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Digital Transformation

Article in IEEE Software · July 2018

DOI: 10.1109/MS.2018.2801537

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Software Technology

Digital Transformation
Christof Ebert and Carlos Henrique C. Duarte

This instalment of the Software Technology department discusses how the digital
transformation is affecting software technology and the software industry.

Digital Transformation (DX) is about adopting The Industry Perspective on DX

disruptive technologies to increase productivity, value Industry is moving to adopt holistic business models,
creation, and the social welfare. Many national completely redesign products and services, and establish
governments, multilateral organizations, and industry closer interactions with suppliers and long-term
associations have produced strategic-foresight studies to partnerships with customers [5,6] The widespread
ground their long-term policies. By proposing the implementation of DX will profoundly affect the industry
implementation of public policies regarding DX, such business environment—for example, by providing better
groups expect to achieve the goals listed in Table 1. value-chain integration and new-market exploitation, with
DX is forecasted to have high annual growth and fast competitive-advantage gains.
penetration [1-3]. But there are barriers slowing its DX is driven by a flood of software technologies.
dissemination, such inadequate or overly heterogeneous Embedded electronics such as microdevices with sensors
company structures or cultures, the lack of DX strategies and actuators connected through the IoT facilitate ubiquity.
and ROI (return on investment) visibility, and even the Data analytics, cloud storage and services, convergent
perception of cannibalization of existing businesses (the interactivity and cognition, augmented reality with
“innovator’s dilemma” [4]). External barriers also exist, visualization and simulation, pattern recognition, machine
such as the lack of recognition of how DX will benefit all of learning, and AI are facilitating a convergence of IT and
society, a shortage of skills and a qualified labor force, embedded systems [2,5]. Underlying these, we’ve identified
lacking or insufficient infrastructure, missing or inadequate enabling methods, techniques, and tools, such as agile
regulation and consumer protection, and poor access to development for flexible systems, blockchains and
funding, particularly for small and medium businesses. Hyperledger to ensure security and trust in distributed
Table 1 – Digital Transformation Goals
transactions, and microservices and open APIs supporting
Perspective Objective software architectures.
Foster the development of a more innovative Let’s look at automotive technologies, where
and collaborative culture in industry and digitization is ramping up fast. A modern car incorporates
society 50 to 120 embedded microcontrollers and is connected over
Change the education system to provide new various external interfaces to a variety of cloud and
skills and future orientation to persons so infotainment technologies. Onboard software is in the range
that they can achieve excellence in digital
work and society of hundreds of millions of lines of code (MLOC) and is still
Social Create and maintain digital communication growing exponentially. Automotive software product lines
infra-structures and ensure their governance, and variants are some of the largest and most complex in
accessibility, quality of service and industry. It’s said that the automobile is rapidly becoming a
affordability “computer on wheels.”
Strengthen digital data protection, Automotive original-equipment manufacturers (OEMs)
transparency, autonomy and trust
Improve the accessibility and quality of digital
are equipping next-generation production processes and
services offered to the population vehicles with connected embedded sensors and actuators to
Implement new and innovative business obtain better intelligence and control. They adapt
models information and communication technology workflows
Increase income generation, productivity and from their IT systems to each car. Vertical integration is
Economic
value addition in economy attained by ensuring that product-lifecycle-management
Improve the regulatory framework and systems, enterprise-resource-planning systems, production-
technical standards
planning-and-control systems, and manufacturing-execution
systems work in coordination with capital goods on plant
floors. Concerning horizontal productivity gains in some factories mainstream customers and that appeal
integration, vehicle parts are delivered with focus on digital process and to only small or emerging markets.
with RFID tags to guarantee competencies. [7]. So, disruptive companies explore the
production traceability. Other industries are following fast occupation gaps left by the market
OEMs work with suppliers that toward DX. Vivo, a company in the leaders. This is a source of innovation
have the same focus, to ensure that the Spanish Telefonica group, is adopting and market change, which Clayton
acquired parts come with self- or the agile-squad model and open Christensen illustrated using price and
distance-monitoring facilities. innovation as the bases of its DX performance data from the hard-disk-
Examples include highly implementation. The company drive industry [4].
interconnected electronic control units developed a social software robot We performed a systematic
(ECUs) from companies such as called Vivi, which helps customers classification of the DX technology
Bosch, Continental, Denso and ZF, formulate requests. Ten million offerings; Table 2 presents some
mechatronic systems from Aptiv, sessions have already been opened, details. Although we haven’t
Magna, Mahle and Schaeffler and and 94 percent of them have been compiled quantitative evidence of the
Head units and infotainment from solved in an automated way. disruptions caused by the analyzed
companies such as Harman, Valeo, Hospital Samaritano and Hospital hardware technologies, Organisation
Panasonic and Visteon. In factories, Sírio-Libanês, two leading São Paulo for Economic Co-operation and
robots from ABB, Denso, Kuka and institutions, have consistently invested Development studies have recognized
Yaskawa assemble complete vehicles in DX to improve the patient that robots, 3D printing, and
from parts with exact monitoring and experience and operational connected devices have disrupted
logging of e.g. screw-load-torque to performance. Both keep integrated productivity in their respective
ensure compliance with production secure electronic health records of markets [1,2,5]
and safety standards. All software is patients, which are used in Likewise, some of the software
individually configured for each procedures, treatments, prevention, technologies we studied have been
single car by modern IT systems, both and healthcare planning and decisions. disruptive, but this is due only to their
in production and after sales with strategic significance, resulting from
over-the-air (OTA) upgrades. These DX Impacts their penetration, adoption, and
movements toward a digital DX has been a source of continuous perceived value in distinct market
automobile world have already entrepreneurship and business segments vis-à-vis the initial markets.
rationalized costs and investments. dynamism, particularly in technology- Finally, the remaining software
For example, according to David intensive industries. These companies technologies we studied can’t be
Powels, former CEO of Volkswagen’s have reorganized themselves to considered disruptive because they
Latin American operations, in the operate simultaneously in two distinct haven’t obtained value recognition
three-year period ending in 2016, the modes. The standard mode keeps outside their initial markets (and
group obtained 30 percent traditional businesses and operations therefore aren’t included in Table 2).
running, while a disruptive mode We structured our findings in the form
seeks additional opportunities to of a knowledge map [6,8], but here we
exploit new markets and innovate in presented just some branches in
technologies, processes, products, or textual, pictorial, and tabular form.
services. Figure 1 illustrates that value We hope this compilation will help
is now created not only in traditional software engineering (SE)
ways (the yellow arrows) but also practitioners and researchers develop
through digitization (the green and implement DX.
arrows).
Software technology today is both The Mutual Influence of the
the driver and effect of disruption. DX and SE Disciplines
The market leaders are ahead of their With software being key to any
competitors because they develop and DX, mutual influences between DX
commercialize new technologies to and SE must exist. But DX
address customers’ future disruptions due to SE innovations
performance needs. However, these might emerge at any time and are
companies don’t want to cannibalize almost impossible to predict. So, we
their current cash cows. So, they’re can only speculate about the
Figure 1: Digital Transformation is rarely in the forefront of implications for SE.
a convergence of hard and soft commercializing new technologies To perform initial verification and
forces and movements from which that don’t initially meet the needs of validation of our ideas, we organized
additional value emerges. a debate panel during the 2016 IEEE
Requirements Engineering addressing these issues, but the processes. (For more on DX and
Conference [5]. During the panel, required key competences for problem systems engineering, see the sidebar.)
researchers and practitioners solving, managing complexity, and With industry, home, healthcare,
discussed the impact and relationship dealing with high abstraction levels and automotive applications being
of requirements engineering and DX are often lacking or insufficient. major drivers, IT will converge with
in industry and research institutions. DX requires software engineers to embedded systems such as the IoT and
The panelists came from companies organize their work efficiently, act on Industry 4.0. At the same time,
such as Intel (US), Nokia (Finland), their own initiative, have excellent embedded industries will evolve
Denso (Japan), Civic (China), and communication skills, and toward IT with cloud solutions and
CI&T (Brazil). successfully perform tasks involving dynamic over-the-air upgrades.
The participants agreed that emotion, intuition, creativity, Critical industries such as the
software technologies at the core of judgment, trust, empathy, and ethics automotive industry involve
DX disruptions have been around for [2]. practically all the quality requirements,
some time. These technologies have At higher organizational levels, such as safety, cybersecurity, usability,
caused disruptions because of: SE managers are expected to change performance, and adaptability. The
their mind-sets and abandon command underlying software components cover
 early or timely value delivery and control, moving to more anything from embedded real-time
(agile methods), leadership-oriented, risk-taking, and firmware to complex secured cloud
 usage at larger scales (APIs, mistake-tolerant approaches. solutions. Failure to meet any of those
microservices, and IPv6), Corporate leaders need to motivate, quality requirements results in
 applications in new domains (3D direct, support, and inspire their expensive callback actions and legal
modeling and printing, control autonomous teams, while learning lawsuits. These challenges will soon
software, and blockchains), and along with them. They must be reach across industries.
 unpredicted technology prepared to face business DX is opening the doors for
combinations (cognitive environments in which technology innovation, new business
computing, which combines hyperawareness, informed decision models, and cross-industry
computer vision, voice making, and fast execution rule. collaboration. The future is arriving
recognition, natural-language How can people obtain such while some are just running in their
processing, and machine skills? DX challenges traditional SE hamster wheels. Thus, we should be
learning). education systems to change their cautious, along the lines of what
methods and content to a digitally technology strategist Herman Kahn
transformed reality. Apart from the already observed several decades ago:
So, DX has not led to the
classroom and learning-by-doing “Everybody can learn from the past.
development of radically new
approaches, continuous, just-in-time, Today it’s important to learn from the
software technologies. Instead, it has
and innovative learning methods— future.” [9].
given rise to new software technology
applications, owing to the additional such as massive open online courses,
requirements that must be satisfied. gamification, and simulation—will be Acknowledgements
Technological solutions’ increasingly demanded. The assumptions, views, and
complexity and scale have increased To meet DX demands, SE will opinions in this article are solely the
substantially, leading to software transform completely, leading to authors’ and don’t necessarily
systems with many MLOC, usually changes in how SE education treats
reflect the official policy, strategy, or
binding together old and new, in- human factors. In this new scenario,
position of any Brazilian government
house and third-party developments. human resources will be extremely
valuable, possibly becoming more
entity.
However, the industry objectives for
DX—an improved customer important than the underlying
experience and operational technologies. Christof Ebert is the managing director
of Vector Consulting Services. He is
excellence—have placed time to DX today is the megatrend across on the IEEE Software editorial board
market, quality, and affordability at industries. However, DX is and teaches at the University of
the forefront. So, practical DX challenging because it demands a new Stuttgart and the Sorbonne in Paris.
problems have become tractable with Contact him at
set of competences, combining christof.ebert@vector.com.
software only with effective embedded-systems development with
development management, reusability, IT and cybersecurity. Software thus is Carlos Henrique C. Duarte is a senior
and requirements-engineering the cornerstone of DX. In its member of the technical staff at the
methods, techniques, and tools. National Bank of Social and
convergence of classic IT with Economic Development in Rio de
The SE branches we’ve described embedded-systems engineering, DX Janeiro, and an IEEE Computer
have many interfaces, which deal with will completely reshape the landscape Society Distinguished Visitor. Contact
unproven metrics, hard complexity of software technologies and him at cduarte@bndes.gov.br and
bottlenecks, and imprecise artifacts. carlos.duarte@computer.org.
The human factor is central to
Table 2. Disruptive Technologies Adopted in DX Implementations
Ease of No. of
Technology Inherent nature and Disruption and Early-adopter adoption alternatives
Adopted technology
type attributes significance experience
URLs
Adoption of cognitive
Hardware capable of computing expanded this Alibaba manages Quicktron self- Hard Few
limited interactivity technology’s applicability retail warehouses in charging robots with
with moving parts and from routine tasks to those China using teams of QR code readers,
Collaborative
remote or embedded requiring adaptability or unmanned shelf- laser or LIDAR anti-
equipment http://translate.google.com/tran
controls having typical autonomy, enabling its carrying robots, collision sensors,
(drones and slate?js=n&sl=auto&tl=en&u=ht
sensor or actuator commercial use in which load and adaptive routing, and
robots) tp://www.flashhold.com/page/16
functions in heavy precision agriculture, unload at Wi-Fi connectivity
industry, space, or logistics, consumable- multifunctional with back-end .htm
military applications product industries, and workstations. software
services.
Advances in image
3D object creation GE Arcam machines,
processing, precision BioArchitects Hard Very few
from digital models, which support
mechanics, and new supplies FDA-
using printer heads additive high-power
materials decreased the certified 3D
Additive driven by software- Electron Bean
price of printers and prostheses to
manufacturing controlled stepper Melting production of
printed objects, making customers in Brazil
and 3D motors, for titanium prostheses
them accessible to and the US, for http://www.arcam.com/products
printing polymerization, jetting, from CAD models
businesses and consumers training doctors and /arcam-q10
extrusion, fusion, generated using
for rapid prototyping and planning surgery
lamination, or diagnostic-imaging
small-scale or procedures.
deposition exams
customizable production.
Hardware with A Kathrein IoT
embedded digital Implementation of IPv6 distributed antenna Hard Some
Volkswagen uses an
electronics, software, and reduced device costs system with
IoT solution based
and network enabled the massive customized software
IoT connected on RFID tags to
connectivity enabling dissemination of connected and standardized
devices manage supply chain
its unique devices in machine-to- UHF RFID tags and https://www.kathrein-
traceability in
identification, data machine transactions and transponders to solutions.com/solutions/logistics
factories worldwide.
collection, and data the IoT. ensure end-to-end
exchange order traceability
Lloyds Bank adopted
Software development
Rapid-prototyping design thinking, agile Medium Very many
based on adaptive IBM Bluemix, a hybrid
development evolved to methods, and a
planning, evolutionary cloud platform-as-a-
widespread agile cloud-based
development, early service architecture,
development owing to user microservice
Agile delivery, and used to support
involvement and rapid architecture to break
development continuous Scrum and a
compliance with down the https://www.ibm.com/cloud-
improvement through minimum-viable-
requirements, time-to- transformation of 10 computing/bluemix
collaboration of self- product development
market reduction, and early customer journeys,
organizing cross- methodology
value delivery. which paid back in
functional teams
three years.
A blockchain open The Ethereum
Continuously growing
source platform has blockchain app Medium Some
lists of decentralized This technology has been
been used to platform, a
information blocks, disseminated to many
manage things decentralized
linked and secured other application domains
ranging from World framework with
Blockchain or through cryptography, that require secure fault-
Food Program programmable virtual-
Hyperledger used in recording tolerant event record
vouchers for Syrian machine and peer-to-
financial transactions management, such as the https://www.ethereum.org
refugees to a peer protocols for
between parties arts, law, accounting,
collaborative defining and running
efficiently, verifiably, commerce, and healthcare.
decentralized news distributed secure
and permanently
network. transactions
Equinix Cloud
This technology’s use in
APIs and distributed Exchange provides Google Apigee, a Easy Many
developing enterprise
services allowing cross-cloud Java-based service
Open APIs application ecosystems out
system architectures application platform to develop,
and of business functionalities,
to be structured in integration and deliver, manage, and
microservices with decoupled deployment
modular and open scalable services by analyze APIs via their http://www.apigee.com
and operation, maximizes
configurations using an open-API proxies
value for money.
platform.
The coupling of AI to big The Microsoft Bot
Telefonica launched
data, cloud computing, Framework and LUIS, Easy Many
A set of algorithmic its AURA AI service
natural-language the respective IDE for
tools for data analysis, to help customers
processing, computer creating and
representation, with any
AI vision and voice deploying software
inference, deduction, bureaucratic,
recognition enabled robots and natural- https://dev.botframework.com
and heuristics-based communication, and
scalable resolution of real language- https://www.luis.ai/home
behavior interactive-content
problems in many understanding
demand.
application domains. integrated services
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