Digitization and digital transformation – an overview of the most important topics from the month of August
02. September 2016
Slowly but surely, summer is coming to an end. It’s time for a short update about the most important news items that relate to digital trends and subjects. Despite the slow news season associated with the summer, there have been some exciting developments in the last few weeks. The race is on for artificial intelligence, digitization is underway in the construction industry, the insurance industry must steel itself against the attack of the InsurTechs, and Austria is debating the proposed machinery tax.
Artificial intelligence is “probably the greatest danger to our existence,” says Tesla CEO, Elon Musk. But luckily, not everyone looks at the situation with such pessimism. Artificial intelligence also offers companies numerous opportunities. This is demonstrated by takeovers such as that of the California AI startup Nervana by chip manufacturer Intel or the startup Turi by Apple. In any case, the pioneers in this area include Google, Microsoft and Amazon. The topic of artificial intelligence has also been well established for some time here in Germany. In this field, there really is no need for German industry – particularly German research – to shy away from its competition in Silicon Valley. Indeed, the German Research Center for Artificial Intelligence (DKFI) in Saarbrucken is currently the largest artificial intelligence research center in the world in terms of the number of employees and the level of external funding. VW has also discovered the subject and is taking part in the DKFI’s research. As VW CEO Matthias Müller notes, artificial intelligence is “a key technology for driverless vehicles.”
Irrespective of whether artificial intelligence now represents an opportunity or a danger for mankind – as Musk and physicist Stephen Hawking, among others, have predicted – this development can only be directed and not halted. The great race is in full swing.
Everyone knows everything (Süddeutsche Zeitung)
Could the bankruptcies, bad luck and mishaps related to the Berlin airport have been prevented using digital technology? Perhaps not the shocking corruption scandals. However, the lack of planning probably could have been prevented, writes the Süddeutsche Zeitung newspaper. The key phrase here is Building Information Modelling – BIM for short. It involves the digital planning and 3D modelling of a construction site, during which all steps and changes can be tracked beforehand by everyone who is involved in the construction. This sounds great, but the enthusiasm in the German construction industry has been rather muted to date. Only 6 percent of building contractors and suppliers from the DACH region use digital technologies. The consequences? Inefficient processes, poor cooperation between those involved, lack of transparency, and a sea of paperwork. Until now, companies have been particularly scared off by the necessity to train the construction site personnel and teach them how to use the digital tools. In this respect, the construction industry needs to understand that every innovation also requires investment.
To date, the construction industry has tended to view digitization as ‘nice-to-have,’ whereas the insurance sector is currently experiencing what it means to be under attack from the new digital competition. Startups such as Trov from San Francisco are showing us what the insurance business could look like in the future. Aspects that already exist or that are under development include transparent, individualized and quickly arranged solutions for customers, as well as support from bots during the advisory process. Nonetheless, the InsurTech scene is still in the starting gates. FAZ editor Philipp Krohn writes: “Digitization makes many things possible for insurers that have been unthinkable to date […], but at present the majority of innovations are in insurance sales rather than in the insurance business.” Yet this is where the largest profit margins are up for grabs. The key here is to minimize the damage, not to compensate for it! The revolutionary InsurTech business model, the so-called Airbnb of the insurance industry, is currently still being sought.
Unfounded fear of the end of work (Neue Zürcher Zeitung)
Is digitization destroying jobs? This question is currently plaguing our Austrian neighbors. Austria’s Chancellor Kern tends more towards pessimism and he now intends to intervene by introducing regulation in the form of a machine tax. Social security and pension systems are to be safeguarded in the future with taxes on production capital. Similar debates are also taking place here in Germany and in Switzerland with regard to the vote on an unconditional basic income. Matthias Benz, editor of the Neue Zürcher Zeitung newspaper (NZZ) makes the following observation: “The popular view of the ‘end of work’ actually has a major catch: To date, it has proven to be incorrect. Despite revolutionary advances in productivity, a far greater number of people are in employment than 100 to 150 years ago.” As was the case in the previous industrial revolutions, which brought motorization and mechanization, digitization will also lead to shifts in the employment world. However, experience also suggests that, all in all, the net effect will remain the same.