Industry 4.0 and Digital Transformation

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The 1973 oil crisis had a devastating impact on the American automotive industry. The large vehicles of the American automotive industry gave their places to Japanese vehicles that are fuel-efficient, robust and affordable, due to their efficiency. At first place of these Japanese companies, we saw Toyota, the creator of the Lean Manufacturing system. Deming’s TQM methodology came to rescue American car industry 10 years delayed. Japanese automotive takes still the lead in this market.

With Lean Manufacturing / TQM or Six Sigma philosophies, the realization of a standard process in a more agile and efficient manner enabled the creation of quality and cheaper vehicles that are more suitable for customer needs.

Although these systems provide great advantages methodologically, we see that they are not sufficient by themselves at the point of competitiveness at the moment.

The concept of industry 4.0, which was introduced as a development plan by the German government in 2011, was launched by Klaus Schwab at the World Economic Forum in 2015. So what does industry 4.0 provide? Transparency, predictability and self-control are the key points of digitization.

Source: BCG

Industry 1.0 and before, production was made with the methods we call personal and tailor-made methods. Of course, this caused very high production costs. Mass production activities started with the 2nd industrial revolution. The biggest component of mass production is the high production volume per piece. In this way, production costs have dropped too much and many products have become accessible to everyone.

The 2nd industrial revolution was followed by the 3rd and today’s 4th wave. With the development of electronic circuit systems, IT technology and higher computing capacity, we are more specialized and able to produce at low costs. We are increasing this day by day.

However, we are moving towards the point of producing customized products and services in almost every sector, especially in the production sector. Our need for systems that will both work tailor-made for complex needs and do this at lower costs is increasing.

Source: Fraunhofer Institute

We have witnessed the devastating impact of the oil crisis on the automotive industry, as we witnessed the meltdown of companies such as Nokia or Kodak, who could not keep up with this change with the recent introduction of smartphones. Now, we are experiencing a much larger change process simultaneously with Covid-19 in all sectors. With the pandemic, our lives started to change completely, of course, this brings brand new concepts and business models to our lives.

4 Digital Trends

We see that the 4 main trends that will increase in importance with the pandemic and will emerge in every sector by 2030 are virtual reality, connected vehicles, hyper-autonomous systems and personalization.

In these days we live, we switch between virtual and real faster and more frequently than ever before. We are connected to our phone or computer almost all the time we are awake. We will see virtual reality in many places very soon. Offices, shopping malls and stores will be accessible just like the virtual reality application currently implemented in some museums.

Like us, the tools we use have come to the point that they are constantly generating data. In recent years, not only cars but many devices from televisions to refrigerators have started to generate a lot of data. In addition, algorithms and robotic systems that can make simultaneous decisions from the produced data are also available.

Many companies know us better and offer personalized offers to sell their products when we produce so much data, both with our connected phones and the items in our home. We see that this will be an area that will force competition in product development and personalized production.

Is digital competence ready for this new world?

There has been a huge improvement in computing power and bandwidth speed in the last 10 years. These were followed by a decrease in the cost of data storage in both cloud environments and onprem. In addition, sensor costs decreased by 50% and robot costs by 30%.

As a result of all this, we are now able to store larger data, perform more accurate operations, and enable machines to make faster (almost simultaneous) autonomous decisions in some areas. This encourages us for this changing new World.

Business model needs challenge technology to be “people-oriented, location-independent and flexible”.

According to the report published by Gartner, the business model needs in the new era push technology development in three main points. These are human centric, location independent and flexibilty.

While the pandemic changes how many people work and interact with organizations, people are still at the center of all business. And they need digitized processes to work in today’s environment. At this point, the prominent concepts are the internet of behavior, personalization and privacy-enhanced information processing to protect personal information security.

With COVID-19, the places where employees, customers, suppliers and organizational ecosystems physically exist have also changed. Location independence requires a technology change to support this new version of business. At this point, we see that the prominent issues are distributed data / cloud infrastructure, location-unrestricted access and cyber security network.

Whether it is a pandemic or a recession, there is fluctuation in the world. Organizations that are preparing to adapt will overcome any interruptions. For this, we encounter agile management, artificial intelligence and hyper-automation components.

Internet of Behaviour

As an IoT concept, connecting sensors embedded in objects with each other and receiving the data they produce. It is the system that allows the objects to take action by processing this data received afterwards.

The interpretation of data collected from different points with different IoT devices is called IoB (internet of behavior). With this concept put forward by Gartner:

• The shopping behavior of customers,

• At what stage of the purchasing process the customer is

Real-time and targeted ads

supports. In short, it is the largest infrastructure established for personalization.

Personalization

Personalization is currently one of the most focused topics in all industries. DNA is extracted with the customer’s activation and historical data. Afterwards, it is aimed to make more sales with personalized actions in the purchasing journey of the customer. For this, it is necessary to store large data, make interpretation and produce simultaneous actions. Therefore, we observe that technology has evolved to this point.

Artificial Intelligence

Another important element in technology trends is artificial intelligence. It has become a part of our lives in all areas where digital platform and data exist. For example, with image processing technology, algorithms that can identify video or pictures and generate action have become quite common. Voice and text can now be put into structured data format and understandable by algorithms. Developed by Open-AI, GPT-3 can even write poems and articles. Chat bots listen to our complaints on websites and help us. Driverless vehicles are the most important example of hyper-automation that covers all of the topics we’ve talked about. Complex systems that can define video, sound and other tools and make decisions simultaneously. We see that artificial intelligence is widespread in many other areas like this.

Entrepreneurial ecosystem focus more on technology and digital-oriented issues.

Digital trends are also shaping the fields of entrepreneurship. According to Startup Watch’s report for 2020;

• The number of startups in the game sector has been at the top for the past two years.

• We see startups that offer Artificial Intelligence-based solutions have ranked in the top 5 in the last 3 years and are on the rise.

• Health technologies are again on the list, as they have been for a long time. After the pandemic, we are getting the signals that we will continue to hear artificial intelligence and IoT technologies more frequently, especially in the field of health.

• Although the issue of Software as a service is decreasing in number, it continues in the top 5.

In terms of investment size, SaaS ranks first. Artificial Intelligence is following this. Then comes marketing, health and financial technologies, respectively. The platforms where you can make your grocery shopping, which has become widespread with the pandemic, have also come to the fore..

The situation is a little different at global startup ecosystem. According to the report of Startup Genome, the sectors that have grown the most in early investment are robotics and production technologies, blockchain, agricultural technologies, artificial intelligence and big data.

Game, advertising and media technologies, on the other hand, are in a downward trend. Unlike us, the decrease in the global gaming industry is interesting. In addition, financial technologies have also matured and are not growing, and a 100% growth continues in exit investment.

Another interesting point is that agricultural technologies have come to the fore. We observe that changing climatic conditions and the compelling effect of the increasing population in obtaining more efficiency from limited agricultural resources increase the need for the development of artificial intelligence and IoT-based solutions.

Source: Startup Genome

The impact of the recent pandemic accelerated the digital transformation process. We have experienced that our lives change very quickly. However, the past 1 year is only the beginning of this process and will continue increasingly the effect of change in the upcoming period. Remote working, transitions between virtual and real life, hyper-autonomous systems and personalized products are the basic concepts that we will encounter. These concepts cause technology to evolve as well. With human-centered, distributed data infrastructures, we see that flexible and security-enhanced system needs that can work independently of location come to the fore.

The trends we have mentioned until 2030 will have an important place in the products we buy and in our lives. The enterprise ecosystem also sees this change and acts towards it. In our country and in the world, we are witnessing that innovative ideas based on artificial intelligence, using big data, and focusing on deep and advanced technology, are intensely turned into startups.

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