The intersection between traditional and digital industries goes through an economic resource that seems to be still undervalued. Machine data is a critical resource for a machine builder, but also a valuable resource for deploying software solutions for manufacturing that most industrialists don’t even think of.

We remain optimists because there are industrial producers in Bulgaria with a mindset of high-tech entrepreneurs.

And that gives confidence to software engineers to develop industrial applications.

It is quite normal, though may be surprising, that the meeting of the industry of machine-building with the digital sectors is more frequent in Bulgarian manufacturers. Although much smaller than the large international manufacturers with a presence in Bulgaria, these small and medium-sized companies are creators, engineers, developers of products whose improvement is literally a business-as-usual routine.

Indicative of this new image of the Bulgarian industry is the example of a family-owned machine-building company for lifts and escalators - Prolift

Prolift is self-defined as a Tier 1 supplier for smart building developers. That typology of the value-added chain comes from the auto industry, but it seems appropriate for a point of contact between engineering, architecture, and construction. To the already complex puzzle of inter-industrial relations, one must also add the software industry. The logical driver of innovation is the Tier 1 supplier – in this case, the lift manufacturer.

The lift industry is a compelling case in a relatively highly regulated market, where mandatory standards can also be a reasonable basis for making better use of machine data from lifts. Manufacturers of different components follow uniform standards, which makes integrating solutions from different manufacturers easier than in other industries.

But a real push for industry innovation would give a concept known as “open data,” or in other words, a possibility for software developers to leverage the accumulated data from lifts and escalators to provide solutions, especially for lift makers who also take over their support. An important point is that machine data is different from personal data, i.e., machine data should generally not allow identifying the actions of a particular person. Data can be used to train machine learning for better efficiency and fewer machine crashes. Prolift CEO Damyan Petrov is one of the drivers for this change globally as Vice President of EFESME - European Federation for Elevator Small and Medium-sized Enterprises. However, such changes require efforts that are sometimes beyond the horizon of the day-to-day running of a business. They need an example, a prototype of an embedded technology that speaks more than any presentation.

Data is not the core business of a machine builder. Controllers, which are essentially the first layer of a single machine data accumulation system, are generally made by suppliers for the machine builders. We don’t underestimate the possibility of more progressive controller manufacturers to take on the challenge of time and adopt open standards and interfaces for integration, which is important even for the ease of their incorporation into smart buildings. But the incentive to use that data most effectively comes first from the machine manufacturer. Aligning incentives and technological capabilities will be difficult, but entirely possible, in a dynamic intertwined ecosystem of software companies and machine manufacturers.

In the business world of technology, we distinguish between two major models – systemic innovation in large corporations or brave small startups, almost none of which will become a large corporation. There are also small teams that rely on the simultaneous development of several ideas, but at the time of the market success of one of them, they focus on only one product. The reason is the lack of capacity to serve a growing consumer interest.

Research and development of new products is feasible in a small IT company

A technological choice makes the business model of systematic research and development of new products feasible even in a small IT company. That is the decision to use a serverless architecture that is built through open source components and cloud services. This enables developers to make changes quickly and cheaply to their product as it evolves and looks for a path to its customers. It also provides endless scaling, but more importantly, it does so with a high degree of automation. Capacity scaling at high demand can be preconfigured, even at critical load, to increase its capacity to absorb peak and then even reduce its resources again when the pressure drops. Usually, the configuration of the infrastructure of such a system becomes part of its code (a model, also known as infrastructure-as-code).

This will change the face of Bulgaria faster than spontaneous restructuring

An example of this new trend is the NotezApp, a tool for daily teamwork in the sports journalism segment, but also very suitable for media with user-generated content. The product makes it easy to collect different types of information (text, audio, and video) all in one place, with real-time reports from a team of reporters or multiple people using their smartphones or computers. This information is instantly accessible to editors who can use it to create professionally crafted content.

The application is created by two software engineers who share a different business outlook than traditional IT and outsourcing companies. They rely more on the flexibility and efficiency of their company rather than on rapid growth. Chudomir Delchev and Andrei Hristov are more like serial entrepreneurs – they reinvest their profits from software services (mainly e-commerce applications and big data analytics) into product creation. Some of them discontinue in the initial phase, after evaluation of their market potential. Still, others reach the stage to be separated as spin-offs and seek investment for their development and scaling.

Specifically, NotezApp was born in response to a niche market open after the failure of social networks to deliver and disseminate quality content and facilitate collaboration between people. This opens up the social and market need for new user-generated media content tools.

The technological feasibility of the business model of systemic innovation beyond large corporations will also change the mindset of small revolutionary tech entrepreneurs. Speed ​​and flexibility will be a part of the business as usual. Not only at the level of support, but also in the design and creation of applications. And by their future changing as needed. From a financial point of view, it is essential to note that clouds save companies the investment in their own infrastructure as well as the commitment to maintain it. This radically changes the entire landscape of the tech business world and eliminates the critical distinction between a large corporation and small startups.

It is not very easy for anyone outside the software industry to differentiate outsourcing companies from product companies. They are, after all, employers mainly for programmers, with clients across the globe competing fiercely in Bulgaria for relatively scarce engineering talent and other motivated, mostly young, people. Every founder of a product company usually talks about the core of their teams as creators of something new. The “developer” position has a literal meaning to them from a market point of view.  Why is this distinction important, after all?

The software industry in Bulgaria is changing

Cheap employees are no longer a competitive advantage, especially when it comes to fast-learning coders. The long-term competitive advantage of the country may be the loyal engineers developing the companies, the flexibility to work remotely in multinational teams scattered around the world. This ecosystem change will take several years, but it has already begun. Product software companies feel more comfortable in Bulgaria, and yes, their teams are traditionally more compact than mass outsourcing. Still, we rarely hear from them that there is no good talent pool in Bulgaria.

This will change the face of Bulgaria faster than spontaneous restructuring

Such positive example comes from the American company SwimCloud, which for five years, has been developing its product with a team from Bulgaria. This is a platform for collecting and analyzing swimmers’ data, as well as connecting them with interested college coaches. Analyzing swimming performance data of tens of thousands of competitors is useful for both swimmers and their parents when choosing a university, as well as university coaches who try to attract the best swimming talents to their team each year.

That model is not particularly well known in Europe. But for the US, college swimming is a significant generator of Olympic and other athletes internationally. 76% of the swimmers in the US national team at the Rio Olympics in 2016 went through the college system. Each year, there are about 9,000 new swimmers who choose a university to compete in (and to study in). Over 90% of them are SwimCloud users.

Founders Ivan Manolov and Greg Earhart decided to create a team of platform developers about five years ago with the clear notion that such an organization could not be sustained in San Francisco. This is especially important for a company that is not looking for VC or debt financing. The so-called “bootstrapping” of a company may be the most valuable advisor in deciding where and how to spend the scarce product development resources. To this day, the company is 100% owned by the two founders, financing its organic growth by reinvesting profits.

The prospects for this startup are promising. The company is self-sustaining, attracting, and training developers who like to participate in the creation of a global product. The two co-founders are first and foremost fans of swimming – and Greg is the executive director of the College Swimming and Diving Coaches Association of America (CSCAA) – and this passion cannot be missed in the performance of the product. All this motivates, attracts, retains young programmers – a loyalty that is a problem for many other players in the industry. This is also the future of this segment of the labor market. People’s scarcity is not a problem in the labor market, but the way people are motivated and developed by employers – something that will be easier with high productivity, which can only be achieved by the development units of global product companies.

Long before smart homes, there were smart factories, which were the test arenas of the solutions we use today in our houses and cars. The significant changes in our lives most often start at the whiteboard of research and development engineers.

The new trends of open manufacturing meet an obvious business need 

For “agility” – innovation must be a natural part of the business. With this logic, large multinationals are already creating collaborative platforms such as the “Open Manufacturing Platform” between BMW Group and Microsoft and the rival project “Open Industry 4.0 Alliance” by Kuka, SAP, and others. The goal is to share technological solutions for production processes by opening code and blueprints, to enable optimized integration and maximized productivity.

Meanwhile, one Bulgarian startup got ahead of everyone

as it first opened to the world the design of its industrial metal detector. Metal detection is a universal need in every manufacturing, mainly for filtering final products and protecting machines from accidents. That is an industrial problem thoroughly researched by Dimitar Tomov, the founder of DesignFirst. He is one of the first engineers we meet in Bulgaria with an apparent aim of creating new technological products for industrial users. Before deciding to create his products, he spent some time researching and developing new technologies for leading companies, including Siemens Hearing Aids (now part of the Sivantos Group). His experience in major manufacturers has been distilled to a crucial discovery: Industry 4.0 not only automates processes but also creates new production management needs.

The young tech company already has a working prototype that can be integrated into production called MDv3 (metal detector version 3). It is being promoted as the world’s first open-design industrial metal detector – any factory in China and Africa can use the shared blueprints and instructions to manufacture a fully functional metal detector for every type of production. This implies a new generation business model and competition with more focus on continuous product improvements and a clear incentive for long-term partnerships.

The Bulgarian startup will also focus on one of the critical processes – cybersecurity of connected industries. Any device with a digital interface is potentially subject to malicious attacks. Any analog device can be neglected by employees in a factory, such as a faulty configuration. Metal detectors are a combination of both analog and digital electronics, as well as algorithms for signal processing. Technological innovation in MDv3 is the ability to add a new layer of software-independent security that can guarantee the state of the machine. This creates a new level of trust that is expected to be in particularly high demand for industrial purposes. And later, it will find a domestic application in the IoT world.

The entire team of the technology company consists of automation engineers, based in Bulgaria. An essential prerequisite for choosing a location is access to industrial customers from a wide range of industries. Despite the known problems of the small and remote market, the high concentration of new industrial sectors in Eastern Europe seems to make it attractive to test new, bold product development and business models. All this, combined with enthusiastic engineering talent, gives a stable position to countries like Bulgaria in the modern industrial era.

Bulgaria is beginning to affirm its position on the global map not only as an investment destination, but also as a technological destination. Nowadays the leading competitive advantage is not cost, but the world-class talented people who chose to live and work here. We see another confirmation in the choice of a Swiss technology startup to position part of its team in our home where the laboratory of product development resides. 

In 1971 the person who sent the first e-mail hardly ever imagined that almost half a century later we will use this protocol as the primary means to exchange information. Today each second there are more than a million e-mails sent. Furthermore, the e-mail address is becoming the preferred, even compared to the phone number method of recovering our online identity. 

Many of us are already thinking about the security of our e-mail 

So, we do not use it to send sensitive information.As an example - think of the cybersecurity level in a law firm or a notary you lastly used, but the layer of security which depends on you can be sensibly improved. Business e-mail compromise is a problem which is at the focus of the technological solution developed currently in the predominantly Bulgarian team of the Swiss-born startup called Vereign. 

Design from Switzerland, Development from Bulgaria

Without doing too much buzz about it, Bulgaria has been the home for one of the most promising technology developments with the potential to impact the world. The vulnerability of e-mail communication is represented by 42% spam of all the e-mail traffic according to data cited in the white paper of Vereign. The business niche is clear - according to estimations the SMEs spend USD 2.2 million a year to remedy e-mail attacks. The e-mail is the main attack vector for identity fraud. 

The average number of logins is 191 per corporate user. This means 191 passwords. There are other ways to deal with it than sticking notes on your desk. However, the current user-friendly technologies are driving a person depending on a particular ecosystem, such as Google, Amazon, and Apple. In the ideal scenario, the recovery of our data should be in a decentralized system that does not have a single point of failure and the technically does not even have the capacity to leak sensitive information. Key innovation by Vereign is the easy management by users of cryptographic keys, de facto eliminating the need for passwords. 

The idea potentially extends beyond the security of your e-mail - people and companies need to be able to sign contracts safely and easily. The goal is technological security for your next-generation identity, which will allow much bolder steps in the introduction of electronic public services (e-government) and significantly faster digitization of paper in companies. The next time you need to send an email invoice with payment instructions, you should not worry that someone will replace your IBAN along the route.

Thanks to our partner Trakia Tech for publishing together with "Invest in Bulgaria".