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Digital transformation: causes, consequences, expectations

Conference Paper · April 2022

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Abdulah Aksamovic Senad Odžak

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Conference Proceedings
ICPAE 2022, March 31st – 2nd April, Zrenjanin, Serbia
Technical Faculty "Mihajlo Pupin", Zrenjanin & Faculty of Sciences and Mathematics, Nis

Digital transformation: causes, consequences,

expectations
Abdulah Akšamović1*, Senad Odžak2

1*
University of Sarajevo - Faculty of Electrical engineering, Zmaja od Bosne bb,
71000 Sarajevo, Bosnia and Herzegovina
2
University of Sarajevo - Faculty of Science, Zmaja od Bosne 33-35,
71000 Sarajevo, Bosnia and Herzegovina
aaksamovic@etf.unsa.ba

Abstract. The last decade is characterized by the term "digital transformation" or "Industry
4.0", which is announced as the 4th phase in the industrial economy. Lack of clear boundary
between the virtual and the real, comprehensive networking, and artificial intelligence are just
some of the determinants of digital transformation. The paper analyzes the technological
assumptions that enabled this transformation. Contrary to the first three phases, the fourth one
is unrelated to some specific invention. Based on the definition of Industry 4.0 adopted by the
European Parliament, its specific technological innovations have been detected. Thus, the
WWW (World Wide Web), IoT (Internet of Things), AI (Artificial Intelligence), and 5G are
marked as the main technological inventions responsible for digital transformation. The
previous three revolutions have enabled significant productivity increase and higher standards
and have produced many problems. These problems are reflected in excessive electricity
consumption and excessive CO2 emissions, generating enormous waste. As the fastest
growing waste, electrical and electronic waste (ee-waste) is of particular concern. The paper
gives a brief analysis of the problem of disposal of ee-waste in Bosnia and Herzegovina
(B&H).

Keywords: digital transformation, Industry 4.0, IoT, ee-waste, decarbonisation

INTRODUCTION

The development of science and technology in the last 300 years has enabled the
accelerated development of humanity in all aspects: GDP growth, population growth,
democratization, public access to education, general health care, liberalization, all of which
resulted in a better quality of life. In addition to evident and significant scientific discoveries
that are the basic premise of this progress, the achieved standard of modern civilization is
due to the excessive use of natural resources: energy, minerals, and the natural environment.
Excessive use of natural resources has led to many ecological, economic, and political
problems.
CO2 is considered the main culprit for increasing the average temperature on Earth [1].
Excessive emissions of this gas are due to excessive combustion of fossil fuels, burning
forests, and organic matter. All this leads to the greenhouse effect that causes the

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 Abdulah Akšamović, Senad Odžak

temperature on Earth to rise. In the last 70 years, there has been: an increase in annual CO 2
emissions of approximately six times (from 6 billion tons to 34.8 billion tons), an increase
in energy consumption six times (from 28,516 TWh to 173,340 TWh), an increase in
population three times from 2.54 billion to 7.79 billion), an increase in the average
temperature of the Earth's surface by close to 1°C. Of concern is the linear trend of rising
temperatures over the last 50 years, which, if not stopped, could lead to a 4°C rise in
temperature in 2100 [2]. These black climate change forecasts have led to a series of
concrete steps in international agreements to limit CO2 emissions. The goal is to complete
the decarbonisation of industry in the EU by 2050 [3].
Table 1 shows the trends: the number of inhabitants on Earth, CO 2 emissions, changes
in the average annual surface temperature of the Earth, the annual gross domestic product
on Earth (GDP), and total energy consumption. The period 1950 to 2020 is covered based
on the Our World in Data database [2]. The 12.2-fold increase in GDP results from an
increase in population (3.06 times) and energy consumption (6.07 times). The rise in energy
consumption twice as much as the increase in the number of inhabitants is a consequence
of the use of energy to operate machines in business processes and an increase in
consumption per capita.

Table 1. Population trends, CO2 emissions, temperature rising, GDP and energy consumption on Earth
from 1950-2020.

Year Number of CO2 emissions, Temperature GDP, Energy

citizens, x 109 x 106 tons rising, °C x 1012$ consumption,
x 103 TWh
1950 2.54 6.00 -0.21 9.80 28.516
1960 3.03 9.39 -0.15 14.62 41.713
1970 3.70 14.90 0.01 23.87 66.378
1980 4.46 19.49 0.35 37.73 87.599
1990 5.33 22.75 0.38 47.04 106.161
2000 6.14 25.23 0.56 63.10 122.073
2010 6.96 33.34 0.63 91.33 152.249
2020 7.79 34.81 0.89 119.56 173.340

PHASES OF INDUSTRIAL ECONOMY

The terms Industry 1, 2, and 3 treat changes in industrial production that have led to
leaps in productivity. The steam-powered loom reduced the required number of workers
and increased production. The conveyor belt in the meat industry, and later in the
automotive industry, enabled skilled workers who performed only one operation, making
them more productive and cheaper due to the lower demand for expertise. The
programmable logic controller (PLC) enabled flexibility in the production phases, which
allowed the production of several different products on the same production line in a way
that only changed the program in the PLC. Hence, 1784 (Loom), 1870 (Meat Production
Line), and 1969 (Programmable Logic Controller, PLC) are used for zero years in these
terms [4]. The terms Industrial Revolution 1, 2, and 3 denote the impact of industrial change
on the radical changes of society as a whole. These changes did happen, but a change in

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 Digital transformation: causes, consequences, expectations

industrial production did not just cause them. There are a lot of important events that have
led to these changes. The terms Industry 4 and Industrial Revolution 4 have been used in
the last ten years. Neither the zero date nor the basic technological invention is mentioned.
Instead, there is a need to make a radical change in industrial production to become more
productive (fewer workers, less energy consumption, fewer materials, etc.), denoted by
Industry 4. On the other hand, the term Industrial Revolution 4 includes apparent changes
that have taken place in the last 20 years in the whole society for which causes are still being
sought, and the possible consequences are being discussed.

DIGITAL TRANSFORMATION

Digitization is the process of introducing new digital techniques in all social flows
(economy, administration, education, health, etc.) with the aim of more efficient action, all
with the aim of improving the quality of life [5]. This process is characterized by
infrastructure, regulation, implementation, and consumption. The infrastructure relies on
communication and information technologies that enable the creation, collection, storage,
and transmission of data. Given that telecommunications and the Internet, due to their
primary purposes, are at a desirable infrastructural level, we are currently working on the
part of the system in terms of developing an efficient way to collect data (for example,
Internet of Things (IoT), automated scanners, etc.). The level of the regulation defines the
rules for the use of data in terms of legal assumptions about the meaning, use, and generation
of data (public disclosure, protection of personal data, digital signature, electronic payment,
etc.). Implementation is a process by which appropriate software solutions enable the use
of data by end-users (information systems, e-commerce, electronic diary, etc.).
Consumption is the process of using the services of implemented software solutions.
Consumers based on these services save time, energy, resources and increase efficiency in
their core businesses.
The European Parliament, 2015, accepts the definition of the term Industry 4.0 as
follows: Industry 4 is a digital industrial transformation with an emphasis on automation,
data exchange, cyber-physical systems, robots, artificial intelligence, Internet of Things
(IoT), 3D printing, nanotechnology, biotechnology, materials science, energy storage,
autonomous vehicles and autonomous industrial techniques to achieve smart industry and
production goals [6].
Based on quantitative indicators that determine the 4th phase of business, an analysis of
global economic entities emerged due to the application of business models characteristic
of the period of digital transformation. Figure 1 shows the analyzed financial entities.
Selected global economic systems represent dominant domains: search engines, social
networks, internet sales.
Figure 2 shows the financial achievements of global economic systems characteristic of
the 4 phases of the business: railway and steel industry (phase I), automotive industry, oil
industry, electronics industry (phase II), semiconductor industry, software industry (phase
III), search engines, social networks, internet sales, the solar industry, electric cars (phase
IV). The available data are based on financial operations given in [7].

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 Abdulah Akšamović, Senad Odžak

Figure 1. The most important global economic systems emerged on the wave of digital
transformation

Figure 2. Trends in financial achievements of global economic systems for the period 2005-2020.

In the profit analysis, the following companies were analyzed: Union Pacific (84), Canadian
Pacific Railway, Siemens (90) for I1.0, Diamler General Motors, Ford, China Petroleum &
Chemical PetroChina, IBM, Philips, Sony Group (96), Texas Instrument (64) for I2.0,
Apple, Microsoft, Intel, Microchip, Analog Devices for I3.0 and Alphabet (Google),
Amazon, Alibaba, Meta platforms (Facebook), Tesla, Twitter, JinkoSolar Holding,
Canadian Solar for I4.0. The diagram shows that the financial share of Phase IV economic
entities is approaching the lead in an exponential trend. When analyzing the technological
assumptions that have enabled the positioning of phase IV economic entities at the global
financial level, they are WWW, IoT, AI, 5G.

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 Digital transformation: causes, consequences, expectations

WWW (World Wide Web)

The WWW was initiated by Tim Berners-Lee in 1989, who proposed and later
demonstrated the use of hypertext documents via the Internet while working for CERN [8].
Unlike a standard text document, a hypertext document contains text, diagrams, images,
sound, video, etc. Such a document becomes dynamic by changing its content according to
new data or user requirements. Also, various software tools are used to create and use these
documents.

IoT (Internet of Things)

IoT (Internet of Things) first appeared as a term in 1985 by Peter T. Lewis [9], where a
new concept of connecting consumer devices to the Internet is defined. These devices
perform their existing function, and with the connection to the Internet, the possibilities of
application are expanding, and new appliances with entirely new functions also appear.
Unlike pre-existing devices with an Internet connection (PC and mobile phone), these
devices can communicate via the Internet without operator intervention, consume much less
energy and are cheaper. These three features have imposed the definition of entirely new
design concepts for such devices and the development of new protocols. The complete
concept is based on the need to automate data input from the environment in real-time. This
data can be used efficiently, which are the basic assumptions of digital transformation.
However, the concept of IoT itself is not reduced exclusively to the parameters of physical
systems that are automatically collected through sensors and made available to users via the
Internet. Currently, the architecture where sensors are the data source is predominantly
considered. Figure 3 shows the concept of IoT. It relies on the rapidly evolving Internet
infrastructure and enables data exchange between devices located in a wide area of human
activity via wireless communication.
To allow the connection of many new devices, the existing IPv4 IP address format has
been extended to IPv6 [10]. IoT draws its beginnings from RFID technology as automatic
identification of products in production or sale by radio. The RFID identifier consists of
memory, processor, and wireless communication system. The memory capacities of RFID
identifiers can be different: from 20 bits to 32KB. In terms of communication, low and
medium frequency bands (50-500kHz and 13.5MHz) with a range of 2.5cm to 72.5cm and
a microwave band (0.9 to 2.5GHz) are used. Active RFID can have a range of up to several
hundred meters [11]. Historically, the principle of radio identification dates back to before
World War II, when used in aviation, and modern RFID is linked to Mario Cardullo's 1973
patent [12].

AI (Artificial Intelligence)

Large amounts of data collected in digital transformation are becoming a problem in

terms of algorithms for processing such data and access to information that will increase
the system's efficiency. Expert systems based on artificial intelligence (AI) are used as one
of the solutions [13]. AI bases its algorithms on imitating biological systems. Basically,
instead of standard data processing methods in AI, the outputs are formed by iterative
adjustment of the system coefficients. In doing so, the outputs are closer to the solutions

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 Abdulah Akšamović, Senad Odžak

offered in the existing practice (learning) to offer outcomes based on new input data, which
we assume are in the domain of desirable (application).

Smart light
192.168.1.4 Communication satellites
Pressure sensor
192.168.1.1 192.168.1.5
Earth satellite
antennas

Network routers

Temperature sensor 106.201.123.33

192.168.1.2

Base stations

192.168.1.6

IoT camera Servers

192.168.1.3

Figure 3. The concept of IoT. The number of devices connected to the Internet in 2020
exceeded 50 x 109.

5G

Many different sources simultaneously generate large amounts of data due to the
application of the IoT concept, which imposes the need for significant improvements in the
communication system. This improvement is implemented in higher transmission speeds,
lower transmission delays, and greater space coverage. The development of mobile
communications from analog (G1) through digital transmission (G2, G3, G4) leads to the
G5 being the fastest transmission in the mobile network. The G5 uses frequencies up to
30GHz, allowing real-time systems applications to require minor delays. A particular
application of the G5 is expected in terms of the development and application of
autonomous vehicles. The first installations of the G5 network were performed in 2019 in
the USA (Chicago and Minneapolis) [14]. In some applications, the G5 is used only locally
(WiFi), while the connection to the Internet is based on the infrastructure for the G3 or the
G4.

ELECTRONIC WASTE

The development of the electronics industry (phase 2 and phase 3), the semiconductor
industry (phase 3), and the mass application of devices for the collection, transmission,
storage, and use of digital data (phase 4) have led to enormous amounts of electronic devices
in use. Due to technological obsolescence, these devices are quickly put out of use,

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 Digital transformation: causes, consequences, expectations

producing large amounts of electronic waste. It is the fastest-growing waste [15]. Such
waste contains over a hundred different substances, some of which are very harmful to the
environment (mercury, lead, chromium, beryllium, etc.), and some are important raw
materials (aluminum, copper, gold, etc.) [16]. Based on the research on the problem of
electronic waste disposal for the Sarajevo Canton (KS) presented in [17], an estimate of the
quantities and composition of this waste for B&H was made. This waste comes from
industry, the public sector, and households. This analysis covers only consumer e-waste
generated by households. Due to the lack of initial data for applying some of the methods
used to estimate the amount of e-waste, the method used here is based on population data
and the assessment of habits and survey results regarding the time of use of the device.
According to the 2013 census, there are 3,166,570 inhabitants in B&H, in 1,143,329
households, with 1,508,981 declaring themselves computer literate [18]. We can assume
with sufficient reliability that all residents from the first grade of primary school onwards
have a mobile phone, that every household has a TV, and that every resident who declared
himself computer literate has a PC. It provides 2,570,012 mobile devices, 1,143,329 TV
sets and 1,508,981 PCs. Technological progress requires that TV be changed after 12 years,
PC after five years, mobile device after three years. Here are the average values obtained
by surveying a sample of 350 students and high school students in KS. The values are
slightly higher than the world average because the standard is such that it conditions the
stated amounts.
Based on the above data, we can calculate the annual decommissioning of the following
devices: 95,270 TVs, 301,585 PCs, and 856,665 mobile devices. Up to 30% of the stated
amount ends in second-hand use (on the second-hand goods market, gifts, etc.). Ultimately,
we have: 66,685 TV, 211,253 PC, 599,662 mobile phone. If we take the average mass of
the TV, PC, and mobile device: 25kg, 20kg, 135g, respectively, we get 5,967 tons of spent
e-waste per year in B&H. By recycling, this amount of e-waste can be obtained: 1,612 tons
of glass (27%), 1,612 tons of plastic (27%), 1,367 tons of mild steel (23%), 476 tons of hard
steel (8%), 176 tons of copper (3%), 176 tons of aluminum (3%), 476 tons of other materials
(8%) and 53 tons of toxic substance (1%). These data were obtained by mapping the results
for KS to the whole B&H with a scaling factor of 0.9. This factor is due to the higher
standard in the Sarajevo region than the rest of B&H.

CONCLUSION

Given the realized development trend and the fact that we are approaching the extreme
limits of available natural resources, there is a change in the basic paradigm of modern
business. Instead of increasing the exploitation of mineral resources, increasing energy
production, market growth, increasing industrial production, which in the previous period
were the main features of development, now the central paradigm can be represented by the
following features: energy efficiency, energy transition, environmental protection,
decarbonisation, sustainable development, optimization, smart cities, circular economy.
The technological basis of all these features is digital transformation.
The impossibility of further raising the standards at the expense of the use of natural
resources has imposed the need for more rational use of existing ones. Therefore, digital
transformation cannot be seen as a new paradigm that will enable progress in new

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 Abdulah Akšamović, Senad Odžak

technology but as a necessity to overcome the problems of lack of energy, lack of raw
materials, environmental and climate issues.

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