Integration: The Key To Digitizing Procurement Processes

Vasudha Karanam

People in procurement, supply chain, and finance functions often choose the best software for their individual responsibilities so they can take advantage of the innovative capabilities it has to offer. However, this creates challenges for IT – with different systems for different but related functions across the organization.

What’s more, IT is also increasingly dealing with transitions from on-premise to cloud solutions, along with the need to manage multiple cloud or hybrid infrastructures. Add in the rapid adoption of business networks to extend procurement processes for collaboration with partners and suppliers, and the IT challenges become even more complex.

For IT staff, all of this can seem daunting, as they must deal with fragmented data; disrupted, inefficient processes; multiple sources of truth; and inconsistent communication. So what’s an IT organization to do?

Striving for excellence, despite the challenges

IT departments work diligently to integrate disparate solutions into their existing infrastructures so they can provide a unified user experience.

This also holds true for companies that want to truly realize the benefits of digitizing procurement processes, and in particular, business networks. A seamless integration between cloud-based solutions and existing infrastructures is key to driving performance, speed, agility, visibility, and control.

Simplifying the path for business networks

For procurement, supply chain, and finance functions, business commerce networks have become an integral part of how companies manage their buying, selling, and supply chain management processes. With more and more buyers and suppliers joining these networks, IT must find an integration path that is scalable and empowering. The optimal option is an underlying integration process that provides self-service capabilities which are simple enough for organizations to quickly navigate on their own.

In fact, simple, self-service, and fast are three core requirements for innovative, best-in-class integration solutions. Here’s why:

  • Simple: Buyers and suppliers want an easy-to-use integration setup that guides them through the process step by step with a single sign-on.
  • Self-service: People who use business commerce networks regularly want a user-friendly interface so they can configure, test, and deploy the solution quickly, without any need for outside help.
  • Fast: Speed is also key for users that want to get into production rapidly. Integration that can be completed within hours is ideal.

Solutions with these advantages allow suppliers to interact with multiple customers by connecting just once, with a single configuration for all customers. With greater visibility into a single source of truth, suppliers can make more informed and confident decisions.

Ultimately, this leads to a faster market-to-cash cycle, greater order and invoice accuracy, lower processing costs, and higher customer satisfaction. And integration processes like this alleviate the burden on IT, which saves time and money for the organization overall.

To learn more about how to digitize and integrate your procurement processes, join SAP for an informative Webinar on simplifying integration on June 29. You’ll also hear from our customer, Devon Energy, on the benefits of integrating procurement, supply chain, and finance operations into a single source of truth. Register now.


Vasudha Karanam

About Vasudha Karanam

Vasudha Karanam is an IT/Platform product marketer with SAP Ariba. With over 11 years of experience in IT, she has spent the last 8 years focused on the procurement solutions sector. She is actively involved in creating product marketing strategies for IT/Platform solutions. She is responsible for integrated marketing plans, growth initiatives, and go-to-market plans for IT/Platform solutions from SAP Ariba. Vasudha was previously responsible for various roles including marketing release readiness and business analytics for SAP Ariba sales and marketing. She holds an MBA from Birmingham City University, UK.

Seven Questions To Ask Before Hiring A Managed Service Provider

Daniel Newman

There’s a lot to keep track of in today’s IT departments, and many businesses are hiring managed service providers (MSPs) to help lessen the load. But are they really necessary? And what value do they really bring to the business table? If you’re currently considering partnering with an MSP to support your company’s digital transformation, be sure to ask the following questions before signing on the dotted line.

How does this MSP help drive my business goals?

Face it: Technology is sexy. There’s a huge pressure on all businesses right now to adopt every new fad and fashion that comes along in the name of tech advancement. But at the end of the day, every investment you make in technology needs to support your specific business goals and vision to be worth the cost associated with it. Before choosing an MSP, be sure to outline your short- and long-term business objectives to ensure that the chosen MSP will help you grow both.

Is the ROI substantial?

Some companies see the immediate cost savings associated with MSPs and assume an improved bottom line is enough. I’d argue that’s only part of the equation. Lots of MSPs can save you money in the short term. But if they can’t grow with you—innovate alongside you—and help you grow in your own way, they may not be worth the investment. Be sure to research how the MSP will help you innovate and advance your business processes—creating more efficient workflows, etc.—before making a commitment.

How will the MSP help optimize, rather than just clean up our mess?

Do you have a tech mess on your hands right now? Is that what’s driving you to seek out an MSP? If so, you aren’t alone. The sheer overwhelming and exhausting task of working through the digital transformation is enough to make any business cry “uncle!” and reach out for help. Still, taking a mess off your IT team’s hands is not enough. Your MSP should be helping you make more—do more—achieve more—than you’re able to do on your own. That’s the benefit of technology—cloud—managed as a service (aaS).

How compatible is it in the long term?

The MSP you choose needs to be compatible now, but also in the long term. It needs to offer bigger and better services than what you currently require because someday you’ll be bigger and better yourself. Choosing a small company isn’t bad. But they need to have a big vision—and one you can count on into the future.

How innovative is the MSP team?

You know how fast things are moving in the digital landscape. As important as it is for our own companies to embrace continuous learning of new trends and innovations in the marketplace, it’s equally or more important for our MSPs. When we choose an MSP, we’re relying on them to take the reins on a chosen tech service. We’re counting on them to be up on changes, improvements, enhancements, and service options available in the greater tech community. We need them to be in-the-know—not just content with the services they currently offer. And, we need them to keep us informed of those new services and innovations as soon as they become available so we can start taking advantage of them if they’re a good fit.

Who is supporting me? 

There is nothing worse than partnering with an MSP, only to find that they have no help desk, their email support is a black hole, and their chatbot is always frozen. Before you partner with an MSP, be sure to understand exactly who will be supporting you. Will it be a team of trained engineers available 24/7? A team of chatbots? A call center with limited hours? How long does it take to respond or fix an issue? If possible, get references and ask them how the support has been. Don’t take the MSP’s word for it. Your company is too valuable not to do your due diligence.

What kind of SLA is available?

Last but not least, make sure you’re 100% on board with your MSP’s service-level agreement (SLA). Is it flexible? Does it hold the MSP accountable for support—in a timely manner? Does it allow you to grow, or keep you locked into a certain level of support? Or will you need a new MSP once you expand? It’s important to fully understand the finest details of the SLA before choosing your MSP partner.

Tech trends don’t become trends unless they hold at least some inherent value. MSPs can be incredibly valuable to your business if utilized well. But as with any trend, it’s possible to fall for the lure of the bandwagon, rather than following your true business goals. The questions above will help guide you in making the right—smart—MSP decision.

Additional Articles on This Topic:

This article originally appeared on Future of Work.


Daniel Newman

About Daniel Newman

Daniel Newman serves as the Co-Founder and CEO of EC3, a quickly growing hosted IT and Communication service provider. Prior to this role Daniel has held several prominent leadership roles including serving as CEO of United Visual. Parent company to United Visual Systems, United Visual Productions, and United GlobalComm; a family of companies focused on Visual Communications and Audio Visual Technologies. Daniel is also widely published and active in the Social Media Community. He is the Author of Amazon Best Selling Business Book "The Millennial CEO." Daniel also Co-Founded the Global online Community 12 Most and was recognized by the Huffington Post as one of the 100 Business and Leadership Accounts to Follow on Twitter. Newman is an Adjunct Professor of Management at North Central College. He attained his undergraduate degree in Marketing at Northern Illinois University and an Executive MBA from North Central College in Naperville, IL. Newman currently resides in Aurora, Illinois with his wife (Lisa) and his two daughters (Hailey 9, Avery 5). A Chicago native all of his life, Newman is an avid golfer, a fitness fan, and a classically trained pianist

Taking The Sting Out Of Dealing With Outdated Custom Code

Carl Dubler

Part 2 in the “Journey to Intelligent ERP” series

It seems that many IT folks would rather have a tooth extracted than come to grips with their custom code.

This is understandable since they are often the custodians of an ERP system that’s been tweaked and adapted over the course of a decade or two. With no clear insight into the scale of the problem, dealing with custom code can seem daunting. Where to begin? Hence, they put off their ERP modernization projects. Meanwhile, the business suffers from its inability to increase agility, just as IT continues to be stuck with overly complex operations.

Adapting incompatible code doesn’t have to hurt

However, evaluating and adapting custom code can be less intimidating than it might seem. Here’s an example: One SAP customer, preparing to upgrade to a next-generation ERP solution, discovered tens of thousands of custom objects and source code items within its ERP system. IT staff were apprehensive about how much work would be involved. And when a readiness-check tool identified more than 4,000 objects incompatible with the new solution, this seemed like an impossible task.

However, using the tool, the team found that they could overcome about half of those problems with a simple fix to the material number field length. About a quarter of the issues were fixed with database views in the new ERP application that mimic the existing ERP structure. The rest required some changes to the code to account for new data models and performance improvements.

Making modernization a key strategic initiative

A key factor that helped motivate the IT team to deal with custom code adaption was the engagement of the CIO, who made the project a strategic priority. For this leading European manufacturer, a high-end brand with worldwide retail distribution, staying current with technology is intrinsic to its business model.

While the team was initially dismayed by the report of thousands of required adaptions, they actually finished this part of the project in a matter of weeks and quickly moved on to the main objective. Now, with a next-generation, intelligent ERP solution in place, the company is on its way toward streamlined processes, faster and better-informed decision-making, and improved business agility. It all began by taking a simple inventory of custom code.

Ensuring custom-code hygiene going forward

Like visiting the dentist, custom-code hygiene is less scary the more frequently you do it. By continually assessing custom code and avoiding it where possible, the next upgrade or innovation will be a lot easier.

A number of valuable tools are available to help you establish a healthy regimen. Most ERP solutions offer usage and procedure logging functionality that logs the use of custom code over time. Tools like these show you which custom code is critical for operations to help you make informed decisions about what needs to stay and where you should return to standard. Recent figures indicate that 65% of custom code objects are no longer in use and only 23% support critical business processes.*

What if standard functionality still isn’t enough?

When you do identify code that is no longer necessary, there are even custom code lifecycle management tools that help with decommissioning. However, if you still need custom development, consider doing that in a cloud development platform. This keeps future customizations out of the way when updates are done, makes them more useful across cloud and on-premise deployments, and allows you to take advantage of the latest technologies and commoditized infrastructure.

In the next blog, we’ll look at how the cloud can accelerate your journey to intelligent ERP. In the meantime, read more here about the SAP Readiness Check tool for SAP S/4HANA. You can also learn more by reading the SAP S/4HANA Journey Guide. 

* Based on continuous quality check data for solution transition assessment and custom code services


Carl Dubler

About Carl Dubler

Carl Dubler is a senior director of Product Marketing for SAP S/4HANA. With an IT career stretching back to the late 1980s, he has done nearly every role in the business. In his ten years at SAP, he also managed SAP’s first commercially available cloud product and first cloud product on SAP HANA.

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.



Why Blockchain Is Crucial For FP&A: Part 1

Brian Kalish

Part 17 in the Dynamic Planning Series

In these times of almost continuous technological change, there is a natural tendency to be suspect of whatever is being heralded as the “flavor of the month” or the “next best bet.” In early 2017, I was graciously given the opportunity to speak on what I believed to be the technologies that were transforming finance and specifically, the FP&A function. The talk I ended up giving covered five areas:

  • Advanced analytics and forecasting
  • Robotic process automation
  • Cloud and Software-as-a-Service
  • Artificial intelligence
  • Blockchain

While all these topics deserve further investigation, for this article, I want to focus on blockchain. Part of the reason for diving deeper into blockchain is the lack of understanding of what it actually is and the great amount of time people in the finance function are currently spending talking about it. This has greatly changed in the past nine months.

Last March, while hosting an FP&A Roundtable in Boston, I ask a group of 25 senior FP&A professionals how familiar they were with the concept of blockchain. Out of this august group, there was only one participant who felt truly comfortable with the concept. I still get asked on a regular basis, all over the world, “Blockchain. What is it?”

Blockchain: What is it?

By allowing digital information to be distributed but not copied, blockchain technology has created the spine of a new type of Internet. Picture a spreadsheet that is duplicated thousands of times across a network of computers. Now imagine that this network is designed to regularly update this spreadsheet, and you have a basic understanding of blockchain.

Information held on a blockchain exists as a shared and continually reconciled database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly transparent and easily verifiable. No centralized version of this information exists for someone to corrupt. Hosted by many computers simultaneously, its data is accessible to any authorized user.

Blockchain technology is like the Internet in that it has a built-in robustness. By storing blocks of information that are identical across its network, the blockchain 1) cannot be controlled by any single entity and 2) has no single point of failure. The Internet itself has proven to be durable for almost 30 years. It’s a track record that bodes well for blockchain technology as it continues to be developed.

A self-auditing ecosystem

The blockchain network lives in a state of consensus, one that automatically checks in with itself on a regular basis. A kind of self-auditing ecosystem of a digital value, the network reconciles every transaction that happens at regular intervals. Each group of these transactions is referred to as a “block.” Two important properties result from this:

Transparency. Data is embedded within the network as a whole, and by definition, is available to all authorized users.

Incorruptibility. Altering any unit of information on the blockchain would mean using a huge amount of computing power to override the entire network. In theory, it is possible; however, in practice, it’s unlikely to happen.

A decentralized technology

By design, the blockchain is a decentralized technology, so anything that happens on it is a function of the network as a whole. Some important implications stem from this. By creating a new way to verify transactions, aspects of traditional commerce may become unnecessary.

Today’s Internet has security problems that are familiar to everyone. However, by storing data across its network, the blockchain eliminates the risks that come with data held centrally. There are no centralized points of vulnerability that can be exploited. In addition, while we all currently rely on the “username/password” system to protect our identity and assets online, blockchain security methods use encryption technology.

I hope this little tutorial helps describe what blockchain is. In my next article, I’ll discuss the value of blockchain to the FP&A profession.

For more on this topic, read the two-part “Blockchain and the CFO” series and “When Blockchain Fulfills CFOs’ Paperless Vision.”

2018 will be a busy year with FP&A Roundtables in St. Louis, Charlotte, Atlanta, San Diego, Las Vegas, London, Boston, Minneapolis, DFW, San Francisco, Hong Kong, Jeddah, and many other locations around the world to support the global FP&A community.

Follow SAP Finance online: @SAPFinance (Twitter)  | LinkedIn | FacebookYouTube


Brian Kalish

About Brian Kalish

Brian Kalish is founder and principal at Kalish Consulting. As a public speaker and writer addressing many of the most topical issues facing treasury and FP&A professionals today, he is passionately committed to building and connecting the global FP&A community. He hosts FP&A Roundtable meetings in North America, Europe, Asia, and South America. Brian is former executive director of the global FP&A Practice at AFP. He has over 20 years experience in finance, FP&A, treasury, and investor relations. Before joining AFP, he held a number of treasury and finance positions with the FHLB, Washington Mutual/JP Morgan, NRUCFC, Fifth Third Bank, and Fannie Mae. Brian attended Georgia Tech in Atlanta, GA for his undergraduate studies and the Pamplin College of Business at Virginia Tech for his graduate work. In 2014, Brian was awarded the Global Certified Corporate FP&A Professional designation.