Energia-alan ja digitaalisen sektorin tulevaisuuden mahdollisuudet ja haasteet Reijo Paajanen CEO DIGILE Oy
DIGILE in a Nutshell Personnel at the end of 2014: 18 people Services at the end of 2014: 4 500 000 4 000 000 3 500 000 3 000 000 2 500 000 2 000 000 1 500 000 1 000 000 500 000 0-500 000 2009 2010 2011 2012 2013 2014 Revenue Result Research programs: 5 parallel programs with annual volume over 60 M Ecosystem programs: 7 programs with total volume close to 7 M FORGE Service Lab: Launched in March 2014 International coordination: ICT Alliance (Finland China) I/UCRC co-operation with NSF (Finland USA) 2
Source: IBM, development in the USA Focus on digital service industry Digital service industry growth! (S) Services: Value from enhancing the capabilities of things (customizing, distributing, etc.) and interactions between things (A) Agriculture: Value from harvesting nature (G) Goods: Value from making products FORGE FORGE Service Lab: Accelerating the transition towards digital service business! 3
Volume Wanted industry volume development Strong mobile technology base Digital services in Internet economy 1. 2. Co-creative intelligence Paradigm change with new created competencies + 50 B Contributing to the same growth - numbers are included Telecom including mobile communication competences and business Computational including cloud computing and big data competences and business Time Computational and human intelligence & innovation with business development
DIGILE s Core Competences Aiming for lead solutions! Balanced actions towards new global breakthroughs! Continuous benchmarking and dynamic adjustment of activities! Fast flow of results - from research to business utilization! Accelerated innovation creation Co-creation in PPP Sharing the IPR Companies, universities and public organizations together Large and small companies in same programs Private and public funding with clear rules Dynamic Clear and open management structure Driver company linking to the global business development Scrum model from SW industry applied on research program level Flexibility to react changes Ambitious Milestone system to monitor progress Business success and results wanted Digital business development and strategies ICT industry wide, annual strategy process Annual renewal of research portfolio Priorities Wide understanding of digital development Trends in business DIGILE s board of directors is full of ICT professionals Trends in academic world Access to national foresight material More and more international contacts Focused Linking the ICT-strengths in Finland and global opportunities Selecting areas where global influence is possible Dreaming big 5
Milestones and summary of cornerstones Requirements: Global star R6 Default goal: Can be achieved (always): R6: Global star R5: Global influence R4: Going global R3: State-of-the-art level reached in a wide sense R2: Widening influence zone R1: Operative program making results R0: Program establishment Defining State of the art R5 R4 R3 R2 R1 R0 Challenger DIGILE Ecosystem includes all these elements 6
Metamorphose of DIGILE DIGILE: IE SHOK Company 2 2013 2015 DIGILE: Ecosystem Service Company Competence creation greenhouse in Internet economy Greenhouse & platform offering E C O S Research FORGE Helping others to build other greenhouses to other substance areas: - Robotics and software robots - Mobility as a Service - JulkICTLab - Etc 23.4.2014 DIGILE Confidential 7
Platforms for different segments E-commerce platform Competence and service creation platform Identity Planning Agreements FORGE Service Lab Reporting Benchmarking 3 rd party = Innovation platform 8
Future challenges and opportunities 9
DIGILE s key messages 10
Future challenges and opportunities Internet economy business models Service dominant logic Platform economy Productivity effect utilization Accumulation of results and reuse of them Increase the automation level Business driven innovation The old model is too slow: scientific research, applied research, R&D, commercialization Needs to be interactive and concurrent business development in interaction with customers/crowds Utilization of ecosystems in innovation work Freedom to innovate outside commercial ecosystems Distributed solutions Two way interaction and related business mechanisms Zero marginal cost society Jeromy Rifkin 11
IE changes the dominant logic Good-dominant logic: the consumer will destroy the industrially created value Value creation Product/Value delivery Value destruction Supplier Supply Chain Producer Consumer Money In service dominant logic: Value is always co-created by multiple actors, including the beneficiary >>> value is also created in the interaction between the service and the beneficiary Value is not destroyed Ecosystems are the essential part of digital service business Read more: Stephen Vargo
Platform economy domination Internet economy s platform economy phase will dominate the following five years Platform economy companies can be created systematically, model is spreading Platform company cumulates the value of service improvements; the use of service will add value to the platform, so does additional development Platform company controls the interfaces and thus also is heading the competence development Platform companies will apply radical adjacency strategy to win more markets In a platform company the success is emerging from five distinct pillars: Business Platforms Business Ecosystems Universal Connectors Cloud Infrastructure Sapient Leadership http://theelasticenterprise.com/ 18.3.2015
Internet economy innovation policy is needed In the Internet economy the business/trial driven innovation model dominates with the speed towards new growth and productivity The traditional science model is not able to compete with the performance of the business driven innovation Balance is moving and should be moved to the winning model to create new growth The Finnish innovation policy needs to be updated to the Internet economy time frame Co-creative approach in ecosystems as a Finnish strength Business trial path Phenomenon Business Creates Business Internet economy Scientific path Explanation Time gap 18.3.2015
Utilization of ecosystems in innovation work Major IE players have their own ecosystems Origin for this was in software development around certain operating system (e.g. Windows) Apple and Google etc. have extended this to cover at least developers and users and interaction with them New challenge: freedom to innovate outside commercial ecosystems Ecosystem benefits are coming from sharing economy business models Partly described in platform company model: business models and rules Productivity in innovation work Flexibility Several competencies working together Joint investment Case DIGILE: Need for Speed research program: 20 M IPR is shared >>> every participant can get results with 20 M Next expected phase of outsourcing: from silo R&D to ecosystems 15
Co-creative intelligence The co-creative intelligence will combine the benefits of human and computational intelligences in several ways This opens enormous new business opportunities and gives much more intelligent and better services Finland has potential be among the leaders in this development Various intelligence categories are working together! Computational Intelligence Computational Intelligence 18.3.2015
Distributed solutions Next big thing: Fog Computing Fog Computing extends the Cloud Computing paradigm to the edge of the network, thus enabling a new breed of applications and services. Dening characteristics of the Fog are: a) Low latency and location awareness; b) Widespread geographical distribution; c) Mobility; d) Very large number of nodes, e) Predominant role of wireless access, f) Strong presence of streaming and real time applications, g) Heterogeneity. In this paper we argue that the above characteristics make the Fog the appropriate platform for a number of critical Internet of Things (IoT) services and applications, namely, Connected Vehicle, Smart Grid, Smart Cities, and, in general, Wireless Sensors and Actuators Networks (WSANs). The trend is wider: Solar panels Distributed cloud Crowdsourcing >>>Two way interaction and related business mechanisms Source: http://conferences.sigcomm.org/sigcomm/2012/paper/mcc/p13.pdf 17
Internet the winning network Internet is the network of networks and will replace other networks: Distributed architecture, development of technology and increasing competition will allow fast evolution and lowest possible cost structure This gives huge productivity gains as only one network can deliver all kind of services to both directions nothing else is enough Interactive IP net Source: BI Intelligence 18.3.2015 Source: KPCD, Internet trends 2014
The Zero Marginal Cost Society Reduction of marginal cost is welcomed by businesses Consumers become prosumers From bits to atoms Via IoT development 2030: 100 trillion sensors The whole purpose of Internet of things is to Increase efficiencies to reduce marginal costs Social commons are more relevant than ever because of internet of things a technological soulmate of social commons Not financial capital but social capital It s time start the journey after 1st and 2nd industrial revolution towards this new revolution: Create more democratic economy Eliminate vertically integrated global companies Scale laterally Eliminate all middle-men Watch the video: https://www.youtube.com/watch?v=5-iducetjvo 19
Summary Internet economy is the biggest ever transformation Technology development is enabling it but the core is to understand how business and economy are changing Winners are brave enough to gain new positions in this turbulent world of changes It is time to act now! 20
DIGILE ENABLING DIGITAL GROWTH www.digile.fi