The Fourth Industrial Revolution (Industry 4.0) is the German government’s high-tech strategy which has received worldwide recognition due to the clarity of the goal formation and has been adopted by many countries around the world. It describes the concept of “smart manufacturing” based on the industrial Internet of Things (IoT), combining physical production and operations with intelligent digital technologies, machine learning and big data. Digitization is one of the necessary elements to the Industry 4.0 model. The Fourth Industrial Revolution or the transition to Industry 4.0 is a relevant topic for business.
The Internet of Things (IoT)is a global network of Internet — connected devices that can communicate with each other using embedded data transfer technologies. They are all connected to the centers of management, analysis, and control of information. IoT combines real things into virtual systems that can solve completely different tasks. Depending on the type of device communication, IoT projects can be divided into two types: mass and critical. Everyone has their own tasks and requirements for the network. Examples of “mass” IoT projects include smart homes, meters, cargo tracking solutions, etc. The “critical” machine communication can be autonomous cars, traffic management or industrial equipment, remote surgery.
The main idea behind this concept is to connect every possible device through the network and thereby get synergy.
In 2016, Japan shared with the world a large plan for social transformation – the concept of “Society 5.0“. If the German Industry 4.0 is considered as a kind of “smart business”, then Society 5.0 is like a “super-smart society”.
The program aims to achieve digitization at all levels of the Japanese society and the digital transformation of society itself. Important roles in the development of the concept are played by the Internet of Things, artificial intelligence, VR/AR, Big Data (analytics), and others. However, it’s not just about technology in people’s lives. The concept addresses some problems faced by Japan which are also relevant for other countries such as population aging, natural disasters, and environmental pollution among others.
Since digital transformation looks different to each organization, it’s difficult to give a clear definition that applies to everyone. In general, digital transformation is the introduction of modern technologies into the business processes of an enterprise. This approach involves not only the installation of modern hardware or software, but also fundamental changes in management approaches, corporate culture, and external communications. As a result, the productivity of each employee and the level of customer satisfaction increase, and the company gains a reputation for being progressive and modern.
Digital transformation can be defined as the strategic transformation of a business, where customer preferences and behaviors determine enterprise technology solutions. “Is it an end-to-end enterprise-wide transformation that affects all parts of the organization?” – says Alexander Bushek, Digital transformation Evangelist, Senior Director, Analyst at Gartner.
“Every digital transformation will start and end with the customer, and I see it in the head of every CEO I talk to,” explains Marc Benioff, the chairman and CEO of Salesforce.
Digital transformation is associated not only with the renewal of technologies and business processes within the company, but primarily with a change in business strategy. According to Marc Benioff, the transformation takes place at a time when the company can re-evaluate the changing market, the needs of its customers and find new directions for development, taking into account the ongoing changes.
“Digital transformation is primarily a change in current business practices in the field of decision-making, which are either made by a person based on the analysis of “hard” data, or are left to the systems, excluding a person from the process, he explains. — Another area of digital transformation is following the customer as they digitalize their lifestyle.”
For example, with the development of the Internet of Things and voice assistants, the role of the buyer will flow to the machines — “Siri” or the refrigerator will decide what to buy, considering the preferences of the owner. A person, in the future, will begin to give more and more authority to technology first on minor issues, and with the growth of trust, and on more significant ones: from choosing a specific brand of milk, to choosing an insurance medical plan for the whole family.
Digital transformation in this sense is also about understanding and responding to the needs of new customers — “digital algorithms”. Another significant trend in customer behavior is a request for personalization, product offers for specific needs, often not yet formed, based on data analytics enriched by different areas of consumption, integration into “ecosystems”, the search for synergy in areas that until recently were considered unrelated, for example, banking services and food delivery.