Challenges and opportunities of smart ecosystems

The impact of new technology on the way we live and work was discussed at an event that brought together German and Brazilian researchers at FAPESP's headquarters.

By Karina Toledo 

Agência FAPESP – The world is already full of smartphones and smart TVs, but before long, practically everything around us will be “smart,” from smart homes and cars to smart factories, farms and medical devices. Appliances and devices will be integrated into this “smart ecosystem” thanks to sensors for real-time data collection and connections to the internet.

The impacts of new technology on the way we live and work, as well as the risks and implications of sharing personal data in cyberspace, were the focus of the 4th German-Brazilian Dialogue on Science, Research & Innovation held on September 29-30 at FAPESP’s headquarters in the city of São Paulo, Brazil.

According to Reiner Anderl, a professor at Darmstadt Technical University in Germany and a speaker at the event, we are currently experiencing the fourth industrial revolution. “The emergence of industry 4.0 involves new value chains and new business models,” he said.

The first industrial revolution, which took place in the nineteenth century, was driven by the invention of the mechanical loom and the use of steam power. The early twentieth century saw a second wave driven largely by the introduction of assembly lines and mass production. The third wave began in the 1970s with the automation of manufacturing based on shop floor electronics and information technology.

The engine of the fourth industrial revolution is the development of so-called cyberphysical systems. “Such a system can be defined in terms of two main aspects. One is that physical systems are made smarter by equipping them with sensors and internet access to permit connectivity and communication. The other is that simulated functionalities, i.e., the virtual world, are much more realistic,” Anderl told Agência FAPESP.

Industry 4.0 works with big data, he explained. Machines collect data continuously and send it to servers for monitoring and evaluation by software. Sensors tell the machines how to run processes in a decentralized system through which various sectors communicate with each other.

“If the system identifies a temperature rise in a specific piece of equipment, for example, it can predict that within a certain number of days, this could cause a failure and interrupt production. Preventive maintenance is then called in,” Anderl said.

New technology leads to the emergence of new business models. Sensors embedded in products can issue alerts telling the system that maintenance is required. Replacement parts, previously manufactured by the parent company and exported to consumer markets around the world, can now be produced locally by 3D printers, thus cutting costs.

“A manufacturer of aircraft engines, for example, need not be limited to selling its products but can also make money from maintenance contracts. This is advantageous for airlines, too, because the engines can be sold for a lower price,” Anderl said.

The impact on the labor market is significant, of course. According to Arnold Picot, a professor at Ludwig Maximilian University Munich (LMU), work in the digital age is characterized by interconnectivity and flexibility.

“Workflows and production processes can be controlled from anywhere and at any time,” Picot said. “Established industrial structures tend to dissolve, and there’s less of a gap between people’s personal and professional lives.”

In the new on-demand economy, work tends to cluster around specific projects, which flexibly integrate various models, including local teamwork, outsourcing, crowdsourcing and freelance work, among others.

“It’s like having workers on tap. You can the tap turn on and off as necessary,” Picot said.

The number of low-skill, low-pay jobs will tend to increase, he continued, but so will the number of jobs that require highly qualified professionals and pay high salaries. The middle levels will tend to decrease, potentially resulting in a more unequal society.

“We must never forget in these discussions that the locomotive is moving, whether we like it or not,” said Dieter Rombach from the Fraunhofer Institute for Experimental Software Engineering (IESE). “This is already happening. I believe the question is whether we want to be part of the process and benefit from the changes. Action is needed to avoid job losses and take advantage of the new work opportunities that are coming our way.”

According to Rombach, all objects have a digital life in smart ecosystems: they produce data through observation using sensors, they record a history that enables prediction, and they are influenced by data and adapt in real time. This is the concept of the Internet of Things (IoT).

The new reality entails a wide array of societal changes, with new opportunities, including new kinds of jobs based on new business models; new ways of addressing the challenges in health, education and other aspects of life; and the optimization of natural resource use through a sharing economy. The main risks are associated with data security and privacy.

“Software and systems engineering capabilities are the key to success,” Rombach said.

Legal aspects

Dennys Antonialli, a PhD scholar in constitutional law at the University of São Paulo (USP), said that most of the big data generated by the IoT consists of personal details, which can be organized, analyzed and used with the aid of algorithms to exert an invisible influence on decisions such as renting a house, hiring employees or subscribing to a service. 

“Your personal data can help businesses or individuals predict things about you, and these predictions can be unpredictable,” Antonialli said. “They may even generate discrimination or invisible bias. How can we control what we don’t see and don’t understand?” 

According to Antonialli, whereas the European Union has adopted strict legislation to protect personal data and privacy, the United States of America believes that the freedom to share data fosters innovation and corporate profitability. In Brazil, where draft legislation is being discussed by Congress, the tendency appears to be to prefer the European model.

Juliano Souza de Albuquerque Maranhão, a professor at the University of São Paulo’s Law School, said that conflicts relating to the digital sphere will require not just the creation of new laws but a profound change in the understanding of law itself.

Other speakers included Hans-Joachim Hof, a professor at the Munich University of Applied Sciences, who focused on the practical limitations and challenges of privacy protection software, and José Molin, a professor at the University of São Paulo’s Luiz de Queiroz College of Agriculture (ESALQ-USP), who delivered a presentation on precision farming.

Fernando Martins, the head of Intel in Brazil, spoke about the impact on economic development of the exponential increase in the data processing and storage capacity of computer chips in parallel with their steadily falling unit cost. 

According to Martins, the world has 7 billion cell phone subscribers, equivalent to 97 out of every 100 inhabitants of the planet. Approximately 30% use smartphones, but this proportion is set to reach 50% by 2016. The cost of an internet connection has fallen 65% in the last five years, and the number of people online is now 3.2 billion, or 43% of the world’s population: 82% of the population is online in developed countries, 35% in developing countries, 9% in less developed countries, and 67% in Brazil.

Thorsten Holz, a professor at Ruhr University Bochum in Germany, spoke about how smartphone apps have revolutionized the way people communicate in their personal and professional lives as well as the ways in which they care for their health, find locations and directions in cities, and consume goods and services. He stressed the importance of making system security mechanisms more user-friendly. 

Challenges and opportunities

The opening ceremony featured Eduardo Moacyr Krieger, Vice President of FAPESP; Dirk Brengelmann, German Ambassador to Brazil; Martina Schulze, Director of the German House of Science, Research & Innovation in São Paulo (DWIH-SP), which co-hosted the event; and Roberto Marcondes Cesar Junior, an area panel member for FAPESP’s Research, Innovation & Dissemination Centers (RIDCs) and its Head Coordinator of Physics, Mathematics, Chemistry and Engineering. 

“Important aspects of our lives and behavior are strongly influenced by information technology already and undoubtedly will be even more so in the future,” Krieger said. “Hence the outstanding importance of the agenda for discussion at this event.” 

The opening keynote address delivered by Ambassador Brengelmann, a former cyber policy commissioner for Germany’s Ministry of Foreign Affairs, focused on the need to create an international consensus on the criteria for responsible behavior in cyberspace.

“Terrorist groups have used the internet for propaganda and recruiting purposes. They may also use it as a weapon,” he said. “Political assets in terms of both systems and infrastructure can be vulnerable when they’re connected to the internet. It’s exactly this kind of connectivity that lies behind the Internet of Things, so attacks can have serious consequences for governments, private enterprise, and society as a whole.”

According to Brengelmann, the world will soon have to learn to live with the uncertainty that is characteristic of cyberspace. “A better understanding of the rules, laws and principles that should govern responsible behavior in cyberspace would enhance international transparency, increase predictability, and contribute to a reduction in instability.”

The other keynote speaker was Virgílio Almeida, Brazil’s Secretary for Information Technology Policy at the Ministry of Science, Technology & Innovation (MCTI). In a presentation entitled “Challenges and opportunities in the digital world: a Brazilian perspective”, Almeida noted that Brazil is one of six countries with over half the world’s population and offers a huge internet market that is highly permeable to digital technology. 

The opening session also featured a speech by Marcio Weichert, coordinator of DWIH-SP, explaining that German-Brazilian Dialogues are held annually to present the state of the art in German research in specific fields and encourage new collaborations with researchers in Brazil. “We’re sure FAPESP is the right partner for us to work with toward achieving these goals,” he said.