Blockchain: The CIO’s Next Big Bet For Digital Revolution

Rob Glickman

From a currency about nothing to a surging $18 billion market, bitcoin has captured the attention of economists and technology futurists since its inception in 2008. Amidst all of this attention, the far-reaching potential of the technology powering its valuation – the blockchain – has been mostly obscured.

But not anymore. A growing community of Fortune 500 companies are proving this distributed ledger’s value beyond the world of money and finance.

In a survey of senior executives from U.S. companies with annual revenues of $500 million or more, Deloitte revealed that 25% view blockchain as a top priority. In fact, 28% have even gone as far as investing at least $5 million in the technology, while 10% spent $10 million or more. However, there seems to be some confusion about the technology’s full potential as 39% still have little or no knowledge about it.

Whether you think blockchain is all hype or possibly one of the best bets for outcome-driven digital transformation, it’s difficult to disagree that the technology represents a radically new way of thinking about digital disruption.  Let’s break it down a bit.

Blockchain matters when reimagining market potential

In its simplest form, a blockchain is an open-source distributed database using state-of-the-art cryptography which creates a platform of trust. The greatest potential of the blockchain resides in its ability to replace intermediaries with mathematical logic. The underlying fundamental concept of the technology reduces overhead costs when trading assets of any kind between two or more parties and proving authenticity, ownership, and truthfulness of information.

Take, for example, Walmart’s recent decision to pilot blockchain for its supply chain. The U.S. retail giant plans to use the distributed ledger technology to track and trace two of its high-volume product categories – pork from China and produce from the United States. Historically, supply chains are universally fraught with loss and inefficiency due to risk, fraud, errors, delays, and volumes of manual paperwork. However, Walmart is hoping that blockchain will help it overcome that all-too-accepted reality by making supply chain management more streamlined and efficient.

Meanwhile, a UK startup, Electron, is proposing a blockchain-based electricity and gas meter registration system to empower consumers to switch between utilities with greater ease. Because the United Kingdom does not have a central register of all electricity and gas meters, it can take between 17 and 20 days to change utility providers, which can be frustratingly long for consumers looking to reduce their expenses. However, by adding the blockchain to the process, the entire process could be reduced to mere minutes.

These two examples are only the start of the overwhelming opportunity enabled by blockchain. Deloitte advises that organizations across industries should consider how the technology can reinvent operations, value chains, and business models. Those that do will be rewarded with the realization of new efficiencies within costly, slow, or unreliable transactions and introduce new opportunities for partnership and collaboration.

Although excitement is lessening about blockchain as a crypto-currency and a mechanism for banks and financial services, venture capitalists are refocusing their efforts on core blockchain applications that have the potential to revolutionize business across industries. Recognition of the blockchain ecosystem across a variety of use cases and technology enablers will inevitably lead to a rise in industry adoption and unprecedented disruption.  The surface has barely been scratched on blockchain’s most compelling uses cases – get ready for even more disruption coming your way.

Learn more about how CIOs can become digital solution innovators.
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Rob Glickman

About Rob Glickman

Rob Glickman is Vice President of Audience Marketing at SAP, where he leads a team chartered with the articulation of SAP’s point of view of the business value of Cloud computing both internally within SAP, as well as externally to customers, partners and influencers. He brings 20 years of marketing experience ranging from lean startups to large enterprises, including running Product Marketing for Symantec and seven years at eBay where he had various marketing leadership roles globally. A dual EU and US citizen with extensive international work and life experience, Rob has a BA from Skidmore College and an International MBA from Thunderbird Graduate School.

Digital Experience: The Key To User Delight

Jason Bloomberg

What if every interaction with your company – from a customer exploring your website to a clerk completing a form to a partner fulfilling an order – was simply delightful?

Whether in consumer or B2B scenarios, the digital experience (DX) drives key business priorities like sales conversions, productivity, and profitability. That’s why enterprises of every stripe are working to deliver seamless, high-quality interactions across every digital touchpoint.

Achieving this goal depends on a complex set of technologies across the enterprise working together. To address this complexity, organizations must take a holistic approach.

“Holistic” is one of those marketing buzzwords that can raise red flags in any discussion of enterprise software – but achieving a holistic experience is the key to delighting people.

Companies’ digital teams should leverage devices, systems, and tools across both systems of record and systems of engagement to deliver the quality of experience that everyone expects.

A well-orchestrated DX streamlines and accelerates both processes and interactions. The results can be extraordinary: increased customer value, higher productivity, and delighted users – inside your organization and out.

Digital experience: simple on the outside, complex on the inside

 To provide the best DX, businesses must rethink existing technology touch points for everyone who interacts with the company.

Customers require seamless interactions as they move from laptop to smartphone to, say, an in-person retail experience. Similarly, employees may interact with an increasing variety of interfaces specific to their role, from increasingly sophisticated voice interactions to a wide range of augmented reality or artificial intelligence-supported devices.

New technologies, in fact, offer both promise and additional complexity. The Internet of Things is exploding the number and variety of user touch points, while artificial intelligence improves the ability for technology to improve its interactions with people well beyond what’s available today.

The opportunities for optimized business processes, improved productivity, reduced errors, and better relationships with customers abound. But far too often user interfaces are overly complicated and disjointed, with little commonality from one to the next.

These incoherent interfaces are a natural outcome of the underlying infrastructure, which typically comprises diverse data sources, incompatible back-end systems, disconnected workflows, and competing, often contradictory business processes. Companies have been leveraging a mix of different tools within departments or lines of business in their own silos, each of which depends on different underlying systems and disjointed data sets.

Business processes often succumb to this technical complexity. Even simple processes like placing an order require multiple teams across an enterprise to collaborate, as they coordinate systems, processes, and data, as the diagram below illustrates. Too often, this results in processes too slow or fraught with errors to maintain any kind of user-friendly DX – and in the end, profitability and competitiveness suffer as well.

Even a simple order touches multiple people using different devices and applications.

Achieving a holistic digital experience

The challenges of technical complexity require organizations to leverage a digital experience platform where they can manage engagements, collaboration, and customer interactions in a single, well-integrated environment.

To succeed, this DX platform must unite all systems of record. By creating a single source of truth, organizations can integrate processes and data across the silos that have interfered with the user experience in the past.

The DX platform must provide this consolidation without disrupting the underlying systems. The goal is to create an environment for delivering end-to-end experiences without needlessly interfering with existing core processes. Thus, a holistic DX platform like SAP Cloud Platform is marked by its ability to integrate seamlessly into existing infrastructure.

Once a DX platform is in place, the digital team can streamline business operations – first by connecting tools, infrastructure, and processes, and then by designing and implementing optimized user interfaces for all audiences. As technologies advance, such platforms can leverage artificial intelligence to improve human interactions.

This optimization can pull together many different efforts. Teams can accelerate integration with back-end software to access core data while simplifying integrated business processes. They can create strategic applications that support multiple touch points – for employees, suppliers, customers, or anyone else who participates in such processes.

The end result will be to simplify and accelerate all tasks via end-to-end services across all lines of business, providing increased value across the enterprise.

The Intellyx take: achieving elusive user delight

As enterprises implement digital experience platforms as they move forward with their digital transformation initiatives, DX should continue to improve. How do you know, then, that your DX is good enough? The answer: when you consistently delight your users.

User delight is one of the most difficult to define, but most important metrics any digital initiative can have. It is essentially a combination of the subtle emotional reactions that impact a person’s perceived opinion of a set of interactions, and generally, with a company overall.

As consumers, we all recognize it—when our interactions with a company are so seamless, so customer-centered, that they are truly delightful. Get DX right, and your organization can reap the rewards.

For more on this topic, see Five Ways AI And Machine Learning Can Improve CX.

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Jason Bloomberg

About Jason Bloomberg

Jason Bloomberg is a leading IT industry analyst, Forbes contributor, keynote speaker, and globally recognized expert on multiple disruptive trends in enterprise technology and digital transformation. He is founder and president of the agile digital transformation analyst firm Intellyx. He is ranked #5 on Onalytica’s list of top digital transformation influencers for 2018 and #15 on Jax’s list of top DevOps influencers for 2017, the only person to appear on both lists. Mr. Bloomberg is the author or coauthor of four books, including The Agile Architecture Revolution (Wiley, 2013). His next book, Agile Digital Transformation, is due within the next year.

Drive Business Growth With A Hybrid Analytics Strategy

Steve McHugh

Combining the most valuable aspects of on-premises and cloud solutions can be extremely beneficial: utilizing a hybrid strategy for your analytics/BI solution has been shown to improve performance and increase revenue. In a recent survey by Forrester Consulting commissioned by SAP, 92% of companies with well-established analytics/BI practices have seen revenue growth of 15% or greater over the last three years. But in order to see those performance and revenue gains, you need to make sure you’re implementing it correctly. Read on to learn what you can do with a hybrid strategy, why it’s important, and how to build up a hybrid strategy effectively.

What can you do with a hybrid approach?

You can take advantage of a hybrid strategy by appropriately leveraging your on-premises offerings and knowing when to extend or expand to the cloud. The great thing is that a successful hybrid strategy can be enacted in many forms, and it’s important to keep in mind that one size does not fit all. Some companies are using a mix of on-premises and cloud deployments by department, while others are using cloud BI as a direct replacement for on-premises deployments. Further, some companies are even using a cloud BI platform that accesses a mix of on-premises and cloud data sources via the same semantic layer.

But the list doesn’t end there. Look at your current on-premises investments and ask yourself: When can we extend or expand to the cloud to reap these benefits? True success comes from analyzing your company’s unique state and offerings and knowing where to branch out.

Why do you need a hybrid strategy?

Some 82% of survey respondents agree that a hybrid approach is a crucial next step in the evolution of their strategy, and nearly two-thirds of companies report they anticipate their future analytics/BI solution will include a mix of on-premises and cloud resources. The benefits extend far beyond the financials.

A hybrid strategy that successfully takes advantage of the best of what both an on-premises and cloud solution have to offer can deliver significant performance gains as well. You’ll see better business agility due to the self-service analytics/BI capabilities and the cloud’s flexibility. You’ll see optimized business performance thanks to rising user adoption of these tools. You’ll get more value from your on-premises data and investments by leveraging them with the cloud’s capabilities. And finally, more departments throughout your firm will be able to access analytical tools and reports, decreasing the ever-common silo effect.

How can you implement hybrid successfully?

The survey also found that 88% of respondents reported that they regard hybrid analytics/BI platforms as important to their company, and 60% are already using a hybrid strategy for their analytics and data. We know that the market sees value in hybrid solutions and that the need is real. To achieve success and build an effective hybrid analytics strategy, follow the footsteps of hybrid trailblazers by:

  • Increasing investment in analytics/BI technology and resources
  • Pursuing greater use of the cloud for data storage
  • Adopting more powerful analytics/BI tools
  • Implementing tighter security controls on data usage

One thing is certain: hybrid is the future, and those who aren’t currently utilizing a hybrid strategy may soon be feeling the weight of lost revenue. Armed with the right information, this can be a seamless transition.

For more information on how a hybrid strategy can help your firm, download this SAP-commissioned thought-leadership study from Forrester Consulting: “Improving Business Performance By Closing BI Maturity Gaps With Hybrid Cloud Deployments.”

Learn how to improve business decision-making with cloud analytics

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Steve McHugh

About Steve McHugh

Steve McHugh is director for BI Enterprise Marketing at SAP. He has a solid background in enterprise performance management and analytics. For the last several years, Steve has been involved in leading marketing efforts for SAP's on-premise enterprise BI solutions. Currently, his focus is on helping enterprise BI customers with their journey to the cloud, extending and expanding their analytics adoption and use by capitalizing on their on-premise investments and data through hybrid analytics.

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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CEO Priorities And Challenges In The Digital World

Dr. Chakib Bouhdary

Digital transformation is here, and it is moving fast. Companies are starting to realize the enormous power of digital technologies like artificial intelligence (AI), Internet of things (IoT) and blockchain. These technologies will drive massive opportunities—and threats—for every company, and they will impact all aspects of business, including the business model. In fact, business velocity has never been this fast, yet it will never be this slow again.

To move quickly, companies need to be clear on what they want to achieve through digital transformation and understand the possible roadblocks. Based on my meetings with customer executives across regions and industries, I have learned that CEOs often have the same three priorities and face the same three challenges:

1. Customer experience – No longer defined by omnichannel and personalized marketing.

Not surprisingly, 92 percent of digital leaders focus on customer experience. However, this is no longer just about omnichannel and personalized marketing – it is about the total customer experience. Businesses are realizing that they need to reimagine their value proposition and orchestrate changes across the value chain – from the first point of interaction to manufacturing, to shipment, to service – and be able to deliver the total customer experience. In some cases, it will even be necessary to change the core product or service itself.

2. Step change in productivity – Transform productivity and cost structure through digital technologies.

Businesses have been using technology to achieve growth for decades, but by combining emerging technologies, they can now achieve a significant productivity boost and reduce costs. For this to happen, companies must first identify the scenarios that will drive significant change in productivity, prioritize them based on value, and then determine the right technologies and solutions. Both Mckinsey and Boston Consulting Group expect a 15 to 30 percent improvement in productivity through digital advancements – blowing the doors off business-as-usual and its incremental productivity growth of 1 to 2 percent.

3. Employee engagement – Fostering a culture of innovation should be at the core of any business.

Companies are looking to create an environment that encourages creativity and innovation. Leaders are attracting the needed talent and building the right skill sets. Additionally, they aim for ways to attract a diverse workforce, improve collaborations, and empower employees – because engaged employees are crucial in order to achieve the best results. This Gallup study reveals that approximately 85 percent of employees worldwide are performing below their potential due to engagement issues.

As CEOs work towards achieving these three desired outcomes, they face some critical challenges that they must address. I define the top three challenges as follows: run vs. innovate, corporate cholesterol, and digital transformation roadmap.

1. Run vs. innovate – To be successful you must prioritize the future.

The foremost challenge that CEOs are facing is how they can keep running current profitable businesses while investing in future innovations. Quite often these two conflict as most executives mistakenly prioritize the first and spend much less time on the latter. This must change. CEOs and their management teams need to spend more time thinking about what digital is for them, discuss new ideas, and reimagine the future. According to Gartner, approximately 50 percent of boards are pushing their CEOs to make progress on digital. Although this is a promising sign, digital must become a priority on every CEOs agenda.

2. Corporate cholesterol – Do not let company culture get in the way of change.

The older the company is, the more stuck it likely is with policies, procedures, layers of management, and risk averseness. When a company’s own processes get in the way of change, that is what I call “corporate cholesterol.” CEOs need to change the culture, encourage cross-team collaborations, and bring in more diverse thinking to reduce the cholesterol levels. In fact, both Mckinsey and Capgemini conclude that culture is the number-one obstacle to digital effectiveness.

3. Digital transformation roadmap – Digital transformation is a journey without a destination.

Many CEOs struggle with their digital roadmap. Questions like: Where do I start? Can a CDO or another executive run this innovation for me? What is my three- to five-year roadmap? often come up during the conversations. Most companies think that there is a set roadmap, or a silver bullet, for digital transformation, but that is not the case. Digital transformation is a journey without a destination, and each company must start small, acquire the necessary skills and knowledge, and continue to innovate.

It is time to face the digital reality and make it a priority. According to KPMG, 70 percent to 80 percent of CEOs believe that the next three years are more critical for their company than the last fifty. And there is good reason to worry, as 75 percent of S&P 500 companies from 2012 will be replaced by 2027 at the current disruption rate.

Download this short executive document. 

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Dr. Chakib Bouhdary

About Dr. Chakib Bouhdary

Dr. Chakib Bouhdary is the Digital Transformation Officer at SAP. Chakib spearheads thought leadership for the SAP digital strategy and advises on the SAP business model, having led its transformation in 2010. He also engages with strategic customers and prospects on digital strategy and chairs Executive Digital Exchange (EDX), which is a global community of digital innovation leaders. Follow Chakib on LinkedIn and Twitter