Vodafone in the digital fast lane

BY SABINE FUSS

(Published in The Produktkulturmagazin issue 4 2018)

One of the enterprises shaping the digital future is the Düsseldorf-based communications group Vodafone. The group has long expanded its efforts beyond the topic of mobile telephony; through strategic acquisitions, joint ventures and partnerships, in recent years Vodafone has become a solid 360° provider for digitalisation.

While many continue to discuss the advantages and disadvantages of digitalisation, the digital transformation itself has long been in full swing. This is a transformation driven mainly by an assortment of technological trends that all have one thing in common: the increasing networking of people, machines and goods. In a manner comparable to the triumphal march of the steam engine over the course of the 19th century, this networking will be accompanied by deep economic and social change.

History is now in the course of repeating itself. This time round, the transformation will be swept along by an assortment of technologies that will unleash their full potential only when deployed in combination. The core issues businesses face in this are similar: How and under what conditions can new achievements be put to profitable use for a company’s own purposes? And what does all this mean in the medium to long term for the nature of interactions with employees and customers? Certainly the answers for our more complex world cannot be identical to the answers produced back then, but there is a significant parallel: progress will certainly not be brought to a halt by the challenges that lie ahead.

IoT, the cloud, blockchain, big data, augmented reality and artificial intelligence – the list of fast-shifting trends in digitalisation seems practically endless. This makes it all the more difficult for outsiders to identify relevant fields for their own company, and to consistently monitor and implement these. With more than 25 years’ expertise in an IT-heavy market environment, Vodafone helps its customers keep pace. The company has positioned itself strategically in recent years by accurately identifying sustainable trends and then using these to develop solutions for business customers.

Its own focus for the years ahead rests on three key pillars. First and foremost is the creation of infrastructural conditions through 5G and fibre optics, because if there’s one thing digitalisation of the economy requires, it’s bandwidth. According to a Seagate/IDC study, 16 zettabytes of data were already generated worldwide in 2016. It is estimated that, by 2025, the volume of data generated worldwide will be ten times this amount, i.e. more than 160 zettabytes. This is not only a number with 21 zeros – it also roughly corresponds to the data volume of all the series and films currently available through Netflix. Viewed nearly 5 billion times. At the same time, companies will grow their share of this traffic to 60 per cent, up from today’s level of 30 per cent. This will place enormous demands on infrastructure performance and dependability, particularly in the context of increasing mobilisation and the use of cloud solutions.

The new 5G network generation has the potential to meet all these requirements and thus create a large number of new possible applications – particularly in industry. 5G promises dependable data transmission of up to 10 Gbit/s. The topic of lag time plays a major role, too. To date, lag time in the 4G network (LTE) has hovered around 50 milliseconds, “but with 5G it’s only one to three milliseconds”, explains Alexander Saul, Director Enterprise Business Unit at Vodafone. Communication thus takes place nearly in real time and thus meets a basic prerequisite for particularly time-critical processes and operations, for instance in autonomous driving.

But there is quite a lot happening in the landline segment, too: several areas are in for a broadband revolution under Vodafone’s ‘Gigabit Campaign’. With investments of more than 2 billion euros, the aim is to connect an additional 12.6 million households to the cable fibre network and to promise fibre connections for 100,000 companies in more than 2,000 commercial areas. The campaign also aims to develop around one million rural households in previously underserved areas.

Another key pillar for Vodafone involves innovative applications for the Internet of Things (IoT). Creating the necessary infrastructure conditions will lay a more solid foundation for the innovation cycle already begun, creating lasting changes in the world around us. This is because future data growth will no longer be driven primarily by streaming services such as Netflix and YouTube, which, combined, account for more than 25 per cent of global download traffic today. In future, growth will mainly result from the huge mass of networked machines, cars and devices communicating with one another and with their owners. For instance, IDC estimates that an individual will directly or indirectly interact with networked devices and machines up to 4,800 times a day by the year 2025. In the context of an anticipated 80 billion active IoT devices by then.

It is these multi-layered opportunities for interaction that will not only offer a unique user experience but will also open up wholly new vistas on one’s own business, particularly from an enterprise standpoint, that will span truly all sectors of the economy. This is because smart networking of one’s own business inevitably produces an entirely new view of internal and external business processes – and hence an opportunity to put processes and business models to the test in general, and to align these in ways consistent with the requirements of a changing economy.

Alexander Saul summarises the current challenge: “In addition to connectivity via SIM card, seamless embedding in customer value chains is particularly important for IoT projects. SMEs, industry and carmakers need tailor-made solutions for their business.” So the trend is away from ‘off-the-rack’ solutions and towards individual offers that are tailored to the requirements at hand and scalable at will. Ultimately, the full digitalisation of the economy can only succeed if SMEs and small entrepreneurs also benefit from the new opportunities: “The Internet of Things needs to be simple and clear. This is the only way the mainstay of our economy, the German middle class, can navigate onto the digital fast track.”

With over 74 million mobile-connected machines and devices, Vodafone is already the world market leader in IoT today. And they intend to consistently build on this position going forward. On the path to a world connected in real time, many billions of euros have already been invested in infrastructure development. Accordingly, potentially up to four billion devices can already be networked via 4G today. The new 5G network will contribute towards this, particularly through smart prioritisation of data streams, multiplying many times over the possibilities that already exist today.

The third focus is on making maximum use of developing the potentials of artificial intelligence (AI). Especially in this context, too, the topic of AI is currently on everyone’s lips. The exponential increase in IoT-related data streams by 2025 will automatically raise the question of how companies should generate added value from the mass of information available to them.

This is where AI can deliver significant added value. The impressive example of the Deep Mind AI alone illustrates the state to which research has already advanced today. In 2016, this AI managed to destroy one of the world’s best players of ‘Go’, the Chinese board game. This is a game of strategy that was long considered the last bastion of human superiority due to its complexity. Actually, the AI was not fed with data in advance, the way one would feed a chess computer; instead, it taught itself the game from scratch, by playing only against itself.

The same applies to a similar attempt made by the ‘OpenAI’ initiative with a computer game. The AI learned more and more, at an average rate of 180 years’ worth – per day. This is an impressive demonstration of the areas in which AI is fundamentally superior to humans: in the speed at which enormous amounts of data can be processed in a targeted manner by means of algorithms to permit profitable conclusions to be drawn automatically for own purposes.

Vodafone has also recognised the potential of AI for itself and its customers. That is why it relies on one of the pioneers in this field as part of a global cooperation with IBM. In 2011, as part of the so-called ‘Jeopardy! Challenge’, IBM’s Watson AI already demonstrated that even the task of finding answers to complex issues could become a domain for machines in future. While at the same time setting groundbreaking standards in the recognition of words and, above all, meaning in human language.

The medium-term aim, however, is not just to make AI usable for its own purposes, as is already done experimentally today in its own customer support, for example, with the ‘TOBI’ chatbot. This acts as a virtual interlocutor for customer queries; these are either answered automatically in real time or, alternatively, passed along to a human counterpart. Rather, it should become possible for SMEs in particular to benefit early on from the outstanding opportunities that artificial intelligence presents. Vodafone sees its mission here in perspective as mainly one of consolidating both the cross-sector and the specific requirements to which AI can provide a possible answer. This ensures that a key pillar of future innovation does not bypass the backbone of the German economy.

As Alexander Saul already suggested, however, there is one thing required if enterprises are to make use of AI and IoT: extensive and partnership-based cooperation on an equal footing is needed if they are to grasp the precise requirements involved and thus arrive at optimal solutions offering the potential to revolutionise business models or even whole industries. This is why Vodafone is hosting a variety of workshops in which it works individually with customers to explore the forms digitalisation approaches might take in designing the workplace, business processes and customer relationship. Where necessary, it relies on a large network of certified partners to meet special requirements.

Thus far, one thing has consistently emerged – whether in logistics or agriculture, whether in construction or manufacturing, whether in retail or online business: apparently there is no sector, no industry, and no sales channel that cannot benefit from the opportunities that the coming transformation has in store.

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