Kathy Gibson reports from CeBIT, Hanover – We talk about the disruption taking place as the Internet of Things slowly but surely becomes a reality. But the real disruption comes when we try to truly understand what happens when we transition from a world of atoms to a world of bits.
This move from the physical world to the digital world is causing huge disruption, says Dr Vishal Sikka, CEO of Infosys – but it’s also opening up massive opportunities for organisations if they grasp the nettle now.
“There is a tremendous opportunity to simultaneously achieve two objectives: to renew the systems we rely on; and build completely new systems,” he says. “In fact, we have an opportunity now to rebuild the spaces we live in.”
Dr Sikka explains that in the economics of value delivery, the physical world places many layers between the production of goods and their consumption.
“Each of these layers feels the need to add their own value. It’s not always relevant to the consumer and often does little more than add cost. It also means that the matching of supply and demand can become weak, which could result in excess inventory and obsolescence.
“But we are seeing a disruption happening now in the digital economy, where the product or service are getting much closer to the consumer. This creates the effect that true value pricing as well as instant feedback have become relevant.
“This results in disintermediation and close matching of supply and demand. Because production of goods its closer to the point of consumption, pricing is a function of the bare bones cost.”
So what should companies that operate in the physical world do in order to safeguard their future?
“We need to renew our existing systems while we build new ones – and these systems must reflect the new economic reality.”
One of the stumbling blocks to imagining how the world will be in the future, he points out, is that humans are good at looking back but not so good at looking forward.
“Moore’s Law is now about 50 years old,” he says. “It was written in 1967, but coined a couple of years before that. And it’s expected to continue to hold true for the next nine to 10 years.
“Yet I find that many people still haven’t fully comprehended what Moore’s Law actually means. The world of digital technology is disrupting every industry, but many people don’t understand the principles that underlie it.
“We battle to comprehend that in five years’ time, something will offer 10-times batter price:performance.”
Today we are building large scale computers servers with 1 080 CPU cores, 22Tb DRAM memory, 40Gbps bandwidth, 200Tb SSD and t petabytes of storage, drawing just 22kWH per year and costing just $875 000 for the full rack.
On the other end of the scale, Dr Sikka says, the University of Michigan has built a tiny computer, just 1mm x 1,5mm that includes a sensor, CPU and memory.
“And in the next nine years will see a doubling of the price:performance of machines like this every two years.”
As a consequence, companies looking to embrace the digital economy have to change their systems with the assumption of massive pervasiveness of computing and connectivity.
“With that I believe we have a great opportunity to rethink all if our physical structures,” says Dr Sikka. “We need to switch the context of digitisation: it doesn’t happen only through a small device, but the whole space could be digital and interactive.”
Every space that we inhabit is an aggregation of service and people, giving us an opportunity to deliver an undiluted, high-end experience, he says. “Our experience of a place is a multi-sensory one – sight, touch, smell all add to it.
Being in a space, immersed and surrounded, can be much better that staring at a small rectangular screen, itself surrounded by other things.”
Addressing digitisation from this viewpoint means that the whole experience can be redesigned, Dr Sikka says. And it could relate equally to a bank branch, a store, a hospital, a classroom, a workplace, a warehouse, at home or in the car.
The car is already becoming a lot more digital, he points out, but every other space offers opportunities for rethinking and redesign.
“Organisations should think about redesigning their assets before they can become liabilities. We have to opportunity to make them experience-rich environments. And this will make the digital revolution something we can all embrace instead of reacting with a knee jerk.
