Making sense of the fourth industrial revolution
Despite the increased focus on the fourth industrial revolution (4IR or Industry 4.0) by government, industry, the media and various conferences, it remains difficult for organisations to understand what the impact of 4IR on their businesses is likely to be.
This is the conclusion reached by Alta van der Merwe, professor within the Department of Informatics at the University of Pretoria, and Aurona Gerber, associate professor within the department, who are researching the issue of Industry 4.0 and digital transformation.
They found that discussions about the impact of all these developments are better understood when placed within context, and a conceptual architecture that graphically illustrates the core components provides a mental map of aspects that need to be analysed to understand the impact.
"These aspects include technologies and technology fusion (in the middle because they drive change), surrounded by the specific profession (or domain), digital disruption and digital transformation," they explain.
"The technology layer refers to the different emerging technologies such as the Internet of things, artificial intelligence (AI), data science, blockchain, robotics, etc.
"Some of these technologies are not new; for example, AI is a concept that has been around since the 1950s. Other technologies such as blockchain emerged more recently.
"Dire predictions are usually made about how these technologies will forever change business and society but these predictions seldom have direct relevance to existing businesses.
"It is clear that management in an organisation has to understand what these technologies are and whether they are opportunities or threats. However, it is not clear how to assess technological impact without understanding that it is the fusion of technologies that enables change," note Van der Merwe and Gerber.
"A distinguishing factor of 4IR is that breakthroughs are the result of this fusion or collective and integrated use of disruptive technologies. The platforms that are central to companies such as Uber and AirBnB use, among others, social technologies, data, artificial intelligence and intelligent algorithms.
"Autonomous vehicles are the products of several technologies, such as intelligent video analysis and mining algorithms, robotics, etc.
"Another emerging example of technology fusion is digital twins. A digital twin is a digital replica of a physical system that includes a version of its processes, people, places, systems and devices, and is used to simulate how such a system operates and lives throughout its life cycle, and this is made possible by using sensor data, simulation and artificial intelligence, computing power, etc.
"Technology fusion creates solutions that alter business and society, and have an impact on the existing functions and purpose of specific domains or professions. If the domain is the hotel business, the fusion of technologies that created AirBnB had a huge impact on the business models.
"A logistics company should take cognisance of autonomous vehicles that would change business models completely. A profession such as the financial profession might be impacted by a fusion of blockchain, data and AI with other technologies to automate some of its functions," they point out.
"Digital transformation focuses on the transformation of the business and the organisation specifically with regard to the different processes, activities, capabilities and models enabled by the fusion of digital technologies.
"This transformation may open up avenues towards new business models. The key of digital transformation is to do what you have been doing better, faster, cheaper, more intelligently and more efficiently. The organisation could strategically make use of business intelligence to make decisions and these decisions will likely be data-driven.
"Where digital transformation is linked to the existing organisation and its business, we also need to consider digital disruption, which might be a threat to existing business," they caution.
"Digital disruption is often mentioned when experts discuss 4IR and the future of the technological changes. Digital disruption creates completely new business models, and Uber and AirBnB are often cited as the best examples of platform businesses that disrupted industries such as the hotel industry and taxi transport.
"These companies do not own the assets they sell, but they are worth billions of dollars. Disruptive companies also emerge with interesting characteristics such as horizontal management structures, a flexible workforce without fixed job descriptions and an extreme focus on retaining customers through customer experience and buy-in.
"A conceptual architecture that depicts the core aspects driven by disruptive technologies could be used as a starting point to brainstorm the nature of business and society in the near future," Van der Merwe and Gerber conclude.