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The world’s population is increasingly ageing and urbanisation seems to be happening overnight. Urbanization is mostly a good thing since it leads to improved livelihoods for those who manage to get a piece of the urban life and hold on to it. However, cities now face increasing strain on available resources and infrastructure. To address these challenges, governments are warming up to the concept of smart cities,  embracing the use and implementation of new technologies in transportation, energy, hospitality and other areas with an overall goal to improve the quality of life for their citizens in a sustainable fashion.

 

A smart city is an urban development plan that utilizes various ICT solutions to manage a city’s community services securely. Smart cities use data from hospitals, water and waste management networks, transport systems, libraries, power plants, law enforcement databases and other service areas.

 

This sharing of data across various city assets improves the efficiency of services provided to citizens. City officials can interact directly with their communities and monitor changes in real time through embedded sensors which collect data from citizens to improve their services. City officials analyze the data received through the sensors and process it to discover new patterns, ideas, innovation hacks and pain points for their citizens. On one side the smart city concept tackles inefficiency through actionable insights that make the most efficient use of a city’s assets.
In this way, a smart city is a city that employs the use of technological solutions to enhance existing processes and optimize the delivery of services, encourage sustainable use of resources while at the same time reducing the costs involved in all these processes leading to a high quality of life for its citizens, its visitors and its businesses.

 

Smart cities’ goals should be to:
  • Increase energy efficiency and increase the use of renewable energies through smart power grids. Environmental pressures, potential cost savings and the emergence of new concepts like electric cars are all advantages of increased energy efficiency.
  • Incorporate wearables with technology that enables practical functions and features like activity trackers to track heart rate, blood pressure and other lifestyle conditions. Wearable technology will enable manufacturers to receive feedback from embedded sensors without needing intervention from the human wearer.
  • Integrate connectivity into manufacturing processes to better run factories. The smart factory moves from the traditional supply chain processes to a fully connected system that uses data from operations and production systems to learn and improve the entire value chain on-the-go.
  • Apply omnipresent computing to a home environment through advanced systems for security, lighting, air conditioning and entertainment, among other uses. A smart home will offer improved quality of life by automating control of home appliances and assistive services.
  • Create, restore and extend the human body capabilities through neuroimplants, brain power boosting drugs, human germline engineering ( changes made to the genes of our reproductive cells -the egg and sperm), nutritional supplements, prosthetics, growth hormones etc.
  • Create secure, smart contracts written in software that are capable of automatically enforcing without intervention by a third party. Smart contracts will be made possible by blockchain technology.
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The internet is the foundation of digital transformation. It has been rapidly evolving in terms of volume and performance allowing the emergence of new disruptive technologies. Collectively these emerging technologies form the technological foundation of the current phase of digital transformation.

Among these emerging technologies is big data, 3D-printing, smart homes, deep learning and artificial intelligence, machine automation and the inclusion of robots into everyday life, VR (virtual reality) and AR (augmented reality) and the Internet of Things (IoT). This list is not exhaustive or categorized in any order since digital transformation is an ongoing process still taking form.

The basic infrastructure supporting all these emerging technologies heavily relies on cloud computing to deliver on-demand services to customers anywhere anytime.

Cloud computing is the provision of on-demand computing resources over the Internet on a pay-as-you-use basis.
It is one of the most disruptive forces in IT and business history and is a primary basic infrastructure of digital transformation.
Cloud computing is used in business and in consumer environments. In 2016, over $100 billion worth of IT spending was shifted to the cloud, and that number will almost double to over $200 billion by 2020.
Pro-actively and strategically using cloud services tends to boost revenue growth rates for companies.
The Cloud computing can be segmented into three main types:
  1. Public: Public cloud services are provided by companies that offer interested parties access to computing resources over a public network. Users of public clouds do not need to own any supporting infrastructure like software or hardware. These are owned and managed by service providers.
  2. Private: private cloud services are operated for a single organization. All infrastructure can be managed internally or by a third party, and hosted either internally or externally.
  3. Hybrid: A hybrid cloud uses a private cloud foundation combined with strategic integration and use of public cloud services.
  • Platform as a service (PaaS): In PaaS, a third-party provides both hardware and software infrastructure needed for application development to users over the internet. Typically, businesses rely on PaaS providers for key services like application hosting.
  • Software as a service (SaaS): SaaS is basically a development platform provided by a third-party to customers who develop and run applications over the internet without installing the applications in their own data centers.
  • Infrastructure as a service (IaaS): IaaS is a way of delivering virtualized computing resources – servers, storage, network and operating systems – over the internet.

Cloud characteristics

Some of the defining characteristics of cloud computing are:
  • On-demand self-service: end users receive services as needed to meet fluctuating needs efficiently.
  • Responsiveness: Ability to access cloud service via different platforms (desktop, laptop, mobile etc)
  • Resource pooling: Resources are pooled across multiple customers.
  • Elasticity: Dynamic adaptation of capacity thus allowing the system to adapt to workload changes autonomously.
  • Measured Service: Billing is metered and delivered as a utility service.

Cloud Pros and Cons

Pros

  • Ease of scalability: Easy to grow applications.
  • Convenience: Scalability at short notice.
  • Cost-effective: pay only for what you use which means reduced infrastructure and upfront costs.
  • SLAs: Everything under cloud computing services is managed under Service Level Agreements (SLAs).
  • Environmental benefits: lower carbon emissions of many users efficiently sharing large systems results in overall environmental benefit.

Cons

  • Greater dependency on service providers puts the company in a reactionary position since problems have to be resolved by a third-party. Even with SLAs there’s no guarantee problems will be solved quickly.
  • Risk of being locked into proprietary or vendor- recommended systems. How easily users can you migrate to another system or service provider if there is a need to?
  • What happens if a cloud service provider decides to stop supporting a product or system the user depends on?
  • Potential privacy and security risks. You’re putting valuable data on someone else’s system in an unknown location. There’s much at risk.
  • If a significant number of people migrate to the cloud, where they’re no longer free to push new developments themselves, what does that imply for the future development of the Internet and innovation in general ?
  • Dependency on a reliable Internet connection.

 


References

 

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The technological and social developments of the current Digital Revolution affect businesses and how they’re managed in many ways. Key business functions and business strategies as a whole will be tested by this new industrial Revolution.

To illustrate the huge impact digital transformation is having on life I like to refer to the book ‘Dematerialisierung – Die Neuverteilung der Welt in Zeiten des digitalen Darwinismus’ by Karl-Heinz Land and Prof. Ralf T. Kreutzer.

In a nutshell Digital transformation can be summed up as the dematerialisation of goods. More and more products, services, and processes that were formerly produced physically are being dematerialized, meaning that they are replaced by software and intelligent machines.

Karl-Heinz and Prof. Kreutzer illustrate the dynamics at force very appropriately: If a key becomes an app, the physical key won’t be produced anymore, which implies that also the machines that produce the keys are not needed anymore. The same applies to the machines that were manufacturing spare parts for the production machines. And finally the keys do not need to be shipped and distributed anymore. At the end of that process many of the attached jobs might disappear. That is dematerialization. And keys are certainly not the only product that are currently prone to dematerialization.

On my commute to work this morning I picked up my smartphone to read the news while I listened to music. My meeting was scheduled a bit outside the public transport route so I ordered a boda boda via Taxify and within a few minutes I was seated at the table discussing business.

Today we can take selfies and scan documents using our portable hand-held devices, we can switch between thousands of languages using a myriad of translation apps available, transfer money to our partners in less than a minute while on the move and control our phones via voice. These are but a few activities that happen during a typical day.

A few years ago, all these activities were largely physical. Speed up to 2018 and while I’m enjoying all these digitalized services, whole industries have been disrupted, the entertainment industry, the banking industry, the travel and hospitality industries. Large parts of these industries’ value chains have been dematerialized through digitization.

On top of the convenience and optimisation happening, production costs of affected services tilts towards zero, as additional units can be produced at almost no cost. This basically creates an infinite possibility of production.

As more and more services get translated from the material into datasets, becoming more and more intelligent, their management soon transforms towards automation where software and machines can take over cognitive activities from human beings.

Today we have manufacturing robots that can learn new tasks just by observing humans, software that composes music or paints new Masterpieces from dead legends, recognizes faces, voices, translates languages, chatbots for customer support, smart devices that automate our homes to name but a few.

Digital Transformation connects different business players and automates many of their underlying operational processes, on top the already existing value chain integration.

Adding up new technologies like the Big Data, Machine Learning and Artificial Intelligence, combined with new production techniques like 3D printing and nanotechnology, new ways of doing business which were impossible until recently are emerging. A completely new economic system arises.

To participate in that value creation, there’s no question about the essence of digital transformation. Digital Transformation is not a choice. It is the only way.

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Although the process of digitalisation is an omnipresent topic in news and media, many people still lack a good understanding of how current technologies may affect human behaviour, businesses and management.

The disruptive power of digital technologies should not be underestimated. According to McKinsey, disruptive technologies are advances that will transform life, business, and the global economy. Their adoption presents a number of challenges that need to be apprehended and understood but offers at the same time, more opportunities for value creation than any previous industrial revolution.

Becoming a digital organization will require bigger changes to the entire business model, more than just adopting the latest digital technologies or scaling digital infrastructures. The transformation to Digital will push traditional stakeholders to question their current strategies, operating models and cultures in order to not just keep up with the pace but move a step ahead in a time of radical shifts that come exponentially.

The task ahead for a huge number of companies is to strengthen their capacity to adapt to future trends by capitalising on the digitalised communications internet which is converging with a digitalised energy internet and an automated transportation and logistics network.

Those key enabling technologies will open up businesses to new productivity gains and create a more sustainable economy and society as a whole while setting the path for future quality growth and assure the long- term competitiveness of the local economy.

At the same time, we must tackle the challenges and threats of this speedy evolution and develop innovative policies and regulation without falling into the trap of killing innovation through over regulation. This will allow us to leverage digital technologies as an opportunity, rather than a threat.

As we progress, important questions to ask are:

  1. What is the essence of digital transformation?
  2. What are the digital transformation’s underlying main technologies and concepts?
  3. What are the business aspects of digital transformation? At the firm level, at industry levels and at the broader market levels?
  4. What is the future of work and jobs?
  5. What are the security and privacy issues related to digital transformation?
  6. What about the regulatory aspects of digital transformation?
  7. What are the important ethical and societal challenges associated with digital transformation?
  8. What are the cultural dimensions of digital transformation?
  9. What about governance in the digital age?

We’ll be answering these and more questions in future posts to make your transition from the traditional to the modern way of doing business as swift and pain-free as possible.

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