THE NETWORK: THE NEW INFRASTRUCTURE

OF OUR FUTURE PROSPERITY

By: Karl-Heinz Land Author, Speaker, and Investor neuland GmbH & Co.KG he digital matrix permeates all areas In many regions of the world, a new Tof modern life. Digital transformation digital infrastructure is emerging. This is not only growing at a fast speed but data and communication system is a also permanently increasing acceleration. global, finely woven fabric that will be Although the media, business, and politics much larger, more powerful, and more talk and write in "4.0 mode" (commerce useful than anything we are familiar with 4.0, industry 4.0, education 4.0), we have from the first 20 years of the internet. already reached the "Fifth Industrial In this "world machine," everything can Revolution," with the Internet of Things communicate with everything. It will fuse (IoT), blockchain, and artificial intelligence the capabilities of man and technology, emerging as critical technologies. In generate information of unprecedented this environment of rapid growth, value, and manage even the most cloud and big data have become the complex global processes. It will optimize most important business enablers. itself, break down boundaries between industries, and enable solutions that are The "Fifth Industrial Revolution" is only a distant concept today. In the past, characterized by cyber-physical systems cities, and companies used to settle near and IoT. These technologies not only rivers, railway stations, and motorways enable automated and AI-controlled to gain rapid access to the infrastructure processes, routines, and services but will and accelerate the value chain. Today, ultimately abolish the interface between access to high internet bandwidth and the artificial and the biological sphere. data determine the new infrastructure. Without these barriers, the collaboration Anyone who is not connected to this between man and machine becomes infrastructure can no longer participate possible. We are no longer talking in the new way of creating value. about automation but autonomous systems. These systems can operate independently without human interaction.

Whitepaper | The Network: The New Infrastructure of our Future Prosperity 2 DIGITAL DARWINISM IS TAKING HOLD: "ADAPT OR DIE" The network is the new infrastructure of our future prosperity.

echnological progress and changing operator but are bundled for the customer Tparadigms have been common in the and combined with other data-driven value. past. Remarkably, the first three stages Above all, the customer gains transparency of industrialization and the associated and access to additional, more convenient increase in productivity lasted for another services. Platform partners or product 250 years or so, while the last two manufacturers gain a wider reach and revolutionary stages were climbed within benefit from lower infrastructure costs 20 years. There are currently more than such as logistics, distribution, and provision 30 billion networked devices. These will of the offer. For this reason, the decisive generate more than 11.1 trillion euros factor for product provider success is fast, in new economic value added by 2025. uncomplicated access to the platform. Many of these activities will be driven by This results in an extensive partner start-ups that have emerged from the network, which the platform operator internet economy. In addition, they will has to map in a technically clean way. come from the service sector and no longer be product-driven. In the same Subscription, commission, or advertising way that we continue to build cars and revenues are popular business models machines today, we will have to think in the platform economy. This leads to about software and services in the future. economies of scale, allowing the platform provider to grow rapidly without making Anyone who wants to participate in further significant investments. The digital value creation should understand greatest profit that can be achieved the paradigm shift in the digital through the platform economy is by economy. The three main drivers of this offering a superior interface to the end development are disintermediation, customer. Detailed information about a disaggregation, and dematerialization. customer's specific purchase and operating behavior gives the platform provider a Disintermediation describes the elimination competitive advantage. The data and of the middleman, also known as the information coming from direct customer platform economy. A platform uses the contact are the new currency of the digital network and becomes more valuable with economy. Therefore, even a marketplace each additional user. The added value, like Amazon is fighting for the last mile to therefore, increases with every user who the customer and changing from a pure joins it. The core of the platform business is online marketplace to a multi-channel that the products and services offered are provider with increasingly stationary not exclusively provided by the platform shops. Online and offline offers are

Whitepaper | The Network: The New Infrastructure of our Future Prosperity 3 cleverly interlinked and made measurable are the machines that make the printer. to offer the customer the best possible Also, the individual parts from which the added value on all channels. Other classic printer is produced are dematerialized. examples of platforms include Uber, They are simply no longer needed. The Netflix, , YouTube, Airbnb, Facebook, value chain is changing significantly. and the Apple Appstore. They all offer their Anyone who believes that products like customers data-based services. They create a car cannot be dematerialized because transparency about distributed offers and the driver will always be physically seated are also able to adapt and individualize in the vehicle is mistaken. Through the the offer to the customer. In this way, they interaction of the three factors presented generate additional data and information, - platform economy, service economy, improve the offer for the customer, and and dematerialization - it is possible to benefit from an immense competitive maximize the utilization of a vehicle. advantage over individual suppliers. Car sharing makes it possible for many households to use just one car together Disaggregation describes the breakdown and only when needed. Twenty cars of existing data into individual elements or become just one. Nineteen cars are specific characteristics. This is the basis for dematerialized. This triad of paradigm the sharing economy and various digital shifts must be understood and used to service models such as the "pay-per-use continue to participate in value creation principle." Car sharing is a clear example in the future. After all, they do not stop of this. In the past, a car manufacturer at any industry, including the automotive knew, at best, when and how many cars industry, trade, banks, media, tourism, were bought by which customer. Today, or mechanical and plant engineering. In manufacturers know a lot more about the age of COVID-19, we are even forced the customer, like the exact time he to dematerialize physical meetings and opened the car door, where he went, how events. The event and catering industry fast he was going, how many kilometers is facing unprecedented challenges he covered, which radio station he and is currently reinventing itself. listened to, and where he locked the car. Disaggregation opens the doors to entirely COVID-19 has turbo-boosted digitization, new, digital business and service models. and yet change will never be as slow as it is today. Each of us can feel how the Dematerialization describes the conversion world seems to be spinning faster and of analog products into digital formats. faster. The lockdown resulting from the Material things become software. If we COVID-19 pandemic showed how quickly only have our train ticket as a QR code on we need to adapt, govern for change, our mobile phone, neither the paper nor adjust our economy, change our social the toner is needed to produce the ticket. and individual behavior in response to The printer is no longer necessary, nor new conditions in record time. In 1965,

Whitepaper | The Network: The New Infrastructure of our Future Prosperity 4 Gordon Earle Moore, computer scientist I get? On the 64th field, I have so many and co-founder of the computer chip grains of rice that I could cover the entire company Intel, formulated a law known area of the Federal Republic of Germany as "Moore's Law". It states that every one 2,065 meters high with rice. Only the or two years, the density of transistors on Zugspitze mountain would still rise! a computer chip doubles. The computing power of the computer, therefore, doubles The result of exponential development is every two years. Mathematicians will difficult for us to imagine, and the same immediately realize that this is nothing applies to technological progress. The more than an exponential function. It is an capacity of the room-sized computer exponential development of technological with which the Apollo 13 mission flew to progress which, together with the the moon is less than that of the average effects of digitization, will regularly turn smartphone today. Today, we are just our world completely upside down. on the 37th square of the chessboard, and the fun has just started. We can only Most people know the story of rice grains guess at the possibilities and opportunities on the chessboard and how the Brahmin offered by technological development. Sissa outwitted the Indian tyrant Shihram Every exponential function reaches the with his understanding of exponentiality. point where the graph rises steeply Since we often underestimate upwards. The ongoing doubling, according exponentiality, I would like to do a little to Moore's law, is almost perpendicular to exercise with you. If you put a grain of rice infinity. This point in time is now reached. on the first square of a chessboard and Slow growth turns into an explosion of then another grain of rice on each further performance. This explains why, since square, you will end up with 64 grains 2010, many digital technologies have of rice in 64 squares - that's how many suddenly, almost simultaneously, become squares a chessboard has. Each additional marketable. Exponential growth is taking field brings an extra grain of rice. This hold and driving digitization forward. describes linear growth. If I increase the number of rice grains exponentially—let’s To understand the power and speed of say I double the number of rice grains this new era, people must overcome their on each additional field—I get two rice tendency to think linearly. It no longer helps grains on the second field, four rice grains to write the past into the future the way on the third field, eight rice grains on the politicians, entrepreneurs, and decision- fourth field, and so on. How many grains makers in society often do. The COVID-19 of rice, do you estimate, I have already pandemic will change our global economy collected on the 37th field? I now have forever. It will disrupt it even more rapidly about 600,000 tons of rice in field 37. This and massively than we already suspected corresponds to the weight of an aircraft before the pandemic. The disruption of carrier. If I continue this exercise until the recent years, which has already affected 64th field, how many grains of rice will many industries, will accelerate even more

Whitepaper | The Network: The New Infrastructure of our Future Prosperity 5 dramatically. The UN member states, in With an infrastructure of prosperity particular, have a choice: they can continue that gives everyone access to education, to timidly turn the screws of the world knowledge, and participation. With system, get lost in the contradictory technologies that bring good medical goals of agenda 2030 due to conflicting services to the most remote areas, national interests, constantly take a step optimizing agricultural yields for countless back and forth, and hope that things will small farmers and mega-farms alike. not be as bad as they look. Or will they With less inequality because of increased finally start to look reality in the eye? access to value systems. Without poverty and hunger, because of increases in basic Hopefully, humanity will not end up at income. All of this is driven by the new the level of development predicted by “social network of thinking exponentially,” Norwegian scientist Jorgen Randers, one and by taking the seemingly impossible into of the co-authors of the Club of Rome consideration, accepting unpredictability report "Limits to Growth," written in 1972. as a principle, and always considering the Randers predicted that in 2052, the global possibility that innovation can change economy would shrink. The population everything overnight. We can create will peak around 2040 but will not rise this world if we decide we want it. as dramatically as feared. However, CO2 emissions are not falling fast enough, and Companies delivering digital services and a climate crisis will occur in the middle of accelerating innovation and transformation the 21st century. According to his forecast, will play a critical role in building this new poverty and hunger will still be the order world. SoftServe is a group of advisors, of the day in 40 years' time. Do we want engineers, and designers who deliver that? Or will the decision-makers, the innovation, quality, and speed. SoftServe states and international organizations, specializes in cloud and DevOps, big data the many NGOs and nonprofits, and and insights, AI and ML, and engineering the commercial industry succeed in services. SoftServe’s key differentiators fundamentally rethinking their approach to include Centers of Excellence (one of the this challenge? Will we succeed in making largest big data and AI Centers of Excellence a “mindset change” towards digitalization, in Eastern ), cooperation with exponential change, and dematerialization? global institutions like the Carnegie Mellon Software Engineering Institute, and award- Only then can we prepare ourselves winning partnerships with companies such for a completely different world, a as AWS, GCP, , , and world optimized through digital means many others. Companies like SoftServe and artificial intelligence. A world that can make a significant difference in consumes far fewer resources because the world’s new digital infrastructure. dematerialization and the sharing Softserve’s use of innovative technologies economy will significantly reduce industrial can help organizations of all sizes become production and consumption, lower data-driven, bringing us closer to a world the use of resources, and curb energy where our most formidable challenges requirements in the long term. are solved by exponential digitization.

Whitepaper | The Network: The New Infrastructure of our Future Prosperity 6 ABOUT US SoftServe is a digital authority that advises and provides at the cutting-edge of technology. We reveal, transform, accelerate, and optimize the way enterprises and software companies do business. With expertise across healthcare, retail, energy, financial services, and more, we implement end-to-end solutions to deliver the innovation, quality, and speed that our clients’ users expect.

SoftServe delivers open innovation, from generating compelling new ideas, to developing and implementing transformational products and services.

Our work and client experience is built on a foundation of empathetic, human-focused experience design that ensures continuity from concept to release.

We empower enterprises and software companies to (re)identify differenti- ation, accelerate solution development, and vigorously compete in today’s digital economy-no matter where you are in your journey.

Visit our website, blog, LinkedIn, Facebook, and Twitter pages.

NORTH AMERICAN HQ

201 W 5th Street, Suite 1550 Austin, TX 75703 USA +1 866 687 3588 (USA) +1 647 948 7638 (Canada)

EUROPEAN HQ

14 New Street London EC2M 4HE United Kingdom

APAC OFFICE

20 Cecil Street #08-01 PLUS Singapore 049705 +6531656887

[email protected] www.softserveinc.com