2020/07/07

Next normal - Towards a new present with future technologies

By Ralf Pichler

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While in recent years digitization has always been a topic of the future, the Corona pandemic has made it unmistakably clear how much it is a necessity of the present. Because of the crisis, we have experienced an unprecedented digital catch-up race in recent weeks, which, in addition to all the relief it has provided, has above all made one thing unmistakably clear: There is no alternative to digitization - even without the crisis. 

And suddenly there was home office! Looking back at the developments of the past few weeks, one could almost think that digitization became necessary only because of the current crisis. However, the broad consensus on remote work that was reached so quickly at the beginning of the Corona pandemic is indicative of a deeper general misunderstanding regarding digitization. As new as it may have seemed to many employers and employees due to the major changes it entailed at the beginning of the crisis, home office was not invented just because of the corona virus. Neither were all the other technologies in the arsenal of digitization. Too often, they have been - and still are - placed in an unspecified future, while at present they are readily available for widespread use.

Digitization is not a dream of the future

"Future technologies", in their wording, may have no relation to the present, but their place is exactly there. Only then can they contribute to securing the future. The term "digital transformation" may refer to a process that will be completed at some point in the future. However, the transformative power of digitization unfolds in the here and now. The current crisis has shown this very clearly. Rapid investment in digital infrastructure has enabled social institutions and businesses to continue functioning as smoothly as possible. On the surface, therefore, the crisis must of course be seen as a powerful accelerator and catalyst of digitization. A closer look reveals a more nuanced picture: the corona crisis has painfully shown us our digitization gap and the need to catch up in this area.

Crisis as the starting signal for the race to catch up

Preliminary results of a Lünendonk study on digital efficiency that Detecon Consulting commissioned together with our partners T-Systems and T-Systems Multimedia Solutions make this reality tangible in figures. For example, more than half of the decision-makers surveyed (54 percent) regard the effects of the corona crisis as a major threat. Almost two-thirds (60 percent) state that they are giving higher priority to investments in new digital technologies due to the situation and are increasing them, whether to reduce costs and increase efficiency or to enable new business models.

Fig. 1: The Corona crisis and global trade restrictions are considered the biggest external threats seen for companies
Fig. 2: New investments as a result of the Corona crisis

A similar picture was seen at the beginning of the year, just before the crisis. In a representative Bitkom survey, more than half (58 percent) of the participating managing directors and board members stated that they considered their company to be a latecomer when it came to digitization. Only a good third (36 percent) saw themselves as pioneers. A small minority (3 percent) even thought they had missed the boat. Yet, at that time there was no incentive for short-term investments.

Against this background, the question of the possibility of a "back to normal" does not arise. That normality was already on its last leg before the crisis.

Making sustainable use of existing technological possibilities

There is no doubt that Covid-19 brings about drastic changes - above all the so-called social distancing, which hardly any script could have foreseen. However, as we have already seen in recent weeks, the consequences of this can be cushioned by the accelerated use of existing digitization trends - be it through decentralized working via digital conferencing, digital learning or the virtualization of entertainment offerings. However, we must not rest on our laurels. Because even if we have managed to pave the way for many office employees to move into home office quickly and with relatively manageable investments, this will not help all those industries whose productivity is severely impaired by social distancing. Moreover, social distancing will undoubtedly accompany us as a condition of social interaction well into the period following the pandemic.

Take the manufacturing industry: its functioning still depends largely on the physical interaction of people at the place of production. In factory halls, employees still have to "lend a hand" in the truest sense of the word, in interaction with each other and with the production machines. And this dependency permeates individual production sites as well as global supply chains. The lockdown has made this sufficiently clear. To break this dependency, a variety of digital technologies is available. Industrial IoT solutions, for example, can be used, through extensive networking and virtualization of industrial plants, to reduce the number of contacts of people employed in production and to automate other parts of production. Using Digital Twins, which simulate logistics and production processes and provide early detection of possible weak points, manufacturing plants can be optimally controlled with little personnel expenditure and alternative links in the overall supply chain can be identified and activated more quickly. Remote maintenance solutions make it possible to maintain production facilities remotely without contact. A welcome side effect of these technologies is that they contribute to increased efficiency. However, their rapid implementation at this point in time would have required forward-looking investments in the past. These must now be made up for as quickly as possible. The level of digitization prior to the corona pandemic may have been sufficient to accelerate some digital trends, but in order to fundamentally help the manufacturing industry, we need to think bigger. Not only short-term solutions are necessary, but also sustainable digital strategies that think beyond the current crisis in the interests of securing the future.

Telcos as enablers for the digital economy

Hardly any other situation has shown recently how important efficient telecommunications infrastructures are. Social distancing regulations have led to a sharp increase in the demand for connectivity (voice, data, media, and value-added services) plus bandwidth for use at home. DE-CIX, the central Internet exchange in Frankfurt, reported new records in terms of traffic volumes transported per day right at the beginning of the crisis. This included a geographical shift from inner cities and commercial areas to residential areas, which was in line with the lockdown, as well as a change in the duration of usage and peak times.

Telecommunications companies (telcos) thus had a task that went far beyond the mere provision of a communications infrastructure: namely to create the conditions for the continued functioning of large sections of society. Especially in the period after the crisis, they will feel even more committed to this responsibility for society as a whole.

To meet this expectation, telecommunications providers, infrastructure operators and digital service providers in dialogue with other relevant players will have to face completely new challenges. While up to now the focus has been on scaling up existing resources in order to be able to meet the increased demand promptly, telcos will have to prioritize infrastructure expansion even more strongly in the future and will not be able to avoid diversifying their offering in line with current circumstances.

In concrete terms, this means that the expansion of broadband supply, whether mobile or fixed, must not be lost sight of in order to be able to confidently counter future extreme situations. Network operators will find new demand that will allow them to make new investments. In terms of volume, however, the expansion can hardly be managed alone. Cooperation will therefore become increasingly important, for example to close mobile phone white spots and to provide sufficient capacity nationwide. At the same time, it will be necessary to increase internal efficiency by driving digitization more strongly at all stages of the value chain, from the network and IT to sales and service. With the new normal, the market also offers telcos further opportunities to position themselves as digital solutions providers. Against this backdrop, digital solutions that were heavily used during the current crisis will have to be continuously developed further and incorporated into new offerings such as security solutions, IoT applications, e-learning offerings and collaboration platforms. Enabling technologies such as the new mobile communications standard 5G will play a significant role in this digital offensive. 

The path to a new normality

A new normality must not only start by casually addressing the symptoms of the current crisis, but must also make up for the lost opportunities of digitization in recent years. This is the only way to create a crisis-resistant and secure digital basis for the functioning of our society and economy.  Yet, to achieve this goal, the wheel does not have to be reinvented. The technologies required for this were and are available. All that is needed is a courageous departure from the old and a consistent affirmation of the already familiar new. It is important to understand digital transformation not only as the introduction of technology, but also as a cultural change that brings about a comprehensive new way of thinking and that is clearly reflected in attitudes and behavior. After all, the crisis has not changed anything about the promises of digitization, except for the fact that they are without alternative now.

 

The original article appeared on Linkedin.

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