New world technologies : 2020 and beyond [First edition] 9781948976862, 1948976862

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New World Technologies 2020 and Beyond

Errol S. van Engelen

New World Technologies: 2020 and Beyond Copyright © Business Expert Press, LLC, 2019. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopy, recording, or any other except for brief quotations, not to exceed 400 words, without the prior permission of the publisher. First published in 2019 by Business Expert Press, LLC 222 East 46th Street, New York, NY 10017 www.businessexpertpress.com ISBN-13: 978-1-94897-686-2 (paperback) ISBN-13: 978-1-94897-687-9 (e-book) Business Expert Press Big Data and Business Analytics Collection Collection ISSN: 2333-6749 (print) Collection ISSN: 2333-6757 (electronic) Cover and interior design by Exeter Premedia Services Private Ltd., Chennai, India First edition: 2019 10 9 8 7 6 5 4 3 2 1 Printed in the United States of America.

Abstract In today’s high-pressured world, digital transformation is everywhere on the agendas of corporate boards and has risen to the top of CEOs’ strategic plans. Artificial intelligence, blockchain, 3D printing, the Internet of Things, and drones are some of the emerging technologies that are already transforming our world. In this fast changing domain—predicted by few and now reality for all—how can companies transform today’s challenges into tomorrow’s opportunities? This book is targeted to help a broad audience such as students, professionals, business and technology managers to transform an old-world brick and mortar organization to a new-world digital leader. The author addresses various questions including: What essential components does digital transformation include, and how does it impact the enterprise? How does convergence of emerging technologies benefit your organization? How can you start transformation and technology planning projects? Keywords 3D printing; artificial intelligence; augmented and virtual reality; blockchain; digital transformation; drones; emerging technologies; Internet of Things; robotics; technology planning

Preface This book is for everyone in Business and Technology, interested in Digital Transformation and Emerging Technologies

When I started writing this book, many different ideas crossed my mind. On one hand, it’s obvious that technology makes our life a lot easier and therefore has a positive impact on society and business. On the other hand, certain technologies outsmart humanity and threaten our survival as the leaders on the planet, scary, but also a feasible scenario. No one can say right now with total certainty what’s going to happen within the next 30 or 40 years. But let’s look at technology in a positive way though. You may have heard this phrase about fast pacing technology “There have been more changes in technology in the past two years than the previous fifty years.” While it’s clear that changes in our business models don’t have the same speed. For this reason, it’s necessary to select new technology very carefully to stay in line with your slower changing business models. Many managers are wondering how to deal with the overload of technologies and are afraid to select the wrong technology to improve their business. Since they own the technology budgets, they need to be sure that the money will be spent wisely. But unfortunately sometimes they overlook difficulties in selecting new technology. In general, large enterprises are well positioned to adopt innovative, new technologies, and jump into this brave new world. The ecosystems around them such as vendors and partners are more than willing to support. And even with tight budgets, large companies have sufficient funding and resources for projects. Whereas small and medium businesses normally don’t have sufficient resources to hire external experts to advise on the right technologies. So they are going to try it themselves. And that can lead to disappointment, because they may lack the required knowledge. Layout of the Content I have focused on the most impacting new technologies. The technology area is so big that it’s fairly impossible to mention them all. That’s why the technologies you will find here are very likely to have a big impact on business and society. When deciding “what technologies to write about,” I felt most inspired by the “Eight Essential Technologies” published by PricewaterhouseCoopers (PwC). I’ve structured the content in four chapters: Chapter 1 is a holistic view of digital transformation which is causing many disruptions both in business and technology. Big data is at the core of this transformation process, while emerging technologies specialize in specific areas. In Chapter 2, I focus on connectivity technologies in which I include blockchain, Internet of Things, augmented and virtual reality. These technologies can be powered by big data, converge with each other and have impact in various industries. In Chapter 3, I focus on intelligence technologies in which I include 3D printing, artificial intelligence, drones and robotics. Again, these technologies can be powered by big data, converge with one another and have impact in various industries. Chapter 4 is about digital transformation planning, which helps to reduce complexity when starting or enhancing a digital transformation project. The approach I find most useful is a mix of methodologies such as SOSTAC® and Business Model Canvas.

Acknowledgments I want to thank everyone who helped in the creation of my book. In technology projects, many in the role of client, employer, or colleague helped me directly or indirectly to obtain the proper image of the impact technology has on business. I would also thank the many online experts and content publishers who increased my knowledge of technology. I hope you enjoy reading while improving your business and technology skills and knowledge with New World Technologies World: 2020 And Beyond.

Errol S. van Engelen Rotterdam, January 2019

CHAPTER 1 Digital Transformation Over the past several years, the term “digital transformation” has entered the realm of enterprise IT. Digital transformation is frequently misinterpreted and misunderstood. What does “digital transformation” really mean? What essential components does it include, and how does it impact the enterprise? Figure 1.1 illustrates that digital transformation should be regarded as business transformation. The Global Center for Digital Business Transformation says that “organizational change is the foundation of digital business transformation.” That’s because changing the nature of an organization means changing the way people work, challenging their mindsets and the daily work processes and strategies that they rely upon. While these present the most difficult problems, they also yield the most worthwhile rewards, allowing a business to become more efficient, data-driven, and nimble, taking advantage of more business opportunities. In my opinion, there are three essential components for businesses going through digital transformation efforts.

Figure 1.1 Digital transformation is business transformation Engagement Through content marketing, you can educate your customers about topics important to them and eventually your business offerings. It gives your brand a voice to engage with your target audience and establish a strong, trustworthy relationship with them. Setting up real good engagement with your audience is not as simple as it may look like. Sure, one of the main reasons for brilliant content creation is ultimately to create leads and increase revenue. But it shouldn’t come across that way. No one likes being pressurized into buying something without having the time to research or think about it first. Instead of trying to sell to your audience, try

to help them. Your customer will be coming to you because they are looking for a product that you provide. So, producing content that answers their questions surrounding that product will build trust and leave a lasting impression. Exposure Going viral on social media is what every business wants to do. All the attention and all the respect can take your business to the next level. The problem is doing it. I’m a regular follower of social media and I’ve experimented with different strategies to garner more interactions. This is how you can improve exposure and reach: More content is better than less, but too much content is not the name of the game Client engagement is your goal, drive traffic to the best-converting pages Connect with your customers—let them speak to their needs and drive trust and reach for your brand by leveraging their experiences as part of your Social Media and Content strategy • Identify opportunities to repurpose your existing content to drive active visitor and audience participation • • •

Technology Without implementing the right technologies, it would be fairly impossible to successfully migrate from a traditional business to a digital company. The most important technologies to use are marketing automation, big data, and business intelligence. Big data empowers other emerging technologies such as blockchain, Internet of Things, augmented and virtual reality, 3D printing, artificial intelligence, drones and robotics. Many of the discussions surrounding digital transformation have focused on the technology: mobile applications, cloud platforms, artificial intelligence, big data, and so on. However, having the technological foundation to support such innovations is only one piece of the digital transformation puzzle. To fully embrace this growing trend and reap all the benefits it offers, corporations need to make a major change to their company culture. Digital transformation is about more than just adopting new technologies: It’s about reinventing your business to be driven by data—and that starts with your team. Think Business Transformation, Not Technology In the business world, everyone is talking about digital transformation—from AI to robots to the Internet of Things. But according to many top experts in the field, most people are missing the point. Technology doesn’t provide value to a business. Instead, technology’s value comes from doing business differently because technology makes it possible. I would like to refer to George Westerman’s MIT Sloan Management Review article, “Your Company Doesn’t Need a Digital Strategy.” Creating a digital strategy can focus the organization in ways that don’t capture the true value of digital transformation. Westerman, who is a Principal Research Scientist with the MIT Sloan Initiative on the Digital Economy, suggests that the right focus is on a better strategy that is enabled by digital. Focus on Strategic Transformation, Not Technology Adoption According to Westerman, technology helps you do business differently, but the right strategy is not technology-focused. It incorporates the right technologies for the right jobs. Regardless of your industry, Westerman suggests keeping these four points in mind to avoid common pitfalls.

Get Away from Silo Thinking Focusing on the technology can direct aspirations toward what technology can do (mobile, big data, virtual reality, and so on) rather than what a transformed business should look like. For example, a mobile strategy comes to a screeching halt when the company fails to consider opportunities that are not enabled by mobile. This kind of incremental thinking misses much bigger opportunities across silos. Don’t Push the Envelope Too Far, Too Fast Looking too far forward toward advanced digital innovations can make other technologies seem mundane. However, business leaders leave easy money on the table if they ignore incremental steps and pursue risky opportunities that may not be ready to pay off yet. Don’t Ask Your Tech Leaders to Drive Transformation Alone Even the best IT leaders won’t be able to transform a business if they don’t run that part of the business. “While I’ve seen many successful digital transformations led by great tech leaders, the transformation comes from working with them, not asking them to do it alone,” writes Westerman. Build Essential Leadership Capabilities, Not Just Technical Ones Think of digital transformation not as a project but as a capability. When you focus on transformation instead of digital, you shift the weight to creating real business value from technological innovations. Digital Maturity Matters in Every Industry Digital maturity (see Figure 1.2) is a combination of two separate but related dimensions. The first, digital intensity, is investment in technology-enabled initiatives to change how the company operates—its customer engagements, internal operations, and even business models. Companies in all industries are investing in interesting digital initiatives. However, in many firms, these investments are uncoordinated and sometimes duplicative. Firms maturing in the second dimension, transformation management intensity, are creating the leadership capabilities necessary to drive digital transformation in the organization. Transformation intensity consists of the vision to shape a new future, governance, and engagement to steer the course, and IT and business relationships to implement technology-based change.

Figure 1.2 Digital maturity matrix Source: Capgemini consulting and MIT center for digital business, 2012 Beginners Pharmaceuticals: Executives see threat in digital transformation but less opportunity than other industries do, perhaps because of regulation. Many are building capabilities in analytics and worker enablement, but most firms are just beginning their digital journeys, leaving many opportunities untapped. Consumer Packaged Goods (CPG): Digital opens new possibilities for firms to engage directly with customers. Twenty-four percent of firms surveyed stand out as digital masters, while others lag far behind. Generally, less-mature CPG firms can improve through stronger visions, greater digital investments and more robust transformation management. Manufacturing: Traditionally slow to react to digital, manufacturing is on the cusp of emerging from “beginner” status. Efforts in digital remain focused on operational efficiencies and worker enablement, but the B2B nature of many companies may limit their attention to digital customer engagement. Manufacturers see less opportunity and threat in digital transformation than other industries. To mature, firms may need a transformative digital vision, plus the engagement and governance to develop impetus for digital investments. Conservatives Insurance: High expectations for digital and strong vision and governance suggest that the insurers should be leading the digital revolution. Yet, this is not the case for most firms. Generally, scores for engaging customers through social media and mobile are lower than average, suggesting that the combination of strong digital governance capabilities, regulatory worries, and a risk-averse culture would not be an innovation enabler.

Utilities: For the conservative utilities industry, efficiency is the name of the game in digital transformation. Constant pressure to reduce costs and the advent of smart metering create digital opportunities in customer experience, worker enablement, analytics and process improvement. Fashionistas Telecom: Facing ever-increasing levels of connectivity and data consumption, telecom firms have been quick to respond. Of the organizations in our study, 78 percent are high on digital intensity (Digital Masters or Fashionistas) and Beginners are almost nonexistent. To complement their digital strengths, telecom firms can focus on stronger digital leadership to integrate and align initiatives across silos. Travel and hospitality: Since the advent of the Web, digital has turned the industry upside down. The industry has responded, with 81 percent of firms in the Digital Masters or Fashionista quadrants and no Beginners. Opportunities exist to improve worker enablement in many companies. To make the jump into Digital Masters territory, Fashionistas will need to build levels of excellence in transformation management to match their high digital intensity, including a transformational vision for the future. Digital Masters Banking: Digital is revolutionizing the relationship between customers and retail banks, who have responded with strong capabilities in customer service, analytics, and even social media. Banks have an opportunity to parlay these successes into new innovations in mobile or social customer engagement and internal knowledge sharing. In addition, opportunities exist to integrate initiatives and processes across corporate silos. Retail: A decade-long history with digital disruption has seasoned retailers and produced a number of digirati (26 percent of firms surveyed). Retailers are generally confident in the potential for social and mobile, as well as their digital skill set. Moving forward, firms may want to focus on cross-channel consistency and worker enablement while building analytics capabilities. High-Tech: For high-tech, digital is close to home. Firms generally enjoy well-developed capabilities and high digital maturity. They are also—not surprisingly—enthusiastic about digital’s potential. This momentum may create further opportunities in mobile and embedded devices. Do We Have Time to Wait? Executives in industries such as CPG, pharmaceuticals, and manufacturing might be tempted to believe they do not yet need to engage in digital transformation. Their industries are less digitally mature than others, so they might have time to wait. However, every industry, regardless of how digitally mature, hosts companies that are Digital Masters. In other words, every industry—from manufacturing to high technology—has firms that have already begun to gain the benefits of digital transformation. This should be a call to action for executives in every firm. It takes several years to build maturity, especially in the transformation management intensity dimension. Digital Beginners in any industry are several years from gaining the digital maturity that their Digital Master competitors already possess. Why Culture Is Key in Digital Transformation

Digital transformation changes the DNA of an organization. It breaks down the silos, rinses existing processes, and makes sure the business is leaner, faster, agile, and more responsive than ever before. However, too often, business leaders forget that for such a transformation to be successful, it needs to be backed by a corresponding cultural shift. “For any transformation to be successful, people need to buy into your vision,” according to Aashish Gupta, Research Analyst at Gartner. He added: The culture aspect and the technology demand equal attention from the application leader, because culture will form the backbone of all change initiatives for their digital business transformation. The staff trapped in a ‘fixed’ mindset may slow down or, worse, derail the digital business transformation initiatives of the company, In order to drive that cultural change, businesses need to invest in it. An online clothes and shoe retailer, Gartner cites, instructs all of its new hires to experience its call center. This, the company believes, allows employees to gain a holistic view of the business and helps them understand why customer service is the backbone of it. If you’re looking for a plan to drive the cultural change, here’s a four-step plan recommended by Gartner: Create a compelling vision: Your vision should be able to inspire and motivate desire for change. Craft it carefully, share it with stakeholders, and ensure that everyone is on the same page as you are—seeking and pursuing growth. “A growth mindset demands people to be comfortable with the speed of the digital era, and they must be willing to make quick and risky bets instead of slow and safe bets,” said Gupta. • Define: “What gets measured, gets managed,” said management guru Peter Drucker. When you’re pursuing a mindset change, similarly, you need to ensure your staff knows what behavioral attributes reflect the change and the individual key performance indicators (KPIs) or goals that must be targeted. • Implement: To make the concrete changes and give employees a strong sense of direction, the human resources (HR) function must update individual job descriptions. Doing so involves a lot of extra effort but can help make a profound impact because it adds stability to how change is introduced, facilitated, and managed. “Acceptance will happen only if the change is visible throughout the organization. You should incentivize people to share knowledge or learn new skills,” said Gupta. • Measure, monitor, and wait: Inspiring a change in your employees’ mindset isn’t going to be quick but it’s going to reap significant dividends in the long run. Gartner advises business leaders to allow some time for changes to percolate and to continuously survey employees about how they understand and perceive the change. “Be patient. Fostering a growth mindset culture that requires behavior changes among your staff takes time. However, the rewards are considerable as everyone perseveres, learns, grows and accepts that potential is nurtured, not predetermined,” explained Gupta. •

How to Accelerate Digital Transformation Our world is changing fast. Customers’ expectations for better and innovative experiences have been growing. This has forced businesses to transform themselves and rethink their service delivery to meet these demands. However, this transformation process needs to be fast. Organizations and their leaders need to keep up with the pace at which the world is evolving if they want to sustain their position in the market and grow. So, how can the C-level management accelerate their organization’s digital transformation to meet the ever-growing customer demands?

Focus on business and technology planning: As a digital leader, it is crucial that you start with an end goal or a business outcome in mind. Market leaders don’t jump at every technology that crosses their path. On the contrary, they start with business outcomes in mind and work backward to choose the technologies that fit their goals and which will help them deliver an experience that is smarter and better. • Invest in your organization’s people and culture: It is essential for organizations to invest in its people and enable them to participate in your digital transformation. Finding people with the right attitude, investing in their training and development, and designing programs that recognize and reward employee’s contributions to customer experience go a long way in retaining talent as well as creating an organizational culture that embraces change on an ongoing basis. • Keep your customer at the center of your business: It is critical for organizations to design their processes in a way that boosts customer experience and retention. Adopt modern technologies in concurrence with evolving buying trends that provide your customers with unique capabilities that save time in their day, add value to their business, and deliver services when and how they want to receive them. • Simplify and modernize IT: Digital transformation leaders should focus on simplifying and modernizing their IT environments by adopting digital differentiators such as cloud-based systems, predictive intelligence capabilities, social and mobile enablers and DevOps practices to design leaner and more agile business processes. • Look for continuous improvement: Successful transformation leaders are those that are continuously exploring the ways they can improve their organization’s processes to deliver superior customer experiences on an ongoing basis. Establish a set of key performance indicators that demonstrate the health of your digital business and keep raising the bar. •

Digital innovation is changing the world faster than we can imagine. The only way that organizations can keep up with this speed is by thinking outside in, outlining key business outcomes, and working backward to adopt agile methodologies and right mix of technology, which will ultimately help them secure their market share and stay ahead of the curve. Key Components for Digital Success Engagement Customers are increasingly empowered and businesses that do not provide a fast, multichannel experience will start to lose these customers. For this to happen “consistent, tangible feedback around the customer’s perceptions, motivations and expectations” is needed, and for the results for such surveys to be meaningfully analyzed. One of the core instruments to improve customer engagement is content marketing. Content Marketing Content marketing is a successful digital marketing strategy that can reach consumers and spread brand awareness. More than half of businesses spend time and money on content marketing, a number that will grow as more companies recognize its utility. Most businesses publish a variety of content frequently, but many still want to make improvements to their content, such as creating more original and visual content. Visual content, such as videos, images, and infographics, engages consumers and keeps their interest piqued for the whole post. Visual content stands out among other text-rich blog posts. It’s always nice to break up text with visuals because we’re all such visual learners. Our attention spans keep decreasing, so visuals keep a reader’s attention. It breaks up the monotony and leads

the consumer through the content pieces. Consumers are more likely to read and stay engaged with your content if it is visual. Exposure Having a strong social media presence can help your business in several ways. Social media platforms of the business act as multiple gateways to a business’s website, creating an external linking structure and more opportunities to appear in search results. Social media creates a way to increase brand awareness and customer base. Any company has the ability to connect with customers in diverse ways while also driving traffic to their website to generate conversions. So let’s see how you can maximize your social media presence. Social Media Social media marketing remains the lynchpin of all other inbound marketing strategies, including e-mail marketing and content marketing. Creating a social media presence for your business can open up new growth opportunities by expanding your brand’s exposure and affinity. Every business should have established objectives before tinkering with their social media presence. Set goals early and monitor them constantly. Simply having a Facebook account is meaningless if you don’t create value for your customers. Build Relationships, Not Traffic Brand advocacy means your customers market and promote your products for you, which is not only cost efficient, but also more believable than what your employees say about your own company. Growing your audience and building relationships with industry thought leaders will position your brand to become a leading voice and an influencer. Before acquiring this status, it’s key to partner with influencers early on who will endorse and market your brand for you. This can be accomplished through sponsorship, engaging with them directly, and sharing their content. Social media is also the ultimate user-review resource, so it’s important to immediately respond to any feedback or criticism to mitigate any negative exposure. Through strong social engagement you can be proactive, rather than reactive, in curating a positive social media presence. Once you’ve established your brand’s identity and built trust with your customers, drop a highly relevant promotion or offer directly in front of them to drive sales. Provide Value Share content, self-produced or not, that provides utility for your customers. This could even include a funny meme or a how-to guide from an industry publication. You’re essentially establishing your own syndicated content platform. Encourage your customers to turn to you for news and information. Provide value that will entice users to engage with your brand in the first place. As an added bonus, the content you share will provide valuable backlinks for your website and help improve its search engine rankings. This will align perfectly with your multichannel marketing campaign. Your highest shared and compounding posts could also be featured on your website and in a company e-newsletter. Interactive and Seasonal Content Seek audience engagement by providing interactive content with value. Interactive content, such as quizzes, contests, and giveaways, is a great choice to entice user clicks and consumer brand engagement. This will promote a positive branded experience. One of the best forms of

interactive content is hosting an event that draws people to your physical offline location. In addition to sharing your blog posts, you could simply ask your followers a provocative or interesting question that encourages debate and discussion. You could host Q&As or live streams that encourage users to post questions to the feed. Analytics Finally, assess how well your social media strategy is aligning with your bottom line. Actively track KPIs, such as the amount of referral traffic generated from social media channels and the social signals each piece of content is acquiring. There are many analytics tools your business could use, such as Hootsuite and Buffer. If you have Google Analytics activated on your website, you can insert a tracking code that will track the amount of times somebody shares a blog post from your website. The important thing to remember is patience. Final Thoughts Social media is a community platform, not a marketplace for your brand. The focus of any inbound marketing strategy is to pull customers closer to you and this requires consistent engagement and value-added content. Align your content marketing strategies with your social media outreach to retain customers and create demand for your products. In an interconnected world, brand affinity remains the most effective weapon in a business’s arsenal to separate itself from the crowd. Technology Too many organizations are stuck in an “old school” seven-year cycle of technology implementation that is susceptible to budget overruns, delays, and major capital outlay without benefit. As a result, boards lose faith in technology departments, and are less open to trying again. In fact, Chief Information Officers (CIOs) are less likely to lead innovation across the business than their global counterparts (18 percent versus 26 percent) and are more likely to take a secondary role in driving transformation. It is clear that while technology is a driver and enabler of transformation, it is not the answer in its own right. Successful technology transformation in today’s fast-paced world requires a fresh approach—one which is about the business model and people—not just technology. Marketing Automation Media and marketing are inevitably linked. With the extensive number of media platforms available to consumers and marketers and the wide reach of those digital platforms, marketers are now looking at the scale and volume of marketing operations that offer personalized customer experiences. Marketing automation can power campaigns, help identify leads, influence a buyer’s decision, and so much more. The global marketing automation software market is anticipated to grow up to a compounded annual growth rate (CAGR) of 9.26 percent by 2022. The market has generated a revenue of $3.86 billion in 2016 and is anticipated to reach up to $7.63 billion by 2025. Marketing automation categories make up a significant subset of marketing technology. All of these areas of marketing have been impacted by predictive analytics, machine learning and AI, and higher personalization of content. Big Data The power of predictive analytics and advanced data science is the reason behind the implementation of future strategies and immediate changes in the global businesses today. Big

data and analytics are entangled with each other today to deliver best end-results unlikely following the traditional approach. Earlier, analytics and data management used to be two different sections under one enterprise. With the emergence of advanced data science, such organizational barriers are broken. The integration of business operations with information technology has brought about successful enterprise transformation. The need for better business analytics has also arisen for business transformation. BI (business intelligence), with its skills and technological efficiency, continues to explore and investigate on past business performances to gain insights and deploy business planning. The integration of big data with traditional business analytics helps in creating a data ecosystem that enables businesses to generate new insights. Engage Your Audience with Great Content Creating business content is complex. It has to satisfy various needs such as raising awareness, driving traffic, generating leads, and ultimately converting customers. Content as shown in Figure 1.3 is often aimed at specific niche audiences of buyers and hence it doesn’t get widely shared.

Figure 1.3 Engage your audience with great content However, there are some types of content that engage large business audiences. I have reviewed the most engaging business content published this year and identified 10 key content types that work well to drive B2B engagement. Here’s a summary of the top 10 most engaging forms of B2B content: Technology developments: Industries can be destroyed and created by technological change, and quickly. Whether it is online banking, artificial intelligence, driverless cars or big data, business audiences eagerly consume content on technology change in their industry. •

Future trends: These trends may be related to technology developments, but they cover a wider range of trends such as customer engagement, regulation, cultural change, and political developments. • Opinion or viewpoint posts: There is no shortage of viewpoints about business developments from ethical and moral perspectives to how to grow a business. Controversial or challenging viewpoints frequently provoke engagement. The views of successful business leaders such as Jeff Bezos also gain high engagement. • Inspirational stories and case studies: Story formats are an increasingly powerful form of business content, particularly data-driven stories and inspirational stories. • Practical tips and how to posts: Business audiences want to do their job better and actively look for practical content that may help them improve their performance. • Personal career advice: Most people want to advance their career and they actively seek out and share good career advice. • Research and reference content: Knowledge can become obsolete very quickly, and new research findings help business audiences to understand changes. Reference content is closely related to practical and “how to” content; it is helpful and a source of support. • Leadership: Aspirational staff aspire to be leaders and good leaders want to improve. There is a thirst for content on leadership from practical tips to case studies and reflections by current and former CEOs. • Industry news: We all have to keep up with the latest developments in our industry and sectors. Thus there is always interest in company news and significant market developments. • In vogue topics or brands: Every year and in every industry there are celebrity brands and topics. These are the in vogue topics people actively discuss in meetings and coffee shops— sometimes in a good way, sometimes not. Recent celebrity brands have included Uber, Apple, and Tesla. Recent celebrity topics have included big data and artificial intelligence. • Last but not least, LinkedIn Pulse articles: If you want to gain more attention on LinkedIn, then you need to be publishing on Pulse. Nineteen of the top 20 most shared articles on LinkedIn this year were published on the platform itself. •

Boost Your Brand Using Social Media The world of social networks is rising at an astonishing pace. According to some recent studies, the number of social media users will rise up to 2.62 billion by the end of 2018. So, what do these figures tell you? To put yourself on the radar of your customers, deliver a personalized approach, and improve your conversion rate, you need to create a solid digital marketing campaign. However, boosting your brand awareness via social networks is not just about creating accounts on all platforms available, inviting random people to like your page, and sharing a few posts every once in a while. It’s about marketing and creating engagement to the right people, through the right channels. Good engagement with your audience is made possible by the use of social media, as shown in Figure 1.4. Here are several social media marketing tips that will take your branding efforts to a whole new level.

Figure 1.4 Social media to create social engagement Choose the Right Social Networks Choosing where to focus your social networking energy may be a daunting task. You need to keep in mind that not all social media platforms will work the same way in helping you reach your goals. Precisely because of this, you need to be picky and make educated decisions. There is a plethora of questions you need to ask yourself, most important of which are: • • • •

What are the social networks your customers use? How popular is a certain social networking channel? Does this channel make sense for your brand? How can it improve your brand awareness?

Share Engaging Content Content marketing is an inseparable and most valuable aspect of your social media campaign. Only by delivering relevant, easily digestible, and shareable content will you establish yourself as an expert in your niche. However, improving the performance of your content on social networks requires more than writing good-old articles. You need to focus on an interactive and engaging visual content, as well. Use infographics, photos, videos, memes, gifs, and quote graphs to hook your followers’ attention and keep them interested in the content you share. Be Unique and Consistent To engage people with your brand, you need to deliver recognizable content people will instantly relate to your brand. Such an approach will help you build trust among your target audience and put an emphasis on your brand’s mission statement, goals, and core values. Here are a few strategies that will set your brand apart from its competitors.

Find Your Tone of Voice To make the most of the content you create, you need to define your tone of voice. Gather a representative sample of the posts you’ve shared so far and cast a critical eye on it. Are your posts trustworthy, quirky, or action-oriented? See what tone suits your brand the best and stick to it in your future content creation efforts. Schedule Your Posts To let your target audience know what to expect from you, you should stick to your content distribution calendar and share your posts regularly. Instead of managing your posts manually, you should make this process simpler by using social media management tools. They will help you sync your social networking profiles, find fresh content, and schedule hundreds of social media posts at once. Answer and Acknowledge One of the most powerful ways to earn your customers’ respect is to provide them with an instant feedback. To stay on top of your communication with your customers, you should use social media monitoring tools. With their help, you will be able to monitor your target audience’s discussions and participate in them in real time. When doing so, you need to obey the following rules of social networking: 1. React and respond to all questions in a timely manner (consider implementing chatbots). 2. Be polite and professional. 3. If you were wrong about something, apologize. Use Social Proof Why do we stay loyal to famous brands like Coca-Cola, Apple, or Starbucks? The fact that there are millions of people around the globe using their products lends an air of authority, trustworthiness, and quality. That’s called social proof and, to integrate it with your social media campaign effectively, you need to: 1. 2. 3. 4. 5.

Share your users’ testimonials. Inspire your customers to rate and review your products and services. Seek for influencer endorsements. Show appreciation for mentions. Share your business’ milestones, such as reaching a certain number of customers.

Offer a Rewards Program When done right, customer loyalty programs are immensely powerful customer retention boosters. As the holiday season is here, you should incentivize your followers for being loyal to your brand, as well as for sending feedback, making referrals, or sharing your posts. And, social networks are a perfect place for you to do so. Turning Big Data into Business Insights No matter how vast your big data sources are, if your company does not devise the right methods for garnering meaningful insights from it, the data is of no avail. The entry of big data has revolutionized the way businesses work. However, till today, a large number of decision makers are confused on how to extract the right insights from big data. This is mainly because businesses embark on this journey without checking if they have all the

parameters in place. Majority of big data projects are implemented after insight expiry or with defective strategies. Before tackling a voluminous amount of data, it is crucial that businesses formulate an apt big data initiative to suit their needs. I think that the following five ways are common to successful businesses and are an effective guide for turning big data into big insights, as shown in Figure 1.5.

Figure 1.5 Turning big data into big insights Enhance Speed and Delivery Speed is a key factor for productive action. For successful execution from insights, you need to act quickly. If you spend a long time discussing and analyzing big data in the hope of acquiring near perfect insights, all your efforts will end up fruitless. When it comes to big data analytics, it is crucial to focus on quick decisions and execution. Today, successful companies like Amazon and Microsoft have one thing in common—they make their decisions from 70 percent of relevant data available. If they, too, would wait for perfect information for perfect insights, their outputs and revenue streams would face the threat of paralysis. Determine What’s Actionable Before you start extracting insights from big data, you need to have a clear understanding of the things you want to achieve from it. Differentiate between the strong areas of your business and those that need reconsideration. Before diving in for answers, it is important to have the right set of questions for big data analytics. Address those questions first that you know are bound to lead to economic opportunities and are practically actionable. It is easy to get distracted by the vast availability of big data. Thus, narrow your approach to core business problems. Set achievable parameters; otherwise, you will risk the loss of manpower and valuable resources.

Assemble a “Smart” Team The next step is to assemble a team of skilled professionals. Actionable insights can only be garnered from big data effectively with the assistance of intelligent humans. There needs to be a presence of creative personnel who can formulate new ideas, develop technological strategies, and produce efficient implementation. Look for individuals who have fair knowledge in the fields of AI, machine learning, big data analytics, and automated support systems. Understand Customer Needs How will you extract insights from big data if you don’t have an idea of your customer needs and your business requirements? Before going into insights, you need to focus on gaining qualitative customer insights. Thus, businesses must consider the challenges their audience is facing. This means interacting with people who use your product or service, recording their responses, and channeling those responses to spark your product or service. Focus on the Right Sourcing While a company’s main aim is to build insights from a range of data sources, it is crucial to focus on the types of data sources that will aid in the progress. The perfect dataset doesn’t exist. Start with analyzing data from a data mart. Most businesses are confused when it comes to the difference between a data mart and a data warehouse. A data warehouse is obviously an essential asset in any company, but a small and selective data mart produces quicker insights and prevents you from getting mired in complexity. Over time, you can then broaden your horizon and focus on additional data sets. Integrating Marketing Automation and Customer Relationship Management (CRM) There are so many leads, prospects, and customers from so many channels in the digitally connected world that you may need both a CRM and marketing automation software to adequately manage all of them. CRM and marketing automation are different processes with different purposes and utilize distinct tools. The confusion usually arises because both CRM and marketing automation typically deal with the same information (contacts, lists, profiles, etc.) and similarly work with leads. Figure 1.6 shows that marketing and sales alignment creates more effective commerce, and involves integrating marketing automation and CRM.

Figure 1.6 Integrating marketing automation and CRM Main Differences Between CRM and Marketing Automation Type of Users Marketing automation platforms are used by marketers while CRM programs are utilized by sales people. Both offer automation, analytics, and reporting features to streamline daily tasks and provide users with important metrics and insights on the progress, efficiency, and effectiveness of marketing campaigns as well as sales activities and efforts. Key Function The primary function of marketing automation is to generate leads from marketing campaigns. A lead can be an individual or business that expresses interest in your product or services and may come as a result of referral or through direct response to your campaigns such as promotion, publicity, or advertising. On the other hand, CRM assists the sales team to nurture those leads from information collected in the contact or lead database. Sales people use CRM to analyze the information gathered, categorize and qualify contacts, and follow through with offers or discounts and other similar campaigns, all aimed at transforming leads in to buying customers. CRM is also used for retaining existing customers. Goal Marketing automation is designed to help generate marketing-qualified leads (MQLs) to be handed over to sales. Meanwhile, CRM’s goal is to convert MQLs to sales-qualified leads (SQLs) and ultimately to sales. Although the respective goals are different as you can see where one ends and the other begins in the sales funnel, marketing automation and CRM have complimentary roles in the effort to transform leads into customers.

Role in the Buyer’s Journey Marketing automation is to create awareness of your products and services while CRM is to set up or prepare for purchase. They are separate roles but at the same time complementary, unifying the two funnels that make up the buyer’s journey. Features of CRM CRM software is the main platform of your sales team and sales agents to improve their productivity and enhance customer interaction with the end goal of closing sales. For this purpose, CRM software brings with it features and capabilities such as the following: Contact management organizes your contacts by categories for easy sorting or retrieval. For all intents and purposes, this feature is sufficient for a small business to undertake a CRM program like e-mail campaigns or classifying customers based on their records. • Sales automation is the main component of CRM software automates the sales process from prospecting to customer inquiry and sending out replies to order taking. • Communication channels gives you the capability to connect, respond, and interact with customers and prospects from various channels including e-mail, phone, instant messaging (IM) or live chat, social media, and forums. • Task/workflow management lets you efficiently manage activities and schedules, and come up with a contact plan. •

The great thing is that CRM integration features allow it to work with most marketing automation platforms, giving your sales team access to customer information collated by your marketing them. Likewise, marketing automation integration means the software can connect with CRM tools and make available relevant information from the marketing end. Features of Marketing Automation Marketing automation software helps the marketing team generate leads and manage contacts. The software is equipped with these features: Lead management: This helps you generate, onboard, nurture, and automate leads. It comes with tools to track and analyze a lead’s activities such as website visits, e-mail opens, completing forms on your website, or reading your blogs. • E-mail marketing: This allows you to compile a contact list from various sources and channels, and send targeted messages, onboard customers, and share both informative as well as promotional content. • Market segmentation: The system can automatically classify and assign the lead to a marketing segment based on information gathered from your lead’s activities and interactions. With analytics, marketers get to know which leads are likely to be converted into customers. • A/B testing: This essential marketing automation software features enable you to use advanced e-mail segmentation to test the effectiveness of different campaigns, compare results, and to optimize and determine the best approach for your marketing strategies. •

To Conclude CRM and marketing automation differs in purpose, users, and uses. It is, however, not a choice between two systems since each plays an important role in your business—driving productivity and efficiency of your sales team and marketing team, and ensuring the effectiveness of your marketing campaigns and sales efforts. Emerging Technologies Powered by Big Data

The Essential Eight Emerging Technologies as illustrated in Figure 1.7 by Pricewaterhouse Coopers (PwC) will influence business models and the competitive landscape for years to come. And one thing’s clear: emerging technology is no longer the realm of IT alone. Business leaders need to begin learning and thinking about how to harness their potential.

Figure 1.7 The essential eight technologies by Pricewaterhouse Coopers (PwC) Source: PwC, “How can boards tackle the essential eight and other emerging technologies?,” June 2017 © 2018 PricewaterhouseCoopers LLP, a Delaware limited liability partnership Blockchain A blockchain is a distributed electronic database or, more broadly, an electronic ledger that uses software algorithms to record and confirm transactions with reliability and anonymity. The record of events is shared between many parties and information once entered cannot be altered, as the downstream chain reinforces upstream transactions. Internet of Things The Internet of Things (IoT) is a network of physical objects—devices, vehicles, appliances— embedded with sensors, software, network connectivity, and computer capability enabling them to collect, exchange, and act on data, usually without human intervention. The Industrial IoT (IIoT) refers to its use in the manufacturing and industrial sectors, or Industry 4.0. IIoT adds sensors to people, places, processes, and products across a value chain to capture and analyze information to advance the goals of the organization. Augmented Reality Augmented reality (AR) is a visual and/or audio “overlay” on the physical world that uses contextualized digital information to augment the viewer’s real-world view. AR-enabled smartglasses help warehouse workers fulfill orders with precision, airline manufacturers assemble planes, and electrical workers make repairs. Virtual Reality

Virtual reality (VR) is an example of creative destruction. In a computer-generated simulation of a three dimensional image or environment viewers can use special equipment to interact with the simulation in realistic ways. However, VR has the potential to transform many other industries as well, especially in the realm of experiential training where workers can be thrown into hazardous, difficult, or cost-prohibitive situations without the intense risks associated with these activities in the real world. 3D Printing 3D printing creates three-dimensional objects based on digital models by layering or “printing” successive layers of materials. 3D printing has the potential to turn every large enterprise, small business, and living room into a factory. Artificial Intelligence Software algorithms are automating complex decision-making tasks to mimic the human thought processes and senses. Artificial Intelligence (AI) is not a monolithic technology. A subset of AI, machine learning, focuses on the development of computer programs that can teach themselves to learn, understand, reason, plan, and act when blasted with data. Machine learning carries enormous potential for the creation of meaningful products and services. Drones Drones vary greatly in their capacity based on their design. Some drones need wide spaces to take off while quadcopters can squeeze into a column of space. Some drones are water-based; some can operate and navigate autonomously (via remote control) or fully autonomously (via onboard computers). In June 2016, the US Federal Aviation Administration cleared a path for commercial drone use, establishing safe-use rules that include airspace, speed, pilot certification, and other guidelines for operators. Robotics Robots are machines with enhanced sensing, control, and intelligence used to automate, augment, or assist human activities. The robot market, which has grown quite large for industrial applications, is poised for radical growth in a broad range of services applications. These applications are transforming manufacturing and nonmanufacturing operations with new capabilities that address the challenges of working in changing, uncertain, and uncontrolled environments, such as alongside humans without being a danger to them. Summary Over the past several years, the term “digital transformation” has entered the realm of enterprise IT. Digital transformation is frequently misinterpreted and misunderstood. What does “digital transformation” really mean? What essential components does it include, and how does it impact the enterprise? In the business world, everyone is talking about digital transformation—from AI to robots to the IoT. But according to many top experts in the field, most people are missing the point. Technology alone doesn’t provide value to a business. Instead, technology’s value comes from doing business differently because technology makes it possible. Since technology is changing fast, it would be wise to develop a twelve-month roadmap. The reasons for developing such a roadmap are not self-evident. Certainly technology is important, but why must the business meticulously plan out their strategy for a year into the future, especially if the environment is working just fine as it is? The truth is that there are many

reasons to draft your roadmap, and some of these reasons will be more or less relevant to different businesses depending on their industry. Digital maturity is a combination of two separate but related dimensions. The first, digital intensity, is investment in technology-enabled initiatives to change how the company operates—its customer engagements, internal operations, and even business models. Firms maturing in the second dimension, transformation management intensity, are creating the leadership capabilities necessary to drive digital transformation in the organization. Digital transformation changes the DNA of an organization. It breaks down the silos, rinses existing processes, and makes sure the business is leaner, faster, agile, and more responsive than ever before. However, business leaders forget that for such a transformation to be successful, it needs to be backed by a corresponding cultural shift. Culture will form the backbone of all change initiatives. Creating business content is complex. It has to satisfy various needs such as raising awareness, driving traffic, generating leads, and ultimately converting customers. Content is often aimed at specific niche audiences of buyers and hence it doesn’t get widely shared. However, there are some types of content that engage large business audiences. I have reviewed the most engaging business content published this year and identified 10 key content types that work well to drive B2B engagement. The world of social networks is rising at an astonishing pace. To put yourself on the radar of your customers, deliver a personalized approach, and improve your conversion rate, you need to create a solid digital marketing campaign. Customers’ expectations for better and innovative experiences have been growing. This has forced businesses to transform themselves and rethink their service delivery to meet these demands. However, this transformation process needs to be fast. Organizations and their leaders need to keep up with the pace at which the world is evolving if they want to sustain their position in the market and grow. Digital innovation is changing the world faster than we can imagine. Having a strong social media presence can help your business in several ways. Social media platforms of a business act as multiple gateways to a business’s website, creating an external linking structure and more opportunities to appear in search results. Social media creates a way to increase brand awareness and customer base. Customers are increasingly empowered and businesses that do not provide a fast, multichannel experience will start to lose these customers. For this to happen “consistent, tangible feedback around the customer’s perceptions, motivations and expectations” is needed. Without the right technologies, it would be fairly impossible to successfully migrate from a traditional business to a digital company. The most important technologies to use are marketing automation, big data, and business intelligence. Big data powers other emerging technologies such as blockchain, Internet of Things, augmented and virtual reality, 3D printing, artificial intelligence, drones, and robotics. Homework Assignment For students: consider a brick and mortar banking company that delivers products and services to the business-to-business (B2B) market. For professionals: consider the company you’re working for or have been working for. Your VP of business development wants to transform the company to a digital leader. As a Clevel business manager with more than average interest in everything digital, you are asked by the VP of business development to conduct a research study, which will lead to a digital transformation strategy. Include exposure, engagement, and technology. Add opportunities to unlock new business values and increase competitive advantages. You can do this exercise alone. However, for best results, consider forming a team with two colleagues with a business background and two with a technology background. You or someone

else can take up the role of facilitator. The other team members will do their questions and answers. At the end of the session, the facilitator will wrap up the results. The initial tasks are involving: • • • •

Set up a digital transformation strategy Digital transformation feasibility and business case Digital transformation security and privacy challenges The competitive advantages you will accomplish by digital transformation

The homework assignment to be conducted is to draft a short report (4–8 pages), which addresses the following questions and topics: Develop a description, definition, and strategy of digital transformation. Define exposure, engagement, and technology as key components for digital success. When you consider using big data: • Define what data needs to be collected for your bank. • What data analytics are needed? • What actions should be needed based on the results from analytics? • Find a list of top digital transformation platform vendors and their solutions (find at least 10 vendors). • Align your strategy with the company’s business strategy. • Inspire your VP of business development to take the next step, which would be a digital transformation session. • • •

CHAPTER 2 Connectivity Technologies Blockchain Introduction Blockchain technology, illustrated in Figure 2.1, is an algorithm and distributed data structure designed to manage electronic cash without any central administration. The original blockchain was invented in 2008 by Satoshi Nakamoto to support Bitcoin, the first large-scale peer-to-peer cryptocurrency, completely free of government and institutions. Blockchain is a distributed ledger technology (DLT). Most DLTs have emerged in Bitcoin’s wake. The central problem in electronic cash is double spend. If electronic money is just data, nothing physically stops a currency holder trying to spend it twice. It was long thought that a digital reserve was needed to oversee and catch double spends, but Nakamoto rejected all financial regulation, and designed an electronic cash without any umpire. Each attempted spend is broadcast to a community, which in effect votes on the order in which transactions occur. Once a majority agrees that all transactions seen in the recent past are unique, they are cryptographically sealed into a block.

Figure 2.1 Blockchain technology A Bitcoin balance is managed with an electronic wallet, which protects the account holder’s private key. Blockchain uses conventional public key cryptography to digitally sign each transaction with the sender’s private key and direct it to a recipient’s public key. The only way to move Bitcoin is via the private key: lose or destroy your wallet, and your balance will remain frozen in the ledger, never to be spent again. The Blockchain’s network of thousands of nodes is needed to reach consensus on the order of ledger entries. The order of entries is the only thing agreed upon by the blockchain protocol, for

that is enough to rule out double spends. The integrity of the blockchain requires many participants. One of the cleverest parts of the BTC blockchain is its incentive for participating in the expensive consensus-building process. Every time a new block is accepted, the system randomly rewards one participant with a bounty. Benefits and Drawbacks This isn’t an exhaustive list of blockchain technology’s benefits and drawbacks, however it’s a good starting point. Benefits Resilience: Rather than using one centralized database, a blockchain approach uses multiple copies of that same database, spread across as many computers as desired. • Unalterable: The term “Blockchain” refers to how the data is arranged in batches—called blocks—that are chained together as follows: a digital fingerprint is taken from each block. Each successive block uses the previous block’s fingerprint as an input to the generation of the current block’s fingerprint. As such, if any transaction in any of the preceding blocks is changed, it affects not only that block’s fingerprint, but all successive blocks’ fingerprints. • Reduces sensitive information: Usernames and passwords are used in many traditional databases. When you log in, you have to provide your password. A malicious third party can access your account if it intercepts your password. A blockchain database doesn’t require a password. Instead, it requires a one-time use code that’s mathematically tied to your password and the specific transaction you’re authorizing. Even if that code is intercepted, it’s useless to the third party. • Efficient: A network can verify a transaction nearly instantly with a blockchain approach, as opposed to a traditional, centralized approach. The traditional approach often includes layers of security and, in some cases, manual review of transactions before they’re approved. With a blockchain approach, security is still important, but it’s perhaps less arduous than with a traditional database. •

Drawbacks Underpowered network: The phrase “safety in numbers” applies to blockchain technology. A blockchain database with a small number of computers could easily be compromised by malicious actors, simply by being outpowered. • Bugs in the protocol: An improperly written blockchain protocol—much like a website with improper security—can potentially be exploited, undermining the system. • Compromised protocol: Consider how the blockchain protocol is deployed to the network’s computers. Each computer plays by the same rules, but if the deployment of those rules is centralized, a hacker could rewrite those rules if he gains access to the computer that deploys those rules. • Lost or stolen private keys: Much like losing your bank account password, losing your private key to your account in a blockchain database means you’re no longer the only person who controls that account. Anyone using the network who has private keys should ensure those keys are kept safe. •

Market Size and Growth The worldwide blockchain technology market is forecast to reach $7.74 billion by 2024, with the financial services sector accounting for the majority of the future market growth, according to a report of Grand View Research, a San Francisco based market research and forecasting

company. The report says, “Blockchain technology is one of the most promising upcoming technological trends in the information technology domain.” The report predicts continued growth in the U.S. and Canadian markets accounting for 40.9 percent of the market. Meanwhile, China and India will see a compounded annual growth rate (CAGR) of 37.6 percent in the next eight years as the growing financial sector adopts Blockchain technology. “Not only does the technology hold the ability to disrupt the way the financial sector often works but it will also have ramifications on many other industries including consumer goods, technology, and media and telecom, among others,” says the report. In a similar report, Transparency Market Research made its own prediction with a much higher expected market of $20 billion in 2024 (as compared to $316 million in 2015). This report predicts a CAGR of 58.7 percent by 2024. Exchange operator NASDAQ is looking to invest in blockchain startups as part of a new venture initiative. Nasdaq Ventures has set its sight on investing in companies that work with Blockchain, as well as firms focused on artificial intelligence, next-generation data analysis and machine learning. The firm will invest as much as $10 million in relevant startups, focusing on both seed-stage and late-stage placements. Blockchain Powered by Big Data We Are Lacking the Combination of Blockchain and Big Data Implementing blockchain can be quite an exciting technological development and it’s expected to be a big year for the technology. For big data, this could give the technology several new methods for managing the information. The process is much more transparent because nothing can be changed without the approval of every server in the network, everyone can see what changes are being made, and there is no one authority who controls the information. This makes it much more difficult for mistakes and fraudulent transactions to occur. When handling transactions, blockchain can be used to handle the amount of data that is being processed. As the blockchain is secure, it can be used to prevent hacking and data leaks. In 2017 a number of banks in Japan moved to the Blockchain to process their big data. It has allowed them to perform security checks in real-time and has made it possible to identify patterns in consumer spending and identify risk transaction a lot quicker. While blockchain is still relatively new, it is starting to have an impact on the world and how big data is processed. As more data is collected in real time, it will be interesting to see how blockchain will continue to revolutionize different industries and bring better data privacy. In spite of the fact that blockchain was created as a system for serving the financial sector, its scope oversteps these bounds. There are even apps using a technology blockchain in a healthcare and science setting. Their creators believe that opportunities of a blockchain data storage will improve people’s life. Experts agree that combining blockchain and big data is a global challenge for the world and will need innovative decisions to be implemented effectively. In the future, the scenario of personal problems and limitations on development will be prevented with the use of technology. How Organizations Are Using Blockchain In the following I have included case studies in very different industries just to show how broad blockchain initiatives are being implemented. IBM and Maersk Using Blockchain to Digitize the Shipping Industry

Figure 2.2 shows that Maersk and IBM are collaborating to use blockchain technology across the global, cross-border supply chain. The solution, based on the hyperledger fabric, will be made available to the shipping and logistics industry. It will help manage and track the paper trail of 10’s of millions of shipping containers across the world by digitizing the supply chain process. When adopted at scale, it has the potential to save the industry billions of dollars, the pair claim.

Figure 2.2 Maersk and IBM together in Blockchain Maersk comments: As a global integrator of container logistics with the ambition to digitize global trade, we are excited about this cooperation and its potential to bring substantial efficiency and productivity gains to global supply chains, while decreasing fraud and increasing security. The projects we are doing with IBM aim at exploring a disruptive technology such as Blockchain to solve real customer problems and create new innovative business models for the entire industry. IBM adds: We believe that this new supply chain solution will be a transformative technology with the potential to completely disrupt and change the way global trade is done. Working closely with Maersk for years, we’ve long understood the challenges facing the supply chain and logistics industry and quickly recognized the opportunity for Blockchain to potentially provide massive savings when used broadly across the ocean shipping industry ecosystem. IBM and Maersk plan to launch a blockchain technology platform that will digitize the shipping industry and all the documentation that goes with it. Transaction Banks in Blockchain Proof of Concept with SWIFT GPI

SWIFT Global Payments Innovation (GPI) and a group of transaction banks are developing a proof of concept (PoC) application that will test whether distributed ledger technology can be used to improve the reconciliation of their nostro accounts in real-time, optimizing their global liquidity. Australia and New Zealand Banking Group, BNP Paribas, BNY Mellon, DBS Bank, RBC Royal Bank, and Wells Fargo are among those participating in the PoC. An additional 20 banks will join the program at a later stage to further validate and test the DLT concept. The results of the PoC will be presented at SIBOS (Swift International Banking Operations Seminar), in Toronto during October. The nostro DLT PoC is deeply embedded in the SWIFT GPI story of streamlining the cross-border payments system. SWIFT GPI is leveraging the recently released hyperledger fabric v1 technology, and combining it with key SWIFT assets, to ensure that all the information related to nostro/vostro accounts is kept private and seen only by the account owner and its correspondent banking partner. The PoC application will use a private permissioned blockchain in a closed user group environment. The data stored on the ledger and the APIs used to query and update it will also be designed to support ISO 20022 message formats. R3 Blockchain Consortium Keeps Expanding R3 is an enterprise software firm working with a network of over 200 financial institutions, regulators, trade associations, professional services firms, and technology companies to develop on Corda, its blockchain platform designed specifically for businesses. In Figure 2.3you can see that R3 is a large blockchain consortium that keeps expanding. R3’s global team of over 180 professionals in 11 countries is supported by over 2,000 technology, financial, and legal experts drawn from its global member base. R3 is backed by investment of more than $120 million from over 45 firms.

Figure 2.3 R3 Blockchain consortium keeps expanding Source: thefinancialanalyst.com

Corda is the outcome of over two years of intense R&D by R3 and its members and meets the highest standards of the financial services industry, yet is applicable to any commercial scenario.

It records, manages, and executes institutions’ financial agreements in perfect synchrony with their peers, creating a world of frictionless commerce. Rebuilding the Music Industry on the Blockchain Many music artists are turning to the blockchain as a way to make online music sharing fairer. Three companies are trying to solve this and other problems by making for more direct payments to the artists and using smart contracts to automatically solve licensing issues, according to Billboard. PeerTracks aims to offer a music streaming platform that lets users listen to music and use the blockchain to directly pay the artists with no intermediary. The platform also hopes to create more direct engagement between artists and customers. Ujo Music, which says it is rebuilding the music industry on the blockchain, is spearheaded by entrepreneur Phil Barry. It also hopes to solve the problem of streaming music and paying artists. Beyond streaming, Ujo is envisioned as a way to better catalog which artists and creators are behind which songs, also using smart contracts as the autonomous brains behind the listings. Mycelia, founded by Grammy-winning artist Imogen Heap, develops intelligent songs with smart contracts built in. The blockchain-enabled contracts let artists to sell directly to fans without going through a record label. Impact of Blockchain on Industries As you might suspect, blockchain technology has a disrupting effect on various industries as shown in Figure 2.4.

Figure 2.4 Impact blockchain on industries Impact on Financial Services A technology as revolutionary as blockchain undoubtedly has a major impact on the financial services industry. Many report blockchain for its potential to demystify the complex financial services industry, while also reducing costs, improving transparency to reduce the regulatory

burden on the industry. But despite its potential role as a forerunner to extend financial services to the unbanked, many fear that its effect on the industry may have more cons than pros. Industries including payments, banking, security, and more will all feel the impact of the growing adoption of blockchain. Profit centers that leverage financial inefficiencies will be stressed. Companies will lose their value proposition and a loss of sustainable jobs will follow. The introduction of blockchain to the finance industry is similar to the effect of robotics in manufacturing: change in the way we do things, leading to fewer jobs, is inevitable. On a positive note, blockchain will change the way financial services is done around the globe. The technology and its broad range of potential uses allows trade to be transacted or contracts concluded without recourse to any institutions or agents acting as intermediaries. This will enable financial service firms to reduce costs and develop new business models. Impact on the Energy Sector The blockchain technology holds great promise to improve the functioning of the energy sector. If it’s applied at an industry wide level, from the ground up, the energy blockchain could be the catalyst to a complete transformation of the energy industry. Blockchain lowers the entry barriers, opening up electricity marketplaces to more participants and their potential energy flexibility. Such an infrastructure would provide an open, transparent, and timely way to record transactions in the energy sector, from generation through consumption. • By providing energy companies a more efficient way to record and process data and customers an easier and more accurate way to manage their bills, the use of blockchain could increasingly streamline global distribution of energy. • Blockchain has also the ability to remove the need for manual meter reading and the inaccurate estimated bills that come with it. A blockchain solution identifying where the energy is coming from, at what price and any markup passed to the consumer will help to regain integrity in the energy industry. •

This could all result in increased competition, streamlined energy distribution, reduced energy spending, transparency, renewed trust between end consumers and energy suppliers, and as a result could help cut electricity bills. Impact on the Retail Sector Blockchain can help retailers increase operational efficiencies, optimize the payment process, reduce fraudulent activity, and ultimately gain consumer confidence. Examining a bit deeper, blockchain can help with the following: Tracking and tracing products: All members of the retail value chain including the manufacturer, retailer, transportation, and logistics vendors–—and perhaps most importantly, the consumer—have visibility into the product across the entire lifecycle. • Detecting counterfeit or stolen goods: With a transparent and secure record, retailers and suppliers alike can detect if the goods they are receiving and selling are coming from genuine sources and are actually what they claim to be. • Personalizing the customer experience: Tech-savvy consumers expect more personalized shopping experiences across the multiple channels. Retailers can only meet this demand by incorporating various systems on the back-end to gain clear visibility about the product preferences, shopping habits and purchasing history of individual customers. • Optimizing guaranties and loyalty programs: Consumers get confused about the product guaranties they are covered under and the rewards they have received through multiple loyalty programs. For consumers, having one cloud-based place to manage these, clears the confusion. •

Impact on the Telecom Sector Blockchain will be a major support system to leverage the present condition of the telecom industries. Blockchain provides a never-ending area of services to deal with. Some of these are discussed as follows: Simplifying the authentication process: Many of those involved in the “authentication game” are trying to minimize their work. They are playing a very clever game of asking everyone to “log in using Facebook.” One click and it’s done. No more beating around the bush. • Resolving transaction issues: The telecommunication industry has a great deal of problems when it comes to billing and invoicing. It is, obviously, an annoying task to manage hundreds of thousands of consumers across oceans. While the blockchain ledger solves this problem in a split second, it offers public and private keys and a full audit trail. • Managing roaming connections: If you join blockchain, no matter where in the world you go, the technology will be made available to you. • Furnishing smart cities: The opportunities are already wide-ranging. Using blockchain will definitely be another reward. • Dealing with mobile money: Looking at mobile money, it closely resembles cryptocurrency. As of now, all of us are aware of blockchain’s efficiency in leveraging the Bitcoin. •

Homework Assignment For students: consider a financial services brick and mortar financial services company that delivers products and services to the business-to-business (B2B) market. For professionals: consider the company you’re working for or have been working for. Your VP of business development wants to transform the company to a digital leader. As a Clevel business manager with more than average interest in everything digital, you are asked by the VP of business development to conduct a research study that will explore blockchain technology and opportunities to unlock new business values and increase competitive advantages. You can do this exercise alone. However, for best results consider forming a team with two colleagues with a business background and two with a technology background. You or someone else can take up the role of facilitator. The other team members will do their questions and answers. At the end of the session, the facilitator will wrap up the results. The initial tasks would involve the following: Understanding the blockchain technology, platforms and providers Blockchain feasibility and business case Blockchain security and privacy challenges The competitive advantages you will accomplish by using blockchain Other emerging technologies that amplify the results of the working with blockchain. Think of big data, Internet of Things, artificial intelligence, and more • • • • •

The homework assignment to be conducted is to draft a short report (4–8 pages), which addresses the following questions and topics: Give a description and definition of blockchain technology. Define benefits and drawbacks of working with blockchain. When you consider using big data: º Define what data needs to be collected for your financial services company. º What data analytics are needed. º What actions should be needed based on the results from analytics. • Find a list of top blockchain platform vendors and their solutions (find at least 10 vendors). • • •

Align your research study with the company’s business strategy. Inspire your VP of business development to take the next step, which would be a feasibility study. • •

Internet of Things Introduction The Internet of Things (IoT) describes a growing network of connected “things” that contain sensors, chips, processors, and the ability to connect with other devices on a network. You can see the complexity of an IoT network in Figure 2.5. While we have accepted that computers, printers, and smart phones have this capacity, we are now starting to see televisions, automobiles, and even electrical grids that can send and receive data or be controlled remotely.

Figure 2.5 Internet of Things (IoT) In our daily lives, the IoT enables household devices like refrigerators, washers, thermostats, and lighting to be controlled by a smartphone from virtually anywhere. These devices can transmit the current temperature within the home from a thermostat, or that their refrigerator is out of milk. Analysts expect the home market for smart devices to grow from $47 billion in 2015 to $122 billion by 2022. Away from home, wearable devices that track body movement and caloric usage are already becoming mainstream. The global market for wearable devices witnessed year-on-year growth of 38 percent in 2016 and has been one of the early drivers within the IoT market. The commute to work or school is a natural place for smart devices, and by 2025 expectations are that 250 million vehicles will be connected to the Internet. This advancement will underpin the movement toward self-driving vehicles, as it provides the infrastructure needed for vehicles to communicate with each other and mapping software in real time.

At work, office buildings will be able to monitor their own erosion and factories will predict maintenance needs, improving health and safety, and overall efficiency. Manufacturing is expected to be one of the largest contributors to the overall growth of IoT, with global revenue opportunities for IoT within manufacturing growing from $472 billion in 2014 to a projected $913 billion by 2018. Utility grids will be able to connect to the Internet and communicate with energy providers and end-users in real time. This information will be used to distribute energy more efficiently across the grid or allow end users to better measure power usage during peak hours. The next iteration is an expansion to smart cities—traffic lights, garbage cans, water and gas lines, all connected and sending service or status updates. This data transmission will help improve traffic and safety, while reducing maintenance costs. It is estimated that municipalities worldwide will increase their spending on IoT systems more than threefold, from $36 billion in 2014 to $133 billion in 2019. According to Gartner, more than 50 percent of new business processes will contain devices connected to the IoT. All things told, the total economic impact of IoT, including consumer surplus, is estimated to be between $3.9 and $11.1 trillion in 2025. Benefits and Drawbacks A number of industries are already finding that IoT offers improvements in areas such as safety, efficiency, data-driven decision making, and infrastructure. Benefits Autonomous (“driverless”) motor vehicles: The World Health Organization (WHO) has put the annual number of car-related deaths worldwide at well over one million. The majority of these deaths are due to human error. IoT technology, especially the rise of safety-focused sensors in automobiles, has the potential to dramatically reduce motor-vehicle related accidents and deaths, especially when embedded in autonomous cars and other vehicles. • Manufacturing: IoT is helping keep workers safe through wearable technology equipped with embedded sensors to warn workers of unsafe conditions, for example, the presence of toxic gasses or overutilization. And IoT devices placed strategically throughout even the most complex global supply chain can give managers deep, real-time insight into any problems, even before they arise. • Health care: IoT enables health care workers to keep much closer tabs on patients. Paramedics, for example, can use IoT devices to capture critical patient data and transmit it instantly to the electronic records (ER), so that by the time a patient arrives, the doctors already have a plan of action in place instead of wasting vital time trying to understand the patient’s condition from the ground up. •

As always, there are also drawbacks connected to the IoT. Drawbacks From what we can see today, the three biggest drawbacks related to the broad use of IoT lie in the areas of privacy, cybersecurity, and liability. Privacy: Related concerns and the Internet date back at least to the advent of tracking software or cookies. The addition of billions more devices constantly monitoring data, much of it personal, will only aggravate these worries for many people, both in their private lives and at work. •

Cybersecurity: This is also a risk we are already familiar with and one that is likely to be aggravated by IoT. Since any node on a network is a potential point of entry for a hacker, overall network security will become an even bigger issue than it is today. • Liability: IoT devices can quickly generate legal and ethical conundrums that no one currently has any idea how to resolve. One example: Should a driverless automobile take every action it can to protect its occupants from harm, even if that means “deliberately” harming other motorists or pedestrians? If the car does crash and injures someone, where does the chain of liability start and end? •

Market Size and Growth The Internet of Things (IoT) has been called the next Industrial Revolution. It will impact the way all businesses, governments, and consumers interact with the physical world. Here are some figures on the topic: Devices: In total, 34 billion devices are forecasted to be connected to the Internet by 2020, up from 10 billion in 2015. IoT devices will account for 24 billion, while traditional computing devices (e.g., smartphones, tablets, smartwatches, etc.) will comprise 10 billion. • Solutions: Nearly $6 trillion will be spent on IoT solutions over the next five years. • Top adopters: Businesses will be the top adopter of IoT solutions. They see three ways the IoT can improve their bottom line by (1) lowering operating costs, (2) increasing productivity, and (3) expanding to new markets or developing new product offerings. • Second-largest adopters: Governments are focused on increasing productivity, decreasing costs, and improving their citizens’ quality of life. They are forecasted to be the second-largest adopters of IoT ecosystems. • Lagging behind: Consumers will lag behind businesses and governments in IoT adoption. Still, they will purchase a massive number of devices and invest a significant amount of money in IoT ecosystems. •

IoT Powered by Big Data With digital transformation, technologies such as big data and IoT are on the topmost agenda of all the businesses. Each of these technologies is no longer a sophisticated “nice to have” technology. They have become a necessity. Although the different technologies evolved independently, they are increasingly becoming more connected. With more adaptation and development, we can see a persistent convergence of these technologies in a way that the capabilities of the technologies are aligned in the best possible way. The Path of Convergence Big data and IoT are distinct disciplines that have evolved separately over time. However, they are increasingly becoming related. The concept of big data and IoT has been around for many years, but its mainstream application started only recently. Today these technologies are more connected than ever in every respect. Demand for big data is calling for the adoption of IoT platforms. With IoT, the amount of big data will obviously increase. The adoption of IoT and big data compels a move toward cloud technology. According to IDC, “Within the next five years, more than 90 percent of all Internet of Things data will be hosted on service provider platforms.” The number of IoT devices is expected to grow to 20 billion by 2020 whereas the big data industry is expected to have a worth of US$66.8 billion by 2021. These are the fastest growing sectors in IT and both are very much necessary for any technological innovation.

How Organizations Are Using Internet of Things IoT has many applications as you can see in Figure 2.6. Following are just a few use cases to give you an idea of its possibilities.

Figure 2.6 IoT use cases Rolls-Royce Uses IoT to Cut Down on Engine Faults and Fuel Costs Rolls-Royce is using Azure Stream Analytics and Power BI to link up sensor data from its engines with more contextual information like air traffic control, route data, weather, and fuel usage to get a fuller picture of the health of its aircraft engines. Using Microsoft’s Azure IoT Suite to collect data, and Cortana Intelligence Suite to derive insights, Rolls-Royce will now go beyond predictive maintenance and into metrics that it can pass onto operations teams at airlines as a value-added service. These insights are aimed at helping airlines to be more efficient when it comes to maintenance, aircraft choice, and route selection. A typical Rolls-Royce Trent engine, which can be found on the latest Airbus A380 and Boeing 787 Dreamliner aircrafts, will be fitted with 25 sensors, tracking everything from fuel flow, pressure, and temperature to the aircraft’s altitude, speed, and the air temperature. ABB Amplifies the Power of Robots Using IoT Robots are no longer the product of science fiction stories. The world is moving rapidly toward the automation of industrial processes, and new industries are entering the robotics market at unprecedented rates. Advancement in technologies and communication make today’s industrial robots more powerful and at the same time user-friendly than ever before. ABB is a leading supplier of industrial robots and modular manufacturing systems. The company has installed more than 250,000 robots worldwide serving a variety of industries including automotive, plastics, metal fabrication, foundry, electronics, machine tools, pharmaceutical, and food and beverage.

“Proactive service means enhanced reliability and higher productivity,” according to ABB Robotics Division. “If we have precise and reliable information about what’s going on with a robot, our customers will benefit from less downtime and higher productivity.” The greatest benefit of the Cisco Jasper platform for ABB is the ability to manage and automate its interconnected devices on a global scale while maintaining the company’s high service reliability and increasing demand for services. “Previously, we were reacting when customers would call us, and it was difficult to get information to understand precisely what was happening at the device level,” explains ABB. “With Control Center automation, we have realtime monitoring data across our remote devices and can automate responses before incidents occur.” Autonomous Vehicles Integrated with the Internet of Things Automated driving is expected to increase safety, provide more comfort, and create many new business opportunities for mobility services. That’s why autonomous vehicles are in the center of interests of experts and general public and their market share is expected to grow over the next couple of decades. The forecasts say that the number of automated vehicles will climb from about 4 percent of the global light-duty vehicle market in 2025, to roughly 41 percent in 2030 and 75 percent by 2035, which means about 95.4 million units annually by then. To use the full potential of the autonomous vehicles, the Autopilot project (coordinated by Ertico and cofunded by the European Union) combines this concept with the Internet of Things (IoT) that enables connections between objects or “things” anytime and anyplace, using any service over any network. The project kicked off in January 2017 and the work is foreseen until the end of 2019. Within the project, the European automotive industry is investing in connected and automated driving with cars becoming moving “objects” in an IoT ecosystem eventually participating in big data for mobility. Autopilot brings IoT into the automotive world to transform connected vehicles into highly and fully automated vehicle. Thanks to the project, the IoT ecosystem will involve vehicles, road infrastructure, and surrounding objects, with a particular attention to safety critical aspects of automated driving. Autopilot will also develop new services, like autonomous car sharing, automated parking, or enhanced digital dynamic maps to allow fully autonomous driving. Smart City Projects and IoT Applications Automated driving is expected to increase safety, provide more comfort, and create many new business opportunities for mobility services. That’s why autonomous vehicles are in the center of interests of experts and general public and their market share is expected to grow over the next couple of decades. The forecasts say that the number of automated vehicles will climb from about 4 percent of the global light-duty vehicle market in 2025, to roughly 41 percent in 2030 and 75 percent by 2035, which means about 95.4 million units annually by then. Smart cities use IoT devices such as connected sensors, lights, and meters to collect and analyze data. The cities then use this data to improve infrastructure, public utilities, and services. You can find a few examples in the following. Amsterdam, shown in Figure 2.7, is a smart city that has been experimenting with offering home energy storage units and solar panels for households that are interconnected to the city’s smart grid. These batteries help lower stress on the grid at peak hours by allowing residents to store energy during off-peak hours. The solar panels also let residents sell spare energy from the panels back to the grid.

Figure 2.7 Smart City Amsterdam The Amsterdam example is just one of many, particularly in Europe, which is leading the world in smart city development. The European Union (EU) has been proactive in encouraging its member nations to develop smart cities, and the European Commission has allocated €365 million for this purpose. And the efforts have already started to bear fruit. Paris debuted an electric car sharing program called Autolib in 2011 and has since grown the fleet of vehicles to 3,000. The connected vehicles can be tracked via GPS, and drivers can use the car’s dashboard to reserve parking spaces in advance. London announced earlier this year that it would begin tests on a smart parking project that would allow drivers to quickly locate parking spaces and remove the need for lengthy searches for an open spot. This, in turn, would alleviate urban traffic congestion. The U.K. capital also plans test electric car and bike-sharing programs. Meanwhile, Copenhagen has started using sensors to monitor the city’s bike traffic in real time, which provides valuable data on improving bike routes in the city. This is crucial, as more than 40 percent of the city’s residents commute by bike each day. North America has lagged behind even though it is the most urbanized region in the world, with more than 80 percent of its population in urban centers. Still, there are plenty of smart city projects up and running in these nations, specifically with regard to public safety and traffic. New York City has tested gunshot detection technology in police precincts in Brooklyn and the Bronx, and the mayor wants to expand this testing around the city. Camden, New Jersey has implemented similar tech. New York City also piloted a connected car program in 2015 with the goal of learning where drivers make frequent hard brakes or sharp turns because of traffic. Officials could then use this data to improve road conditions and alleviate traffic.

Finally, San Diego has started using cameras built into connected streetlights to monitor pedestrian traffic and reroute cars during peak hours to avoid pedestrian accidents and alleviate congestion. Impact of IoT on Industries What It Means for the Industry IoT has a huge impact on various industries, Figure 2.8 shows the impact on automotive and self-driving cars.

Figure 2.8 Impact of IoT on industries ROI for the Businesses Will Increase IoT and big data analytics transforming how businesses are creating value. Data analytics backed by the expansion of computing power is enabling companies to extract maximum value from data to get the best insights. Data lake is becoming normal as organizations attempt to create more value out of their data pool. Data has become the new currency. However, data storage still remains a concern. People are gradually shifting to the cloud due to less complex structure and lower costs. With more data in hand, a safe storage platform, and analysis of such data, the ROI of businesses will become very high. The cost of computation for the businesses is also likely to go down as the cost of deploying these technologies will decrease more with time.

Health Care Industry Will Become Smarter The combined features of the technologies can reshape the next generation of e-health systems. Big data in health care sector can lead to a transformation from hypothesis-driven research to data-driven research. The humungous amount of personal data collected through personal records and sensors from different medical devices needs a platform of storage. This is where cloud computing becomes important. Further analysis of these data can enable smarter health care system with personalized diagnostics and assistance. By controlling and analyzing trivial and nontrivial connections between different sensor signals and existing big data, new ways to provide remote diagnostics, and a better understanding of disease and development of innovative solutions for therapeutics can be easily achieved. Self-Service Analytics Will Be on the Rise People will become less reliant on IT department as most of the functions can be handled with data integration and automation. The business intelligence (BI) tools will increasingly become simple and self-sufficient to do basic functions. Analytics as a service will become more common. Industrial Internet of Things (IIoT) Will be Benefitted IIoT has been receiving growing attention from both academia and industry and is at the forefront of the application of the combined technologies. It generally is comprised of a variety of connected devices and is supposed to monitor, collect, exchange, analyze, and instantly act on information to moderate the industrial device’s behavior or the industrial ecosystem. Keeping this in view, the convergence of IoT and big data in IIoT is an essential component. Edge-Computing Will Be Widely Adopted Acting on real-time data has become a necessity. The importance of real-time action will increase due to the deployment of these technologies. Big data and IoT both enable real-time, on-demand action. In this view, edge computing is also becoming very popular. Convergence Between Blockchain and IoT Change is the only constant. Do you feel and see how technology has completely transformed our lives in the last few years? If you go back about 10 years, you will find that your life involved a lot less technology back then, due to which performing even simple tasks took a lot more time and effort. Most of the changes that have come about are owed to the Internet. However, if you think that the Internet revolution is over, then you are wrong. The impact of such technology is set to be of massive magnitude as it’s estimated that the installed base of IoT will reach approximately 26 million units by 2020. This means that it will hold a market worth of about $3 trillion within a couple of years’ time. Further, by 2026, it’s expected to reach an astronomical figure of $6.2 billion, with the manufacturing and health care sectors feeling the most substantial impact. Influence on Sectors IoT will impact all the major sectors like manufacturing, transportation, health care, retail, energy, agriculture, and electronics among others. Innovations like real-time data analysis and aid, automation of tasks due to intelligent machines, better customer experience, increased jobs in more flexible and open organizations, complete elimination of waste in supply chain, and reduced time to market will benefit not one or two, but the majority of the industries. A boom in investments in IoT seems inevitable in the next few years, as it can help attain more

transparency to operations in the supply chain. This will further help in reducing out of stock products and improved selection based on consumer preferences. Additionally, customer relationship management (CRM), enterprise resource planning (ERP), and other premium enterprise organizational systems are also utilizing IoT to make their business processes more rational. Due to this, massive level data transfer is now possible from different devices. All these innovations have the capacity to help industries keep a record of inventory, increase efficiency, control mechanism, reduce cost, and in many cases even save lives. Thus, it could prove to be a massive asset in the very near future. For IoT to continually grow and prosper, the use of blockchain is essential. IoT is bound to find a few hurdles on its way to ensure broad adoption. Some of the most significant challenges at present seem to be issues related to connection, identification, management, and security of a massive number of devices. Moreover, threats like distributed denial of service (DDoS) attacks mean that many IoT deployments may look to enable at least the basic levels of blockchain services. Security issues: The most critical reason why the IoT and blockchain convergence is essential is the issue of security and privacy. Manipulation and falsification of the collected data need to be prevented for us to benefit from the latest technologies. Blockchain can create a democratized secure platform, which is independent of all the parties. The risk is almost phased out by the distribution of data across a variety of sources. As a result of which hacker attack damage is limited. Not only will access be denied under such circumstances but the criminal will also be caught publicly. • Responsibility issues: Another area of concern relating to the adoption of IoT are the issues pertaining to the creation of various feasible commercial relationships among the humans and their devices. This is where responsibility issues come into play. In this case, it can be particularly risky as machines regularly take action on the basis of operations that are automatically taken by an application, triggered by another. Therein lies the challenge of interactions and making devices which act more like a human. •

Homework Assignment For students: consider a brick and mortar manufacturing company that designs, produces, and sells products and services to the business-to-business (B2B) market. For professionals: consider the company you’re working for have been working for. Your VP of business development wants to transform the company to a digital leader. As a Clevel business manager with more than average interest in everything digital, you are asked by the VP of business development to conduct a research study that will explore IoT technology and opportunities to unlock new business values and increase competitive advantages. You can do this exercise alone. However, for best results, consider forming a team with two colleagues with a business background and two with a technology background. You or someone else can take up the role of facilitator. The other team members will do their questions and answers. At the end of the session, the facilitator will wrap up the results. The initial tasks involve the following: Understanding the IoT technology, IoT devices, platforms and providers IoT feasibility and business case IoT security and privacy challenges The competitive advantages you will accomplish by using IoT Other emerging technologies that amplify the results of working with IoT. Think of blockchain, big data, artificial intelligence, robotics, and more • • • • •

The homework assignment to be conducted is to draft a short report (4–8 pages), which addresses the following questions and topics: Give a description and definition of IoT technology. Define benefits and drawbacks of working with IoT. When you consider using big data:  Define what data needs to be collected for your manufacturing company.  What data analytics are needed.  What actions should be needed based on the results from analytics. • Find a list of top IoT platform vendors and their solutions (find at least 10 vendors). • Align your research study with the company’s business strategy. • Inspire your VP of business development to take the next step, which would be a feasibility study. • • •

Augmented Reality Introduction Augmented reality (AR), as you can see in Figure 2.9, refers to both the technologies and the resulting experience during which contextually relevant digital information (in the form of text, images, graphics, animations, video, 3D virtual objects, or sound) is presented to the user in real-time overlaid on the real environment.

Figure 2.9 Augmented Reality (AR)

It is important to highlight the fact that a solution can only be considered AR if the information presented is in real time. For example, the digital annotations used to analyze football matches are not considered AR as they are added later to the video feed in postprocessing. The most common AR techniques include the following: Heads-up display: Relevant information is presented to the user overlaid on his or her field of view in user-centric manner. • Mixed reality: The digital overlays are blended in the environment and have a spatial relationship with the surrounding objects. • Spatial AR: The augmentations are projected directly on the environment. •

Market Size and Growth According to IDC, total revenue for virtual reality (VR) and augmented reality (AR) is projected to increase from $5.2 billion in 2016 to over $162 billion in 2020. 1. More than half of the revenue will come from VR/AR hardware sales: Additionally, service revenues are projected to increase over the period as demand grows for enterprise-class support. 2. AR systems will ultimately contribute more revenue than VR systems: Games and paid content will be strong sources of revenue for VR systems, particularly in the next two years. 3. Most revenue through 2020 will come from the United States: The United States, Western Europe, and Asia Pacific (excluding Japan) are projected to account for three-quarters of revenue for VR and AR. The adoption of AR and VR headsets will be driven primarily by the introduction of less expensive models to the market, first powered by smartphones before mainstream adoption of stand-alone headsets. While early adopters will drive the initial wave of purchasing, sustainable growth will likely come from VR and AR app developers building a robust and engaging ecosystem of content that entices slower adopters. The tech industry has promoted the prospect of VR for the past few decades. But only now, with headsets backed by big names like Sony and Facebook, is VR finally becoming a concrete product with mass market potential. AR Powered by Big Data AR began as a visionary idea that would change the way that humanity interacted with the world around them. The first applications of augmented reality were actually geared toward improving human performance in the workplace. But there’s far, far more to be explored. In order to stay in the front-line of the competition, organizations need to stride ahead with adopting every change in business analytics such as augmented analytics. For achieving clear insights, organizations are starting to focus on crafting models along with integrating data in order to simplify and automate the job. This has triggered the ample need for skilled data scientist in the market. Augmented analytics is emerging as the replacement of the data scientists and is capable of completing data-to-insight-to-action activities successfully such as building models, preparing the data, deciphering data patterns, and many more. This will be helpful in saving money, time, and resources while finding relevant business insights from the available data. Augmented reality can be used for data insights automation with the combined effort of natural language generation and machine learning. These insights are helpful in faster data-based decision making. We can thus consider augmented analytics is the new wave of change in the field of data analytics and industries should adopt it while it is maturing. How Organizations Are Using Augmented Reality

Apple and Microsoft Betting on Augmented Reality The battle of the smart glasses, as illustrated in Figure 2.10 is becoming fiercer every day and it’s unknown yet who’s going to win this battle.

Figure 2.10 Apple, Microsoft, and Google in Augmented Reality Apple’s plans to get involved in AR has got the tech world curious and excited about what it will entail. However, I have very little concrete to go on so far. By piecing together what we do know, like their pattern of acquisitions and statements, we can easily speculate wildly about what the future might hold. We all remember how the iPhone reshaped and, in some ways, created the market for mobile apps we know today. With that in mind, an Apple AR device could change the field for developers and consumers alike. Microsoft, Apple’s great competitor, has developed and is close to releasing the final product of their HoloLens. In effect, it could be defined as an AR device. In order to emphasize the degree to which the HoloLens is a definitive step forward in scale and kind from existing AR technologies, they decided to term it as a mixed reality device. The HoloLens is a head-mounted device that allows the user to interact with virtual elements that realistically interact and integrate with physical components of the surroundings. This means that, unlike traditional AR mobile apps that operate as “overlays,” this mixed reality includes virtual objects that bounce off physical surfaces, roll down real slopes, and are occluded by passing objects. The Google Glasses were a well-documented bust. Some people say the technology just wasn’t advanced enough to support the idea, whereas others blamed how they looked. In all likelihood, these two major reasons worked in tandem to kill the groundbreaking technology. With the success of HoloLens yet to be determined, the figures at Apple must be reasoning out the costbenefits of embarking on a similar project.

Is Apple looking to make the same leap made by Google and Microsoft in building a completely new type of device that, if successful, would be game changer in the mold of the iPhone? It seems to me that perhaps that is a long-term goal and we’re much likely to see iPhone-oriented AR first. BMW Experiments with AR technology BMW is working with management consultant Accenture to roll out an app called the BMW iVisualizer that utilizes Google’s proprietary Tango AR technology. Users can call up a 3-D image of an i3 or i8 onscreen, which is overlaid onto whatever is in the background. Just like the real thing, the doors can be opened, the lights switched on, and so on. “The thing that sets Tango apart is the fact that it understands the context of the space that it’s in. So the wheels are really on the floor, giving the whole experience a much more realistic feel,” according to Google AR business development. “It’s that level of detail which means this technology offers the customers real added value.” There are customization features built into the app as well. For example, exterior paint colors, interior options, and wheel styles can all be changed by simply tapping on the touchscreen. Afterward, the modifications can be saved and shared via e-mail, QR code, or social media. The German manufacturer says it is the first automotive brand in the world to roll out such an offering. The i-Visualizer is part of BMW’s Future Retail program was launched three years ago, aimed at evolving the customer vehicle purchasing experience. Other innovations include the Product Genius and the Virtual Product Presenter. The i-Division was chosen as the starting point due to its reputation as the “spearhead of innovation at the BMW Group.” IKEA Promotional Techniques Using AR IKEA uses a variety of promotional techniques to promote its brand. Most unique and most successful among the tools used by IKEA to promote its brand are the promotional catalogs. It is also the most used and most effective of all its marketing communication channels. These catalogs of IKEA products are printed in several languages and different catalogs are served in different markets. Apart from unique home furnishing ideas, there are real life stories and a wide range of products showcased through the hundreds of pages of the catalog. The catalog is available both in print and online. IKEA uses both traditional and digital channels to advertise and promote its brand. It has used social media to attract and engage customers. Separate country pages are used to engage customers on Facebook. Pinterest, Twitter, Google Plus, and other social media channels are also used by the brand to promote itself. From time to time, IKEA also uses well-designed outdoor campaigns for promotion. Now, IKEA is using augmented reality to help customers get a better experience of how well IKEA products fit into their homes and lives. Another key area where IKEA has focused to build a better reputation is sustainability. Today, IKEA is a successful brand. However, there is the power of marketing behind its success. One key thing that is important to focus when operating in a global environment is cultural sensitivity. IKEA has responded to the cultural challenges by using product designs and marketing techniques that suit the local markets. Most important things to be successful in any market are product quality and pricing strategy. Impact of AR on Industries Impact on Government AR creates a number of new possibilities in government services such as the following:

E-governance: citizen engagement, and e-services: Services in which every government form and application can be accessed, viewed, and completed through a variety of AR devices— smartphones, smart glasses, in-office displays, and readers. Services in which citizens and businesses can actually see through AR what planned public works projects will actually look like—highways, water and energy facilities, public parks, new transit lines, and station. • Asset management and maintenance: Municipal workforces that are able to efficiently and accurately maintain city assets—streetlights, cell towers, water wells and roads—using hard hatmounted devices and other hands-free AR devices. • Public safety and emergency services: Firefighter and disaster services being able to navigate to and through their environments with emergency vehicles equipped with AR devices. Real-time data-driven AR services that allow law enforcement officers to access location-specific information and data on dangerous situations via smart glasses, in-vehicle displays, and other wearables. • Public health, wellness, and sustainability: Inspectors of all kinds—health, building and public safety, environmental quality, and so on—being able to instantaneously “see” and interact with all the available data and information related to a facility, an agricultural area, a neighborhood or district. • Transportation and urban mobility: Being able to see and visually “connect” the various transportation systems—from traditional highway, roadway and fixed-rail infrastructure, to modern on-demand and shared mobility services, and active transit (walking and biking). • Culture, heritage, and tourism: Across the globe, protection of heritage and culture is a high priority. One of the richest uses of AR is to enhance places, such as historic buildings, castles, monuments, and heritage sites and battlefields. •

Impact on Automotive One of the industries where AR technology will have an enormous impact, is in automotive. This is illustrated by Figure 2.11.

Figure 2.11 AR technology in automotive

AR has taken the global automotive industry by storm lately. Not only AR is impacting how the future automotive industry will drive forward, but also has created some significant changes in making the car manufacturing, shopping, to car driving experience safer. Despite the fact that the AR market is relatively small and geo-centered to some continent at this present time, still there are enough reasons to believe that growth of this industry will skyrocket in the coming years. The most renowned brand BMW has moved ahead of its competitors with automotive’s first immersive, augmented reality app. Others are also following this footprint. Augmented reality apps for car selling slowly not only is revolutionizing the car buying experience for customers but also is enthusing new tech-savvy customer groups to bring dealerships to customers digitally. This new immersive approach eventually transforming the way car buyers are choosing, configuring, and making purchasing decisions by viewing and interacting with a full-scale virtual version of the car through a simple mobile application. Impact on Education Education will be one of the areas where AR technology will have a great impact. AR in education, as illustrated in Figure 2.12, can serve a number of purposes. It helps students easily acquire, process, and remember information. Additionally, AR makes learning itself more engaging and fun. Following are the pros and cons.

Figure 2.12 Impact of AR in education Pros of AR in education:

Accessible learning materials anytime, anywhere: AR has the potential to replace paper textbooks, physical models, posters, printed manuals, and so on. It offers portable and less expensive learning materials. As a result, education becomes more accessible and mobile. • No special equipment is required: Augmented reality doesn’t require any expensive hardware. Because 73 percent of all teens currently own a smartphone, AR technologies are immediately available for use for the majority of the target audience. • Higher student engagement and interest: Interactive, gamified AR learning can have a significant positive impact on students. It keeps them engaged throughout the lesson and makes learning fun and effortless. • Improved collaboration capabilities: AR apps offer vast opportunities to diversify and shake up boring classes. Interactive lessons, where all students are involved in the learning process at the same time, help improve teamwork skills. • A faster and more effective learning process: AR in education helps students achieve better results through visualization and full immersion in the subject matter. A picture is worth a thousand words, right? So, instead of reading theory about something, students can see it with their own eyes, in action. • Practical learning: Apart from schooling, professional training can also benefit greatly from the use of AR. For example, accurate reproduction of in-field conditions can help master the practical skills required for a certain job. • Safe and efficient workplace training: Imagine being able to practice in heart surgery or operating a space shuttle without putting other people in danger or risking millions of dollars in damage if something goes wrong. It is possible with AR. • Universally applicable to any level of education and training: Be it learning games for kindergarten or on-the-job training, AR isn’t limited to only one use case or field of application. •

Cons of AR in education: A lack of necessary training: Some teachers might struggle to put these new technologies into practice, as their background training doesn’t provide the necessary skills. Only the most openminded teachers and innovative educational institutions are ready to apply augmented reality apps in education. • Dependence on hardware: Using augmented reality in the classroom requires a certain resource base. For example, not all students have smartphones capable of supporting AR applications. • Content portability issues: The AR app you build needs to work equally well on all platforms and devices. However, it is practically impossible to provide the same quality of AR content on any device. •

Homework Assignment For students: consider a brick and mortar media company which designs, produces, and sells products and services to the business-to-business (B2B) market. For professionals: consider the company you’re working for or have been working for. Your VP of business development wants to transform the company to a digital leader. As a Clevel business manager with more than average interest in everything digital, you are asked by the VP of business development to conduct a research study that will explore augmented reality (AR) technology and opportunities to unlock new business values and increase competitive advantages. You can do this exercise alone. However, for best results consider forming a team with two colleagues with a business background and two with a technology background. You or someone else can take up the role of facilitator. The other team members will do their questions and answers. At the end of the session, the facilitator will wrap up the results. The initial tasks involve the following:

Understanding the AR technology, AR devices, platforms, and providers AR feasibility and business case AR security and privacy challenges The competitive advantages you will accomplish by using AR Other emerging technologies that amplify the results of working with AR. Think of big data, virtual reality, blockchain, Internet of Things, artificial intelligence, and more • • • • •

The homework assignment to be conducted is to draft a short report (4–8 pages), which addresses the following questions and topics: Give a description and definition of AR technology. Define benefits and drawbacks of working with AR. When you consider using big data: º Define what data needs to be collected for your manufacturing company. º What data analytics are needed. º What actions should be needed based on the results from analytics. • Find a list of top AR platform vendors and their solutions (find at least 10 vendors). • Align your research study with the company’s business strategy. • Inspire your VP of business development to take the next step, which would be a feasibility study. • • •

Virtual Reality (VR) Introduction Virtual reality (VR), shown in Figure 2.13, immerses you in a virtual world through the use of a headset with some type of screen displaying a virtual environment. These headsets also use a technology called head tracking, which allows you to look around the environment by physically moving your head. The display will follow whichever direction you move, giving you a 360degree view of the virtual environment.

Figure 2.13 Virtual Reality (VR)

At the moment, there are two major types of headsets. Both have their pros and cons, which you’ll want to consider if you’re looking to purchase one: The first type has a screen built in to the headset. These devices connect to a computer and require a pretty powerful system to operate smoothly. They have great graphics and perform well, but they’re also pretty expensive, ranging from about $400 to $800. A few popular examples of these include the Oculus Rift, the Vive, and the PlayStation VR, which connects to the PlayStation 4 game console. • The other type of headset houses your phone and uses its screen as the display. These don’t require a computer and run completely off of apps on your smartphone. The graphics and performance levels on these headsets aren’t quite as good as those with a built-in screen, but they do tend to be much cheaper. Some popular examples include Google Cardboard and the Gear VR. •

Benefits and Drawbacks One of the newest technology trends has been the birth of accessible VR. VR has enticed the market and is impacting the way we perceive and interact with the world around us. Even successful, well-known brands such as Google have utilized VR by inventing the Google 360 Virtual Tour. Could integrating a new technology such as VR be helpful for your business to thrive in our ever-changing market? Explore the advantages and disadvantages of this technology trend listed in the following to see if VR is right for your business’s future success. Benefits Since VR has hit the market, technology has finally produced user-friendly headsets for ordinary people who want their hands on the product. For businesses, VR has the potential to relay information and experiences into the corporate world like never before. Virtual Meetings: One essential benefit of incorporating VR into your business is that meetings or conferences can be easily accessible for anyone. Are employees out of town or unable to attend an important scheduled meeting? VR can make it available for those employees to conveniently set up the VR headset (or goggles) and everyone can virtually be at the same conference room all at once. • Interviews: Similar to earlier point, interviewing candidates with VR could be a great tool for those in the HR department or for hiring managers that are unable to meet directly face-toface. VR could create an intriguing experience with the introduction of remote offices for potential candidates to be interviewed in as opposed to over-the-phone interviews. VR offers the potential to read body language in order to help better examine how someone responds to interview questions. • Google 360 Virtual Tour: Have you ever wanted to preview a business or its services before making the final decision to actually pay a visit? With Google 360 Virtual Tour, this tool is perfect for prospective and current customers to experience a virtual tour of your business during the hours when you might otherwise be closed. •

Drawbacks Cost: Virtual meetings, interviews, and Google 360 Virtual Tour can be an affordable solution for large established businesses. For small businesses, could an employer afford headsets or goggles for all employees? Are meetings and interviews something a small business needs the luxury of VR for if they are not on a consistent basis? VR is still in its early stages. Therefore, the price of equipment can be costly and will most likely rise as technology improves. •

Perception not reality: While technological improvements have made life effortless and easier for all of us, VR will only ever be able to replicate reality. VR may make us feel like we are experiencing everything in real time, but we are still left with the inability to truly experience all five senses in the same way we are in the real world. Some have a negative reaction to VR, with an overall feeling of disconnect. •

VR Powered by Big Data The popularity of VR has exploded over the last few years. With large companies like Facebook, Samsung, and Google actively investing in the future of the technology, expect to see the popularity of these headsets continue to increase! Most of the applications that exist today are focused on the entertainment sector with games being the most prevalent. While many people are happy with VR being a solely entertainment device, the technology has an incredibly large amount of enterprise applications. These are only a few of the business applications of VR. Training materials: Typical training sessions at a company take place in a room or in front of a computer screen. While this style of teaching may be able to communicate information concerning an employee’s job, it is unable to create a realistic representation of an employee’s day-to-day work. By simply putting on a VR headset, an employee is able to experience a simulation of what a typical day will entail. • Sales aids: Every company has some type of sales demo. Regardless of the industry, salesmen can win or lose a sale based on how effective their demo is. By converting sales aids and demos into a virtual reality format, the sales team will be able to close more deals! • Collaboration: We have all experienced the same problem when working with colleagues in different locations. Regardless of how you describe your ideas or thought process, something is lost by the distance. How can virtual reality solve this problem? Collaborative environments! By using headsets, users can be transported to virtual rooms and speak directly to a colleague. How is this any different than Skype or other traditional collaborative methods? 3D images can be generated and uploaded, notes can be written and highlighted directly on objects, and images instantly changed to represent decisions and change in directions. • Marketing: People don’t want to just hear about a product, they want to experience it. Marketing such as Facebook ads, billboards, and television commercials can convey a message but aren’t able to truly connect with viewers. VR’s ability to transport a person to a completely different environment allows companies to transform their message and connect to potential clients. Large, international corporations such as Coca-Cola and McDonalds have already started using VR marketing campaigns. • Conferences and trade shows: From travel expenses to the price of admissions, companies can spend millions of dollars sending their employees to conferences and trade shows. Unfortunately for companies trying to save money, there was never a good way to save money but still gain all the valuable information from a trade show. VR allows companies to attend these trade shows from the comfort of their own homes. • Interior design: Interior designers have traditionally been able to show their vivid designs on a computer. Although these images can show details, clients are unable to experience the layout and feel of the room. VR interior design spaces allow for clients to stand in the middle of their new room or building. AutoCAD drawings can be uploaded and immediately converted into VR format, while collaborative environments allow for changes to be made immediately. • Shopping: How we purchase everything from clothes to furniture has greatly changed in the last few years. Shopping malls are going out of business while online stores are thriving. VR will help online stores to become more effective and profitable. Let’s use purchasing a couch as an example. Instead of just seeing a picture and imagining what it looks, a user can see the color and size of the furniture in real time. The viewer can walk around the virtual couch and see every aspect of the couch. •

Military: The military has been using virtual simulations for training for some time and for good reason! A soldier can be immersed into any scenario they may encounter. These scenarios can be programmed to change, be responsive, and record decisions making them much more powerful than simple training exercises. Monitoring VR training simulations are much easier than monitoring traditional exercises. • Real estate: For real estate agents, showing multiple houses in different areas can be extremely difficult and time consuming. For potential buyers, wasting their time at houses they don’t like can be extremely frustrating and lengthen the process. VR can solve all these problems for both the agents and buyers. By being able to virtually tour multiple houses from the comfort of a living room, potential buyers can easily rule out houses and visit only the ones which truly interest them. Real estate agents will be able to close more deals as they can show more houses. • Medical: Medical students can read and train as much as possible, but they can’t completely simulate the experience of their first operation. VR allows for students to view a surgery from the eyes of the surgeon. By the time a student steps into an operating room, they will have been able to experience every type of operation in real time. The benefits of the technology go far beyond just immersive teaching. Being able to relax in a hospital is extremely difficult and can be almost impossible for small children. By being able to completely transport a patient to a new environment, VR can comfort a patient and alleviate most of their worries. •

Those were only 10 use cases for VR. With the ability to transport a viewer to a completely new environment, the technology can be applied to almost any industry. The real question is, how can you imagine using VR? How Organizations Are Using Virtual Reality Virtual Reality, an Ideal Fit for Lufthansa Travel companies such as Lufthansa are already using VR to ensure that their brands stand out in a fiercely competitive industry where traditional methods of advertising no longer always suffice. The Lufthansa Group used VR in its summer campaign. For Lufthansa it’s about thinking and acting strategically to gain top-of-mind awareness, particularly among travel agents, the airline’s largest distribution channel. Lufthansa’s agency, Artifact, developed a 360-degree app for travel agents that “takes them around the world” by combining the use of VR with Google Street View. The app, which is called “Guesstinations,” works by showing users various possible locations within the Lufthansa group’s network in an interactive quiz-type format. Agents “land” in a destination and must use landmarks to guess where in the world they are. Prizes and incentives are included to keep engagement at an optimal level. And there are other use cases for Lufthansa to utilize VR headsets: Improving accessibility for people with any impairments: Headsets can be used to guide passengers on how to navigate around different parts of the terminal using specific sensory nodes. • Improving wayfinding to, from, and around an airport for locals and visitors: Headsets can be used to aid passengers navigate through the entire airport experience to ease anxiety • Extending unique media to allow for continuous viewing from Lufthansa lounge to gate area to on board, which could potentially create a new ancillary revenue stream. • Adding new games and other interactive components (such as shopping, curated tours, and educational). • Improving training for maintenance, on the ground and on board services. •

Enhancing the Lufthansa travel agency concept but in a smaller scale so that it can be easily put into place at more travel agencies, tourist destinations, and other retail outlets. •

Audi Brings Virtual Reality to Their Showrooms VR is now a reality in Audi showrooms and it’s coming to a dealership near you. Audi claims to have launched the world’s first fully functional VR system in the automotive retail industry, with the “Audi VR experience” now being deployed in dealerships in Germany, Spain, and the UK. Audi customers in these countries will use VR as shown in Figure 2.14.

Figure 2.14 Audi brings VR to the showroom Source: audi-press.be

The Audi VR system will then be rolled out across showrooms in other markets. Simply by wearing a VR headset, Audi customers will be able to explore the interior and exterior of vehicles that have been “digitally configured” to their own specifications. The Audi VR experience is also designed to deliver VR tutorials, but its main function will be to provide potential buyers with “an extremely realistic experience of their individually configured car, down to the last detail.” With the VR experience, Audi has developed a full-fledged sales tool for their dealers. It offers their customers more information and certainty when making their purchasing decision, as well as a special excitement factor. With this, Audi is taking the next step in their strategy to combine digital innovation with the strengths of the bricks-and-mortar dealership. Audi VR will allow dealers to virtually showcase to customers the entire Audi model range, including all equipment options.

Audi says the groundbreaking system will add to the “digital toolbox” already available in the German luxury brand’s Customer Private Lounge digital consulting suites, of which there are so far more than 400 globally. With the VR headset, prospective buyers can configure their individual dream car and explore even the smallest details from an extremely realistic perspective, selecting from several hundred million possible models and equipment variants. Apart from being able to see and hear personalized vehicles in a variety of environments and times of day, propeller-headed customers will also be able to “X-ray” them and look beneath the surface of the car into its mechanical components. In the future, further VR software upgrades will allow Audi to demonstrate new technologies such as different lighting systems at night and in poor visibility, and even to immerse customers virtually in “special Audi moments” such as a close-up experience alongside mechanics during a pit stop at the 24 hours of Le Mans. Although it’s long been used for vehicle design and engineering, Audi has also employed VR tech for some time in various parts of its business including sales, production, and technical training, with VR headsets used to train logistics staff at production plants, for example. The full retail rollout of the Audi VR application follows customer feedback from a beta version first released at selected dealers in Brazil and Germany in 2015. Audi developed the high-performance graphics engine behind its VR system, and in most markets Audi dealerships will use the Oculus Rift headset from primary project partner Oculus. UPS Enhances Driver Safety Training with Virtual Reality UPS said it will start training student delivery drivers to spot and identify road hazards using VR headsets that vividly simulate the experience of driving on city streets while teaching a more memorable classroom lesson. The company will begin launching VR training in September at its nine UPS Integrad training facilities. The adoption of VR for driver safety training reflects UPS’s commitment to using the latest and best technology to protect its on-road employees and the communities they serve. IT experts at UPS created the VR training modules that users see and hear inside VR headsets like the HTC Vive. Students using the modules must verbally identify potential road hazards such as pedestrians, parked cars, and oncoming traffic. The 360-degree view inside the headset is realistic down to the finest details. VR offers a big technological leap in the realm of driver safety training. It creates a hyperrealistic streetscape that will dazzle even the youngest of their drivers whose previous exposure to the technology was through video games. The VR training modules replace the touchscreen devices UPS Integrad facilities currently use to teach lessons on road hazards. For now, the VR training is only for those who drive package delivery trucks. But the company is exploring VR and even AR for training tractor trailer drivers and performing other duties throughout the operation. The first UPS Integrad opened in Landover, Maryland, in 2007. The training—based on the philosophy “Teach me. Show me. Let me”—occurs before students begin more intensive on-road training. Nearly 9,000 drivers have graduated from UPS Integrad locations since 2007. This training is foundational and VR brings it to life, VR complements real-world training in a way that deeply engages their employees in the UPS Integrad curriculum. Impact of VR on Industries Like other emerging technologies, VR will have an enormous impact on different industries, as illustrated by Figure 2.15.

Figure 2.15 Impact of VR on industries Impact on Retail In a world where physical and virtual environments are rapidly converging, industries are looking to find an effective touch point for marketing products to consumers. It is becoming increasingly necessary for retailers to provide customers with experience-based platforms that spark e-commerce conversion rates. VR and branding: Retailers are starting to engage consumers with story-driven VR experiences that educate and entertain. This will create a new kind of relationship between brands and audiences, as they move away from observing companies and begin interacting with them. • Empowering the customer experience: Virtual marketing and sales channels provide customers with an interactive and highly personalized experience that has plagued the sales conversion of online shopping. Advances in the use of VR in e-Commerce provide the treasured “try before you buy” experience for shoppers. • Home furnishings: Consumers are empowered with unlimited personalization options for redecorating the home they have. The interactive nature of virtual e-commerce programs presents great opportunity for retailers to showcase their products and capture an audience in new and creative ways. • Home improvement: VR also takes aim at larger and more structural home improvement projects, such as new flooring and remodeled kitchens and bathrooms. The LA Times reports that with VR, people are able to take an immersive view of “how a slab of marble or different paint color can change an entire room. • Apparel: Clothing retailers are taking a lifestyle approach in utilizing VR to engage customers with their brand. Leading here is The North Face. Known for their quality clothing for the great outdoors, North Face provides an in-store experience that appeals to the adventurous spirit of their target demographic. •

Impact on Travel

In the last few decades, the invention of low-cost flights and the Internet have revolutionized the way that we go on holiday, opening up every corner of the globe to tourists. So what will the future of tourism hold for regular travelers? Here are some of the biggest changes set to rock your summer holiday over the next few decades. Travel will no longer be a luxury: In the last 30 years, the foreign summer holiday has become an annual event for many families, thanks to cheap flights and online hotel deals. But in the next 10 years, vacations will happen far more regularly throughout the year, thanks to the rise of remote-working environments. • E-tourism: Websites like TripAdvisor already allow tourists to plan their culinary experience before they’ve even set foot in their holiday destination. Tourist attractions, restaurants, and bars will be completed connected. Meteorology technology will also play a part in tripplanning, predicting the best days for each aspect on an itinerary. • Flying hotels: Cruise-lovers often speak of falling asleep in one destination and waking up in another, but one Canadian design firm is taking this concept to a new level with a flying hotel. They came up with the idea of Driftscape, where hotel room pods would attach to a roaming central hotel lobby and restaurant. • Off-grid retreats: While the world becomes more connected, so will the desire to switch off from technology. The last five years has seen a huge increase in holiday retreats that offer digital detoxes and that is set to be a massive trend for the coming decades. • The airport “experience”: In many airports, the highlight is still a soggy sandwich and a lukewarm cup of coffee as you wait for the flight, but in big cities like London and Amsterdam, terminals have begun to offer far more customer-friendly experiences. For example, in Amsterdam Schiphol there is an art gallery curated by the Rijksmuseum. • Virtual Reality tourism: VR headsets will transform both holiday and airplane experiences over the coming years. Airlines such as Qantas have already started to offer VR headsets on some of their flights as part of an immersive flying experience and offer people a chance to experience a destination like Venice or Rome without leaving home. • Limited tourist zones: Popular tourist destinations like Venice struggle to deal with the huge number of visitors they get during peak seasons. Venetian locals have already started to protest about the number of day trippers and called for quotas in the summer months for people who aren’t staying in local hotels and contributing to the economy. •

Impact on Entertainment VR allows a person to view three-dimensional images and these images appear life-sized to the person. The aim is for a seamless connection between the person’s head and eye movements and the appropriate response. This ensures that the virtual environment is both realistic and enjoyable. This is what VR brings to Entertainment. Video games: VR gaming is where a person experiences being in a three-dimensional environment and interact with it. Movements are interpreted by a computer and trigger a variety of responses. These movements are fed back to a computer, which analyzes the data and uses it to transform your actions into the appropriate responses on the screen • Virtual Museums: Interactive displays form a large part of many exhibitions and particularly appeal to children. Children are often difficult to attract at a museum or gallery, as they tend to see this as a boring experience. But the use of interactive technologies such as VR entertainment has changed that perception. • Galleries: Immersive 3D experience allows students to manipulate virtual objects and experience whatever they’re studying. It started with the pencil to write the books. Then •

teachers started using the blackboard. Finally, we now have the abilities to answer any questions we have through the device that is in our pocket. • Theater: In the theater, VR aims to achieve engagement of the audience. This is described as immersing the participant through engaging story telling. These plays provide a wealth of information on the art and practice of immersing a theater audience within a fictional world. • Virtual theme parks: Get ready with goggles in theme parks. VR entertainment, with its computer-generated sights and sounds that surround users, soon will transport park visitors to places impossible to build. VR can create spaces that are too elaborate or fantastical to construct in real life and are scary and perilous. Convergence Between AR and VR Extended reality (XR) is a combination of augmented reality, virtual reality, mixed reality, and everything in between the continuums. The underlying technologies of AR and VR are very similar, and a convergence between the two is inevitable as can be seen with the Microsoft HoloLens. The Microsoft HoloLens is a virtual reality headset with transparent lenses for an augmented reality experience. This helps pave the way for a more immersive extended reality experience. Converging the two increases possibilities endlessly, allowing the technology to be used for a variety of things: everyday consumer experiences, industrial manufacturing, health care, education, and retail among other things. For example, for health care, medical students have performed numerous virtual surgeries in preparation for the real ones using the virtual and augmented reality technologies. Although the current wearables support either virtual reality or augmented reality, it is believed that, given time, the wearables, in the form of glasses, will merge to support the functionalities of XR. They will provide the functionalities of AR, VR, and a smartphone all in one device. Google’s wearable, Google Glass, was rolled out to the early adopters in the spring of 2013. Google did not provide the device to the mass market, but only to a select few that had to register beforehand for the chance to get a pair. The reason for this was that the R&D team knew the product was not ready to hit the market just yet. However, this was their way of beta testing the product to further improve it before the big launch. The “exclusive” group Google brought together in hopes of spreading positive word of mouth had the opposite effect on the Google Glass. The Google Glass had a number of issues: it looked aesthetically unappealing, limiting the number of users who would feel comfortable and confident wearing it; felt like an unfinished product to consumers even though they had to pay an outstanding $1,500 to get a pair; and was launched with no clear benefit as to what it does, albeit being launched to a limited, exclusive group. There were also the health and safety concerns associated with the device as it emitted carcinogenic radiations, making it unsafe for everyday use. Marketers can use Google Glass’s failure to their advantage as a “what-not-to-do” guide when it comes to wearable devices. The issues that need to be addressed are the health and safety concerns as the device will be in direct and constant contact with the user, the aesthetics of the device as users care about its appearance, and the marketers should be able to provide the users with a clear understanding of its exact functionalities to clear any doubts. However, before becoming the premier device, there a few technical challenges that need to be overcome. Common Illumination Having the ability to make virtual objects indistinguishable from real objects, under any lighting condition, is a challenge but will increase the immersion a user experiences when using the

technology. Overcoming this challenge requires further convergence between the disciplines of computer vision and 3D graphics. Motion Tracking The tracking of the head, eyes, and hands allows for intuitive interaction with the XR wearable device, creating greater immersion. Moreover, as there are no controllers available to the user, the tracking is considered paramount to carry out the necessary actions. Power and Thermal The large number of processes and actions the small wearable device is expected to run increases the chances of overheating and power drainage. The device should be able to accommodate the “always-on, intensive workloads” of XR, stressing the need for a solution to be found for the high-power consumption in relation to its small size. Connectivity For XR to deliver what it is meant to, it needs constant, uninterrupted connection to the Internet and cloud services, using 5G connection. The 5G connection will provide multigigabit throughput, as well as over-the-air latency down to 1 millisecond to help improve the speed of interaction with streaming XR video applications. Why Go for XR? According to Accenture’s Technology Vision 2018 report, 52 percent of businesses are developing an XR strategy and 79 percent believe that XR will have a widespread, cross-industry impact in the coming three years. However, many innovative brands have already begun applying XR’s immersive capabilities to bring users and consumers closer to the content through unprecedented digital experiences. One of XR’s strengths that make it attractive is that it helps close the gap between consumers and brands by blurring physical and virtual worlds while providing accurate experiences. What Can XR Offer? Many features will create an enormous market for XR glasses, as you can see in Figure 2.16. Following are a few of these features.

Figure 2.16 Features of XR glasses Source: booredatwork.com Person-to-Person Interaction XR promotes person-to-person interaction without taking away any of the real-world benefits of interpersonal engagement regardless of the distance and physical barriers involved. Closer Access to Information XR can improve perception and increase the speed at which people can understand the world around them. In the business world, this translates to better workflow, reduced errors, and improved productivity. Experiences Are Redefined Because XR blurs the physical and virtual worlds, it has the potential in bringing brands and consumers closer together, improving the overall user experience. With the developments in 3D imaging, information processing and storage, and the advances in AI and computing speed, an augmented, mixed reality world is not as far as most people believe. Although there are still barriers in making this a reality, technologists live in the hope that this immersively engaging medium will be able to enable new leaps in bounds in communication and travel and redefine the way people work. In other words, watch this space. Homework Assignment For students: consider a brick and mortar education and training company which designs, produces and sells products and services to the business-to-consumer (B2C) market. For professionals: consider the company you’re working for or have been working for. Your VP of business development wants to transform the company to a digital leader. As a Clevel business manager with more than average interest in everything digital, you are asked by the VP of business development to conduct a research study that will explore virtual reality (VR)

technology and opportunities to unlock new business values and increase competitive advantages. You can do this exercise alone. However, for best results consider forming a team with two colleagues with a business background and two with a technology background. You or someone else can take up the role of facilitator. The other team members will do their questions and answers. At the end of the session, the facilitator will wrap up the results. The initial tasks involve the following: Understanding the VR technology, VR devices, platforms, and providers VR feasibility and business case VR security and privacy challenges The competitive advantages you will accomplish by using VR Other emerging technologies which amplify the results of working with VR. Think of big data, augmented reality, blockchain, Internet of Things, artificial intelligence, and more • • • • •

The homework assignment to be conducted is to draft a short report (4–8 pages), which addresses the following questions and topics: Give a description and definition of VR technology. Define benefits and drawbacks of working with VR. When you consider using big data: º Define what data needs to be collected for your manufacturing company. º What data analytics are needed? º What actions should be needed based on the results from analytics? • Find a list of top VR platform vendors and their solutions (find at least 10 vendors). • Align your research study with the company’s business strategy. • • •

Inspire your VP of business development to take the next step, which would be a feasibility study.

CHAPTER 3 Intelligence Technologies 3D Printing Introduction 3D printing—also known as additive manufacturing and shown in Figure 3.1—turns digital 3D models into solid objects by building them up in layers. The technology was first invented in the 1980s, and since that time has been used for rapid prototyping (RP). However, in the last few years, 3D printing has additionally started to evolve into a next-generation manufacturing technology that has the potential to allow the local, on-demand production of final products or parts thereof.

Figure 3.1 3D Printing Already it is possible to 3D print in a wide range of materials that include thermoplastics, thermoplastic composites, pure metals, metal alloys, ceramics, and various forms of food. Right now, 3D printing as an end-use manufacturing technology is still in its infancy. But in the coming decades, and in combination with synthetic biology and nanotechnology, it has the potential to radically transform many design, production, and logistics processes. In basic terms there are four categories of 3D printer: •

Printers that extrude a molten or otherwise semiliquid material

• • •

Printers that solidify a photo-curable resin Printers that bind or fuse the granules of a powder Printers that stick together cut sheets of paper, plastic, or metal

Market Size and Growth The 3D printer market was worth $2,200 million in 2012; all reports and forecasts point to a huge growth cycle. The market is expected to hit $7,240 million by 2019, with global forecasts calling for $30.19 billion by 2022. Even after significant media hype, some market sectors are reporting huge growth rates. Growth in the market will partly arise from the increasing use of 3D printers among existing users, in addition to the adoption of 3D printing by new users in industries where mass customization is required as standard and design complexity no longer adds cost. Aerospace and oil and gas have the top two rates of growth of end-user industries. In aerospace, companies are using the technology to produce airplane components and entire wing structures. In gas and oil industries, 3D printed components allow replacement parts to be printed on an “as needed” basis in field operations. Advances in 3D printing are being announced daily. The technology is being used for all kinds of applications from building hearts, to building houses! Even NASA has a 3D printer on the International Space Station (for that just-in-case moment). 3D Printing Powered by Big Data Over the past decade, the primary business models in almost every industry have been shifted by digitalization. The companies that leveraged this shift and used software systems to harness, evaluate, and process data have taken over economic leadership in the platform era. These are the leaders of the digital economy—Google, Amazon, Microsoft, and Facebook. The harnessing, processing, and sorting of data has overtaken the production of goods in terms of the total economic value, at least for now. Agile Manufacturing (AM): Stepping Into the Next Industrial Revolution In the past five years there has been a real shift toward data-driven production. As the quality of 3D printing improves and drives down prices, there has been a significant move from producing prototypes to functional products. This is a landmark for product digitalization. End products are beginning to be produced on-demand from digital data. Just as the Amazon growth model illustrates, when customer data begins to influence process streams, it drives customization, automatization, and entirely new business models. While additive manufacturing has been a main focal point for digital production, other systems (artificial intelligence for logistics, sensor-based tracking throughout production processes) are also contributing to the rapid changes we are experiencing. This combination of manufacturing and tracking is what allows entire production streams to adapt dynamically. These costs fall based on the yearly increase in the amount of AM machines joining the production capacity, the decrease in cost for sensor and tracking technologies, and software platforms like 3YOURMIND that combine automated access to production resources and customer data ready for generative design and intelligent logistics. AM combines data-driven digital manufacturing streams with the principles of agile programming. It is the same methodology that powered the growth model of Internet businesses. AM creates algorithms, so digital production workflows can respond in real time to customer needs. The advantages of data-driven design will become a new opportunity for businesses to position their value in the market, as production streams become decentralized with shorter logistic chains and less expensive through automation.

AM promises to bring those same principles to products. An individualized product will not cost any more than a mass produced item. Over time, once design and licensing fees are recovered, the cost to deliver a product to the end customer will approach the cost of the raw material. This is the promise of generative design combined with digitally driven production and AI/robotics— a 3D model is dynamically designed based on customer and production specifications, and it is automatically added to production at the nearest production and logistics center. On-demand, individualized physical products are slowly becoming part of customers’ expectations. Just a few years ago, AM could only deliver prototypes at a low quality. Now we see customized accessories in cars, efficient engine parts for rockets, and the hearing aid market switch almost entirely to 3D printing. AM uses data-driven processes to predict ordering and make recommendations that will begin to provide the products you need “before you know you want them.” This is the true promise of Industry 4.0 and will be brought into reality by AM. In fact, the manufacturing industry is already on its way. How Organizations Are Using 3D Printing 3D Printing Taking Off at Ford Motor Co. 3D printing is one of the strategies that Ford uses to improve efficiency in automotive and parts production and is illustrated in Figure 3.2.

Figure 3.2 Ford in 3D Printing Since the Ford Motor Co. was founded June 16, 1903, it has racked up a number of firsts, among them on the manufacturing side are the moveable assembly line (1913) and automated stamping of body parts (1950). Now it can add piloting large-scale 3D printing to the list.

The automaker is running a project with Stratasys, a manufacturer of additive manufacturing systems based in Eden Prairie, Minnesota, that’s testing the production of big, single-piece units as prototypes, auto parts, and components. The new Stratasys Infinite Build system, housed at Ford’s Research and Innovation Center in Dearborn, Michigan, grows large, lightweight thermoplastic parts with repeatable mechanical properties horizontally out of a chamber. Ford recognizes the Stratasys system as a potentially more efficient and affordable way to create tooling, prototype parts, make components for low-volume vehicles (such as performance cars), and produce personalized car parts. The Infinite Build works in much the same way as a conventional industrial 3D printer. It analyzes CAD specifications and then prints one layer of material at a time, gradually stacking them into a finished 3D object. But when the system senses the material canister is empty, a robotic arm automatically replaces it with a full one, allowing the printer to operate unattended for hours, even days. The time is right to test the printer’s potential. Declining prices, new materials, and expanding applications are driving the global market for 3D printers, according to Global Industry Analysts Inc., a market intelligence firm in San Jose, California. It’s projecting sales of $16.8 billion by 2022. This capability would make the automaker more nimble as it creates design iterations, says Ellen Lee, Ford technical leader, additive manufacturing research. “We’re excited to have early access to Stratasys’s new technology to help steer development of large-scale printing for automotive applications and requirements.” A SmarTech study forecasts growing demand from the automotive sector with the rise of capable composites generating $530 million in sales by 2021. There are plenty of benefits as the technology advances, especially in automotive production where the ability to produce lighter weight parts translates into improved fuel efficiency. For example, Ford notes a 3D-printed spoiler could weigh less than half its cast metal counterpart. On the prototyping side, developing a new intake manifold would normally involve an engineer creating a computer model of the part and then waiting months for the prototype tooling. Ford can 3D-print the manifold in a couple of days. The technology isn’t fast enough for high-volume work, but at low volume and minus the constraints of mass production, it creates a host of lower-cost possibilities for more timely production of specialized parts that function more efficiently. 3D Printed Heart and the Revolution of 3D Printed Organs 3D Printing Is Helping to Save Lives Thanks to Artificial Organs Twenty-six million people worldwide are suffering from heart problems, and there are not enough donors to do all the transplants that are actually needed to save lives. Figure 3.3shows a 3D printed heart that can help many people with heart problems. We saw it recently with the 3D printed kidney, or even with the 3D printed brain: 3D printing is becoming an impressive and efficient way to save lives.

Figure 3.3 3D printed heart Source: healthysimulations.com

3D printing could allow to create organs for all the patients in need of a transplant. However, it is still complicated to transplant devices made with plastics and metals materials. But, with the promising evolution of 3D bio-printing, the printing technology could go even further with medical applications. We can assume that in the upcoming years, it will be easier to 3D print human tissue and create actual organs using patients’ own cells. It could be possible to get a fully 3D printed heart, with heart tissue created with the original heart cells of the patient. 3D printers will be able to print human organs in no time and be transplanted in a real human body. Custom-Made Organs: How Is It Possible? One of the most interesting benefits of 3D printing is mass customization. This is also totally working when it comes to medical applications. Using 3D scanning and 3D modeling software, surgeons are now able to recreate organs, or create new organs or body parts totally adapted to the morphology of the patient. By creating parts adapted to the body and the disease of the patient, additive manufacturing has obviously an important advantage. Custom-made treatments and organs will be more reliable and will hopefully save a lot of lives. We are now going to see what has already been made, how it is already useful and how promising is this 3D printing application. 3D Printed Heart: A New Reality A 3D printed heart, soon able to replace a real human heart.

It will soon be possible to print artificial heart able to replace real hearts and solve all the problems regarding the lack of donors for heart transplants. A team of researchers recently developed an artificial heart using the additive manufacturing technology. Scientists from the ETH Zurich in Switzerland developed a 3D printed heart. This artificial heart can beat just like a real heart, in half an hour. After that, it breaks down. This soft artificial heart using a transplantable and soft material is already a big success. By improving this 3D printed heart, it could progressively be efficient enough to replace a real heart for a long-term perspective. This 3D printed silicone heart features a left and a right ventricle and beats like a real heart. The heart beats thanks to pressurized air that inflates and deflates, creating mechanical pumps driving blood through the ventricles. 3D Printed Heart to Prepare Complex Surgeries 3D printed organs are a big game changer for surgeons. Indeed, surgeons were already using 3D modeling software and 3D visualization software to get a better overview of the patient’s disease and prepare their intervention. 3D printing the organs to get real model is now helping them to rehearse their surgeries, get the perfect technical gestures, and anticipate all the possible complications. Printing heart models can clearly help to see where a potential tumor is and what the best technique to extract it would be. Moreover, printing a heart replica is helping patients to get a better understanding of their disease, as they get a real model of their heart to visualize clearly what the problem is, and how it will be solved. These organ models can be a solution to rehearse any kind of heart surgery. A Time-Saving Method for the Medical Industry 3D printing a heart in order to plan a surgery is helping surgeons to save time, which can be an important factor during complex interventions. For the case of the nine-month-old baby with the heart failure, the surgery time has been cut by two, according to the doctors. As the surgeons know exactly what they have to do, and how they have to do it, they just have to apply what they rehearsed before the actual surgery. Time is precious both for the surgeon and the life of the patient, and 3D printing is helping to optimize it. Moreover, when it will become possible to 3D print an artificial heart, ready for a heart transplant, the patient will not have to wait for a donation. Doctors could be able to prepare and print a new heart when the patient needs it. 3D printed artificial organs are now a reality and are already helping with some surgeries. The recent experiments made with 3D printed hearts are really promising and are already saving lives. Imagine 3D Printing a House in 24 Hours: It’s Really Happening The applications for 3D printing seem to be endless. While it is still a new technology, innovators are already developing ways to use it to automate the construction process with large-scale printers that could conceivably build homes overnight. How It Works 3D printers are often thought of as microwave-sized machines that recreate digital models out of plastic. While this is true for most consumer-based 3D printers, there’s a whole other level of 3D printing technology being developed and implemented for industrial uses, including construction. Large-scale 3D printers designed for bigger projects are becoming more mainstream and affordable. The introduction of 3D printers to the industry can lead to reduced costs labor and materials and more efficient construction.

Companies that have working prototypes of large-scale 3D printers include Apis Cor, which has a printer that can create a 400-square-foot structure within 24 hours. The project costs just over $10,000 to build, including labor and materials. While the company’s printer created the cement walls, manual labor was still required to install the roof, wiring, plumbing, and insulation in order to make the home livable. Contour Crafting is another company that is working on concepts to 3D-print structures using a massive, on-rails scaffolding. It even has concepts to print structures on the moon or Mars. Materials Rather than the photopolymer resin used in most 3D printing, the industrial-sized printers for construction projects use other materials, the most common being a concrete composite. The 3D printing construction company CyBe uses a specially designed mortar that sets within three minutes of being printed and dries in one hour. Many companies currently use or are developing a concrete mix made with recycled materials. Construction company Cazza’s mix is made from up to 80 percent recycled material. Other Uses While the larger scale applications are still being developed, 3D printing can still be useful to construction companies and contractors. Rather than printing whole structures, some companies are using it to create individual pieces and parts. “3D printing within construction is already happening, but mostly for very specific components like joints and connectors,” said Sam Janzen, creative director at LUMA-iD. “If one expensive 3D print costs less than a series of standard components, or if the 3D print is small enough to be cost-efficient, then it’s a no-brainer.” If you own a 3D printer, the Internet is home to thousands of open source 3D printing plans for a multitude of tools that could be used for work. On Thingiverse, you can find free plans for wrenches, hand-screw clamps, hand drills, wire strippers, tweezers, measuring tools, and plenty of other tools to round out your handyman belt. If you need to pitch a project to potential clients, you can impress them with a 3D-printed model of the finished project drafted with AutoCAD or another blueprint program. Presenting a physical, scaled-down version of the project may be the trick to winning a bid. Bottom Line While it’s not likely we’ll see 3D-printed buildings become commonplace anytime soon, it’s important to keep the concept in mind and think of ways it can be applied to your business in the near future. Pros Reduced labor costs: With machines doing much of the heavy lifting, labor will be exponentially reduced (though not eliminated, as there is still need of subcontractors and experts to set up and run the machines). Faster construction: Many 3D printing construction companies claim their process is faster than traditional cement laying. Standardized construction: With printers working off a single digital blueprint, there should theoretically be few errors. Less waste: Ideally, printers would use only the exact amount of raw materials needed for each project.

Cons • • •

Less labor and traditional materials demand affects the industry. Transportation and setup can be tedious and costly. Errors on the digital back end can cause tremendous setbacks.

Impact of 3D Printing on Industries Impact on Construction As the capability of 3D printing machines grows to produce larger parts with multiple materials, it is highly likely more modular building components will be entered into the supply chain. Traditional manufacturing techniques that are used to produce everything from plumbing fixtures to concrete panels could be replaced by 3D printers that operate 24/7 with less labor and repeatable quality. As machines replace humans for assembly work, how will the labor force be impacted? 3D printing could alleviate the current and predicted future labor shortages in construction. However, a January 2018 study by the Midwest Economic Policy Institute suggests 2.7 million construction jobs could be done by robots in 2057. Impact on Medical Industry The medical industry is a field in which innovation and new technologies have a direct impact on improving processes, operation results, and saving lives. In the medical field, 3D printing enables doctors to work faster, shorten patient theater time, and improve operation results. The outlook for medical uses of 3D printing is evolving at an extremely quick pace as specialists are beginning to utilize the technology in more advanced ways. Patients are now experiencing improved quality of care through 3D printed implants and prosthetics. There are also applications such as 3D printing pens, which are evolving in orthopedic surgery. Impact on Automotive The market for automotive 3D printing illustrated by Figure 3.4, has been experiencing phenomenal growth over the years since the advent of the technology. A report by Allied Market Research states that the automotive 3D printing industry is likely to reach $2.73 billion by 2023, growing at a CAGR of 19.7 percent from 2017 to 2023. The need for efficient management of logistics, as well as reduced manufacturing time and associated costs, is driving the demand for the industry.

Figure 3.4 Impact of 3D Printing on automotive Therefore, 3D printing exhibits wide applications within the sector for prototyping and tooling, research and development, and product innovation. On the other hand, the market faces certain challenges such as high cost of 3D printing software and the dearth of skilled labor. Homework Assignment For students: consider a brick and mortar manufacturing company which designs, produces and sells products and services to the business-to-business (B2B) market. For professionals: consider the company you’re working for or have been working for. Your VP of business development wants to transform the company to a digital leader. As a Clevel business manager with more than average interest in everything digital, you are asked by the VP of business development to conduct a research study that will explore 3D printing technology and opportunities to unlock new business values and increase competitive advantages. You can do this exercise alone. However, for best results consider forming a team with two colleagues with a business background and two with a technology background. You or someone else can take up the role of facilitator. The other team members will do their questions and answers. At the end of the session, the facilitator will wrap up the results. The initial tasks involve the following: • • •

Understanding the 3D printing technology, devices, platforms, and providers 3D printing feasibility and business case 3D printing security and privacy challenges

The competitive advantages you will accomplish by using 3D printing Other emerging technologies that amplify the results of working with 3D printing. Think of big data, augmented reality, blockchain, Internet of Things, artificial intelligence, and more • •

The homework assignment to be conducted is to draft a short report (4–8 pages), which addresses the following questions and topics: Give a description and definition of 3D printing technology. Define benefits and drawbacks of working with 3D printing. When you consider using big data: º Define what data needs to be collected for your manufacturing company. º What data analytics are needed. º What actions should be needed based on the results from analytics. • Find a list of top 3D printing platform vendors and their solutions (find at least 10 vendors). • Align your research study with the company’s business strategy. • Inspire your VP of business development to take the next step, which would be a feasibility study. • • •

Artificial Intelligence (AI) Introduction The common view of the latest breakthroughs in artificial intelligence (AI), illustrated in Figure 3.5, is that sentient and intelligent machines are just on the horizon. Machines understand verbal commands, distinguish pictures, drive cars, and play games better than we do. How much longer can it be before they walk among us?

Figure 3.5 Artificial Intelligence (AI) The current focus is on what might be called mainstream AI tools: machine learning and deep learning. These are the sorts of technologies that have been able to play “Jeopardy!” well, and

beat human Go masters at the most complicated game ever invented. These current intelligent systems are able to handle huge amounts of data and make complex calculations very quickly. But they lack an element that will be key to building the sentient machines we picture having in the future. Obviously we need to do more than teach machines to learn. We need to overcome the boundaries that define the four different types of artificial intelligence, the barriers that separate machines from us—and us from them. There are many ways to classify different kinds of AI algorithms. I will categorize them in terms of how advanced they are. This is illustrated in Figure 3.6.

Figure 3.6 Four different types of artificial intelligence Source: hightechjigsaw.com Type I: Reactive machines: The most basic types of AI systems are purely reactive and have the ability neither to form memories nor to use past experiences to inform current decisions. Deep Blue, IBM’s chess-playing supercomputer, which beat international grandmaster Garry Kasparov in the late 1990s, is the perfect example of this type of machine. Deep Blue can identify the pieces on a chess board and know how each moves. It can make predictions about what moves might be next for it and its opponent. And it can choose the most optimal moves from among the possibilities. But it doesn’t have any concept of the past, nor any memory of what has happened before. Apart from a rarely used chess-specific rule against repeating the same move three times, Deep Blue ignores everything before the present moment. All it does is look at the pieces on the chess board as it stands right now and choose from possible next moves. • Type II: Limited memory: This Type II class contains machines that can look into the past. Self-driving cars do some of this already. For example, they observe other cars’ speed and direction. That can’t be done in a just one moment, but rather requires identifying specific objects and monitoring them over time. These observations are added to the self-driving cars’ preprogrammed representations of the world, which also include lane markings, traffic lights, and other important elements, like curves in the road. They’re included when the car decides when to change lanes, to avoid cutting off another driver or being hit by a nearby car. But these simple pieces of information about the past are only transient. They aren’t saved as part •

of the car’s library of experience it can learn from, the way human drivers compile experience over years behind the wheel. • Type III: Theory of mind: We might stop here, and call this point the important divide between the machines we have and the machines we will build in the future. However, it is better to be more specific to discuss the types of representations machines need to form, and what they need to be about. Machines in the next, more advanced, class not only form representations about the world, but also about other agents or entities in the world. In psychology, this is called “theory of mind”—the understanding that people, creatures, and objects in the world can have thoughts and emotions that affect their own behavior. This is crucial to how we humans formed societies, because they allowed us to have social interactions. Without understanding each other’s motives and intentions, and without taking into account what somebody else knows either about me or the environment, working together is at best difficult, at worst impossible. • Type IV: Self-awareness: The final step of AI development is to build systems that can form representations about themselves. Ultimately, AI researchers will have to not only understand consciousness but build machines that have it. This is, in a sense, an extension of the “theory of mind” possessed by Type III artificial intelligences. Consciousness is also called “selfawareness” for a reason. (“I want that item” is a very different statement from “I know I want that item.”) Conscious beings are aware of themselves, know about their internal states, and are able to predict feelings of others. We assume someone honking behind us in traffic is angry or impatient, because that’s how we feel when we honk at others. Without a theory of mind, we could not make those sorts of inferences. While we are probably far from creating machines that are self-aware, we should focus our efforts toward understanding memory, learning, and the ability to base decisions on past experiences. This is an important step to understand human intelligence on its own. And it is crucial if we want to design or evolve machines that are more than exceptional at classifying what they see in front of them. AI Powered by Big Data AI is one of hottest trends in tech at the moment, but what happens when it’s merged with another fashionable and extremely promising technology such as big data? Researchers are looking for ways to take big data to the next level by combining it with AI. We’ve just recently realized how powerful big data can be, and by uniting it with AI, Big Data is swiftly marching toward a level of maturity that promises a bigger, industrywide disruption. What to Expect from the Convergence of Big Data and AI? The application of AI on big data is arguably the most important modern breakthrough of our time. It redefines how businesses create value with the help of data. The availability of big data has fostered unprecedented breakthroughs in machine learning that could not have been possible before. With access to large volumes of datasets, businesses are now able to derive meaningful learning and come up with amazing results. It is no wonder then why businesses are quickly moving from a hypothesis-based research approach to a more focused “data first” strategy. But How Is Big Data Driving Rapid Breakthroughs in AI? Businesses can now process massive volumes of data, which was not possible before due to technical limitations. Previously, they had to buy powerful and expensive hardware and software. The widespread availability of data is the most important paradigm shift that has fostered a culture of innovation in the industry.

The availability of massive datasets has corresponded with remarkable breakthroughs in machine learning, mainly due to the emergence of better, more sophisticated AI algorithms. The best example of these breakthroughs is virtual agents. Virtual agents (more commonly known as chat bots) have gained impressive traction over the course of time. Previously, chat bots had trouble identifying certain phrases or regional accents, dialects, or nuances. In fact, most chat bots get stumped by the simplest of words and expressions, such as mistaking “Queue” for “Q” and so on. With the union of big data and AI however, we can see new breakthroughs in the way virtual agents can self-learn. IPSoft’s Amelia A good example of self-learning virtual agents is Amelia, a “cognitive agent” recently developed by IPSoft. Amelia can understand everyday language, learn really fast, and even gets smarter with time! She is deployed at the help desk of Nordic bank SEB along with a number of public sector agencies. The reaction of executive teams to Amelia has been overwhelmingly positive. Google’s DeepMind Google is also delving deeper into big data–powered AI learning. DeepMind, Google’s very own AI company, has developed an AI that can teach itself to “walk, run, jump and climb without any prior guidance.” The AI was never taught what walking or running is but managed to learn it itself through trial and error. The implications of these breakthroughs in the realm of AI are astounding and could provide the foundation for further innovations in the time to come. However, there are dire repercussions of self-learning algorithms too and, if weren’t too busy to notice, you may have observed quite a few in the past. Microsoft’s Tay Not long ago, Microsoft introduced its own AI chatbot named Tay. The bot was made available to the public for chatting and could learn through human interactions. However, Microsoft pulled the plug on the project only a day after the bot was introduced to Twitter. Learning at an exponential level mainly through human interactions, Tay transformed from an innocent AI teen girl to an evil, Hitler-loving, incestuous, sex-promoting, “Bush did 9/11”-proclaiming robot in less than 24 hours. Should the Evolution of AI Concern Us? Some fans of sci-fi movies like Terminator also voice concerns that with the access it has to big data, artificial intelligence may become “self-aware,” and that it may initiate massive cyberattacks or even take over the world. More realistically speaking, it may replace human jobs. Looking at the rate of AI learning, we can understand why a lot of people around the world are concerned with self-learning AI and the access it enjoys to big data. Whatever the case, the prospects are both intriguing and terrifying. There is no telling how the world will react to the amalgamation of big data and AI. However, like everything else, it has its virtue and vices. For example, it is true that self-learning AI will herald a new age where chat bots become more efficient and sophisticated in answering user queries. How Organizations Are Using AI AI is Innovating Health Care Sector

We are under the spell of the Fourth Revolution or the digital revolution. The ability of technology to help the humankind is empowering each day. With AI, machine learning, IoT, and virtual reality, we are witnessing a diminishing line between the man and the machine. While the machine is helping man to live luxuriously, it has also extended its help in saving lives. The use cases of AI in health care are fascinating, be it robotic surgery, digital consultation, managing medical records over a blockchain network, or a virtual nurse assisting you. AI in health is assisting machines to sense, analyze, act, diagnose, and help in the clinical and administrative task in a hospital. Let’s explore in detail on how AI is helping humans to stay healthy and save lives. Assisting Patient at Every Step An AI app/product could effectively scan the medical records and help in diagnosing the particular disease, minimizing chances of human error. Based on the prescriptive analysis, the AI software could aid real-time case prioritization. It can precisely analyze actions and predict the risk associated with specific clinical procedures. AI programs could also help in providing personalized services based on patient data and moods. In fact, an AI app can also recommend the best doctor as per your medical record. AI can be a helping hand for many expectant mothers, with continuous monitoring and ability of early diagnosis. Reaching New Heights in Research and Development Collecting data samples of all the patient in a clinic/hospital, applying big data techniques and deep learning technology could help in extracting meaningful information. Such information could be used to study pattern for a disease or about an individual. Genetics and study of genes are one of the most crucial jobs in health care, with AI the study could be exhaustive and precise resulting in impactful drugs and medicine. Applying medical intelligence could help in understanding the connection between drug and disease at the root level. Helping Hospitals with Pricing, Risk, and Operations In need of a marketing strategy that highlights the pain points, lessons learned, target segment, and market perception? AI could help you. AI can present you a unique strategy that helps in modeling competitive pricing charts, understanding market risk, and structuring market data into meaningful actions. Rehauling of your repetitive tasks or back office could be achieved by implementing robotic process automation (RPA) into your system. AI Competition Heats Up Between Major Economies Progress has not been lost on any major competitive economy, particularly in some developing countries. A 2016 report by the International Federation of Robotics (IFR) predicts that the number of industrial robots in use globally will grow to about 2.6 million units in 2019. According to IFR, about 70 percent of industrial robots in use today are in the automotive, electronics, and machinery industries, with electronics seeing the strongest growth rate of 18 percent in 2015. On a global scale, China appears to be the most bullish. In its most recent 13th five-year-plan (2016–2020), General Secretary Xi Jinping notes “intelligent manufacturing and robotics” as a key priority for super-sized growth in China by 2030. In May of last year according to the U.S.China Economic and Security Review Commission, China’s National Reform and Development Commission (NRDC) also announced an AI Three Year Implementation Plan, with plans to accelerate China’s AI technology and integrate big data and cloud computing networks.

All of these initiatives contribute to IFR’s predictions of an average increase in China of 20 percent in total industrial robot sales, amounting to more than 400,000 units in 2019. In the IFR’s report, Korea and Japan came in second and third, respectively, as of 2016 for world’s largest market for industrial robotics. The United States ranked as the fourth largest market for industrial robots, with the total number of industrial robots at 36,000 units in 2015 and a predicted an average growth rate between 5 and 10 percent between 2016 and 2019 across all of North America. Economists, researchers, and the media have expressed concern in the growing gap of funding for industrial robotics between Chinese and U.S. governments. The Future of Retail Is All About AI AI is an engine that is poised to drive the future of retail to all-new destinations. We live in an era where a tremendous amount of data is being generated online and offline. However, access to larger datasets doesn’t lead to improved business results. The key to success is the ability to extract meaning from big data to solve problems and increase productivity and that’s what AI will enable. AI is already making significant headway into the retail industry. In Figure 3.7 you can see an example of the future of retail. We are still seeing only early glimpses of the way the industry will change. Intel is collaborating with industry leaders to apply AI across the entire product and service cycles, both online and offline, to unlock new opportunities in personalization, inventory management, conversational commerce, loss prevention, and a host of other applications.

Figure 3.7 Artificial Intelligence is the future of retail Let’s look at some of the industry’s leading use cases in more detail. Customer behavior tracking and the insights generated from it are invaluable in retail. Retailers always look for more ways to understand a customer’s path to purchase, and it’s no news that they have the ability to observe our buying behavior online. With the rise of AI, retailers are also starting to track shoppers’ journey in stores the same way they do on the web. Using cameras and sensors, they can understand how shoppers are interacting with their store. For example, AI can inform retailers of how many times an item was picked up from the shelf,

put in the shopping cart, back on the shelf or purchased, therefore better understanding the shopper’s mentality. Inventory management is another area that can benefit greatly from the use of AI. In physical stores, one of the top factors in customer frustration is an out-of-stock product. Utilizing AI solutions, associates can be notified when an item is out of stock, running low, or misplaced within the store. These capabilities are all part of the vision for an “Autonomous Store,” one that is able to operate smartly on its own, constantly informed by cloud-based intelligence. Supply chain management is an area where AI will play an increasingly prominent role by filling customers’ need more quickly, reducing downtime due to faults, cutting shrinkage and maximizing stock, and more. For instance, retailers can use predictive analytics to factor in weather forecast and current inventory levels and redirect trucks to different store locations while in transit. Theft prevention is a common problem in retail. Retail stores have long used video cameras to keep a look out for shoplifters, but AI can take this to a new level. Intel has been working with technology provider Spot Crowd on a solution that uses computer vision cameras and AI to recognize known shoplifters when they enter the store. Visual search is one of the leading use cases online and 75 percent of U.S. Internet users search for visual content prior to making a purchase. Pinterest’s recently announced partnership with Target to integrate its “Pinterest Lens” visual search technology into Target’s apps and website is a great example. Personalization is key for retail customer experience. AI helps create new level of personalization not only online but also in the store. For instance, as customers enrolled in a loyalty program enter a store, associates can use face recognition to identify them in real time, use AIenhanced analytics to access their preferences, and make personalized product recommendations. The possibilities are endless, and we are just getting started. Although a longer term vision, offline (or in-store) and online retail can be merged in a way to make a customer’s shopping experience even more seamless. Offline merging with online (OMO) will take customer recommendations, personalization, supply chain, inventory management, and a host of other applications in retail to a new level. Impact of AI on Industries AI has been the next best thing to revolutionize the world we live in. Once a distant dream, AI is now a reality owing to higher and far more powerful processing powers and advances in the field of machine learning. The applications of AI are bountiful and range over many areas. Here are some of the areas where AI is working wonders. Health Care AI surpasses human capabilities when it comes to processing massive amounts of data efficiently and accurately in a matter of seconds or minutes. This can become indispensable for the medical sector. There are AI-powered apps such as Ada and Babylon where users can enter their symptoms, and the apps use data analytics to offer the users a medical consultation. AI can also generate customized treatment paths for patients depending on their medical histories, genetics, and symptoms. Since AI is based on machine learning algorithms, the more data you feed, the more accurate the results will be. In a field where the question is often about saving someone’s life, using systems that are quick, efficient, and free of human error will go a long way. Security

Another critical area where AI is increasingly deployed is security. The amount of data being stored in the cloud has given rise to some severe cyber security concerns. AI, through a combination of data analytics and machine learning, can offer protection from hackers by automating the intricate process of detecting and preventing breaches. This can be done with the speed and accuracy that lie beyond human ability. Since it uses machine learning that mimics humans’ experiential learning. AI-powered security systems are getting progressively sophisticated and powerful as they analyze more data. This also makes it more difficult for hackers to steal or corrupt data. However, technology has its limitations, and it is possible for AI to lose against a hacker so a combination of humans and AI can proficiently combat the increasing security threats. Education Another field where AI has an increasing influence is in the area of education. One of the primary uses of AI is in grading, which is a very time-consuming job that often might have errors. Deploying AI-powered machines for grading objective questions like multiple choice questions can save a lot of time. This can also be used across a wide range of students from school to graduate students. AI can also be used to analyze large amounts of data and develop personalized lessons for students based on previous learning patterns. Each of us learn at different paces and need different techniques and AI can do precisely that. It can also focus on places and subjects we lack in and thus revolutionize education as a whole. AI cannot replace teachers as a whole but can help them better the experience for students. Human Resources One of the most fundamental jobs of HR is that of recruitment. An HR department might have to go through loads and loads of applications which can be very time-consuming and stressful. Additionally, as psychology has time and again points out, humans are often subject to biases. AI can swiftly find the best candidates for a position based on processing all the data on the candidates’ CVs. AI is also devoid of the human element of bias. AI can also find possible risk areas of performance through data analytics of the employees. Moreover, it also can use available data and machine learning to offer decisions that would be best suited for the company. Automotive We all know about Tesla and Elon Musk’s claims about the capability of its autopilot feature. We hear that the company is very close to being able to navigate autonomously from coast to coast in the United States. I have witnessed autopilot firsthand and, on a motorway, it was very impressive. However, that was a motorway with fairly straight lanes and nice, clear road markings. Navigating through the center of London or, even harder, on a single-track country lane with hedges on either side, is an entirely different proposition. In my opinion, we are a very long way from AI that is powerful and experienced enough to safely navigate a very complex journey on its own. Nevertheless, AI in automotive is a very interesting and challenging topic with many experts giving lectures, as can be seen in Figure 3.8.

Figure 3.8 Impact of AI on automotive Car manufacturers are now looking at embedding AI services such as Amazon Alexa into their vehicles to allow passengers to control technology in the car through natural language voice commands. At this year’s CES show in Las Vegas, Mercedes-Benz demonstrated its new AIpowered in-car personal assistant, and in 2017, BMW announced it would start integrating Alexa into selected BMW and Mini vehicles in 2018. Kia also recently announced it will soon embed Google Assistant into its infotainment systems. Undoubtedly, we will see increasingly powerful AI within new cars over the next few years, used for both navigation and as in-car virtual assistants. But I think it will be many years (even decades) before we have cars that use AI to be truly autonomous. E-Commerce and Customer Service Retail is one of the fastest-moving industries in the world, and e-commerce retail is even faster. Competition is often fierce, and this drives innovation within the industry. Chances are you have already experienced AI in e-commerce, but you may not have noticed. Every time Amazon recommends a product to you, this is driven by AI. A very complex set of algorithms is used to determine what you are likely to purchase based on your demographic profile, your purchasing history, and what other products you have viewed. Amazon generates vast quantities of data, and this data can be used by AI to generate highly targeted recommendations. You may also have used a live chat tool, either on a website or on a platform such as Facebook, to communicate with a brand. There is a good chance that, at least once, you have been speaking to an AI-powered bot that is feeding you a preset range of replies based on your comments. Customer service is the perfect area for automation using AI. Most customer service queries follow a very similar pattern, such as “where is my order?” or “can I change the delivery

address?” Customer service agents will normally have a script to follow based on the query, and the majority of queries will fit into a small set of scenarios. It will be interesting to see how AI will be used in e-commerce over the next few years. I predict that AI will have its biggest impact in customer service, but also in user personalization to provide more targeted recommendations and experience to users. Homework Assignment For students: consider a brick and mortar retail company which sells products and services to the business-to-consumer (B2C) market. For professionals: consider the company you’re working for or have been working for. Your VP of business development wants to transform the company to a digital leader. As a Clevel business manager with more than average interest in everything digital, you are asked by the VP of business development to conduct a research study, which will explore artificial intelligence (AI) technology and opportunities to unlock new business values and increase competitive advantages. You can do this exercise alone. However, for best results, consider forming a team with two colleagues with a business background and two with a technology background. You or someone else can take up the role of facilitator. The other team members will do their questions and answers. At the end of the session, the facilitator will wrap up the results. The initial tasks involve the following: Understanding the AI technology, devices, platforms, and providers AI feasibility and business case AI security and privacy challenges The competitive advantages you will accomplish by using AI Other emerging technologies which amplify the results of working with AI. Think of big data, augmented and virtual reality, blockchain, Internet of Things, and more • • • • •

The homework assignment to be conducted is to draft a short report (4–8 pages), which addresses the following questions and topics: Give a description and definition of AI technology. Define benefits and drawbacks of working with AI. When you consider using big data: º Define what data needs to be collected for your manufacturing company. º What data analytics are needed? º What actions should be needed based on the results from analytics? • Find a list of top AI platform vendors and their solutions (find at least 10 vendors). • Align your research study with the company’s business strategy. • Inspire your VP of business development to take the next step, which would be a feasibility study. • • •

Drones Introduction Although the word drone has been commonly associated with male insects in the past, it is now better known as an unmanned aerial vehicle (UAV). This means it is an aircraft without a human pilot aboard. See Figure 3.9 to see what drones are all about. Although the drone originated for military operations, where missions are classed too dangerous for humans—and

can often involve carrying weapons for airstrikes, civilian drones now outnumber those of the military.

Figure 3.9 Drones It has been estimated that more than a million drones were sold by 2015. There are six categories of drone—target and decoy, reconnaissance, combat, logistics, research and development and civil and commercial. Aside from military missions there are thousands of civilian drones used for aerial crop surveys, photography, search and rescue operations and delivering medical supplies to inaccessible reasons, among others. Recreational use also includes police investigations, agriculture and archaeology. While other people have found different uses for the drones—as they are sometimes used to drop items into prisons. Companies such as Amazon have been looking into developing drones which can deliver packages to people’s homes after they order online. China is developing a factory to build hunter-killer drones in Saudi Arabia—the first in the Middle East. The increase in the adoption of drones has resulted in the commencement of another market that focuses on a solution for rogue drones, complete with net-firing bazookas, electromagnetic shields and anti-drone death rays. The steep rise in the adoption of drones for commercial as well as recreational purposes has increased concerns regarding aerials attack and threats. Detection and identification of these unmanned aircraft systems have become a vital factor for the maintenance of the security. Various institutions across the world are increasingly deploying counter drone measures to address the ever-growing need for safety and security. Drones Powered by Big Data

Drones and big data are both enterprise tech trendsetters, and the convergence of the two in specific areas of application create new opportunities and challenges for IT. Among the heavyhitter drone/big data applications in industry are in the following: Drones used by land surveyors Drones used in construction for site monitoring and security Drones used in mining for typography measurement, materials measurements, and remote surveillance • Drones used in underwater exploration • Drones used for traffic accident forensics on freeways and at busy street intersections • Drones used in rescue and other natural disaster field operations • Drones used to assess soil types and conditions, field typography, and crop health for agribusiness • • •

Despite the fact that US drone regulations are still in a state of flux, these drone/big data apps are being deployed because they fill specific niches and it’s easy for companies to see the business value in their investments. The drone/big data tech meld is also a great foundational piece from which to launch new tech initiatives. Drones offer a vast, bird’s eye view for collecting data, which can contribute enormously to diverse areas such as weather, traffic flow, and even disaster forecasting. A fleet of drones can collect and analyze road conditions in real-time, amassing data that can help alleviate gridlock. And, unlike traffic cameras, drones have the flexibility to observe from numerous angles and can be sent swiftly to flashpoints, making them ideal for monitoring our roadways. Data collected by drones will also help the drone industry itself. With copious amounts of data to power unmanned aerial vehicles, “smart drones” will become more adept at navigating hazards on their own and communicating among themselves to negotiate safe flight paths, alter routes automatically in real time according to current conditions, and even abort missions altogether if the data shows too much risk. One day, AI-powered drones may even make the drone air traffic control system NASA is currently developing redundant. Of course, there are darker clouds, with fear of drones being used as “big brother” tools, spying down on us from above. Consumers usually vote with their wallets on the side of convenience at the expense of privacy, but regulators need to be mindful of such issues when charting the path for drones in the coming year. How Organizations Are Using Drones DHL Launched the World’s First Drone-Based “Last Mile” Delivery The power of drone technology is not just capturing the imagination, it’s beginning to change the way we live and work. Drones are being employed to conduct crucial visual inspections of high-rise towers under construction, check bridge, and highway infrastructure for dangerous structural decline, and assist with search and rescue missions. They are used to map agricultural land in order to improve crop health, and their entertainment and competitive possibilities are vast. In fact, the drone delivery revolution has already begun. Consider, for instance, the third-generation parcelcopter that DHL has created. After years of development, research, and testing, DHL recently launched the world’s first drone-based “last mile” delivery system, using specially developed Parcelcopter Skyports, or package kiosks, to complete the fully automated process of loading and offloading shipments. Have a look at Figure 3.10 to see the DHL drones.

Figure 3.10 DHL using drones for last-mile delivery During a three-month test of the drone delivery system in the Bavarian Alps on the German/Austrian border, private customers were able to place their packages into a skyport, where automated shipment via drone was initiated and ultimately completed. In total, 130 autonomous drone deliveries were performed. What does the parcelcopter tell us about the future of drone delivery? Given that the test occurred in a high-altitude region known for rapidly changing weather conditions and severe temperature fluctuations, the experience demonstrates the real advancements that are happening in drone technology. Technically enhanced parcelcopters were able to carry heavier loads for longer distances, and these drones were able to deliver successfully in difficult and unpredictable environments. In the future, delivery drones will reach not just remote locations, but urban and rural businesses and consumers around the globe, changing the very notion of how companies connect with their customers. In the age of e-commerce and on-demand delivery, drones are a game changer. As more businesses of all sizes look to reach new audiences on an international scale, the challenge of last-mile delivery is growing by the day, and drone technology offers a critical solution for fast and efficient order fulfillment. Amazon Setting New Standards in Delivery Amazon is trying to set new standards in customer choice and fast delivery in its battle with online rivals. Nearly four in 10 online shoppers say they now expect retailers to offer free twoday delivery. About half of millennials expect it, making “fast and free” the new norm. Under pressure from increased demand, Amazon recently asked small businesses to help them complete the “last leg” of delivering packages. “Amazon has surging demand. It has not stopped in this race to give us faster, better, cheaper at our doorstep. It’s really taking the supermarket and the mall and bring it to us, if

you think about it,” said Leigh Gallagher, Fortune magazine’s senior editor at large. “That is enormously complicated, and it’s really maxed out Amazon’s ability to use partners like the USPS, DHL, UPS, and FedEx. It’s using them all to the max.” Amazon is offering to help entrepreneurs start and manage a delivery business with potential $10,000 reimbursements for some candidates and vehicle leases. Other large retail companies are also trying to compete, including Kroger, which is investing in automated warehouses and driverless cars, and Target.“Target has partnered with a company called Shipt to offer same-day service and same-day delivery, among other things, so it’s all about faster, faster, faster,” Gallagher said. “It’s never been a better time to be a consumer. You can sit at home and have everything come to you.” How Matternet Plans to Become the UPS of Drone Delivery Systems Andreas Raptopoulos was first inspired to found Matternet when he realized one billion people around the world did not have reliable road access to their homes and often encountered difficulties accessing critical supplies such as medicine. His idea was validated while touring Papua New Guinea with aid organization Medicins Sans Frontieres when their 20-truck convoy became stranded in mud. He knew a global network of drones could address these problems and change the way delivery services all over the world operate. Today, Matternet has recruited a strong team of industry experts, has graduated from startup accelerator, Alchemist, and is ready to take on the world. The grand plan is to create a global network of Matternet Stations. Customers who need to send a package can then scan it at one of the stations and feed it into a special slot. The parcel is then loaded into a drone and autonomously delivered to the designated destination station. The drone then returns to its home base to refuel, ready for the next delivery. A partnership with Mercedes-Benz is allowing Matternet drones to reach even more locations. Mercedes vans with built-in Matternet Stations can drive as close to the destination as possible. From there, the drone can take off and carry the package the rest of the way. Until Matternet Stations are a common sight around the globe, the partnership with Mercedes is a great way to expand the operational range of the service, especially when one considers the company’s original raison d’etre. With the van/drone delivery system, Matternet can begin operations straightaway, before they’ve established their network of stations. The program is currently being tested in Zurich, Switzerland, with plans to roll it out globally when all the necessary regulatory approval has been obtained. “If we succeed, we expect to expand the Zurich delivery service to other hospitals in Switzerland, and then to e-commerce solutions in Europe, the US and Japan,” said Raptopoulos. “Achieving this level of scale should reduce the cost dramatically, making our technology viable in parts of the world where the infrastructure is broken. Just as cell phone networks have leapfrogged the wired Internet in some places, on-demand delivery could leapfrog the limitations of ground-based infrastructure.” Impact of Drones on Industries The future is bright for drones in business. With retail giant Amazon using drone tech to deliver goods, and Facebook’s ambitious plans to deliver wireless Internet connectivity to remote areas, the opportunities for businesses to develop around this technology is enormous. In case you’re interested in starting an innovative business utilizing UAV tech, these are some of the industries that need those skills now and ones that may rely on it in the not-so-distant future.

Top Industries Using Drones Now Farming and Agricultural Research Drone technology in farming and agriculture represents a huge opportunity for those with an entrepreneurial spirit. Drones can assist farmers in assessing crops and livestock, as well as marking boundaries and planning wide-scale fencing. They are also used effectively to establish irrigation systems, and in agricultural consultancy to assess and improve flora and fauna management. Research students working on vast agricultural fields, as well as farmers concerned about the productivity of their crops, can make great use of their drone skills—or the skills of hired consultants—by conducting aerial surveys. As drones are less expensive than helicopters and Cessnas or light aircraft, their experimental use in crop fertilization, sewing, and pest and disease reduction is also proving highly effective. In each case, UAVs are proving invaluable as a means of expediting mundane agricultural work that would typically take up a good deal more time and money. Photography and Filmmaking Drones are changing the way we make movies and take pictures. Whether you are a wedding photographer or a budding documentary filmmaker, drones are allowing us to see and imagine visual media like we never have before. Up until recently, major motion pictures that used drone technology were mostly being made outside the United States due to regulatory restrictions. “Skyfall” and “Harry Potter” are two examples. However, as demand grows and regulations change, we can expect to see more and more filmmakers using drones to produce high-quality and engaging entertainment. As the perfect complement to any professional photographer, drones are increasingly being adopted for capturing special events. While movie and cinema production will always require a wide range of video technology, photographers, especially those who serve at special events like weddings, cannot afford to be left behind and will need to adapt to this new technology. Education As the acquisition and use of drones in the public sphere increases, so does the regulation surrounding drone and UAV use. This has led to regulatory bodies establishing industry standards that also involve training and education. Take a look at Figure 3.11 to see how drones are used in education.

Figure 3.11 Drones used in education Training organizations are seeing the opportunity to increase their own market share in the education sphere by providing high-level training that meets industry standards in various sectors. Drones are being used for training in firefighting, physics, and geography. Beyond that, we are seeing drone use in the education system itself. In engineering training, environmental studies and more, drones can provide new perspectives for students and enable them to demonstrate and perform their own research with the technology. They are even being used at the most basic and practical of levels by assisting children in the development of fine motor skills. Marketing and Media Drones are also providing the marketing sector with the ability to innovate and further develop rich content marketing strategies. To see an example of that, take a look at Figure 3.12. As the demand for video content increases, agencies are under pressure to provide more compelling rich media marketing. Drone technology enables marketing agencies to showcase even small businesses with high-definition video and a fresh approach.

Figure 3.12 Drones used in marketing Forward-thinking news media are also seeing the massive advantage of drones in covering stories. Drones can capture news and events as they unfold, without the distractions or risks reporters face on the ground. Where Can We Expect to See Drones in the Future? Drones are here to stay, and as more businesses adopt the technology, we may find ourselves in a world where drones are as common as smartphones. Town Planning Don’t be surprised if you see your local councils and town planners relying on drone technology in the years ahead for the mapping of real estate, housing, and industrial complexes. Police and Security We should also expect to see the use of drone technology in investigative police and detective work. You may even find the police in the station while the drones are out doing the work of monitoring our streets and neighborhoods. The same can be said of security services, which may adopt the technology as a means of protecting industrial estates, business centers, and possibly entire communities. Such things are already common in the armed services, and it would be a fairly simple step to have these security systems become the work of drones. Schools and Playgrounds

In concert with the idea of security, people these days expect greater supervision, particularly of children and young adults. Those demands for supervision may be met in the future with technology beyond that CCTV. Perhaps we will begin to see the use of drone technology in disaster and rescue operations and in loco parentis at schools and public playgrounds. All of these areas represent opportunities for businesses that are willing to adopt and develop the technology that UAVs bring to the table. If you have entrepreneurial ambitions, now is a wonderful time to lay hold of technology that is almost certainly going to be a winner. As more industries adopt drone technology in how they do business or serve clients, licenses are being developed to maintain industry standards. The future is bright for drone technology in business. With retail giant Amazon utilizing drone capabilities to deliver goods, to the ambitious and innovative plans of Facebook to deliver wireless Internet connectivity to remote areas, the opportunities for business to develop around this technology is enormous. In the United States, the Federal Aviation Administration governs UAV operations and provides guidance on the various licensing requirement. Convergence Between AI and Drones Drones are taking the technology and the gadget world by surprise. Participating in this new era are various functionaries to utilize drones for inspection, surveillance, and maintenance. Drones previously were controlled by humans. It is in the recent present that artificial intelligence has stepped in. Better or otherwise known as unarmed aerial vehicles, drones have been a shoulder in combat operations and border surveillance. AI removes the manned part of the drone industry. Companies are working on making the drones work on AI and perform better than humans. Researchers at NASA’s Jet Propulsion Laboratory put to test the human skills in competition with an AI-powered drone. The results put the ball in the AI’s court. The team built the drones with relevant and complex algorithms required for the drone to fly at higher speeds and manage obstacles at the same time. The drone was smoother, faster, and could sense the obstacle faster than the human. Without a human supervision, autonomous drones rely on the in-built algorithms to function. Therefore, installation of a camera can equip them to work in closed spaces for safety inspection like that of a warehouse or a consolidated area. Avitas Systems, a subsidiary of GE, has employed AI-powered drones for infrastructure and transportation inspection. The high-resolution cameras not only inspect but also collect data which is again reutilized in data analytics. In recent times, a new AI has been developed that claims to defeat human pilots in combat called ALPHA. In the first series of tests, it already beat the earlier version of AI used. ALPHA was found to be reacting instantly and planning for tackling obstacles in the way. It defeated the human pilot skills. Since the AI was specifically built for military combat, the tests showed that it could easily change between offensive and defensive modes as per needs. More regressive testing showed better results. ALPHA can process sensor data and plan moves for four combats in less than milliseconds, which is commendable. Fun fact is that it doesn’t require any fancy computer or supercomputer to function. It runs perfectly fine on a normal personal computer. The decisions made by ALPHA are not based on numbers but on a “fuzzy logic,” which eventually reduces the steps in decision making. It is created based on genetic algorithm. All that being said, there is a lacuna in everything that looks so satisfying in perspective of functioning. Remember how the nuclear science was created for the sake of scientific finding and other reasons related to its discovery. It ended up bringing the human race at peril with the entry of nuclear weapons.

Similarly, the emergence of drones with self-ability to tackle obstacles and to be used in combat operations could lead to a calamitous outcome. It can kill millions in the blink of the eye. It has been found in the tests that an AI-powered drone taught itself to inspect 20 different environments by trial and error in merely 40 hours of time. As amazing and breaking it sound, it is at the same time daunting and disastrous. Such behavior could lead to uncontrolled steps and deteriorating environments. AI is meant to be a tool for problem-solving and helping us. Discoveries in the field of science are supposed to be a boon for humankind and not put its existence in jeopardy. The potential benefits are numerous but the side effects of extensive implementation of AI for drones can be calamitous. Surely, it is a breakthrough as it allows a combat to be executed from a distance but the devastation can also be equally breakthrough. There has been a call for a ban on autonomous weapons being pleaded. One must not forget the curse of science as much as one is excited to discover and appreciate the aspects of it. Homework Assignment For students: consider a brick and mortar retail company which sells products and services to the business-to-consumer (B2C) market. For professionals: consider the company you’re working for or have been working for. Your VP of business development wants to transform the company to a digital leader. As a Clevel business manager with more than average interest in everything digital, you are asked by the VP of business development to conduct a research study that will explore drones technology and opportunities to unlock new business values and increase competitive advantages. You can do this exercise alone. However, for best results, consider forming a team with two colleagues with a business background and two with a technology background. You or someone else can take up the role of facilitator. The other team members will do their questions and answers. At the end of the session, the facilitator will wrap up the results. The initial tasks involve the following: Understanding the drones technology, devices, platforms, and providers Drones feasibility and business case Drones security and privacy challenges The competitive advantages you will accomplish by using drones Other emerging technologies that amplify the results of working with drones. Think of big data, augmented reality, blockchain, Internet of Things, artificial intelligence, and more • • • • •

The homework assignment to be conducted is to draft a short report (4–8 pages), which addresses the following questions and topics: Give a description and definition of drones technology. Define benefits and drawbacks of working with drones. When you consider using big data: º Define what data needs to be collected for your manufacturing company. º What data analytics are needed? º What actions should be needed based on the results from analytics? • Find a list of top drones platform vendors and their solutions (find at least 10 vendors). • Align your research study with the company’s business strategy. • Inspire your VP of business development to take the next step, which would be a feasibility study. • • •

Robotics

Introduction This robot is probably better at playing the violin than you. Toyota’s violin-playing robot debuted at the Japan Pavilion during the Shanghai Expo in 2010. It has been performing at the Toyota Commemorative Museum of Industry and Technology in Nagoya since June 2014. Figure 3.13 shows you how smart robots are now.

Figure 3.13 Robotics The bipedal walking “partner robot” is equipped with 17 joints and is able to do delicate arm and finger movements, just like a human. It even tilts its head while performing at the museum five times a day. Industrial robotics is a big industry and it changes quickly. The technology has changed dramatically in the past few decades, as has the volume and variety of deployments. For those who are new to the industrial robotics industry, it may seem difficult to find a starting point. A broad overview of the types and benefits of automation can provide a basic understanding of industrial robotics technology and the growing robotics industry.

Types of Industrial Robotic Automation There are many different types of automation applications that industrial robots are equipped to handle. Often, robots are designed or integrated with a specific task in mind and tailored to meet the unique needs of that task. Some common forms of industrial robotic automation include: • • • • • •

Robotic welding Robotic material handling and packaging Robotic pick and place Robotic dispensing Robotic cutting Robotic nondestructive inspection

While there are certainly other types of industrial robotic automation, and a myriad of other types of collaborative and service robots, the applications listed earlier are some of the most common industrial forms of robotic automation. Benefits of Industrial Robotic Automation Industrial robots have transformed the manufacturing industry for a reason—they come with many bottom-line benefits. Their first and most important benefit is their efficiency. They complete tasks more quickly than manual labors, and their uptime is significantly higher. The combination of speed and uptime leads to higher throughput at lower operating costs. In addition, industrial robots, when programmed properly, are inherently repeatable. This improves the consistency of production dramatically, boosting overall product quality and reducing waste. Industrial robots typically deliver great return on investment (ROI) despite high initial costs. The productivity gains from efficiency, consistency and reduced operating costs add up quickly—part of what has made industrial robots so popular among manufacturers over the past decade. Industrial robots come with many bottom-line benefits, regardless of which type of industrial robot is being implemented. As long as a robot is programmed properly and suited to fit the unique needs of a certain application, it will almost certainly outperform manual labor. The market for industrial robots is big and growing quickly. The underlying technology changes just as fast. It can be difficult to keep up with the fast pace of change in the robotics industry but understanding the types of industrial robots and the benefits they provide is a great start. Market Size and Growth The global Industrial Robotics Industry was estimated at $25.68 billion in 2013 and is expected to reach $40 billion by 2020. Growing concerns to reduce operational costs by many manufacturing companies is expected to drive the global market growth. Industrial robots are designed to control and automate processes including testing, assembly, packaging, welding, product inspection, and painting. Human errors can be minimized, thereby increasing the process efficiency and reliability of the machinery. Rising labor costs in many mature economies including United States and UK is estimated to drive the global robotics market. Many heavy machinery manufacturers are expected to replace workforce with automation to reduce hiring costs and increase overall production. Automation involves the installation of advanced technologies and sensors, such as cloud communications and wireless, to monitor and control the entire facility throughout the day. The prerequisite to comply with governmental regulations and to reduce costs has encouraged the use of industrial robots in heavy industries market. For example, the average labor costs in

China have been rising by nearly 10 percent yearly. The use of robots in industries has helped to reduced workers idle time by 80 percent and save more than 50 percent of the production cost, leading to significant cost savings. The use of industrial robots for tasks such as welding and sheet handling in heavy industries has also proved the efficiency of the robotic systems in terms reduction in cycle time and raw material wastage. Implementation of robotic in heavy industry sector is expected to increase the operational flexibility of end users for addressing various product requirements. Robots are used to handle repetitive tasks and are also ideal for multitasking. They are usually deployed in accident prone areas in different production lines. Robotics Powered by Big Data With the advances in data science, the field of robotics has definitely improved to a great extent. During the initial days of development, scientists were faced with two major challenges: (i) predicting every action of a robot and (ii) reducing the computational complexity in real-time vision tasks. While robots could perform specific functions, it was impossible for scientists to predict their next move. For every new functionality, a robot would have to be reprogrammed every time, which made the task a tedious one. Another major obstacle with robots is that unlike humans who use their unique sense of vision to make sense of the world around them, robots can only visualize the world in a series of zeros and ones. Thus, accomplishing real-time vision tasks for robots would mean a fresh set of zeros and ones every time a new trend emerges, thereby increasing the computational complexity. Enter machine learning (ML) to solve these issues in robotics. With ML, robots can acquire new behavior patterns through labeled data. Handwriting recognition is an excellent example. In handwriting recognition, computers are fed with labeled data—both positive and negative. Once the computer has successfully learned to differentiate between positive and negative examples, it is presented with new data. Based on the previous experience (during the training phase), the computer can predict the qualified classifiers for recognizing the handwriting. Thanks to advanced ML algorithms powered by tons of data that computers are now able to perform handwriting recognition much more accurately than they were 10 years ago. Furthermore, reinforcement learning, the branch of ML that is “the closest that machine learning can get to the way how humans learn” teaches computers and robots to perform specific functions according to their environment to generate outcomes that fetch either rewards or penalties. Thus, every time the robots lead to penalties, they can learn from their mistakes and know what course of action to take to fetch awards. Personalized recommendation lists of online portals such as Amazon and Netflix are the best examples of reinforcement learning. This wasn’t possible 10 years ago. A complete new machine that comes very close to a human being is robot Sophia. This robot is made of three emerging technologies: data science, AI, and robotics. Take a look at Figure 3.14 to see how that worked out.

Figure 3.14 Data science, AI, and robotics As data scientists continue to leverage AI and ML to develop smart machines, in the process, they are gaining a deeper insight into the world of data science itself. Using AI and ML, data scientists and analysts can process, analyze, and interpret vast data sets much faster than ever. For instance, the MIT Data Science Machine can process large volumes of data and produce better predictive models anywhere between two and 12 hours, while the same would take months if done manually by data scientists. Another excellent case in point is that of California’s NuMedii Labs. Data scientists at the NuMedii Labs used network-based data mining algorithms to identify the correlations between the disease information and the drug composition to estimate the drug efficacy accurately. In this way, NuMedii aims to reduce the amount of time and risk associated with the process of drug development by bringing effective drugs into the market much faster than would happen through traditional methods. The collaboration between data science, AI, and ML has given us things like self-driving cars, smart assistants, robo-surgeons and nurses, and so much more. In the future, more is to come! How Organizations Are Using Robotics Ocado: The Automated Warehouse of the Future Is Here If you aren’t utilizing a service that delivers your groceries to your door now, you most likely will use one in the future. Thanks to automation, you won’t have to cast your mind to the nonexistent workers that are packaging all of your groceries up for you because all of the workers will be robots.

If it sounds like a persuasive brochure from a futuristic sci-fi novel, it isn’t. It’s already happening. Ocado warehouse in Hampshire, England, utilizes hundreds of robots on a metal grid, speedily transferring groceries from holding cell to packet to your front door. And we have engineers to thank for that. See Figure 3.15 to have a glance at Ocado automated warehouse.

Figure 3.15 Ocado automated warehouse Source: eveningexpress.co.uk

The warehouse where the robots perform their gymnastics is completely unmanned. Pick-andplace robots are abundant, carefully lifting and then putting down items that will be shipped to the demanding customer. It is all made possible through an automated solution named the Ocado Smart Platform Automated Fulfilment Solution. The graphical representation of what is going on in the computers’ brains as it fulfills an order looks like this. The whole robotic “ecosystem” is orchestrated through a 4G-based wireless protocol system that is running the whole system in real time and can optimize the operation on-the-fly. The company says the system is the most advanced system for logistics in the world. Thousands of little specks on a digitized warehouse blueprint map show what the robots see— items ready to be fetched and delivered. It is called a resource map. Then 440 other specks (the robots) need to travel into the interior of the warehouse and pick the items up. The 4G network makes the magic happen—it communicates at 10 interactions per second with each robot.

The robots need to know where to be at the appropriate time. The system can handle 3 million routing calculations per second. Something that quantum computing, upon its arrival, will more than quadruple. It is an ecosystem of robotic automation, working in complete harmony— something human workforces are hard pressed to perfect. Talking about efficiency, the grid that Ocado has designed ensures that all possible warehouse floor space is utilized so that there is no wasting of resources whatsoever. The company says that the grid can be retrofitted into existing warehouses. The robots themselves can carry tens of kilograms and can move at several meters per second. There is no doubt that the robots are efficient. They are so efficient they have dubbed their robot battalion a “swarm” of robots. Traversing a grid the size of several football fields, the robots communicate via a cloud-based solution and continually generate data that gets plugged into an analytics program named BigQuery. It is a data and communications tour de force. Experts say the data communications network the company is running is the first of its kind and is the “first deployment of unlicensed 4G spectrum for warehouse automation.” The warehouse can handle up to 1,100 robots. Thus, it is a glimpse of the not too distant future for all warehouses. However, Ocado isn’t the only company utilizing robots in warehouses. Amazon has a staggering 45,000 robots currently whizzing around in 20 fulfillment centers—grabbing the relevant items customers have ordered and transporting it to the delivery departments. From 2016 to 2017, they doubled the number of robots that was working for them. Amazon purchased the robot company Kiva Systems in 2012 and has been using warehouse robots ever since. It is no secret. Automation is replacing the pick-and-place workers in warehouses. What has been kept secret are the incredible data communications systems in place to ensure the most efficiency for a warehouse. Companies are looking to automate more efficiently than the next company, and it seems Ocado—with their own novel software and systems—is pulling ahead. Maserati: A Connected, Smart Car Factory One auto manufacturer that is making progress with smart manufacturing is Maserati. Perhaps the company’s interest in smart manufacturing is for good reason: no two of the autos it ships are alike; it prides itself on providing extreme customization, even with 50,000 luxury autos a month being shipped. As a result, its manufacturing plants produce a range of different parts. Recently, James Lorincz of Advanced Manufacturing documented how the company’s Turin manufacturing plant made the transition. The plant produced more than 5,000 components, resulting in millions of possible combinations. The time was ripe to move to smart factory technology. The analytics produced with this smart factory process “provide Maserati with a wealth of information regarding production flows and vehicle throughput,” Lorincz explains. Information is accessible via tablets and mobile devices, replacing paper manuals. “The analysis and interpretation are graphically represented in an immediate and user-friendly manner, which allows operators and engineers to quickly assess the health of the individual machines and identify potential break-downs or bottlenecks before they happen,” according to Massimo Ippolito, innovation manager for Comau, quoted in the case study. Comau reports that the introduction of 82 robots across Maserati’s assembly processes has streamlined build times and full coordination between manual and automated processes, as well as enabled the simultaneous processing of parts and subgroups on models with different components and chassis lengths. More than half of the weld spots are now applied automatically. The system also enables the company to manage maintenance and component replacement, employing historical and statistical data gathered. “Furthermore, the robots themselves are designed to interface with the operator, signaling the possibility of component wear,” Lorincz adds. “This allows operators to intervene before the issue can result in throughput inefficiencies

or downtime; thus, ensuring the long-term repeatability and efficiency of the robots and more importantly, the quality of the manufacturing.” Impact of Robotics on Industries Robots are taking over. You can see it already happening at McDonald’s with its automated ordering kiosks, or your nearest supermarket with its self-checkout machine. Soon, it will be normal to see driverless cars and people walking their robot dogs outside. And this is only the beginning. With advancements in technology, many jobs typically performed by humans are being replaced by AI and robots. Given as follows are seven industries that are significantly impacted by automation. Transportation Fully autonomous vehicles, or self-driving cars, will be hitting the road in the next few years. In fact, personal self-driving cars are expected to be on the market by 2018, with commercial applications not far behind. Self-driving cars will gain even more popularity as Uber plans to acquire 24,000 autonomous Volvo SUVs. This means you can expect to see more people being dropped off at places without a driver in the near future. Although this may put many transportation workers out of business, Morgan Stanley predicts that driverless cars will save the $1.3 trillion a year by 2035 to 2050, for a global annual saving of $5.6 trillion. As well, self-driving cars will help improve transportation in many ways including decreasing the risks of accidents, alleviate traffic congestion, and lower energy costs. Self-driving vehicles also extend to aircrafts. In 2017, the U.S. military and its Defense Advanced Research Agency (DARPA) has announced the successful simulated flight and landing of a Boeing 737 by an AI robot copilot named ALIAS. The U.S. military believes automated aircrafts may improve mission safety and success rates. However, when it comes to airplanes, automation isn’t new. Commercial airplanes have been already run on autopilot for a long time; pilots are still responsible for providing all the commands and monitoring various conditions and situations, including tracking fuel consumption. Nevertheless, with developments in AI, this could change in the future. Manufacturing It’s no surprise that manufacturing industries made the list. From 2000 to 2010, Canada and the United States have seen 5.6 million factory jobs disappear in which a whopping 85 percent of job losses resulted from automation, compared with only 13 percent of job losses due to international trade. Manufacturing is one of the first industries to use AI robots to assemble products and package them for shipment. Figure 3.16 shows you how a modern factory is now using robots. These are used to assemble more complicated items, including electronics, cars, and home appliances. Not only this, these robots have drastically increased manufacturing output in the last years. A 2016 New York Times article found that workers produced 47 percent more than 20 years ago, with technology being the main reason for the resurgence.

Figure 3.16 Impact of Robotics on manufacturing Packaging and Shipping In addition to manufacturing, packaging and shipping industries have incorporated robots for some time to make distribution more effective. When it comes to shipping, Amazon is at the forefront of automation. In 2014, the e-commerce company began rolling out robots to its warehouses, using machines developed by Kiva Systems, a company Amazon bought for $775 million two years earlier. Today, Amazon has over 100,000 robots in its warehouses worldwide and intends to add much more to the mix. Customer Service If you recently ordered a hamburger at McDonald’s or have purchased groceries from a supermarket chain, it’s likely that you have seen an automated kiosk or self-checkout, so that you don’t have to interact with a human. Cashiers, retail salespeople, and food counter attendants are among the jobs that are at a high risk of being affected by automation, according to a 2016 report by the Brookfield Institute for Innovation + Entrepreneurship. In fact, it is predicted that more than 23,000 customer services will be deployed worldwide by 2022. While AI customer service agents don’t interact the same way as humans do, it’s becoming far more advanced. For instance, automated customer service company Digital Genius is developing chatbots that could harness natural language processing and machine learning to create friendly robots that could imitate human speech. Very soon, you won’t be able to tell whether you’re having a conversation with a real person or a chatbot powered by AI. Finance Many financial services companies are turning to AI to keep up with an increasing amount of financial data. Robots can use predictive systems and market data to forecast stock trends and manage finances, more efficiently than humans. On top of this, financial advice is being

automated with a growing trend toward “robo-advisers” to provide suggestions for simple financial problems. Automation is also replacing certain accounting jobs, in which it can be used to record journal entries, conduct ledger account reconciliation, perform intercompany transactions, and maintain accounting master data. Health Care Medical and pharmaceutical companies are using AI machines to complete a variety of medical procedures, such diagnose diseases, deliver anesthesia, and perform surgery. In some cases, such as with IBM’s Watson, these machines are more accurate in their tasks than human doctors. As well, some robot caregivers are cropping up to help with patient recovery. For example, Robear, designed by scientists from the Sumitomo Riko Company in Japan, can aid patients in walking or getting out of bed. Agriculture With the world population expected to reach 8.5 billion by 2030, sustainability is becoming an increasing challenge. However, many sustainability issues could be addressed by developments in AI and automation. For instance, a startup called AgriData is developing a way for machines to manage the productivity of its fields, by scanning trees to pinpoints fruits and determine their yield. Drones are also gaining popularity in agriculture, replacing the use of satellite imaging to get detailed maps of farmland—a very time-consuming process. Drones equipped with multispectral sensors can survey land, take images, and reveal the fertility of specific patches of soil, the number of water crops need, among other valuable information. As well, some automated farm vehicles such as automated tractors are removing traditionally grueling labor and can work 24/7 without human input. Are Robots Taking Over? Although AI and robots are replacing traditional jobs in many of our top industries, they are also creating new kinds of work in which humans will supply digital services to complement AI. According to a Forbes article, while America has lost 7 million manufacturing jobs in recent decades, it has also added some 53 million jobs in services. In addition, robotics technicians will be needed. So you can be reassured that we won’t run out of jobs in the future. As John Donahoe, CEO of ServiceNow says, “Technology replaces and creates. It replaces manual work and creates new opportunities—new tasks if you will. And productivity creates growth, which creates new kinds of work. It is a virtuous cycle.” AI and robots help free us from manual labor and “jobs that no one really enjoys doing,” giving more opportunity to be creative and innovative in our work. Our role is to adapt to these industry trends and develop new skills, to remain competitive in the labor market. Convergence Between AI and Robotics Artificial intelligence is everywhere. On your screens, in your pockets and one day may even be walking to a home near you. The headlines tend to group together this vast and diverse field into one subject. Robots emerging from the labs, algorithms playing ancient games and winning, AI and its promises are becoming a part of our everyday lives. While all of these instances have some relationship to AI, this is not a monolithic field, but one that has many separate and distinct disciplines. A lot of the times we use the term artificial intelligence as an all-encompassing umbrella term that covers everything. That’s not exactly the case. AI, machine learning, deep learning, and robotics are all fascinating and separate topics. They all serve as an integral piece of the greater future of our tech. Many of these categories tend to overlap and complement one another.

The broader AI field of study is an extensive place where you have a lot to study and choose from. Understanding the difference between these four areas are foundational to getting a grasp and seeing the whole picture of the field. Artificial Intelligence At the root of AI technology is the ability for machines to be able to perform tasks characteristic of human intelligence. These types of things include planning, pattern recognizing, understanding natural language, learning, and solving problems. There are two main types of AI: general and narrow. Our current technological capabilities fall under the latter. Narrow AI exhibits a sliver of some kind of intelligence, be it reminiscent of an animal or a human. This machine’s expertise is, as the name would suggest, is narrow in scope. Usually, this type of AI will only be able to do one thing extremely well, like recognize images or search through databases at lightning speed. General intelligence would be able to perform everything equally or better than humans can. This is the goal of many AI researchers, but it is way down the road. Current AI technology is responsible for a lot of amazing things. These algorithms help Amazon give you personalized recommendations and makes sure your Google searches are relevant to what you’re looking for. Mostly any technologically literate person uses this type of tech every day. One of the main differentiators between AI and conventional programming is the fact that nonAI programs are carried out by a set of defined instructions. AI on the other hand learns without being explicitly programmed. Here is when the confusion starts to take place. Often times—but not all the time—AI utilizes machine learning, which is a subset of the AI field. If we go a little deeper, we get deep learning, which is a way to implement machine learning from scratch. Furthermore, when we think about robotics we tend to think that robots and AI are interchangeable terms. AI algorithms are usually only one part of a larger technological matrix of hardware, electronics, and non-AI code inside of a robot. Robot or Artificially Intelligent Robot? Robotics is a branch of technology that concerns itself strictly with robots. A robot is a programmable machine that carries out a set of tasks autonomously in some way. They’re not computers nor are they strictly artificially intelligent. Many experts cannot agree on what exactly constitutes a robot. But for our purposes, we’ll consider that it has a physical presence, is programmable, and has some level of autonomy. Here are a few different examples of some robots we have today: • • • •

Roomba (vacuum cleaning robot) Automobile assembly line arm Surgery robots Atlas (humanoid robot)

Some of these robots, for example, the assembly line robot or surgery bot are explicitly programmed to do a job. They do not learn. Therefore we could not consider them artificially intelligent. These are robots that are controlled by in-built AI programs. This is a recent development, as most industrial robots were only programmed to carry out repetitive tasks without thinking. Self-learning bots with machine learning logic inside of them would be considered AI. They need this in order to perform increasingly more complex tasks.

What’s the Difference Between AI and Machine Learning? At its foundation, machine learning is a subset and way of achieving true AI. It was a term coined by Arthur Samuel in 1959, where he stated: “The ability to learn without being explicitly programmed.” The idea is to get the algorithm to learn or be trained to do something without being specifically hardcoded with a set of particular directions. It is the machine learning that paves way for artificial intelligence. Arthur Samuel wanted to create a computer program that could enable his computer to beat him in checkers. Rather than create a detailed and long-winding program that could do it, he thought of a different idea. The algorithm that he created gave his computer the ability to learn as it played thousands of games against itself. This has been the crux of the idea ever since. By the early 1960s, this program was able to beat champions in the game. Over the years, machine learning developed into a number of different methods. Those were: 1. 2. 3. 4.

Supervised Semisupervised Unsupervised Reinforcement

In a supervised setting, a computer program would be given labeled data and then be asked to assign a sorting parameter to them. This could be pictures of different animals and then it would guess and learn accordingly while it trained. Semisupervised would only label a few of the images. After that, the computer program would have to use its algorithm to figure out the unlabeled images by using its past data. Unsupervised machine learning doesn’t involve any preliminary labeled data. It would be thrown into the database and have to sort for itself different classes of animals. It could do this based on grouping similar objects together due to how they look and then creating rules on the similarities it finds along the way. Reinforcement learning is a little bit different than all of these subsets of machine learning. A great example would be the game of chess. It knows a set amount of rules and bases its progress on the end result of either winning or losing. Deep Learning For an even deeper subset of machine learning comes deep learning. It’s tasked with far greater types of problems than just rudimentary sorting. It works in the realm of vast amounts of data and comes to its conclusion with absolutely no previous knowledge. If it was to differentiate between two different animals, it would distinguish them in a different way compared to regular machine learning. First, all pictures of the animals would be scanned, pixel by pixel. Once that was completed, it would then parse through the different edges and shapes, ranking them in a differential order to determine the difference. Deep learning tends to require much more hardware power. These machines that run this are usually housed away in large data centers. Programs that use deep learning are essentially starting from scratch. Of all the AI disciplines, deep learning is the most promising for one day creating a generalized AI. Some current applications that deep learning has spurned have been the many chatbots we see today. Alexa, Siri, and Microsoft’s Cortana can thank their brains because of this nifty tech. Homework Assignment For students: consider a brick and mortar manufacturing company that designs, produces, and sells products and services to the business-to-business (B2B) market.

For professionals: consider the company you’re working for or have been working for. Your VP of business development wants to transform the company to a digital leader. As a Clevel business manager with more than average interest in everything digital, you are asked by the VP of business development to conduct a research study that will explore robotics technology and opportunities to unlock new business values and increase competitive advantages. You can do this exercise alone. However, for best results, consider forming a team with two colleagues with a business background and two with a technology background. You or someone else can take up the role of facilitator. The other team members will do their questions and answers. At the end of the session, the facilitator will wrap up the results. The initial tasks involve the following: Understanding the robotics technology, devices, platforms, and providers Robotics feasibility and business case Robotics security and privacy challenges The competitive advantages you will accomplish by using robotics Other emerging technologies that amplify the results of working with robotics. Think of big data, augmented reality, blockchain, Internet of Things, artificial intelligence, and more • • • • •

The homework assignment to be conducted is to draft a short report (4–8 pages), which addresses the following questions and topics: Give a description and definition of robotics technology. Define benefits and drawbacks of working with robotics. When you consider using big data: º Define what data needs to be collected for your manufacturing company º What data analytics are needed? º What actions should be needed based on the results from analytics? • Find a list of top robotics platform vendors and their solutions (find at least 10 vendors). • Align your research study with the company’s business strategy. • • •

Inspire your VP of business development to take the next step, which would be a feasibility study.

CHAPTER 4 Digital Transformation Planning What Is Digital Transformation Planning Business and IT leaders have talked about the need for IT/business alignment for well over a decade. They all want the benefits that successful alignment brings, like improved business efficiency, reduced costs, increased agility, and so on. Who wouldn’t want that? Yet, despite understanding the importance of IT/business alignment, it’s still an issue in many companies. This everlasting struggle between IT and business is illustrated in Figure 4.1. Why? What stumbling blocks stand in the way? Why—after all of these years—do companies still struggle to align their IT departments with the business? And perhaps more importantly, how can companies remove these stumbling blocks?

Figure 4.1 Digital transformation planning for business IT alignment Technology Can Hinder IT/Business Alignment in a Couple of Ways First, a lack of modern technology can create a stumbling block. Tied to outdated enterprise software or applications, the IT department focuses most of its time and energy keeping the lights on. The maintenance requirements and inflexibility of the old system handcuffs the IT department, keeping them from providing the business with modern solutions. Second, confusing technology can drive a wedge in between IT and the business. Oftentimes, IT delivers technology with little input from the business. This leads to “Shadow IT,” as end users bypass the technology for third-party solutions.

Traditional IT Structure Traditionally, IT has been siloed from the business side of the house, where strategic business plans and requirements are decided. In other words, strategy and tactics have generally been divided. As business goals and strategies evolved, changing the needs of an enterprise, IT was not included in the conversations. In the case of traditional IT, the mentality of “build it and they will come” has lost traction. Why the change in approach? Rather than the continuous on-premises implementation and upgrades, the cloud presented a new challenge that required IT to show the anticipated business benefits. New investment structures, subscription-based rather than upfront investments changed the financial model of IT. Instead of standardized applications across business lines, the cloud enabled end-users to access more agile solutions. As the approach to technology changed, so did the need for a shift in how the business functioned. The Challenge The challenge with this shift is that there isn’t one owner of enterprise alignment. While organizations can restructure to enhance relationships across business groups, the responsibility to make this alignment happen occurs at an individual level. Enterprises are complex, with hundreds and thousands of employees, a variety of business lines, and as a result, differing expectations. Business–IT alignment works best if individuals are bought in to finding solutions that meet IT compliance standards and capabilities that simultaneously meet the unique needs of internal business groups. Why Pay Attention to the Shift: The Benefit of Alignment Strategically aligned businesses function better because they work smarter, not harder. While there is no one best way to align, a business where IT and business strategy are in lock-step can improve organizational agility and operational efficiencies. As the business goals pivot, IT can respond with the necessary solutions to support and as technology changes and improves, IT can influence business strategy. It’s necessary to continue this discussion around business–IT alignment and how IT professionals can better enable their business. Why You Need a Digital Transformation Plan A digital transformation plan or roadmap should have a validity of 12 months. The reasons for developing a 12-month roadmap are not self-evident. Certainly technology is important, but why must the business meticulously plan out their strategy for a year into the future, especially if the environment is working just fine as it is? The truth is that there are many reasons to draft your roadmap, and some of these reasons will be more or less relevant to different businesses depending on their industry. Staying competitive: There are industries that are so intertwined with their technology that lagging behind could cost the business their position in the market. The story of Uber is an excellent example of this dynamic. Uber disrupted an enormous taxi industry in a remarkably short period, because they offered an experience to their customer that was considered without doubt superior to their competitors. The experience was driven almost exclusively by their mobile app, which other taxi companies simply didn’t have. • Predictability of IT expense: IT expenses can be notoriously difficult to predict. Should a piece of data center hardware fail, it could cost thousands of dollars of capital to replace. A roadmap provides at least some semblance of IT expenditures for the duration of the roadmap. Yes, equipment can still fail, and the IT budget may still need cushion for such an event. Yet, the •

business will still be able to confidently point to other costs along the way and plan accordingly. • Answers the Cloud question: The cloud is not something any company should rush into. It takes a lot of time to migrate, and if not done correctly, your migrated applications may not even work. To save time and money, a detailed roadmap would be best. With the end goal being, “an ideal cloud deployment for our business needs,” you can chart the myriad of different steps that need to be taken by the business to achieve that elusive goal. • Ensuring the business meets regulatory and compliance needs: A roadmap provides the opportunity to prepare for any compliancy or regulatory changes that must be made in the organization. • Attract better IT talent: If you know what you want and you know what you need to do to achieve it, you’ll understand what additional personnel will be required to complete the roadmap. This gives you a clear advantage in the job market. You can attempt to find an IT professional with the skills most suited for your current needs. Furthermore, a clear vision for what you expect of a new hire will make your business more attractive. • Using employee time wisely: It is easy in IT to get lost in the weeds of day-to-day management of an IT environment. Administrators can lose hours in a day to putting out fires and addressing immediate concerns. The roadmap puts the long-term goals of the department front and center in the minds of the team. With specific milestones and deadlines, the team can budget their time appropriately to ensure their goals are met. • Improve the relationship between IT and the business: It can be seen in the business as a barrier, when it should be the enabler of success. Instead of IT telling other business units no when they request a new application or technology, the roadmap will ensure the IT department addresses the needs of the business in the most stable, secure, and cost-effective method possible. This will lead to more communication between departments and hopefully an understanding of the capabilities and limitations of the IT department. Other business units no longer need to make these requests out of the blue. They can be addressed during roadmap planning sessions and understand that their needs will be met on a transparent timeline. Moving Forward with the Roadmap With an understanding of what a roadmap is and why a business should devote time to developing one, the next phase will describe how to best draft your roadmap. I’ll cover best practices, pitfalls, and proven strategies to ensure that this process goes as smoothly as possible. The final result will be a realistic, strategic roadmap that actually yields the change in your IT department that the business needs. Holistic Digital Transformation Plan If you are the founder of a new startup or an existing business, it’s highly recommended that you develop a roadmap that will get you from where you are today to where you want to be tomorrow, six months from now, or a year or longer down the road. The roadmap is a guide to help you overcome roadblocks, prevent costly mistakes and eliminate time-consuming detours that can prevent you from attaining your goals, and reaching your destination. In my work, I employ a variety of enterprise grade services to aid in planning comprehensively for business and nonprofit success. I believe the Business Model Canvas and SOSTAC® methods together represent a valuable toolkit for effective management of your assets, capacities, and revenue. I hope to leave you with the following: that there are two freely available methods that capably stitch together your marketing, customer retention and acquisition strategies, your unique brand identity, and your legal and financial needs. Both these methods as shown in Figure 4.2 are worth using because they are portable, lightweight, and actionable. What this really means is both methods are easy to use in practice. The way to put these models into use in human terms is equally simple: bring your team

together at a comfortable meeting space, display the method in a way that allows each team member to participate and share opinions, have a note taker and a project facilitator, and then start recording observations. Both models are a bit like advanced guided brainstorming. These processes require team members to come together, and as a consequence using these models requires buy-in from management.

Figure 4.2 SOSTAC and Business Model Canvas for best practice The business model canvas first originated in the book Business Model Generation by Alexander Osterwalder and Yves Pigneur. They described the canvas as follows: What are the harsh new realities that small businesses, individuals and public sector organizations face in today’s marketplace? The business model canvas helps to address your human, financial and brand capacities. The company behind Business Model Generation, the Business Model Foundry has a new web app that deserves special mention. Called Strategyzer, the web-app offers a platform for global digital collaboration and rapid business model prototyping with the business model generation tool-kit. The SOSTAC® planning model by Paul Smith of PRSmith came to my attention via David Chaffey of SmartInsights. This method is different from business model generation in that it is directed more at those in digital marketing, customer relations and professional communications. SOSTAC® stands for situation analysis, objectives, strategy, tactics, actions and control. Like the business model canvas, the SOSTAC® method delivers a complex message with ease. The SOSTAC® model is also as good for business model planning as it helps to highlight the required assets for efficient reputation management and crisis communications, no doubt due to the fact that this method was authored by a public relations professional. Nevertheless, the value of the model is in the details. Focused on the digital marketplace, it offers valuable methodologies to ensure the following: that your brand relates and engages with key influences

and communities; that you refine your unique selling position and messages; and finally, that you crucially develop your communications with an understanding of your strengths and weaknesses. Case: Digital Transformation in Automotive The integration of digital technologies in the automotive industry is probably the most gamechanging development in recent years. Each step in the value chain will be affected by digitalization. Moreover, new business models arise on the back of these developments and traditional ones are transformed in the digital world or simply being disrupted. Luxury car brands in particular are competing fiercely to become the digital leader in their market. BMW at the Forefront of the Digital Revolution Currently, BMW is incorporating Industry 4.0 concepts to innovate at each stage of the production process, from design to postmarket. Design 3D printing has become a commodity for BMW, something you wouldn’t have believed three years ago. They are now producing over 25,000 prototype parts per year; as a result, the hardware design phase has accelerated and entire development loops have changed completely. 3D printing is also being used for spare parts. Now, rather than having spare parts built and lying somewhere, which is an investment in assets, BMW can create them on demand. Planning In the planning phase, BMW has had their facilities 3D scanned and digitized their entire assembly shop to create a 3D accurate model they can play with to test and plan various configurations of product lines, equipment, processes, and people. Launch To reduce time to market, BMW is using digitalization and virtual commissioning. They can virtualize and digitalize a product to test it, and cut down on physical build phases. They can also simulate a lot with structural parts, but it’s much more difficult with parts like rubber, or scenarios where they have to simulate gravity. As such, they do have mixed reality worlds, which incorporate some hardware and some digital components. Data and Analytics BMW is taking advantage of the low cost of sensors and installing them to monitor brownfields, drives, conveyor belts, and bearings. Making use of the data lake, they are able to predict when there will be a problem and schedule maintenance accordingly. Implementation BMW is involved in a number of educational collaborations to strengthen their innovation and workforce pipeline. As a founding partner of Clemson University’s International Center for Automotive Research, BMW is part of an automotive ecosystem where industry and academia meet to conduct research on lightweight design, component production, quality, sustainability, safety, and much more. Cooperation with Georgia Tech provides input for BMW’s production and assembly locations worldwide. The collaboration leverages mutual strengths in industrial engineering and production systems in preparation for increasing global digitalization. Series Production

At the series production phase, BMW is utilizing automation but also innovating in how to make work better for their employees. The division of labor in their facilities gives robots domain over repetitive and physically demanding tasks, while humans work on things that require finesse and craftsmanship. Combining the strengths of both, they can create a safe and ergonomic work environment, where technology supports and assists associates in a whole new way. They utilize cobots, which can work safely alongside humans, and also use innovations in ergonomics, such as exoskeletons that support the arms of people who have to do work overhead. SOSTAC : Transformation Planning in Six Steps ®

The SOSTAC® methodology can be found in Figure 4.3. SOSTAC® is a widely used tool for marketing and business planning, which is rated in the top three most popular marketing models in the Smart Insights review of Marketing Models that Have Stood the Test of Time.” In this book, I give an example of how I have applied PR Smith’s SOSTAC® planning model, which I think is a broader interpretation of SOSTAC®.

Figure 4.3 SOSTAC Methodology Source: eglesdigitalmarketing.wordpress.com

David Green, Head of Global Digital Marketing, KPMG says, “PR Smith has applied his highly acclaimed SOSTAC® marketing planning system to digital marketing to great effect—even for experienced digital marketers.” “Although most businesses are now doing digital marketing, nearly half don’t have a plan—that’s shocking! SOSTAC® gives you an awesomely simple framework to put that right,” according to Dave Chaffey, CEO Smart Insights.

How Does a SOSTAC Session Work? ®

The SOSTAC® session is typically a brown paper session. This involves lining the walls of a large room in brown paper (or any other paper type—as long as it’s large). Then capturing content by sticking notes to the paper that records people’s contribution based on their area of expertise. The notes can denote anything to do with the digitalization process that is under investigation— importance, size, effort, resources, documentation, and opportunity for improvement. I’m not going to argue for or against the merit of this approach. What I would like to suggest is that the process for capturing the output of such sessions creates a massive amount of work— often for an individual—which more often than not results in content, which at best creates documentation that is rarely read, or at worst, gets filed as it is impossible to revisit in context. The momentum built in the session quickly fades away as the participants head back to their day jobs, the facilitators head off to their next engagement, and ultimately change or transformation is hard to stimulate. By using a software tool like Spilter during the brown paper session, you can work more effectively. The room is equipped with computers so that the participants can respond to the questions. Everyone enters their response at the same time, which saves a significant amount of time during the brown paper session. Since all participants are working through the computer, everyone participates actively, not just the talkative participants. What’s more, responses can be entered anonymously, which makes it even easier for participants to freely share their opinions. It’s a perfect way to brainstorm successfully. Categorizing the responses is just as easy. The responses are organized digitally and categorized in relevant clusters. SOSTAC® can be used for all sizes of organizations and companies—just adjust how much detail you want in your plan. Step 1: Situation Analysis Step 1 of implementing a digital transformation plan framework is setting out the situation analysis. The situation should provide an overview of your organization—who you are, what you do, and how you interact and trade online by addressing internal and external factors impacting the business. Analyzing the situation involves researching your clients, finding out their industry, what their competitors are doing, and what content and strategy has worked well so far. It’s good to do an audit at this point on what they currently do on social media, as well as other marketing activities. I also recommend asking your clients what they are hoping to get from social media at this stage. Are they looking to build awareness? Grow revenue? What are their overall business goals? This step should be painting a picture of your organization and to do this, consider using some of the following methods to bring this step to life: Who your digital customers currently are—how do they interact with the brand, the platform/s used, demographic breakdown. • SWOT analysis—what are the strengths, weaknesses, opportunities, and threats to the whole organization • Competitor analysis—who are your competitors? How do they compete? For example, price, product, customer service, reputation, what are their key differentiators? • Digital channels landscape. List out all the various digital channels used and success of each for your organization—what’s performing well or not? •

Step 2: Objectives

Step 2 of your digital transformation planning should focus on the objectives of your strategy. Step 1 looked at the situation analysis, which provided an overview for your organization, specifically who you are, what you do, and how you interact and trade online by addressing internal and external factors impacting your business. Here you want to outline SMART targets for your plan. What achievements will prove your strategy actually works? Examples might be: • • • •

Grow 100 new B2B clients in 2018. Modernize your value proposition. Double the exposure and engagement on social media. Implement three emerging technologies to grow sales by eight percent.

These should all be measurable, so you can monitor success and adjust the plan if it’s not going as you want. As a hint, if you are new to this set targets that will impress your client but that you feel confident you can achieve. From defining your objectives to make it measurable, it is important to turn each objective into SMART objectives, which stands for: Specific: Are you focusing enough on a specific issue or challenge within the organization? Measureable: How do you plan to assess the performance? Will it be monitored through quantitative or qualitative analysis for example? • Actionable: Will it assist in improving performance if achieved? • Relevant: Is the issue to be addressed within the domain of the digital marketing team? • Time-related: Have you set a specific time period? • •

Step 3: Strategy Strategy means how you plan to get there in terms of fulfilling the objectives set. This is an overall plan to hit your objectives. You aren’t going into detail, yet this should be overarching plans rather than talking about platforms. It’s a good point to introduce the type of content and core messages you want to get across to the audience. What would ensure your audience remain engaged and incentivize following? Contests? Signing up influencers? Brand advocate programs? What content would generate an increase in revenue? How can you deliver that message on social media where people typically don’t like being sold to? The strategy section should also identify: • • • • • •

Which segments of the market you aim to target? What your value proposition is? What your digital core activities are? How your branding is to be improved? How you organize your exposure and engagement? How you are going to implement emerging technologies and data?

Segmenting, Targeting and Positioning You need to identify what market segments are best for your business and what segments you will focus on. Positioning is the process you use to determine how to best communicate your product benefits to your target customers based on customer needs, competitive pressures, communication channels, and carefully crafted key messages. Value Proposition

Value proposition explains what benefit you provide for who and how you do it uniquely well. It describes your target buyer, the pain point you solve, and why you’re distinctly better than the alternatives. Digital Core Activities Digital core activities are digital business functions that are critical, and closely related to your company’s strategy expressed in customer service, marketing, product design, and manufacturing. Routine administrative and maintenance tasks are not included as core activities. Branding Your brand helps you connect with your customers emotionally. A good brand connects with people at an emotional level, they feel good when they buy your brand. Purchasing is an emotional experience and having a strong brand helps people feel good at an emotional level when they engage with your company. Engagement and Exposure Exposure is the degree to which your audience (readers, listeners, viewers, visitors to your website) is in receipt of a promotional message. Customer engagement is the depth of the relationship a customer has with a brand. Engaged customers are either purchasers, evangelists, responders, or loyal customers. Technology and Data Emerging technology is a relative term, because someone may see a technology as emerging and others may not see it the same way. According to BusinessDictionary.com, emerging technology is a new technology that is currently being developed, or will be developed within the next five to 10 years. Big data is characterized by 3Vs: the extreme volume, the wide variety, and the velocity at which the data is growing online. Step 4: Tactics Tactics cover the specific tools of the digital mix that you plan to use to realize the objectives of your digital marketing plan. The strategy section should also identify which segments of the market you aim to target with your plan. In tactics you go detailed. How often will you post? What channels will you use? What skills and expertise will you hire? This is where you plan out the meat of your content that ties to the core message in the “Strategy” section. Listing channels and major activities that will be used to carry out the strategy. Channels A way of bringing products or services to market so that they can be purchased by customers. A channel can be direct if it involves a business selling directly to the customers, or it can be indirect if an intermediary such as a retailer or dealer is involved in selling the product to customers. People (Skills and Expertise)

Skills are the expertise or talent needed in order to do a job or task. Skills are what makes you confident and independent in life and are essential for success. It might take determination and practice, but almost any skill can be learned or improved. Step 5: Action Step 5 of your digital transformation plan is focused on how to bring your plan to life, to make actionable measures. In the actual model, essentially this just means once approved going ahead and doing it. I use this space in the plan to write deliverables in a timeline as well as key responsibilities. You may require your client to provide some things and this just makes it clear to them. The action section covers what needs to be achieved for each of the tactics listed in the previous section of the SOSTAC plan to realize the objectives of your digital marketing plan. ®

Step 6: Control The final step is to lay out how you plan to monitor and measure your performance based on the objectives set at step 2. The tactics have been considered and your control section is providing you with a series of dashboards tailored for each tactic. The following steps should be covered under the Control step: What need to be measured (which Objectives/key performance indicators (KPIs)). By whom, how often and at what cost. Report processes. Look to set the KPIs per tactic that tie back into the objectives set and review your KPIs on a regular basis (at least once a month) and adjust tactics or potentially even strategy to ensure objectives get met. • • • •

It’s important to also communicate your concerns with the wider team to ensure there is buy-in to the transformation plan. Business Model Canvas (BMC) However, SOSTAC alone is not sufficient for your digital transformation Plan. You will also need to have a methodology where you can describe and innovate your business model. The most common and widespread tool for developing and visualizing a business model is the business model canvas (BMC) by Alexander Osterwalder and Yves Pigneur. The BMC and its building blocks can be found in Figure 4.4. The canvas was cocreated with many practitioners and was based on the business model ontology developed by Alexander Osterwalder in 2004. The results are a best-seller book titled Business Model Generation, and the tool business model canvas. The BMC has been published online with a Creative Common license and therefore published and iterated by many practitioners.

Figure 4.4 Business Model Canvas (BMC) What’s the Business Model Canvas? If you’re already familiar, you can skip the explanation. The BMC gives you the structure of a business plan without the overhead and the improvisation of a “back of the napkin” sketch without the fuzziness (and coffee rings). The BMC has nine building blocks. Together these building blocks provide a pretty coherent view of a business’ key drivers: 1. 2. 3. 4. 5. 6. 7. 8. 9.

Customer Segments: Who are the customers? What do they think? See? Feel? Do? Value Propositions: What’s compelling about the proposition? Why do customers buy, use? Channels: How are these propositions promoted, sold, and delivered? Why? Is it working? Customer Relationships: How do you interact with the customer through their “journey”? Revenue Streams: How does the business earn revenue from the value propositions? Key Activities: What uniquely strategic things does the business do to deliver its proposition? Key Resources: What unique strategic assets must the business have to compete? Key Partnerships: What can the company not do so it can focus on its key activities? Cost Structure: What are the business’ major cost drivers? How are they linked to revenue?

The BMC is popular with entrepreneurs and intrapreneurs for business model innovation. Fundamentally, I find it delivers three things: Focus: Stripping away the 40+ pages of “stuff” in a traditional business plan, I’ve seen users of the BMC improve their clarity and focus on what’s driving the business (and what’s noncore and getting in the way). • Flexibility: It’s a lot easier to tweak the model and try things (from a planning perspective) with something that’s sitting on a single page. •

Transparency: Your team will have a much easier time understanding your business model and be much more likely to buy in to your vision when it’s laid out on a single page. •

Business Model Innovation for Competitive Advantage Short-term competitive advantage is created by exploiting existing business models. However, in the long term, all markets mature, competition intensifies, and turbulence increases. Consequently, new sources of growth must be explored, and fresh answers to enduring success must be found. The answer used to be innovate or die. But research shows that pouring more money into pure product innovation does not lead to improved performance. We need to dig deeper. To succeed in innovation and to seize new opportunities, the scope of innovation must be expanded to encompass the full business model, and new processes must be mastered. This chapter explores how an innovative business model is linked to customer value creation, defines growth opportunities, and presents key success factors to exploit the potential of business model innovation. In essence, the scope of creating customer value propositions and, thus, competitive advantage has been expanded from delivering basic products to crafting advanced business models. Professor Michael Porter captured this paradigmatic shift back in 1996 when he noted that a strategic fit among many activities is fundamental not only to competitive advantage, but also to the sustainability of that advantage. Porter argued that it is considerably harder for a competing firm to match an array of interlocked activities than it is merely to imitate a particular sales force approach, match a process technology, or replicate a set of product features. Therefore, positions built on systems of activities are far more sustainable than those built on individual activities. Scrutinizing the business model to discover new business opportunities places the customer center stage by asking if the fit between current activities and customer needs maximizes value creation for both customer and company. As shown in the opportunity matrix, business model innovation does not have to be radical. Simple moves can achieve great results in existing markets and discover new differentiation factors. Redesign the current business model to expand the market: Incremental change in the current business model can be leveraged to expand the market by attracting noncustomers. For example, the practice of serving products in small and affordable sizes is a widely used strategy by global consumer brands to enter emerging markets. Seven out of 10 Filipino smokers buy their cigarettes by the stick rather than by the pack, and as much as 68 percent of Procter & Gamble’s shampoo business in the Philippines is generated by sachet sales. The core product is left unchanged, while innovative distribution setup and packaging changes are keys to success. Attracting noncustomers can sometimes be achieved through small changes, and, thereby, a latent demand can be converted into real demand. Typically, noncustomers are those who are either unaware of your offering or meet some sort of barrier to consumption. Understanding and removing the barriers are keys to expanding the market. Understanding commonalities in the noncustomer segments paves the way for redesigning the business models. Launch a new business model to disrupt the existing market: Investigating the needs of current customers in some cases leads to the discovery of attractive subsegments that are not appropriately served by the current business model. The discovery of underserved or overserved customers leads to important managerial decisions. Should all segments be served by the same business model while running the risk of opening a flank for

competitors? Or should a radically new business model be designed to serve attractive subsegments while cannibalizing the existing business model? At the other end of the spectrum, the high end of a market can be equally attractive to explore through new business models. Consider the makers of automated espresso machines powered by easy-to-use coffee capsules such as Nespresso. By removing the risk of failing to brew the perfect cup of coffee and reducing the time it takes to make a nice single-shot espresso, an attractive niche of espresso drinkers has been identified. Whereas high-end disruptions typically are based on a technology leap, low-end disruptions can also be achieved by simplifying and lowering costs. Launch a new business model to create new markets: Designing radically new business models can be leveraged to create entirely new markets where large groups of customers have been locked out. In some markets, minor business model tweaks such as sachet marketing are simply not enough. A complete overhaul or even a new business model is needed to commercialize a value proposition for a new market. New markets can be defined both geographically such as bringing products from developed markets to emerging markets and as needs-based such as fulfilling emerging customer needs. A business model currently under development illustrating the idea is the current debate concerning designing a house for the poor that can be constructed for under $300 which keeps a family safe, allows them to sleep at night, and gives them both a home and a sense of dignity. It is a grand challenge that surely can only be solved by thinking innovatively about the entire business model. The potential is huge. 2.5 billion people at the so-called bottom of the pyramid live on less than $2.50 per day and are by far the largest global socioeconomic group. Furthermore, fulfilling the vision leads to value creation that, by far, goes beyond pure economic value creation. New market creation demands innovative business models. Moreover, these emerging markets are often judged unattractive to well-established companies, because they start out small and do not meet the expected growth rates to attract ordinary innovation investments. However, these markets often become large and profitable, and patience for growth pays off. In a world characterized by exponentially increasing turbulence, expanding your innovation horizon to encompass the entire business model is timely and needed for gaining long-term competitive advantage. However, to stay true to the principles, we should not get caught up in too much theorizing, but just do it and learn along the way. Close the laptop, get out of the building and learn from your customers to discover your future business models. BMC Building Blocks The business model canvas is broken into nine building blocks for your customers. I’ll break down each of those segments so you can get a better understanding of what each of them means for your company. Value Proposition The first section is about your value proposition. Your value proposition is what your company is making and who they’re making it for. It’s not about your specific idea or product, it’s about solving a problem or filling a need. It’s also about who you are solving that problem for. Once you know what problem you’re solving and who you’re solving it for, you can get into what exactly your product or service is. This is where you list all the benefits and features of your product and what they do to solve the problem. Customer Segments

Perhaps the most important part of your canvas is the customer segments. If you don’t know who your business is catering to, you’ll never be able to sell to them. You need to figure out who your customers are and why they would buy from you. You want to get very specific and figure out where your customer lives, what their social habits are, how old they are, if they’re male or female, and so on. You want to be so detailed that you could draw a picture of your customer, put it on a wall, and have it detail their exact persona. On day one, this is nothing but a hypothesis, but as you start testing and selling your products, you will be able to change this accordingly. Channels Your channels are what you use to deliver your product from your company to your customer. In the old days, you really only had one channel and that was the physical channel. You had a storefront and your goal was to get people to visit your store. With the rise of technology, a storefront is no longer necessary. Now many people use the Internet and mobile devices as their channels. Even if you have a physical channel setup, you’re most likely still going to have a web presence. You need to decide which outlet or outlets are best for you to get your product to the customer. Customer Relationships Your customer relationships are the fourth piece in your business model canvas. This section is about how you get your customers, how you keep your customers, and how you grow your customer. The channel you choose to distribute your product will also help determine your customer relationships. A physical store will acquire its customers differently than an online store. If you’re using a website as your main channel, you need to figure out how to get them to your website, how to get them to buy once they are there, and how to get them to hang around and buy more of your products. Just like previous steps this is only a hypothesis on day one and will be figured out as your business grows. Revenue Streams Your revenue streams are how you will actually make your money from your value proposition. What value is your customer paying for and how are you going to capture that value? Depending on your company, it could be a direct sales model, a freemium model, a subscription model, or a licensing model. Again, the model you choose depends on your business, and your business could use multiple revenue models. Your revenue streams aren’t about the actual pricing of your product, it’s just your way of capturing revenue. Resources The next section of your business model canvas deals with is your resources. This is what you need to sell your product, the assets that are required for you to be successful. The most important resource for many new companies is financing. Do you have enough cash on hand to fund your business? Will you need funding or a line of credit? There are also physical needs like a store, manufacturing plant, or delivery trucks. You might need intellectual properties as patents and customer lists. You might also need a good, strong workforce of salesmen, programmers, and manufacturers. Key Partners

Your key partners are the people and companies who are going to help you grow your business. There are some things you aren’t going to be able to do and some you just won’t want to do on your own, so you’ll want to partner with people that can do them for you. Two of the most common partnerships are suppliers and buyers. The two main questions you need to ask yourself before forming a partnership is what you’re going to get from them and what activities they are going to perform. If you have a one man startup, your partnerships will likely be different than the partnerships a larger company has. In your first year, you might choose to do everything yourself just to save money. As your business grows, you will be able to invest in partnerships that can save you time and help grow profits. Key Activities Your key activities are the most important things your business must do to make your business model work. If you’re in the production business, you’ll be making products. Maybe you’re a consultant and you’re in the business of solving problems. You could also be in sales and be responsible for getting people to buy various products. Whatever it is that your business does, your key activities are what you need to become an expert in for your business to be successful. Cost Structure Your cost structure is what it’s going to cost you to keep the business running. You have to think beyond the obvious costs like your payroll, rent, and materials and be sure you are including everything. You need to know what the most important costs are, what your most expensive resources are, and how much your activities and partnerships cost. Then you will need to ask the typical accounting questions like what your fixed and variable costs are, and any economies of scale. Anything that is going to cost you money to keep your business operational needs to be included here. BMC Before Transformation: Automotive Case The BMC before transformation is required because you need to have an overview of your original business model as a starting point. Figure 4.5 is the starting point where I developed the BMC for a traditional high-end automotive company.

Figure 4.5 BMC before transformation—Automotive The first part of the business model canvas is focused on your customers. Let’s start with defining your value proposition. Value Proposition Your value proposition is what defines your business, and what excites your clients to do business with you. If you are not exciting your clients enough, they would not go through the effort of trying your product or service. Here are four questions to ask yourself about as you define your value proposition: • • • •

What is the problem that you are trying to solve? What is the value that your product or service add to your target segment? How do you address the needs of your target segment? How is your value proposition different from others—or unique?

Keeping your value proposition clear and effective allows you to communicate it effectively within your company and to your target segments. Every one of your team members needs to understand how their work contributes to that value proposition. Value proposition for this case would look like this: • • • • •

Driving experience Model range State-of-the-art technology Migration to full-electric Remote services

Customer Segments

Customers segments have something in common with each other allowing you to reach them more easily by knowing what their interests are, where you can reach them, and what they need. All through the development of your business, it is crucial that you and your team are very clear on the market segment that you are trying to reach as this would guide many other decisions that you need to take. Customer segments for this case are as follows: • • •

Performance-driven people Quality-minded people Conscious people

Channels Channels are the way that you interface with your clients and services. Your aim is to find the most convenient way for your clients to buy your products and services and to have a great experience doing so. For this particular case, channels would be as follows: • • •

Dealers Online rental booking Third party mobility service providers

Customer Relationships Your customer relationship will influence the experience that they will have with you and the frequency of engagement with them. Determine which relation types have the most value to your business and to your clients’ experience resulting in great customer service. For this specific case, customer relationships would be as follows: • • •

Trade shows Always at your service Brand loyalty (car for life)

Revenue Streams Revenue streams or sales refer to how you generate cash from your clients. In the business model canvas, different client segments could pay you in different ways. Without sales, a business can’t function, so this is the most important aspect of any business. Ensuring which revenue streams are most convenient for each of your target segments and in turn allowing you to generate the most business is an essential aspect of having your business survive and thrive. For this case, I’ve defined revenue streams as follows: • • • •

Car sales Service and maintenance Leasing fees Rental fees

After focusing on the customer aspect of the business, we shift our views to the internal operations which sustain our business model. Key Resources

Key resources reflect the most important assets of your business. Identifying them will help you in protecting these assets and making the most of them. Identifying your most important assets in your business and protecting them is essential to making your business function well. For this case, I defined key resources as follows: • • • •

Efficient dynamics Brand Agile manufacturing system Talented people

Key Partners Forming strong partnerships with your ecosystem is a great tool to help in expanding your reach and making sure that your business is delivering its promise to clients. Continuous evaluation of the available partnership options is essential to stay abreast of the latest developments. For this case, I defined the following key partners: • • • •

Car designers Other car companies Supply chain partners IT companies

Key Activities There are many daily tasks that are done within the business, but it is always important to be clear about what are the key activities that need to be conducted within the business to deliver on the value proposition that you are promising your clients. By identifying these activities, it would help you to prioritize the efforts taking place in your business. Reviewing your key activities and improving the performance is an essential part of innovating a better product or service to your clients. For this case, I decided for the following key activities: • • •

Sales, marketing, and production Innovation for driving experience Develop future of mobility

Cost Structures Cost structure refers to all the costs that you incur to deliver on your business model. Keeping your costs under control is essential to maintain a healthy business. When you are starting up a business, keeping the fixed costs as low as possible is essential so that you don’t run out of cash too quickly before you start selling enough products and services to cover your costs. For this particular case, cost structure looks as follows: • • • • •

R&D Innovation and exploration Production Sales and marketing People training

BMC After Transformation: Automotive Case Information for the BMC after transformation comes out of the SOSTAC® sessions and are marked in red in Figure 4.6. This gives you an overview of your innovated business model. Figure 4.6 is the situation after transformation where I developed the BMC for a digital high-end automotive company.

Figure 4.6 BMC after transformation-Automotive I will start again with your value proposition. Value Proposition New topics in the value proposition for this case are: • • • • •

Personalized vehicles Full-electric Connected drive Twenty-first-century services Self-monitoring vehicles

Customer Segments A new topic in customer segments is: •

Environmentally and safety-conscious people

Channels New topics in channels are: • •

Augmented reality Direct sales channels

Customer Relationships New topics in my customer relationships are: • •

At your service 24/7, 365 days/year Schedule test drive

Revenue Streams A new topic in revenue streams is: •

Car sales (split by dealer/direct sales)

After focusing on the customer aspect of the business, we shift our views to the internal operations that sustain our business model. Key Resources New topics in key resources are: • •

Fully automated manufacturing (IoT, machine learning) Robots

Key Partners A new topic in key partners is: •

Charging partners

Key Activities New topics in key activities are: • •

Sales, marketing, and 3D printing production Data analytics and insights

Cost Structures New topics in cost structure are: • •

Software and technology development People and robots

Summary Business and IT leaders have talked about the need for IT/business alignment for well over a decade. They all want the benefits that successful alignment brings, like improved business efficiency, reduced costs, increased agility, and so on. Who wouldn’t want that? Yet, despite understanding the importance of IT/business alignment, it’s still an issue in many companies. A digital transformation plan or roadmap should have a validity of 12 months. The reasons for developing a 12-month roadmap are not self-evident. Certainly technology is important, but why must the business meticulously plan out their strategy for a year into the future, especially if the environment is working just fine as it is? The truth is that there are many reasons to draft your roadmap, and some of these reasons will be more or less relevant to different businesses depending on their industry.

In my work, I employ a variety of enterprise grade services to aid in planning comprehensively for business and nonprofit success. I believe the business model canvas and SOSTAC methods together represent a valuable toolkit for effective management of your assets, capacities, and revenue. I hope to leave you with the following: that there are two freely available methods that capably stitch together your marketing, customer retention and acquisition strategies, your unique brand identity, and your legal and financial needs. The integration of digital technologies in the automotive industry is probably the most gamechanging development in recent years. Each step in the value chain will be affected by digitalization. Moreover, new business models arise on the back of these developments and traditional ones are transformed in the digital world or simply being disrupted. Luxury car brands in particular are competing fiercely to become the digital leader in their market. SOSTAC is a widely used tool for marketing and business planning, which is rated in the top three most popular marketing models in the Smart Insights review of Marketing Models that Have Stood the Test of Time. In this book, I give an example of how I have applied PR Smith’s SOSTAC Planning Model, which I think is a broader interpretation of the original SOSTAC . SOSTAC can be used for all sizes of organizations and companies—just adjust how much detail you want in your plan. However, SOSTAC alone is not sufficient for your digital transformation plan. You will also need to have a methodology where you can describe and innovate your business model. The most common and widespread tool for developing and visualizing a business model is the business model canvas (BMC) by Alexander Osterwalder and Yves Pigneur. The canvas was cocreated with many practitioners and was based on the business model ontology developed by Alexander Osterwalder in 2004. The results are a best-seller book, titled Business Model Generation, and the tool business model canvas. The BMC has been published online with a Creative Common license and therefore published and iterated by many practitioners. The BMC before transformation is required because you need to have an overview of your original business model as a starting point. The first part of the business model canvas is focused on your customers. Information for the BMC after transformation comes out of the SOSTAC sessions and are marked in red in the previous figure. This gives you an overview of your innovated business model. Homework Assignment For students: consider a brick and mortar banking company that delivers products and services to the business-to-business (B2B) market. For professionals: consider the company you’re working for or have been working for. Your VP of business development wants to transform the company to a digital leader. As a Clevel business manager with more than average interest in everything digital, you are asked by the VP of business development to conduct a research study that will lead to a digital transformation strategy. Include exposure, engagement, and technology. Add opportunities to unlock new business values and increase competitive advantages. You can do this exercise alone. However, for best results, consider forming a team with two colleagues with a business background and two with a technology background. You or someone else can take up the role of facilitator. The other team members will do their questions and answers. At the end of the session, the facilitator will wrap up the results. The initial tasks involve the following: • • •

Set up a digital transformation plan using SOSTAC® and business model canvas Feasibility and business case for a digital transformation plan The competitive advantages you will accomplish with the digital transformation plan

The homework assignment to be conducted is to draft a short report (4–8 pages), which addresses the following questions and topics:

Outline your digital transformation plan. Test your digital transformation plan for success. Remember the sequence to develop your final digital transformation plan: º Develop your original (brick and mortar) business model canvas º Develop your SOSTAC® six-step model º Develop your innovated (digital) business model canvas • Find a list of top digital transformation consultants and their solutions (find at least 10 vendors). • Align your strategy with the company’s business strategy. • • •

Inspire your VP of business development to take the next step, which would be the implementation of your digital transformation plan.

About the Author Errol S. van Engelen is an author of management books living in Rotterdam, the Netherlands. He is also a 35+ years IT and Business Development veteran at Technology and Consulting companies. While working in a full-time career, he completed Marketing Management and Business Administration studies in the evening hours. He has been working independently since 2001, and has been focusing on Digital Transformation and Emerging Technologies for the past 10 years. Digital Transformation is becoming increasingly complex. To reduce this complexity, he has developed a methodology that integrates two existing, successful methods. This method offers possibilities to effectively carry out Transformation and Technology Planning projects. This book is number one in a series of four books.