ICT drives innovation in all economic sectors
The disruptive potential of ICT results from its nature as a general purpose technology. It is all about communicating and processing of digital data. Digital data may represent all kinds of information, including numbers, symbols, voice, audio, pictures, video, etc. Digital data are therefore exchanged and processed for many different purposes. Major applications include making phone calls, watching films, calculating and simulating physical world phenomena and publishing knowledge and news, to name a few.
In the 1990s, the first wave of ICT based convergence of industries has blurred the boundaries of the telecommunication, the computer and the broadcasting sectors. Today, consumers take this convergence as a given and expect to watch news on their smartphone, to make voice calls using a notebook or tablet, and to surf the Internet with their television set.
Distributed processing of digitized voice, moving pictures and other information on networked computers has driven the first wave of convergence and disrupted prior separate vertical consumer markets. However, these previously separated vertical markets for telephony, computing and television have not converged into a single much larger market. The opposite holds true, ICT-based technology convergence resulted in accelerated market segmentation. Today, many alternative products and services coexist for telephony and TV, not mentioning the many new services never anticipated like social networks or e-commerce.
The processing power has continued to grow exponentially according to Moore’s Law. The amount of data is exploding at unprecedented speed since whatever can be digitized has been and is digitized. Moreover, connecting what can be connected further boosts the exponential, self-amplifying, combined potential of ICT at large to embrace new application areas.
The combinatorial effect of more powerful general purpose computing platforms, an unprecedented abundance of digital data, including sensor data, and connectivity of all kinds of devices and objects are redefining other industries by transforming businesses and society. Thus, ICT drives innovation in all sectors, from the smart home to the smart city, from the smart grid to smart transportation, from smart healthcare to smart manufacturing in all kinds of industry sectors.
New wave of convergence
A second wave of convergence is under way and building speed. It is based on the integration of distributed processing of information and operation of equipment.
While the first wave of ICT based convergence revolutionized mainly consumer markets, the second wave of convergence will heavily impact critical infrastructure, industry, and business-to-business markets. The activities of economic actors in all sectors, whether manufacturers, service providers, administrations and their customers will be dramatically altered. Some examples are:
- interfaces between product and service suppliers and their customers, whether these are other businesses, governments or end-consumers will change profoundly. In this process, particularly close attention must be paid to the over-arching issues such as security, data protection and privacy and sometimes accessibility in order to make these changes fully acceptable and manageable for those outside the ICT industries themselves.
- in the case of industrial companies, many must rely on time-sensitive local area networks operated as private networks in order to ensure highly available and reliable closed loop control operating side-by-side with less critical information services. Operation of all kinds of systems, including utilities, will be increasingly automated and will be more and more autonomous - mainly by adding Artificial Intelligence (AI);
- regarding data value chains, common, semantically enriched data formats as well as common semantics are critical to enable the free flow of data both vertically and horizontally within industry domains and across industry sectors. This is needed as an accelerator for digitisation, e.g. in the context of the Internet of Things (IoT), for digitising industry, for smart cities and for digitisation in public services;
- many of these more conventional economic sectors such as transportation, utilities, manufacturing, agriculture, or healthcare are more regulated than various segments of ICT markets. Software, appliances, machines, and robots increasingly make decisions and act accordingly in an unsupervised manner, being more and more autonomous in their operation. They need to smoothly integrate into societies and interact with humans in alignment, not only with laws, but also with ethical principles. Trust is inevitable for the adoption of smart infrastructure. Regulatory requirements may change or have to be adapted.
Enhanced ICT enables a smarter world and is an inevitable means to reach crucial European policy goals. ICT is the basis of the European Digital Single Market and the key enabler for digitizing European industry and indeed society as a whole.
Integrated solutions for different industry domains
The power and disruptive potential of ICT results from being a general purpose technology advancing exponentially in a combinatorial manner. More and more powerful ICT products and services are available for
- digitizing analog information
- data management
- symbolic computing and machine learning
These may be integrated into domain-specific platforms or be used as part of a solution for various different industry domains. Generic standardized solutions to exchange data, to analyze data, to decide and act upon knowledge extracted from data are applicable in many sectors, from transportation to manufacturing to agriculture. In this respect, ICT may be regarded as a common horizontal technology. The process of applying more and more such horizontal ICT technologies as an integral part of by now tightly vertically integrated industry domain specific infrastructures is known as ‘Digital Transformation’.
Business drivers for the digital transformation include the following:
- cost reduction (OPEX mainly)
- new services (easy deployment)
- productivity gains
- less vendor lock-in
- economies of scale
- mass production of personalized products
It is, however, not straight forward how to benefit from digital transformation. There will not be a single end-to-end standardized system solution, but many instances tailored to company needs will coexist. The digital transformation is an innovation race to gain competitive advantages.
It is not obvious how to apply standardized ICT platforms or parts thereof to solve specific problems in manufacturing, transportation, agriculture, health care, or in other domains.
- From an ICT industry viewpoint the challenge is to enable novel solutions for various vertical industries based on common solution elements.
- From a vertical industry sector viewpoint the challenge is to reuse standardized ICT as enablers for innovations.
Common horizontal ICT building blocks will not be introduced in one go, but used and integrated step-by-step according to the needs of a particular industry. It is all about a process of adoption of off-the-shelf ICT solution elements depending on industry domain specific requirements. It is an evolution with revolutionary results rather than a revolution from the start.
Figure 1: Examples for horizontally versus vertically integrated solutions for different industry domains (cSE=common Service Enabler, sSE=specific Service Enabler)
Various combinations of integrated horizontal and vertical building blocks for diverse industries will coexist, as is illustrated in Figure 1. The challenge, however, persists how to combine as many common horizontal building blocks as possible with as many vertical building blocks as necessary to maximize benefits.
Provided the digital transformation of industries works out as a smooth transition process, economy and society at large will benefit from achieving policy goals like
- customer choice
- protection of consumers and SME users of ICT solutions, both to ensure (physical and electronic) security and data protection and in the sense of ensuring citizens' rights, service quality etc.
- vibrant innovative eco-system
- business opportunities for new entrants
- economic growth
In these processes, the standardisation system will be challenged.
- ICT standardization is characterised by its fragmentation, with the involvement of multiple organisations, both formal and informal.
- On the other hand, in the other sectors that will be more and more influenced by ICT, standardization is typically a slow and formal process.
- Ways need to be found to ensure collaboration between the involved SDOs, and that participants in standardisation committees have the necessary competences.