Leading The Shift To A Digital Business With Determination

Carsten Linz

Part 6 of the “Leading through Digital Transformation” series 

Digital transformation is still a blurry topic of varied definitions and diverse mindsets – but a wealth of potential. Essentially, it is an organizational change that happens when new digital technologies are used to enable innovation and next-generation business models to gain, or regain, a competitive edge.

This view is very similar to how many small and midsize businesses perceive it – namely as a chance to adjust their processes and renew their customer experience. Some are even innovating their operating model or creating entirely new business models.

In a recent study “Digitizing IT: Catalysts for Growth,” The Economist Intelligence Unit (EIU) revealed that 63% of senior executives from companies with annual revenue between US$250 million and US$500 million consider digital transformation to be the highest or relatively high in strategic priority.

Of the top digital initiatives undertaken in the last three years, these ranked highest:

  • Addition of new customer-facing digital channels (61%)
  • Launch of new products or services made possible by digital technology (63%)
  • Promotion of digital collaboration among employees (57%)
  • Prioritization of digital marketing over traditional forms (50%)
  • Application of digital technology to improve internal operations (41%)

From a company-wide leadership perspective, 49% believe their IT department should lead (29%) – or, at least, take an active role (20%) – in managing business model change enabled by digital technology. Surprisingly, though, only 19% see management of business model change as the most critical success factor of their organization’s digital initiatives.

True digital transformation challenges the status quo

There are many cases of initiatives that digitize existing processes, but only a few are adding game-changing customer value. In fact, only 17% of respondents surveyed in the EIU study consider their digital initiatives over the last three years to be highly effective. It appears that many small and midsize businesses make the mistake of just automating what they have, instead of redefining current business processes – no matter if they are strategic for new revenue streams or will likely cease in a couple of years.

As the host of a recent SAP CIO Summit event in Frankfurt, Germany,  I had an inspiring conversation with Peter Gantner, CIO of MAPAL Group. Like many component parts (C-parts) suppliers, the precision tool manufacturer recognized a significant challenge two years ago: How can MAPAL remain relevant in the long-term when the digital quality of its products are becoming increasingly important, at least as important, as their physical qualities? Moreover, how can it ensure the long-term continuance of the company?

To address these concerns, the MAPAL senior management team decided to approach digital transformation holistically based on the three work streams:

  • Digital lean: Geared towards efficiency gains due to digitalization and internal process automation, this work stream includes all activities needed to secure interconnectedness and consistency for significant data throughput. Existing lean programs were integrated into this approach, as well a focus on generating high-efficiency results.
  • Digital twin: To create value-add and differentiating capabilities effectively, MAPAL created a digital twin of the real work stream – created and maintained just like the digital lean version. Aggregating all relevant information for technical descriptions and handling, as well as commercial and lifecycle data, helped evolve MAPAL into a data content provider on top of their traditional hardware business. The digital twin is the heart of the company’s digital strategy to significantly improve the production process. If the machine knows the ideal cutting speed of a tool, the workflow can be optimized towards cutting performance. If the machine is aware of the cycles a tool has already performed, the remaining operating distance can be predicted. The digital twin becomes the prerequisite for meeting the requirements of external partners and process contributors.
  • Digital services: This mindset focuses on the development and implementation of new business services through a platform business model. MAPAL developed an open, cloud-based approach for the efficient handling of their tools and tool-related digital services by building on the vast and growing volume of available master, process, and inventory data generated from every product. For example, the entire lifecycle of their inventory of tools can be tracked and optimized for performance through mobile devices. With this insight, operations managers can determine the best time to regrind their tools. Production site managers can also analyze how and why local production approaches differ from other company sites worldwide – such as which cuts lead to lower tool wear. As a result, best practices can be productized, shared, and rolled out across the globe with real-time machine data.

Lessons learned from MAPAL

There are many lessons we can learn from MAPAL’s digital transformation approach. First, technology investments should always enable the reimagination of business processes, operations, and business models. Second, strategies may call for better access to real-time, accurate insights; actionable decision-making; or streamlined processes; but ultimately, a scalable, reliable infrastructure is needed to power it all.

Digital transformation does not mean that a company must replace existing business operations entirely. Such a decision will only disrupt cash flow and upset customers. Instead, organizations must assess how emerging opportunities and risks can be addressed through agility, technology-driven intelligence, and ambitious innovation to pave the way to untapped incremental revenue streams and additional competitive advantage.

Based on my learnings from more than 150 CxO meetings on digital transformation each year, I can recognize a successful leadership pattern in a small and midsize business with the ambition to remain a champion over the long term. Separating digital leaders from digital laggards is the combination of making a strategic bet and executing with determination.

The changing role of the CIO

The challenges posed by digital transformation are opening the door for IT leaders to prove what they have known all along: Technology is the enabler, not the motivator. Moreover, as executives scramble to meet the demands of an increasingly digital present and future, the CIO’s value becomes even more apparent. According to the EIU survey, 44% of respondents cite that the ideal role for IT is to help devise and implement a digital transformation strategy.

The sole purpose of IT can no longer reside in the development, implementation, and maintenance of technology. Otherwise, the CIO and his team would only be regarded as a back-office role while others lead the company’s digital journey. By combining so generated technology expertise with the business side of the executive table, CIOs can provide valuable insights and ideas that enable the entire executive team to map the best course for revenue generation and proactive, disruptive innovation.

By embracing entrepreneurial and transformational leadership, CIOs have a unique reason to rise into prominence as they spearhead competitive innovation, create a unique value proposition for the brand, and set a clear road map that delivers the full promise of digital transformation.

To learn how your business can embrace the promise of the digital economy, check out The Economist Intelligence Unit’s recent report “Digitizing IT: Catalysts for Growth.” Be sure to check every Tuesday for new installments to our blog series “Leading through Digital Transformation,” to explore the various leadership roles in today’s growing small and midsize companies.

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Carsten Linz

About Carsten Linz

Dr. Carsten Linz is an entrepreneurial leader with more than twenty years of business experience and a proven track record for driving innovation, growth, and transformation. As the Business Development Officer at SAP SE, he repeatably leads the build-up and scale-out of new businesses. In his role as Global Head of the Center for Digital Leadership, Linz acts as an advisor to other CIOs and C-level executives by showcasing next-generation digital innovation and transformation approaches. He also serves as advisory board member, coaches CEOs of fast-growing companies, and is an active member of the investment committee of Europe’s largest seed stage fund. As senior lecturer, he teaches in executive education programs at top-ranked business schools, publishes books and articles in renowned journals, and is a sought-after keynote speaker. He supports social innovators as advisory board member of Social Impact Berlin.

How To Stop Hesitating And Start Demystifying The Cloud For Your Business

Ted Basile

After a decade of discussion, cloud adoption is beginning to be viewed as a business necessity, not just another technology option. And if IDC’s 2018 prediction is correct, 30% of enterprises will spend more on public cloud operations than on-premises and any other datacenter IT operations this year.

Even though they may understand the benefits of the cloud or use cloud applications in siloed areas, most organizations stop short of moving all or part of their on-premises core solutions to the cloud. All too often, an all-or-nothing mindset inevitably stalls the business from proceeding – which is unfortunate, because this line of thinking negates the ultimate potential of investing in the cloud.

Many opportunities if you know where to look

Cloud platforms provide tremendous flexibility, with a choice of variations and combinations ranging from pure cloud to a mix of cloud platforms or a blend of cloud-based and on-premises solutions. However, with so many options available, it’s no surprise that CIOs and IT leaders are still overwhelmed when considering new cloud investments.

If you think about it, investing in a cloud environment is similar to purchasing a luxury car for the first time. We study mountains of brochures to evaluate the latest features and go to car shows to dream how the purchase will fit into our lives. However, no matter how much information you read or how many car models you see, nothing matches the peace of mind after a test drive.

The same should be the case when choosing a cloud platform. To turn the bottleneck of a “won’t move” mindset into an enabling “can do” commitment, businesses should explore a cloud environment that contains the functionalities the business needs and is not connected to existing systems. This approach allows every IT and non-IT organization to determine if a cloud option matches their requirements, delivers needed capabilities, and feels like the right direction for the future of the business.

For companies that are still unsure about moving to the cloud, this low-risk, simple entry point can confirm or dispel any doubt about whether a chosen cloud platform is a viable option. Plus, it can help fast-track the cloud implementation when the business is ready – without requiring additional training or acquisition of infrastructure components.

Turning a “won’t do” bottleneck into a “can do” enabler

It is challenging to know which technology options and implementation approaches enable the capabilities a business needs now and the freedom to grow at its own pace in the future. CIOs and IT leaders want a cloud investment that replicates the control, security, and confidence enabled by their on-premises systems. At the same time, they are eyeing an opportunity to not only reduce their IT costs but, more important, innovate their business model and practices at a pace and influence that was never possible in the past.

Unfortunately, no one has a crystal ball that can foretell whether a cloud platform under consideration will provide all the capabilities the company desires. But this doesn’t mean that they have to dive into a cloud based on a guess. Sometimes, all it takes is a test drive in the cloud environment to know whether a cloud option will meet the needs of the business now and in the future.

See firsthand why SAP HANA Enterprise Cloud can help your business realize the full benefits of the cloud. Sign up for SAP Cloud Start today by contacting your SAP representative.

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Ted Basile

About Ted Basile

Ted Basile is the senior director responsible for global marketing for SAP HANA Enterprise Cloud. His charter spans messaging, positioning, and building customer-facing assets to support all marketing and sales activities. @teddybgame | LinkedIn

Top 10 IT Trends, Part 3: Smart Object Storage, Video Analytics, And Blockchain

Hu Yoshida

Part 3 of the “2018 Top IT Trends” series

So far in this series, we’ve explored four key IT trends in 2018: adoption of Internet of Things (IoT) platforms, virtualization, analytics and artificial intelligence, and data governance for personal data protection. Read on for more on the next three.

Object storage gets smart. Many enterprises started their digital transformation last year. But the first problem that they ran into was the inability to access their data. Data is often locked in isolated islands that make it costly to extract and use. These islands were built for a purpose and not to be shared, and many contain data that is duplicated, obsolete, or no longer used because of changes in business process or ownership.

Data scientists tell us that 80% of the work involved in gaining analytical insight from data is the tedious work of acquiring and preparing the data. The concept of a data lake is alluring. But you can’t just pour your data into one system unless that data is properly cleansed, formatted, and indexed or tagged with metadata so that the data lake is content-aware. Otherwise, you end up with a data swamp.

While object storage can store massive amounts of unstructured data and provide metadata management and search capability, the ability to be context-aware is missing. Object storage now has the ability to be “smart” with software that can search for and read content in multiple structured and unstructured data silos and analyze it for cleansing, formatting, and indexing.

Solutions are available that can extract data from the silos and pump it into workflows to process it in various ways. Users can be authorized so that sensitive content is viewed only by relevant people and document security controls are not breached. An intelligence content solution can create a standard and consistent enterprise search process across the entire IT environment. It can connect to and aggregate multi-structured data across heterogeneous data silos and different locations and provide automated extraction, classification, enrichment, and categorization of all of an organization’s data.

Wider adoption of video analytics will spread across industries. Video content analytics will be a “third eye” for greater insight, productivity, and efficiency in a number of domains, beyond public safety. The algorithms to automatically detect and determine temporal, spatial, and relational dimensions can apply to a wide range of businesses like retail, healthcare, automotive, manufacturing, education, and entertainment. Video, when combined with other IoT information like cell phone GPS and social media feeds, can provide behavior analysis and other forms of situational awareness.

For example, video can be used by automotive manufacturers in quality management to increase product quality, reduce cost of rework, and eradicate root causes. Retailers are using video to analyze customer navigation patterns and dwell time to position products and sales assistance to maximize sales. Video analytics relies on good video input and thereby requires video enhancement technologies like de-noising, image stabilization, masking, and super-resolution. Video analytics may be the sleeper in terms of analytics for ease of use, ROI, and generating actionable analytics.

Blockchain projects will begin to impact IT. Blockchain will be in the news in 2018 for two reasons:

First is the use of blockchain in cryptocurrencies, which saw growing acceptance last year. The value of the most popular cryptocurrency, Bitcoin, skyrocketed from $1,000 at the beginning of 2017 to nearly $19,000 by year-end. While the value of Bitcoin fluctuates wildly, it is viewed as a stable currency in countries that were plagued by hyperinflation. Japan and Singapore are also indicating that they will create fiat-denominated cryptocurrencies in 2018 that will be run by banks and managed by regulators. Consumers will use this for person-to-person payments, e-commerce, and funds transfers. This will lead many banks to turn to blockchain to help them build the capacity needed to manage accounts in cryptocurrencies.

Second is the growing use of blockchain in the financial sector for routine processes like internal regulatory functions, customer documentation, and regulatory filings. Interbank fund transfers via blockchain ledgers are also expected to expand in 2018, and other sectors will begin to see prototypes with smart contracts and identity services for healthcare, governments, food safety, and counterfeit goods. Expect to see every industry looking at blockchain as having the potential to save costs and accelerate their business. These platforms will need the help of IT to replace, integrate, and extend existing applications and architectures.

The fourth and final blog in this series explores a few IT trends that we that we don’t hear as much about – because they are less about new technology and more about approaches to applying technology.

Read more from this series: Top 10 Trends, Part 1: Adoption Of IoT Platforms.

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Hu Yoshida

About Hu Yoshida

Hu Yoshida is responsible for defining the technical direction of Hitachi Data Systems. Currently, he leads the company's effort to help customers address data life cycle requirements and resolve compliance, governance and operational risk issues. He was instrumental in evangelizing the unique Hitachi approach to storage virtualization, which leveraged existing storage services within Hitachi Universal Storage Platform® and extended it to externally-attached, heterogeneous storage systems. Yoshida is well-known within the storage industry, and his blog has ranked among the "top 10 most influential" within the storage industry as evaluated by Network World. In October of 2006, Byte and Switch named him one of Storage Networking’s Heaviest Hitters and in 2013 he was named one of the "Ten Most Impactful Tech Leaders" by Information Week.

The Blockchain Solution

By Gil Perez, Tom Raftery, Hans Thalbauer, Dan Wellers, and Fawn Fitter

In 2013, several UK supermarket chains discovered that products they were selling as beef were actually made at least partly—and in some cases, entirely—from horsemeat. The resulting uproar led to a series of product recalls, prompted stricter food testing, and spurred the European food industry to take a closer look at how unlabeled or mislabeled ingredients were finding their way into the food chain.

By 2020, a scandal like this will be eminently preventable.

The separation between bovine and equine will become immutable with Internet of Things (IoT) sensors, which will track the provenance and identity of every animal from stall to store, adding the data to a blockchain that anyone can check but no one can alter.

Food processing companies will be able to use that blockchain to confirm and label the contents of their products accordingly—down to the specific farms and animals represented in every individual package. That level of detail may be too much information for shoppers, but they will at least be able to trust that their meatballs come from the appropriate species.

The Spine of Digitalization

Keeping food safer and more traceable is just the beginning, however. Improvements in the supply chain, which have been incremental for decades despite billions of dollars of technology investments, are about to go exponential. Emerging technologies are converging to transform the supply chain from tactical to strategic, from an easily replicable commodity to a new source of competitive differentiation.

You may already be thinking about how to take advantage of blockchain technology, which makes data and transactions immutable, transparent, and verifiable (see “What Is Blockchain and How Does It Work?”). That will be a powerful tool to boost supply chain speed and efficiency—always a worthy goal, but hardly a disruptive one.

However, if you think of blockchain as the spine of digitalization and technologies such as AI, the IoT, 3D printing, autonomous vehicles, and drones as the limbs, you have a powerful supply chain body that can leapfrog ahead of its competition.

What Is Blockchain and How Does It Work?

Here’s why blockchain technology is critical to transforming the supply chain.

Blockchain is essentially a sequential, distributed ledger of transactions that is constantly updated on a global network of computers. The ownership and history of a transaction is embedded in the blockchain at the transaction’s earliest stages and verified at every subsequent stage.

A blockchain network uses vast amounts of computing power to encrypt the ledger as it’s being written. This makes it possible for every computer in the network to verify the transactions safely and transparently. The more organizations that participate in the ledger, the more complex and secure the encryption becomes, making it increasingly tamperproof.

Why does blockchain matter for the supply chain?

  • It enables the safe exchange of value without a central verifying partner, which makes transactions faster and less expensive.
  • It dramatically simplifies recordkeeping by establishing a single, authoritative view of the truth across all parties.
  • It builds a secure, immutable history and chain of custody as different parties handle the items being shipped, and it updates the relevant documentation.
  • By doing these things, blockchain allows companies to create smart contracts based on programmable business logic, which can execute themselves autonomously and thereby save time and money by reducing friction and intermediaries.

Hints of the Future

In the mid-1990s, when the World Wide Web was in its infancy, we had no idea that the internet would become so large and pervasive, nor that we’d find a way to carry it all in our pockets on small slabs of glass.

But we could tell that it had vast potential.

Today, with the combination of emerging technologies that promise to turbocharge digital transformation, we’re just beginning to see how we might turn the supply chain into a source of competitive advantage (see “What’s the Magic Combination?”).

What’s the Magic Combination?

Those who focus on blockchain in isolation will miss out on a much bigger supply chain opportunity.

Many experts believe emerging technologies will work with blockchain to digitalize the supply chain and create new business models:

  • Blockchain will provide the foundation of automated trust for all parties in the supply chain.
  • The IoT will link objects—from tiny devices to large machines—and generate data about status, locations, and transactions that will be recorded on the blockchain.
  • 3D printing will extend the supply chain to the customer’s doorstep with hyperlocal manufacturing of parts and products with IoT sensors built into the items and/or their packaging. Every manufactured object will be smart, connected, and able to communicate so that it can be tracked and traced as needed.
  • Big Data management tools will process all the information streaming in around the clock from IoT sensors.
  • AI and machine learning will analyze this enormous amount of data to reveal patterns and enable true predictability in every area of the supply chain.

Combining these technologies with powerful analytics tools to predict trends will make lack of visibility into the supply chain a thing of the past. Organizations will be able to examine a single machine across its entire lifecycle and identify areas where they can improve performance and increase return on investment. They’ll be able to follow and monitor every component of a product, from design through delivery and service. They’ll be able to trigger and track automated actions between and among partners and customers to provide customized transactions in real time based on real data.

After decades of talk about markets of one, companies will finally have the power to create them—at scale and profitably.

Amazon, for example, is becoming as much a logistics company as a retailer. Its ordering and delivery systems are so streamlined that its customers can launch and complete a same-day transaction with a push of a single IP-enabled button or a word to its ever-attentive AI device, Alexa. And this level of experimentation and innovation is bubbling up across industries.

Consider manufacturing, where the IoT is transforming automation inside already highly automated factories. Machine-to-machine communication is enabling robots to set up, provision, and unload equipment quickly and accurately with minimal human intervention. Meanwhile, sensors across the factory floor are already capable of gathering such information as how often each machine needs maintenance or how much raw material to order given current production trends.

Once they harvest enough data, businesses will be able to feed it through machine learning algorithms to identify trends that forecast future outcomes. At that point, the supply chain will start to become both automated and predictive. We’ll begin to see business models that include proactively scheduling maintenance, replacing parts just before they’re likely to break, and automatically ordering materials and initiating customer shipments.

Italian train operator Trenitalia, for example, has put IoT sensors on its locomotives and passenger cars and is using analytics and in-memory computing to gauge the health of its trains in real time, according to an article in Computer Weekly. “It is now possible to affordably collect huge amounts of data from hundreds of sensors in a single train, analyse that data in real time and detect problems before they actually happen,” Trenitalia’s CIO Danilo Gismondi told Computer Weekly.

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials.

The project, which is scheduled to be completed in 2018, will change Trenitalia’s business model, allowing it to schedule more trips and make each one more profitable. The railway company will be able to better plan parts inventories and determine which lines are consistently performing poorly and need upgrades. The new system will save €100 million a year, according to ARC Advisory Group.

New business models continue to evolve as 3D printers become more sophisticated and affordable, making it possible to move the end of the supply chain closer to the customer. Companies can design parts and products in materials ranging from carbon fiber to chocolate and then print those items in their warehouse, at a conveniently located third-party vendor, or even on the client’s premises.

In addition to minimizing their shipping expenses and reducing fulfillment time, companies will be able to offer more personalized or customized items affordably in small quantities. For example, clothing retailer Ministry of Supply recently installed a 3D printer at its Boston store that enables it to make an article of clothing to a customer’s specifications in under 90 minutes, according to an article in Forbes.

This kind of highly distributed manufacturing has potential across many industries. It could even create a market for secure manufacturing for highly regulated sectors, allowing a manufacturer to transmit encrypted templates to printers in tightly protected locations, for example.

Meanwhile, organizations are investigating ways of using blockchain technology to authenticate, track and trace, automate, and otherwise manage transactions and interactions, both internally and within their vendor and customer networks. The ability to collect data, record it on the blockchain for immediate verification, and make that trustworthy data available for any application delivers indisputable value in any business context. The supply chain will be no exception.

Blockchain Is the Change Driver

The supply chain is configured as we know it today because it’s impossible to create a contract that accounts for every possible contingency. Consider cross-border financial transfers, which are so complex and must meet so many regulations that they require a tremendous number of intermediaries to plug the gaps: lawyers, accountants, customer service reps, warehouse operators, bankers, and more. By reducing that complexity, blockchain technology makes intermediaries less necessary—a transformation that is revolutionary even when measured only in cost savings.

“If you’re selling 100 items a minute, 24 hours a day, reducing the cost of the supply chain by just $1 per item saves you more than $52.5 million a year,” notes Dirk Lonser, SAP go-to-market leader at DXC Technology, an IT services company. “By replacing manual processes and multiple peer-to-peer connections through fax or e-mail with a single medium where everyone can exchange verified information instantaneously, blockchain will boost profit margins exponentially without raising prices or even increasing individual productivity.”

But the potential for blockchain extends far beyond cost cutting and streamlining, says Irfan Khan, CEO of supply chain management consulting and systems integration firm Bristlecone, a Mahindra Group company. It will give companies ways to differentiate.

“Blockchain will let enterprises more accurately trace faulty parts or products from end users back to factories for recalls,” Khan says. “It will streamline supplier onboarding, contracting, and management by creating an integrated platform that the company’s entire network can access in real time. It will give vendors secure, transparent visibility into inventory 24×7. And at a time when counterfeiting is a real concern in multiple industries, it will make it easy for both retailers and customers to check product authenticity.”

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials. Although the key parts of the process remain the same as in today’s analog supply chain, performing them electronically with blockchain technology shortens each stage from hours or days to seconds while eliminating reams of wasteful paperwork. With goods moving that quickly, companies have ample room for designing new business models around manufacturing, service, and delivery.

Challenges on the Path to Adoption

For all this to work, however, the data on the blockchain must be correct from the beginning. The pills, produce, or parts on the delivery truck need to be the same as the items listed on the manifest at the loading dock. Every use case assumes that the data is accurate—and that will only happen when everything that’s manufactured is smart, connected, and able to self-verify automatically with the help of machine learning tuned to detect errors and potential fraud.

Companies are already seeing the possibilities of applying this bundle of emerging technologies to the supply chain. IDC projects that by 2021, at least 25% of Forbes Global 2000 (G2000) companies will use blockchain services as a foundation for digital trust at scale; 30% of top global manufacturers and retailers will do so by 2020. IDC also predicts that by 2020, up to 10% of pilot and production blockchain-distributed ledgers will incorporate data from IoT sensors.

Despite IDC’s optimism, though, the biggest barrier to adoption is the early stage level of enterprise use cases, particularly around blockchain. Currently, the sole significant enterprise blockchain production system is the virtual currency Bitcoin, which has unfortunately been tainted by its associations with speculation, dubious financial transactions, and the so-called dark web.

The technology is still in a sufficiently early stage that there’s significant uncertainty about its ability to handle the massive amounts of data a global enterprise supply chain generates daily. Never mind that it’s completely unregulated, with no global standard. There’s also a critical global shortage of experts who can explain emerging technologies like blockchain, the IoT, and machine learning to nontechnology industries and educate organizations in how the technologies can improve their supply chain processes. Finally, there is concern about how blockchain’s complex algorithms gobble computing power—and electricity (see “Blockchain Blackouts”).

Blockchain Blackouts

Blockchain is a power glutton. Can technology mediate the issue?

A major concern today is the enormous carbon footprint of the networks creating and solving the algorithmic problems that keep blockchains secure. Although virtual currency enthusiasts claim the problem is overstated, Michael Reed, head of blockchain technology for Intel, has been widely quoted as saying that the energy demands of blockchains are a significant drain on the world’s electricity resources.

Indeed, Wired magazine has estimated that by July 2019, the Bitcoin network alone will require more energy than the entire United States currently uses and that by February 2020 it will use as much electricity as the entire world does today.

Still, computing power is becoming more energy efficient by the day and sticking with paperwork will become too slow, so experts—Intel’s Reed among them—consider this a solvable problem.

“We don’t know yet what the market will adopt. In a decade, it might be status quo or best practice, or it could be the next Betamax, a great technology for which there was no demand,” Lonser says. “Even highly regulated industries that need greater transparency in the entire supply chain are moving fairly slowly.”

Blockchain will require acceptance by a critical mass of companies, governments, and other organizations before it displaces paper documentation. It’s a chicken-and-egg issue: multiple companies need to adopt these technologies at the same time so they can build a blockchain to exchange information, yet getting multiple companies to do anything simultaneously is a challenge. Some early initiatives are already underway, though:

  • A London-based startup called Everledger is using blockchain and IoT technology to track the provenance, ownership, and lifecycles of valuable assets. The company began by tracking diamonds from mine to jewelry using roughly 200 different characteristics, with a goal of stopping both the demand for and the supply of “conflict diamonds”—diamonds mined in war zones and sold to finance insurgencies. It has since expanded to cover wine, artwork, and other high-value items to prevent fraud and verify authenticity.
  • In September 2017, SAP announced the creation of its SAP Leonardo Blockchain Co-Innovation program, a group of 27 enterprise customers interested in co-innovating around blockchain and creating business buy-in. The diverse group of participants includes management and technology services companies Capgemini and Deloitte, cosmetics company Natura Cosméticos S.A., and Moog Inc., a manufacturer of precision motion control systems.
  • Two of Europe’s largest shipping ports—Rotterdam and Antwerp—are working on blockchain projects to streamline interaction with port customers. The Antwerp terminal authority says eliminating paperwork could cut the costs of container transport by as much as 50%.
  • The Chinese online shopping behemoth Alibaba is experimenting with blockchain to verify the authenticity of food products and catch counterfeits before they endanger people’s health and lives.
  • Technology and transportation executives have teamed up to create the Blockchain in Transport Alliance (BiTA), a forum for developing blockchain standards and education for the freight industry.

It’s likely that the first blockchain-based enterprise supply chain use case will emerge in the next year among companies that see it as an opportunity to bolster their legal compliance and improve business processes. Once that happens, expect others to follow.

Customers Will Expect Change

It’s only a matter of time before the supply chain becomes a competitive driver. The question for today’s enterprises is how to prepare for the shift. Customers are going to expect constant, granular visibility into their transactions and faster, more customized service every step of the way. Organizations will need to be ready to meet those expectations.

If organizations have manual business processes that could never be automated before, now is the time to see if it’s possible. Organizations that have made initial investments in emerging technologies are looking at how their pilot projects are paying off and where they might extend to the supply chain. They are starting to think creatively about how to combine technologies to offer a product, service, or business model not possible before.

A manufacturer will load a self-driving truck with a 3D printer capable of creating a customer’s ordered item en route to delivering it. A vendor will capture the market for a socially responsible product by allowing its customers to track the product’s production and verify that none of its subcontractors use slave labor. And a supermarket chain will win over customers by persuading them that their choice of supermarket is also a choice between being certain of what’s in their food and simply hoping that what’s on the label matches what’s inside.

At that point, a smart supply chain won’t just be a competitive edge. It will become a competitive necessity. D!


About the Authors

Gil Perez is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Tom Raftery is Global Vice President, Futurist, and Internet of Things Evangelist, at SAP.

Hans Thalbauer is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Dan Wellers is Global Lead, Digital Futures, at SAP.

Fawn Fitter is a freelance writer specializing in business and technology.

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.

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Four Retail Technology Trends To Take Off In 2018

Shaily Kumar

Over the past few years, technology has seen a significant shift from cyclical, invention-led spending on point solutions to investments targeting customer-driven, end-to-end value. The next wave of disruption and productivity improvements is here, which means a huge opportunity for digital-focused enterprises – if you are following the right roadmap.

Technology trends have significant potential over the next few years. Establishing a digital platform will not only set the stage for business innovation to provide competitive advantage, but it will also create new business models that will change the way we do business. Technology trends in 2018 will lay the foundation for the maturity of innovative technologies like artificial intelligence and machine learning and will prepare both businesses and shoppers to be ready for their consumption.

Like any other industry, retail is being disrupted. It is no longer enough to simply stock racks with alluring products and wait for customers to rush through the door. Technological innovation is changing the way we shop. Customers can find the lowest price for any product with just a few screen touches. They can read online reviews, have products sent to their home, try them, and return anything they don’t want – all for little or nothing out of pocket. If there are problems, they can use social networks to call out brands that come up short.

Retailers are making their products accessible from websites and mobile applications, with many running effective Internet business operations rather than brick-and-mortar stores. They convey merchandise to the customer’s front entry and are set up with web-based networking media if things turn out badly.

Smart retailers are striving to fulfill changing customer needs and working to guarantee top customer service regardless of how their customer interacts with them.

2017 saw the development of some progressive technology in retail, and 2018 will be another energizing year for the retail industry. Today’s informed customers expect a more engaging shopping experience, with a consistent mix of both online and in-store recommendations. The retail experience is poised to prosper throughout next couple of years – for retailers that are prepared to embrace technology.

Here are four areas of retail technology I predict will take off in 2018:

In-store GPS-driven shopping trolleys

Supermarkets like Tesco and Sainsbury’s now enable their customers to scan and pay for products using a mobile app instead of waiting in a checkout line. The next phase of this involves intelligent shopping trolleys, or grocery store GPS: Customers use a touch screen to load shopping lists, and the system helps them find the items in the store. Customers can then check off and pay for items as they go, directly on-screen. These shopping trolleys will make their way into stores around the last quarter of 2018.

Electronic rack edge names

Electronic rack edge names are not yet broadly utilized, but this could change in 2018 as more retailers adopt this technology. Currently, retail workers must physically select and update printed labels to reflect changes in price, promotions, etc. This technology makes the process more efficient by handling such changes electronically.

Reference point technology

Despite the fact that it’s been around since 2013, reference point technology hasn’t yet been utilized to its fullest potential. In the last few years, however, it’s started to pick up in industries like retail. It’s now being used by a few retailers for area-based promotions.

Some interesting uses I’ve observed: Retailers can send messages to customers when they’re nearby a store location, and in-store mannequins can offer information about the clothing and accessories they’re wearing. I anticipate that this innovation will take off throughout 2018 and into 2019.

Machine intelligence

The technological innovations describe above will also provide retailers with new data streams. These data sources, when merged with existing customer data, online, and ERP data, will lead to new opportunities. Recently Walmart announced it would begin utilizing rack examining robots to help review its stores. The machines will check stock, prices, and even help settle lost inventory. It will also help retailers learn more about changing customer behavior in real time, which will boost engagement.

Clearly, technology and digital transformation in retail have changed the way we live and shop. 2018 will see emerging technologies like machine learning and artificial intelligence using structured and unstructured data to deliver innovation. As technology develops, it will continue to transform and enhance the retail experience.

For more insight on e-commerce, see Cognitive Commerce In The Digital World: Enhancing The Customer Journey.

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Shaily Kumar

About Shaily Kumar

Shailendra has been on a quest to help organisations make money out of data and has generated an incremental value of over one billion dollars through analytics and cognitive processes. With a global experience of more than two decades, Shailendra has worked with a myriad of Corporations, Consulting Services and Software Companies in various industries like Retail, Telecommunications, Financial Services and Travel - to help them realise incremental value hidden in zettabytes of data. He has published multiple articles in international journals about Analytics and Cognitive Solutions; and recently published “Making Money out of Data” which showcases five business stories from various industries on how successful companies make millions of dollars in incremental value using analytics. Prior to joining SAP, Shailendra was Partner / Analytics & Cognitive Leader, Asia at IBM where he drove the cognitive business across Asia. Before joining IBM, he was the Managing Director and Analytics Lead at Accenture delivering value to its clients across Australia and New Zealand. Coming from the industry, Shailendra held key Executive positions driving analytics at Woolworths and Coles in the past.