The dematerialization and virtualization of physical objects and thus the shift from hardware to software open up completely new potentials for innovation and efficiency increase in companies. CIOs should work closely with their business colleagues to exploit the potential of dematerializing physical objects, which makes their processes slow, cumbersome and expensive.
If you look at all the physical objects we were using just a decade ago, it is clear that many of them have literally disappeared in their physical form and now "exist" more as data or services in the cloud or as an app on our smartphone or tablet. This trend toward virtualization and the dematerialization of physical objects will have fundamental implications for most businesses. While some industries such as music and photography have already experienced these effects, many other companies have yet to address them.
Just a decade ago, most music was sold on physical media such as CDs, cassettes, records, etc. Today the vast majority of music is sold, streamed or downloaded online. Physical sound carriers have almost disappeared. Twenty years ago, photographs were usually delivered to customers in physical form, i.e. printed on paper. Today, photo printing and distribution has literally disappeared, and photos are mostly distributed electronically.
With the virtualization of objects, the marginal cost of these objects has dropped to zero, and their replication, cloning and distribution without delay have become a reality. This is indeed a major shift from the physical to the virtual world.
No limitation
An alarm clock is included for free on a smartphone, a VCR as a physical device has been virtualized and is now available as a free service in the cloud as part of your streaming subscription. Music in mp3 (or FLAC) format can be copied and distributed technically unlimited (if we ignore the copyright issues for a moment), storage space for digital photos is available in huge quantities on our devices or in the cloud and is practically free, free cards on our smartphone or tablet have long since replaced physical cards on paper.
Digitization means that any object that captures and collects information (camera, microphone, etc.), stores information (books, film rolls, music cassettes, CDs, DVDs), processes information (calculators, language translators, etc.) or displays information (watch, ticket, any means of identification such as keys, passport, ID cards, credit cards, etc.) has the potential to be dematerialized or virtualized into an app or service in the cloud or on our smartphone.
Thinking beyond the physical objects
When trying to digitize their company or business processes, companies are very short-sighted in their attempts to automate only one traditional process that is still focused on physical objects. If companies really want to redesign or reinvent their processes, they have to think beyond the physical objects and imagine a situation where all these objects are virtualized.
For example, when airlines replace check-in counters with self-service machines, this is not well thought out, because in a digitalized world a boarding card, and therefore the actual check-in process, is no longer necessary. Banks may be replacing cashiers with ATMs, but this is only a first intermediate step towards reducing costs. The real breakthrough for bank customers will come when all money is virtualized and paper money is no longer needed at all.
CIOs who want to create sustainable and significant added value for their company should do more than just follow the "low-hanging fruits" and push the simple automation of established processes in order to achieve short-term cost savings. Instead, they should take a more far-sighted approach and focus on technology-driven innovation. CIOs should work closely with their business peers to realize the potential of dematerializing physical objects that make their processes slow, cumbersome and expensive.
This article is published on xing-news.com