s simply much cheaper and more effective.

But this in turn means: everything that can be uploaded to the digital layer and done there, will get uploaded. The old-style process has no chance to survive against its new digital sister once she is alive. For industries and our clients this means: digitalization is not an option or a new feature – it’s a question of staying in business or not.

Oh, and maybe you are asking yourself what Ubirch has to do with all this? It’s easy: we secure the arrows by sealing them and making them immutable, hence irrefutable. Our technology makes it possible, that the data that creates the digital sphere can be verified and that a connected machine or e.g. an AGV or an industrial garage door creates an immutable log of every action. Only with such high levels of trust and certainty new business will flourish.

 

Name of author

Name: Stephan Noller

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