Introduction to the Digital World — Part 1 of 5

We have heard many CEOs and CTOs speak of the digital world. Everything is going digital. So what is the digital world?

Briefly, the digital world is one that resides on the Internet. CEOs and CTOs who discuss about the 4th Industrial Revolution will also speak of the integration of the digital world and the physical world.

Let me skirt through a few topics in the digital world that have changed how we work, play and interact.

The E-Commerce World

The ubiquity of the “brick and mortar” store is seriously jeopardised with the rise of e-commerce. Household names such as Toys ‘R Us, slow movers in the digital world, are vanishing. In place of the plethora of household brick and mortar stores are the e-commerce equivalents. The e-commerce outfits are far more convenient, scalable and secure than their brick and mortar counterparts.

These factors alone, however, do not make them digital behemoths today. What provides the digital edge to e-commerce is data. Data mining through the clicks we make on an e-commerce store, the time we spend on critical pages such as checkout counters and the searches we do allow data analytics engines to predict products we may like.

Take for instance, a guy who purchases Swarovski jewellery for his girlfriend (a very lucky girlfriend indeed!), and is shocked when the e-commerce site can accurately make recommendations to buy more gifts for his girlfriend, which he duly buys, and keeps his girlfriend happy. The question: how did the e-commerce site predict his behaviour?

The answer lies in the accurate correlation between data sets, and obtaining insights from the data. In this case, the logical flow is somewhat obvious. A guy usually does not purchase Swarovski jewellery for himself. But it must be for someone. It is likelier to be for a girlfriend (being a good boyfriend) or mother (filial piety). At the finer level, based on others who had bought the same product for various reasons, some inferences can be made of the correct use case. Perhaps he bought a design of jewellery for the younger audience, which would lean closer to the girlfriend hypothesis. In that case, the e-commerce application dutifully advertises products that “others bought”, such as certain brands of make-up to maintain a youthful look, handbags and accompany accessories. Predictably, the boyfriend buys all of these, further cementing his profile as someone who “shops for his girlfriend”. The e-commerce site has successfully become customer-centric without even assigning a customer relations officer to him. Brick and mortar stores simply do not innovate enough at data collection, let alone attempting to profile their customers and recommending them auxiliary items to cement their customer’s loyalty.

Content Creation

The democratisation of content has provided end-users with the ability to make additional copies of content at almost zero marginal cost (how costly can it be to copy and paste?). This has led to large issues across many industries that centre on three main questions.

  • How are content creators remunerated? These include journalists, musicians and software developers. All of their digital work can potentially be pirated by an adversary, denying content creators of revenue.
  • What type of business model should content creators and content creators managers adopt? Previously, the business model centred around the ownership of a product. This could mean a soundtrack, or a piece of software. This is now shifting to a service subscription model, because the product can be easily replicated and made available at zero cost.
  • To what extent can protections be applied on the intellectual property content creators produce? One such school of thought that has attracted controversy is the use of digital rights management (DRM). Briefly put, DRM allows content creators to enforce policies on the use of their content, such as access and replication restrictions. Proponents argue that DRM allows for regulations to be applied analogous to the physical world, while opponents argue that DRM can be used for other arbitrary lock-down mechanisms, to the detriment of the consumer.

The key driver to all of these is the ease of creation and replication of content. This has made digital goods overwhelm equivalent physical goods (online news versus broadsheets), sending many content creators out of business.

Connectivity

Fifteen years ago, when I had to use the Internet, I had to hang up the phone. It was in the days of Internet Relay Chat (IRC) and the 56 kbps modem. The clunky old desktop, complete with a CRT display, was the gateway to the digital world.

Today, there are more Internet of Things (IoT) devices than the human population. In some of the smartest cities on the planet, almost everyone uses a smartphone. In fact, smartphone addiction has become a problem in many Asian metropolises. Connectivity has increased dramatically.

The digital world has extended its reach to almost every aspect of life — almost every physical aspect of life now has a digital dimension. What used to be a menial process of checking the “vital organs” of a building are now being managed by smart building management systems, which obtain information through smart sensors. Even while we work in our workplaces, we are constantly updated about our babies through the use of baby monitors. Even the supposedly physical concept of citizenship has now obtained a digital form in Estonia.

In fact, we take our connectivity for granted. Thanks to the high reliability of the power grid, robust infrastructure design, our Internet hums along well, for now. What happens should access to the digital world be suddenly cut off through a hypothetical meltdown? How much of our digital identity will we lose? Will we suddenly not be able to perform the work we could normally do, now that we lost our crutch of accurate sensor information?

If you missed all of that, the key takeaways are the following:

  • Data now drives our world.
  • The digital world allows for free creation and replication of data.
  • Most physical things we do or have are now intertwined with the digital world; we cannot divorce the two of them.

There are many more topics in the digital world, but we will refer to these frequently once we inject the cybersecurity discussions into the digital world.

Next part: the key ingredient in the digital world — data.

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