Digitalizing infrastructure: active management for smarter networks

Digitalization enables traditional infrastructure managers to reduce costs in the design, construction, and maintenance of their physical assets. Digital technologies also enable infrastructure managers to optimize the coordination of their physical assets, through more active management, identifying and exploiting new network effects, to conform a more efficient network. However, fragmentation in infrastructure-based industries is an obstacle to digitalization, as collaboration between different players is necessary to fully digitalize each industry. In the absence of collaboration, new players in the data layer - the digital platforms - can use digital technologies to become the system coordinator if they outperform traditional players in the construction of network effects on top of the physical assets owned by infrastructure managers. Platforms might disrupt infrastructure industries and transform them into multisided markets, just as they have disrupted media and other industries.