Engaging Digital Experiences: The Key To App Adoption

Eric Solberg

Building a technically perfect application that no one uses is a hard lesson for an IT team. It’s not good enough to have applications that are robust, secure, and scalable; applications must also be useful. For an enterprise application to maximize user adoption and establish long-term success, IT must deliver an end-user experience similar to those found in consumer applications. User-centered design practices are ideal for delivering modern and engaging user experiences (UX) at the enterprise level. While the term UX has been around for years, the concept of “digital experience” has evolved over the past year with the advancement and consolidation of UX, design, mobility, collaboration, and content services in the cloud.

Application designers strive to create a digital experience that leaves users feeling connected to an organization. Whether an application provider is a startup, a small business, or a large enterprise, when an effective and engaging UX is embraced, users develop trust in the brand.

Every enterprise IT department is an application provider. Every interaction between an enterprise and an employee, business partner, or end user has the potential to generate revenue, decrease costs, and achieve strategic business goals. Improperly designed, these digital experiences can also lead to dissatisfaction, inefficiency, and increased costs. When complex applications add friction to tasks that drive your business, users will either stop using the application or use it in an unproductive way.

Business end users have come to expect a superior UX, and enterprise designers have few excuses for not getting it right.

How to improve the digital experience

Ensuring that solutions are mobile-enabled is key for an improved digital experience. Simple, task-oriented applications are a good place to start for mobile enablement as they demonstrate quick value to a wide segment of enterprise users. These applications usually need to run on multiple mobile devices and tend to favor prebuilt apps, micro-apps, and hybrid app architectures that leverage HTML5 and responsive design. Some organizations prefer to focus on fully mobile-enabling a specific process or job function by designing and building rich and sophisticated applications from the ground up.

Desktop digital experiences can easily be optimized by applying a modern-styled rendering layer – that leverages Web or mobile delivery – over classic user interface (UI) technologies. Cloud-based enterprise portal and content management services can also modernize the enterprise UX for both internal and external users. A modern enterprise portal provides one-stop access to updated and new applications, and composite or mash-up applications that orchestrate interactions with core enterprise processes in new ways. It is a much leaner and more flexible portal approach than the monolithic employee portals familiar to many enterprise users.

A digital experience that combines mobile, portal, and other channels of engagement places the focus on the long-term customer relationship as opposed to one transactional interaction. Add in Big Data and machine learning technologies, and a highly contextualized digital experience can be achieved to meet user needs and expectations.

A digital experience that incrementally engages with a user across devices and locations often incorporates information collected from connected devices (IoT), allowing for seamless integration between people and machines. Digital experiences may also leverage new channels and modes of interaction, including automated chat bots and virtual private assistants that augment or completely replace traditional application interactions.

An effective strategy for application innovation places the user at the center to deliver a superior digital experience across multiple mobile, portal, and IoT channels. To achieve this strategy, every organization requires an agile platform that facilitates innovation by providing tools and services that fully support iterative and collaborative design, development, test, deployment, and measurement phases of your application lifecycle. This agile platform is known as the cloud platform.

The creation of innovative and useful cloud applications is about more than providing users with an engaging digital experience. It’s about redefining the role of IT to treat every enterprise business process interaction as an opportunity to exceed user expectations and to grow the brand value of your organization.

For more on digital experience, visit SAP Cloud Platform.

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About Eric Solberg

Eric Solberg is a product manager for the SAP User Experience Platform and has been with SAP for about 12 years, delivering platform technologies. Eric has 20+ years of industry experience as a full-stack developer, software architect, development manager, and technology leader from startups to leading enterprise software companies prior to joining SAP. Eric got his start in Southern California, then moved to Silicon Valley as the Internet was exploding on the scene in the late 90s. Outside of work, Eric is a passionate hobbyist in the maker community – tinkering with anything that involves cool technology, and enjoys home wine making and gourmet cooking.

The Marriage Of Big Data And Enterprise Data

Ella Brand

Data is flowing and the volume is growing. With the massive generation of information from the advent of the Internet and the increasing digitalization of business, there is tremendous opportunity in the new amounts and types of data collected. But this data explosion has also dramatically increased the complexity of the enterprise data landscape, with multiple data lakes, data warehouses, operational applications, e-commerce, online interactions, and so on.

As stated by Gartner’s Ted Friedman in a recent paper*: “Organizations struggle to design a business-relevant infrastructure that is both effective and efficient at mediating differing semantics (e.g., governance) to support data sharing and integration.” You know you have a data landscape management problem when:

  • Your data is kept in silos (files, Hadoop, data warehouses) across the enterprise.
  • Your user groups can’t access and work with data according to their needs.
  • You face organizational boundaries between IT (Big Data vs. enterprise data), as well as lines of business.

Complex problems require complex solutions

Why not just put all the data into one massive, super data lake? That’s what the Hadoop distribution providers want you to do. But as the satirist H. L. Mencken said, “For every complex problem there is an answer that is clear, simple, and wrong.”

Big Data technologies lack enterprise governance, holistic lifecycle management, and security concepts. These providers are just coming up the curve and trying to provide the level of enterprise governance and security that enterprise data warehouse and database providers have been delivering for their offerings for years.

That means that organizations are stuck with limited tools for integrating systems and creating data pipelines. As a result, it takes a lot of effort to create a data pipeline across the enterprise, including:

  • High investment in resources and many non-integrated technologies, such as Hadoop, Spark, Kafka, MongoDB, Cassandra, and so on, is needed to address the business needs.
  • Integration effort usually prevents business value creation.

Some companies have tried to solve these issues by maintaining two sets of data: one for transactions and one for analysis. But this is not only costly and inefficient; it also leads to discrepancies because it’s hard to keep them in sync. And discrepancies lead to inaccurate analytical outcomes, with the obvious negative impact on decision-making.

Challenges of data landscape and DataOps management

Better meeting the needs of business and the fast pace of today’s demands means that the landscape needs to overcome the following three challenges:

  1. Governance

We face the lack of visibility, and ask: Who changed the data? What was changed? Who is accessing it?

  1. Data pipeline

It is difficult to refine and enrich data across multiple systems. For example, this might involve improving the value of existing data by appending information, such as connecting sensor data with the asset ID and asset profile information, held in a different system.

  1. Data sharing

Unfortunately, integration is manual, point-to-point, painful, and slow. Changing an integration point usually depends on the agility and flexibility of the IT line.

A modern data landscape management strategy

The solution to better address these challenges would be a data landscape and DataOps management solution that enables agile data operations across the enterprise, and also enables data governance, pipelining, and sharing of all data in the connected landscape.

The vision should be to provide the ability to understand, connect, and drive processes across the multiple data sources and endpoints with which the enterprise struggles today. By providing visibility into the landscape of data opportunities, as well as providing an easy way to connect data sources and create powerful data pipelines that hop across the landscape, businesses would be able to better achieve the data agility and business value that they seek.

Want to learn about how SAP faces these data landscape and DataOps management challenges, and what the future Big Data warehousing is about? Then register for the upcoming Webinar on November 28 at 11:00 a.m. ET/17:00 p.m. CET. You’ll hear from Marc Hartz, product manager of SAP Data Hub. See you there!

*Gartner, Use a Data Hub Strategy to Meet Your Data and Analytics Governance and Sharing Requirements, Andrew White, Ted Friedman, 2 February 2017

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Ella Brand

About Ella Brand

Ella Brand is the product marketing lead for SAP Data Hub with expertise and a general focus on analytics and Big Data solutions.

Content Management: The Surprisingly Obvious Starting Point For Digital Transformation

Bil Khan

Part 2 in the Content Management ROI series

Digital transformation is quickly rising to the top of the business agenda. Across nearly all industries, executives fear being outperformed by digital competitors. Some see the potential for breakthrough opportunities made possible through advances in digital technologies. The writing is on the wall: Digital innovators are redefining long-established business models, turning competitive landscapes upside-down, and rendering obsolete the value propositions of established products and services.

There are all kinds of studies and papers and examples focusing on how to drive digital transformation. But the challenge for most organizations is where to start. It can take time to develop the right strategy, get it approved at the board level, secure budgets, and start the implementation and change management program. Digital transformation initiatives can require far-reaching changes – including organizational structures, processes, resources, culture and values – and related networks.

The problem is that there’s no time to waste. Companies need to get started today, because by the time external pressures make apparent the need to shift strategy, it could be too late.

The question is, how?

Start simple – and start now – with ECM

Here’s an idea: While you’re busy creating your digital strategy and securing resources, lay the foundation with an enterprise content management (ECM) solution that prepares your unstructured content for use by a digitally transformed enterprise. Unstructured content includes everything from emails and attachments to Microsoft Office files, videos, CAD drawings, claims, medical notes and test reports, call center records, and recorded phone conversations. These assets contain critical information that core systems cannot capture, and yet are critical to day-to-day operations and processes. In addition, they can yield valuable insights and can be shared with partners to facilitate closer collaboration, automation, transparency, and efficiency.

Increasingly, our customers understand that if they are serious about digital transformation, they need a strategy for handling this unstructured content. 80% is a huge proportion of your information to have trapped in silos, disconnected and inaccessible for analysis or reuse within digitally transformed processes. In fact, I believe it’s impossible to realize the full benefit of digital transformation initiatives without a strategy for unstructured content. It’s essential to having an intelligent, digital, touchless end-to-end processes.

A real-world example

To illustrate, let’s consider a real-world example: invoice processing. Traditionally, it’s a very high-touch process that costs the average organization US$12.90 for every invoice.

Why so much? Think about how many invoices come into organizations as email attachments. Each attachment must be manually opened, reviewed, approved, and funneled to accounts payable for check creation, distribution, and recording in the general ledger. As long as invoices are unstructured documents – with the actual data locked up in the attachment – the degree to which this process can be digitally transformed is minimal.

Enter ECM, which can extract the data in email attachments instantly – as they flow into email inboxes – so that it can flow automatically to a “smart” system for automated invoice processing. Now network business rules alert suppliers about errors and prevent incorrect invoices from entering your process workflow or back-end system at all. And if the invoice data does match what’s in the system, payment is handled in an automated, 100% touchless process.

Think less complexity, more strategy, and lightning-fast processing that can dramatically lower costs. And instead of spending time handling paper, exceptions, and phone calls, your AP team can focus on more strategic pursuits such as helping to free up cash and optimize working capital. You can also benefit from:

  • Accelerated cycle time
  • Automated exception-handling
  • Stronger compliance with internal and regulatory policies
  • Reduced savings leakage
  • Supplier visibility into payment status
  • Improved cash flow for your suppliers
  • Automated capture of negotiated terms

ECM is foundational to enabling smart, automated invoice management – and this is just one example of the many business processes in which unstructured content is involved.

Reap immediate benefits – then more

Introducing an ECM solution is the fastest, easiest way to begin executing on your digital strategy. Start by transforming unstructured content, freeing it from silos so that it can flow where you need it to go for analysis and reuse. You can even extend ECM through digital and mobile processes to supply chain partners and employees on the go. In other words, ECM prepares all your content for use within a digitally transformed business.

Meanwhile, as I pointed out in Part 1 of this blog series, you can reap huge cost savings along the way. Read the Forrester FEI report for more information.

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Tick Tock: Start Preparing for Resource Disruption

By Maurizio Cattaneo, Joerg Ferchow, Daniel Wellers, and Christopher Koch

Businesses share something important with lions. When a lion captures and consumes its prey, only about 10% to 20% of the prey’s energy is directly transferred into the lion’s metabolism. The rest evaporates away, mostly as heat loss, according to research done in the 1940s by ecologist Raymond Lindeman.

Today, businesses do only about as well as the big cats. When you consider the energy required to manage, power, and move products and services, less than 20% goes directly into the typical product or service—what economists call aggregate efficiency (the ratio of potential work to the actual useful work that gets embedded into a product or service at the expense of the energy lost in moving products and services through all of the steps of their value chains). Aggregate efficiency is a key factor in determining productivity.

After making steady gains during much of the 20th century, businesses’ aggregate energy efficiency peaked in the 1980s and then stalled. Japan, home of the world’s most energy-efficient economy, has been skating along at or near 20% ever since. The U.S. economy, meanwhile, topped out at about 13% aggregate efficiency in the 1990s, according to research.

Why does this matter? Jeremy Rifkin says he knows why. Rifkin is an economic and social theorist, author, consultant, and lecturer at the Wharton School’s Executive Education program who believes that economies experience major increases in growth and productivity only when big shifts occur in three integrated infrastructure segments around the same time: communications, energy, and transportation.

But it’s only a matter of time before information technology blows all three wide open, says Rifkin. He envisions a new economic infrastructure based on digital integration of communications, energy, and transportation, riding atop an Internet of Things (IoT) platform that incorporates Big Data, analytics, and artificial intelligence. This platform will disrupt the world economy and bring dramatic levels of efficiency and productivity to businesses that take advantage of it,
he says.

Some economists consider Rifkin’s ideas controversial. And his vision of a new economic platform may be problematic—at least globally. It will require massive investments and unusually high levels of government, community, and private sector cooperation, all of which seem to be at depressingly low levels these days.

However, Rifkin has some influential adherents to his philosophy. He has advised three presidents of the European Commission—Romano Prodi, José Manuel Barroso, and the current president, Jean-Claude Juncker—as well as the European Parliament and numerous European Union (EU) heads of state, including Angela Merkel, on the ushering in of what he calls “a smart, green Third Industrial Revolution.” Rifkin is also advising the leadership of the People’s Republic of China on the build out and scale up of the “Internet Plus” Third Industrial Revolution infrastructure to usher in a sustainable low-carbon economy.

The internet has already shaken up one of the three major economic sectors: communications. Today it takes little more than a cell phone, an internet connection, and social media to publish a book or music video for free—what Rifkin calls zero marginal cost. The result has been a hollowing out of once-mighty media empires in just over 10 years. Much of what remains of their business models and revenues has been converted from physical (remember CDs and video stores?) to digital.

But we haven’t hit the trifecta yet. Transportation and energy have changed little since the middle of the last century, says Rifkin. That’s when superhighways reached their saturation point across the developed world and the internal-combustion engine came close to the limits of its potential on the roads, in the air, and at sea. “We have all these killer new technology products, but they’re being plugged into the same old infrastructure, and it’s not creating enough new business opportunities,” he says.

All that may be about to undergo a big shake-up, however. The digitalization of information on the IoT at near-zero marginal cost generates Big Data that can be mined with analytics to create algorithms and apps enabling ubiquitous networking. This digital transformation is beginning to have a big impact on the energy and transportation sectors. If that trend continues, we could see a metamorphosis in the economy and society not unlike previous industrial revolutions in history. And given the pace of technology change today, the shift could happen much faster than ever before.

The speed of change is dictated by the increase in digitalization of these three main sectors; expensive physical assets and processes are partially replaced by low-cost virtual ones. The cost efficiencies brought on by digitalization drive disruption in existing business models toward zero marginal cost, as we’ve already seen in entertainment and publishing. According to research company Gartner, when an industry gets to the point where digital drives at least 20% of revenues, you reach the tipping point.

“A clear pattern has emerged,” says Peter Sondergaard, executive vice president and head of research and advisory for Gartner. “Once digital revenues for a sector hit 20% of total revenue, the digital bloodbath begins,” he told the audience at Gartner’s annual 2017 IT Symposium/ITxpo, according to The Wall Street Journal. “No matter what industry you are in, 20% will be the point of no return.”

Communications is already there, and energy and transportation are heading down that path. If they hit the magic 20% mark, the impact will be felt not just within those industries but across all industries. After all, who doesn’t rely on energy and transportation to power their value chains?

The eye of the technology disruption hurricane has moved beyond communications and is heading toward … the rest of the economy.

That’s why businesses need to factor potentially massive business model disruptions into their plans for digital transformation today if they want to remain competitive with organizations in early adopter countries like China and Germany. China, for example, is already halfway through an US$88 billion upgrade to its state electricity grid that will enable renewable energy transmission around the country—all managed and moved digitally, according to an article in The Economist magazine. And it is competing with the United States for leadership in self-driving vehicles, which will shift the transportation process and revenue streams heavily to digital, according to an article in Wired magazine.

Once China’s and Germany’s renewables and driverless infrastructures are in place, the only additional costs are management and maintenance. That could bring businesses in these countries dramatic cost savings over those that still rely on fossil fuels and nuclear energy to power their supply chains and logistics. “Once you pay the fixed costs of renewables, the marginal costs are near zero,” says Rifkin. “The sun and wind haven’t sent us invoices yet.”

In other words, zero marginal cost has become a zero-sum game.

To understand why that is, consider the major industrial revolutions in history, writes Rifkin in his books, The Zero Marginal Cost Society and The Third Industrial Revolution. The first major shift occurred in the 19th century when cheap, abundant coal provided an efficient new source of power (steam) for manufacturing and enabled the creation of a vast railway transportation network. Meanwhile, the telegraph gave the world near-instant communication over a globally connected network.

The second big change occurred at the beginning of the 20th century, when inexpensive oil began to displace coal and gave rise to a much more flexible new transportation network of cars and trucks. Telephones, radios, and televisions had a similar impact on communications.

Breaking Down the Walls Between Sectors

Now, according to Rifkin, we’re poised for the third big shift. The eye of the technology disruption hurricane has moved beyond communications and is heading toward—or as publishing and entertainment executives might warn, coming for—the rest of the economy. With its assemblage of global internet and cellular network connectivity and ever-smaller and more powerful sensors, the IoT, along with Big Data analytics and artificial intelligence, is breaking down the economic walls that have protected the energy and transportation sectors for the past 50 years.

Daimler is now among the first movers in transitioning into a digitalized mobility internet. The company has equipped nearly 400,000 of its trucks with external sensors, transforming the vehicles into mobile Big Data centers. The sensors are picking up real-time Big Data on weather conditions, traffic flows, and warehouse availability. Daimler plans to establish collaborations with thousands of companies, providing them with Big Data and analytics that can help dramatically increase their aggregate efficiency and productivity in shipping goods across their value chains. The Daimler trucks are autonomous and capable of establishing platoons of multiple trucks driving across highways.

It won’t be long before vehicles that navigate the more complex transportation infrastructures around the world begin to think for themselves. Autonomous vehicles will bring massive economic disruption to transportation and logistics thanks to new aggregate efficiencies. Without the cost of having a human at the wheel, autonomous cars could achieve a shared cost per mile below that of owned vehicles by as early as 2030, according to research from financial services company Morgan Stanley.

The transition is getting a push from governments pledging to give up their addiction to cars powered by combustion engines. Great Britain, France, India, and Norway are seeking to go all electric as early as 2025 and by 2040 at the latest.

The Final Piece of the Transition

Considering that automobiles account for 47% of petroleum consumption in the United States alone—more than twice the amount used for generators and heating for homes and businesses, according to the U.S. Energy Information Administration—Rifkin argues that the shift to autonomous electric vehicles could provide the momentum needed to upend the final pillar of the economic platform: energy. Though energy has gone through three major disruptions over the past 150 years, from coal to oil to natural gas—each causing massive teardowns and rebuilds of infrastructure—the underlying economic model has remained constant: highly concentrated and easily accessible fossil fuels and highly centralized, vertically integrated, and enormous (and enormously powerful) energy and utility companies.

Now, according to Rifkin, the “Third Industrial Revolution Internet of Things infrastructure” is on course to disrupt all of it. It’s neither centralized nor vertically integrated; instead, it’s distributed and networked. And that fits perfectly with the commercial evolution of two energy sources that, until the efficiencies of the IoT came along, made no sense for large-scale energy production: the sun and the wind.

But the IoT gives power utilities the means to harness these batches together and to account for variable energy flows. Sensors on solar panels and wind turbines, along with intelligent meters and a smart grid based on the internet, manage a new, two-way flow of energy to and from the grid.

Today, fossil fuel–based power plants need to kick in extra energy if insufficient energy is collected from the sun and wind. But industrial-strength batteries and hydrogen fuel cells are beginning to take their place by storing large reservoirs of reserve power for rainy or windless days. In addition, electric vehicles will be able to send some of their stored energy to the digitalized energy internet during peak use. Demand for ever-more efficient cell phone and vehicle batteries is helping push the evolution of batteries along, but batteries will need to get a lot better if renewables are to completely replace fossil fuel energy generation.

Meanwhile, silicon-based solar cells have not yet approached their limits of efficiency. They have their own version of computing’s Moore’s Law called Swanson’s Law. According to data from research company Bloomberg New Energy Finance (BNEF), Swanson’s Law means that for each doubling of global solar panel manufacturing capacity, the price falls by 28%, from $76 per watt in 1977 to $0.41 in 2016. (Wind power is on a similar plunging exponential cost curve, according to data from the U.S. Department of Energy.)

Thanks to the plummeting solar price, by 2028, the cost of building and operating new sun-based generation capacity will drop below the cost of running existing fossil power plants, according to BNEF. “One of the surprising things in this year’s forecast,” says Seb Henbest, lead author of BNEF’s annual long-term forecast, the New Energy Outlook, “is that the crossover points in the economics of new and old technologies are happening much sooner than we thought last year … and those were all happening a bit sooner than we thought the year before. There’s this sense that it’s not some distant risk or distant opportunity. A lot of these realities are rushing toward us.”

The conclusion, he says, is irrefutable. “We can see the data and when we map that forward with conservative assumptions, these technologies just get cheaper than everything else.”

The smart money, then—72% of total new power generation capacity investment worldwide by 2040—will go to renewable energy, according to BNEF. The firm’s research also suggests that there’s more room in Swanson’s Law along the way, with solar prices expected to drop another 66% by 2040.

Another factor could push the economic shift to renewables even faster. Just as computers transitioned from being strictly corporate infrastructure to becoming consumer products with the invention of the PC in the 1980s, ultimately causing a dramatic increase in corporate IT investments, energy generation has also made the transition to the consumer side.

Thanks to future tech media star Elon Musk, consumers can go to his Tesla Energy company website and order tempered glass solar panels that look like chic, designer versions of old-fashioned roof shingles. Models that look like slate or a curved, terracotta-colored, ceramic-style glass that will make roofs look like those of Tuscan country villas, are promised soon. Consumers can also buy a sleek-looking battery called a Powerwall to store energy from the roof.

The combination of solar panels, batteries, and smart meters transforms homeowners from passive consumers of energy into active producers and traders who can choose to take energy from the grid during off-peak hours, when some utilities offer discounts, and sell energy back to the grid during periods when prices are higher. And new blockchain applications promise to accelerate the shift to an energy market that is laterally integrated rather than vertically integrated as it is now. Consumers like their newfound sense of control, according to Henbest. “Energy’s never been an interesting consumer decision before and suddenly it is,” he says.

As the price of solar equipment continues to drop, homes, offices, and factories will become like nodes on a computer network. And if promising new solar cell technologies, such as organic polymers, small molecules, and inorganic compounds, supplant silicon, which is not nearly as efficient with sunlight as it is with ones and zeroes, solar receivers could become embedded into windows and building compounds. Solar production could move off the roof and become integrated into the external facades of homes and office buildings, making nearly every edifice in town a node.

The big question, of course, is how quickly those nodes will become linked together—if, say doubters, they become linked at all. As we learned from Metcalfe’s Law, the value of a network is proportional to its number of connected users.

The Will Determines the Way

Right now, the network is limited. Wind and solar account for just 5% of global energy production today, according to Bloomberg.

But, says Rifkin, technology exists that could enable the network to grow exponentially. We are seeing the beginnings of a digital energy network, which uses a combination of the IoT, Big Data, analytics, and artificial intelligence to manage distributed energy sources, such as solar and wind power from homes and businesses.

As nodes on this network, consumers and businesses could take a more active role in energy production, management, and efficiency, according to Rifkin. Utilities, in turn, could transition from simply transmitting power and maintaining power plants and lines to managing the flow to and from many different energy nodes; selling and maintaining smart home energy management products; and monitoring and maintaining solar panels and wind turbines. By analyzing energy use in the network, utilities could create algorithms that automatically smooth the flow of renewables. Consumers and businesses, meanwhile, would not have to worry about connecting their wind and solar assets to the grid and keeping them up and running; utilities could take on those tasks more efficiently.

Already in Germany, two utility companies, E.ON and RWE, have each split their businesses into legacy fossil and nuclear fuel companies and new services companies based on distributed generation from renewables, new technologies, and digitalization.

The reason is simple: it’s about survival. As fossil fuel generation winds down, the utilities need a new business model to make up for lost revenue. Due to Germany’s population density, “the utilities realize that they won’t ever have access to enough land to scale renewables themselves,” says Rifkin. “So they are starting service companies to link together all the different communities that are building solar and wind and are managing energy flows for them and for their customers, doing their analytics, and managing their Big Data. That’s how they will make more money while selling less energy in the future.”

The digital energy internet is already starting out in pockets and at different levels of intensity around the world, depending on a combination of citizen support, utility company investments, governmental power, and economic incentives.

China and some countries within the EU, such as Germany and France, are the most likely leaders in the transition toward a renewable, energy-based infrastructure because they have been able to align the government and private sectors in long-term energy planning. In the EU for example, wind has already overtaken coal as the second largest form of power capacity behind natural gas, according to an article in The Guardian newspaper. Indeed, Rifkin has been working with China, the EU, and governments, communities, and utilities in Northern France, the Netherlands, and Luxembourg to begin building these new internets.

Hauts-de-France, a region that borders the English Channel and Belgium and has one of the highest poverty rates in France, enlisted Rifkin to develop a plan to lift it out of its downward spiral of shuttered factories and abandoned coal mines. In collaboration with a diverse group of CEOs, politicians, teachers, scientists, and others, it developed Rev3, a plan to put people to work building a renewable energy network, according to an article in Vice.

Today, more than 1,000 Rev3 projects are underway, encompassing everything from residential windmills made from local linen to a fully electric car–sharing system. Rev3 has received financial support from the European Investment Bank and a handful of private investment funds, and startups have benefited from crowdfunding mechanisms sponsored by Rev3. Today, 90% of new energy in the region is renewable and 1,500 new jobs have been created in the wind energy sector alone.

Meanwhile, thanks in part to generous government financial support, Germany is already producing 35% of its energy from renewables, according to an article in The Independent, and there is near unanimous citizen support (95%, according to a recent government poll) for its expansion.

If renewables are to move forward …, it must come from the ability to make green, not act green.

If renewable energy is to move forward in other areas of the world that don’t enjoy such strong economic and political support, however, it must come from the ability to make green, not act green.

Not everyone agrees that renewables will produce cost savings sufficient to cause widespread cost disruption anytime soon. A recent forecast by the U.S. Energy Information Administration predicts that in 2040, oil, natural gas, and coal will still be the planet’s major electricity producers, powering 77% of worldwide production, while renewables such as wind, solar, and biofuels will account for just 15%.

Skeptics also say that renewables’ complex management needs, combined with the need to store reserve power, will make them less economical than fossil fuels through at least 2035. “All advanced economies demand full-time electricity,” Benjamin Sporton, chief executive officer of the World Coal Association told Bloomberg. “Wind and solar can only generate part-time, intermittent electricity. While some renewable technologies have achieved significant cost reductions in recent years, it’s important to look at total system costs.”

On the other hand, there are many areas of the world where distributed, decentralized, renewable power generation already makes more sense than a centralized fossil fuel–powered grid. More than 20% of Indians in far flung areas of the country have no access to power today, according to an article in The Guardian. Locally owned and managed solar and wind farms are the most economical way forward. The same is true in other developing countries, such as Afghanistan, where rugged terrain, war, and tribal territorialism make a centralized grid an easy target, and mountainous Costa Rica, where strong winds and rivers have pushed the country to near 100% renewable energy, according to The Guardian.

The Light and the Darknet

Even if all the different IoT-enabled economic platforms become financially advantageous, there is another concern that could disrupt progress and potentially cause widespread disaster once the new platforms are up and running: hacking. Poorly secured IoT sensors have allowed hackers to take over everything from Wi-Fi enabled Barbie dolls to Jeep Cherokees, according to an article in Wired magazine.

Humans may be lousy drivers, but at least we can’t be hacked (yet). And while the grid may be prone to outages, it is tightly controlled, has few access points for hackers, and is physically separated from the Wild West of the internet.

If our transportation and energy networks join the fray, however, every sensor, from those in the steering system on vehicles to grid-connected toasters, becomes as vulnerable as a credit card number. Fake news and election hacking are bad enough, but what about fake drivers or fake energy? Now we’re talking dangerous disruptions and putting millions of people in harm’s way.

The only answer, according to Rifkin, is for businesses and governments to start taking the hacking threat much more seriously than they do today and to begin pouring money into research and technologies for making the internet less vulnerable. That means establishing “a fully distributed, redundant, and resilient digital infrastructure less vulnerable to the kind of disruptions experienced by Second Industrial Revolution–centralized communication systems and power grids that are increasingly subject to climate change, disasters, cybercrime, and cyberterrorism,” he says. “The ability of neighborhoods and communities to go off centralized grids during crises and re-aggregate in locally decentralized networks is the key to advancing societal security in the digital era,” he adds.

Start Looking Ahead

Until today, digital transformation has come mainly through the networking and communications efficiencies made possible by the internet. Airbnb thrives because web communications make it possible to create virtual trust markets that allow people to feel safe about swapping their most private spaces with one another.

But now these same efficiencies are coming to two other areas that have never been considered core to business strategy. That’s why businesses need to begin managing energy and transportation as key elements of their digital transformation portfolios.

Microsoft, for example, formed a senior energy team to develop an energy strategy to mitigate risk from fluctuating energy prices and increasing demands from customers to reduce carbon emissions, according to an article in Harvard Business Review. “Energy has become a C-suite issue,” Rob Bernard, Microsoft’s top environmental and sustainability executive told the magazine. “The CFO and president are now actively involved in our energy road map.”

As Daimler’s experience shows, driverless vehicles will push autonomous transportation and automated logistics up the strategic agenda within the next few years. Boston Consulting Group predicts that the driverless vehicle market will hit $42 billion by 2025. If that happens, it could have a lateral impact across many industries, from insurance to healthcare to the military.

Businesses must start planning now. “There’s always a period when businesses have to live in the new and the old worlds at the same time,” says Rifkin. “So businesses need to be considering new business models and structures now while continuing to operate their existing models.”

He worries that many businesses will be left behind if their communications, energy, and transportation infrastructures don’t evolve. Companies that still rely on fossil fuels for powering traditional transportation and logistics could be at a major competitive disadvantage to those that have moved to the new, IoT-based energy and transportation infrastructures.

Germany, for example, has set a target of 80% renewables for gross power consumption by 2050, according to The Independent. If the cost advantages of renewables bear out, German businesses, which are already the world’s third-largest exporters behind China and the United States, could have a major competitive advantage.

“How would a second industrial revolution society or country compete with one that has energy at zero marginal cost and driverless vehicles?” asks Rifkin. “It can’t be done.” D!


About the Authors

Maurizio Cattaneo is Director, Delivery Execution, Energy and Natural Resources, at SAP.

Joerg Ferchow is Senior Utilities Expert and Design Thinking Coach, Digital Transformation, at SAP.

Daniel Wellers is Digital Futures Lead, Global Marketing, at SAP.

Christopher Koch is Editorial Director, SAP Center for Business Insight, at SAP.


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

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IDC 2018 Predictions: If You’re Not In The Cloud, You’re Isolated From Innovation

Susan Galer

IDC Research just released its top ten 2018 predictions, outlining why every company must operate like a digital-native enterprise. Frank Gens, IDC senior vice president and chief analyst, shared an expansive to-do list for CEOs, line-of-business and IT organizations during a webinar entitled, “IDC FutureScape: Worldwide IT Industry 2018 Predictions.”  His central message was that business is rapidly entering the Cloud 2.0 phase where public cloud is the best and increasingly only platform that every company’s ecosystem will use to hyper-connect industries for accelerated digital transformation journeys with technologies like AI, machine learning, IoT, augmented reality (AR), virtual reality (VR), and blockchain.

“Companies must re-architect operations around large-scale digital innovation networks, in effect becoming a new corporate species. We’re going to see a massive jump in the number of digital services and the pace of innovation. This is the ticking clock running inside the heads of CEOs in every industry, driving them quickly along digital transformation journeys,” said Gens. “Cloud everywhere for everything is what we’re likely to see over the next several years. Companies need to assess their cloud supplier’s ability to support an expanding range of use cases. If you’re not in the cloud, you’re isolated from innovation.”

These are IDC’s top ten 2018 IT predictions:

  1. By 2021, at least 50 percent of global GDP will be digitized, with growth driven by digitally-enhanced offerings, operations and relationships. By 2020, investors will use platform/ecosystem, data value, and customer engagement metrics as valuation factors for all enterprises.
  1. By 2020, 60 percent of all enterprises will have fully articulated an organization-wide digital transformation strategy, and will be in the process of implementing that strategy as the new IT core for competing in the digital economy.
  1. By 2021, spend on cloud services and cloud enabling hardware, software and services doubles to over $530 billion, leveraging the diversifying cloud environment that is 20 percent at the edge, over 15 percent specialized compute, and over 90 percent multi-cloud.
  1. By 2019, 40 percent of digital transformation initiatives will use AI services; by 2021, 75 percent of commercial enterprise apps will use AI, over 90 percent consumers interact with customer support bots, and over 50 percent of new industrial robots will leverage AI.
  1. By 2021, enterprise apps will shift toward hyper-agile architectures, with 80 percent of application development on cloud platforms using microservices and functions, and over 95 percent of new microservices deployed in containers.
  1. By 2020, human-digital (HD) interfaces will diversify, as 25 percent of field-service techs and over 25 percent of info-workers use AR, nearly 50 percent of new mobile apps use voice as a primary interface, and 50 percent of consumer-facing Global 2000 companies use biometric sensors to personalize experiences.
  1. By 2021, at least 25 percent of Global 2000 companies will use blockchain services as a foundation for digital trust at scale; by 2020, 25 percent of top global transaction banks, nearly 30 percent manufacturers and retailers, and 20 percent of healthcare organizations will use blockchain networks in production.
  1. By 2020, 90 percent of large enterprises will generate revenue from data-as-a-service, selling raw data, derived metrics, insights, and recommendations — up from nearly 50 percent in 2017.
  1. Improvements in simple (“low-/no-code”) development tools will dramatically expand the number of non-tech developers over the next 36 months; by 2021, these non-traditional tech developers will build 20 percent of business applications and 30 percent new application features (60 percent by 2027).
  1. By 2021, more than half of Global 2000 companies will see an average one-third of their digital services interactions come through their open API ecosystems, up from virtually zero percent in 2017, amplifying their digital reach far beyond own customer interactions.

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This article originally appeared on Forbes SAPVoice.

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