# Collaborative Networks: A Pillar of Digital Transformation
## 3 Industry 4.0 and Digital Transformation  
Two main characteristics of the ongoing \"industrial revolution\" are digitalization and intense interconnection of components, systems, value chains, products, and processes, which trigger the development of new business models. The transformation towards the extensive adoption of digital technologies to create/modify business services, processes, culture, and customer involvement/experiences to meet fast-changing business and market requirements is known as \"digital transformation\". Of special relevance in this process is the interconnection of the cyber and physical worlds via \"Cyber-Physical Systems\" and \"Internet of Things\". One of the relevant notions in this regard is the \"representation\" of physical entities in the cyber world, which led to the concept of \"digital twin\". According to [14; 15], a \"digital twin\" is a real-time \"reflection\" of a physical device or sub-system in the cyberspace, being permanently synchronized with the real-world asset. Furthermore, the concept is evolving to assume a complete integration with the physical component, allowing access to both real-time data flows and historical data. When combined with simulation mechanisms and artificial intelligence, it can support verification and analysis of measured and predicted behaviors. In the literature, Industry 4.0 is often discussed in reference to 4 main dimensions, i.e., [7]: (1) \"vertical integration/networking\", (2) \"horizontal integration/networking\", (3) \"through-engineering\", and (4) \"acceleration of manufacturing\" [1; 16]. Some publications also refer two additional dimensions: (5) \"digitalization of products and services\", and (6) \"new business models and customer involvement\" [17]. These dimensions can be described briefly as:  
1. **\"Vertical integration\"** relates to integrating systems and processes vertically across the whole organization, i.e., networking all its units, from the shop floor layer (e.g., \"smart production systems\", \"smart products\", \"smart logistics\"), up to the engineering and business layers (e.g., engineering and development, product and production management, quality assurance, marketing, etc.) [1; 10; 16]. This interconnection through information and communication technology (ICT) [18] is expected to allow easy data access and transparency, facilitating decision-making and agility. As sub-systems progressively become smarter, more than integration the direction is towards seeing the organization as a network of smart (and partially autonomous) units. 2. \"**Horizontal integration\"** refers to \"networking along the whole value chain, from suppliers and business partners to customers\" [1; 10; 19], bringing them into a \"close working relationship with each other\", i.e., \"in order to achieve seamless and secure cooperation between enterprises\" and towards the market [9; 20; 21; 22]. Horizontal integration should be based on a reliable and secure infrastructure supporting the collaboration between manufacturing organizations and their partners in the supply chain. Through such support all actors and units involved can communicate changes and share information in real-time. This infrastructure also allows collaboration with technology and machine providers, and software developers, by offering them a standardized framework for interaction [23; 24]. 3. \"**Through-engineering\"** dimension, also known as \"**end-to-end engineering**\", integrates all engineering-related activities involved in the entire product lifecycle, from design/manufacturing to disposal/recycling [1; 16]. Digitalization enables new functions for collaboration at the various phases of the lifecycle where different actors are involved, supported by the exchange of large volumes of data on products and processes. It also allows better interaction with the customer.