Power Your Digital Transformation With A Smart, Universal Data Platform

Kristin McMahon

If technology is the engine that drives digital transformation, data is the fuel. For forward-looking organizations it’s powering new insights, new ways of working, new products and services, and disruptive new business models. But in some industries, the gap between digital thrivers and survivors is growing as IT organizations are overwhelmed by information-related challenges. As data complexity and volumes skyrocket, business users are pressing for even greater speed and agility to meet customer demands and identify new revenue opportunities. According to an IDC survey, 91% of executives rank data and analytics as a competitive advantage or differentiator, but only 25% of organizations have managed to extract maximum value from data.

As information is at the core of the new digital ecosystem, organizations need to treat data and information the way they would treat any other asset, and invest in the right technology and skills to optimize its effectiveness and value. However, every enterprise is unique and the journey to digital transformation winds along different paths depending on the starting point. Selecting the right route requires a critical self-assessment of your enterprise’s current data and information capabilities and a vision for evolving transformation.

So, where is your organization starting from? IDC’s research identifies three categories of enterprises, depending on their current data and information capabilities.

  1. Enterprises that are seeking to transform their existing (often legacy) data management architecture and solutions. They are hampered by siloed data management technology that lacks the scalability and performance to process the volume, variety, and velocity of data created within the enterprise or by the ecosystem of external data sources.
  1. Enterprises that are looking to expand on recently deployed, next-generation data management technology, and ensure integration with internal legacy systems as they progress towards a more comprehensive transformation of their data management capabilities. These organizations have experienced project-level data management success that has led to tangible business benefits, including data monetization initiatives.
  1. Organizations that have already made a substantial investment in next-generation data-management technology. These enterprises have successfully integrated legacy and new technologies, and achieved business value in specific areas. It’s now time to expand on early successes by enabling an increasing number of internal and external stakeholders with innovation accelerators – such as artificial intelligence – that are made possible by the new data-management solution.

Whatever your digital transformation starting point, your destination needs to be what IDC calls an “enterprise digital platform:” a cloud-first technology architecture that spans IT, digital, and business domains. At its core is a data layer that provides a smart, universal digital platform that can handle data transactions, processes, and all aspects of data management from data integration, integrity, and security to analytics and application development. This platform will smooth your digital transformation as your organization moves through the three key phases of:

  • Becoming demand-oriented via the rapid, incremental addition of functionality
  • Being more data-driven by augmenting internal data with external data to enhance master data management and analytics
  • Maximizing digital execution by monetizing data internally through real-time insights, and externally via new data-driven products and services

Digital transformation offers opportunities for everyone. The initial benefits of investing in data architecture and solutions transformation will be mainly technical, but as your digital transformation journey continues, the focus will switch to improving business value. Eventually, investment in a data platform will deliver exponential business benefits.

To help you assess your organization’s current data and information capabilities and identify the opportunities and challenges posed by your particular digital transformation journey, IDC and SAP have developed three maturity models based on the categories above. To access these reports, please click here to register.

Comments

Kristin McMahon

About Kristin McMahon

Kristin McMahon is a solution marketing director for SAP Enterprise Information Management (EIM) solutions with expertise and focus on data services and data quality tools.

Increasing The Velocity Of Change In Digital Transformations With Open Source

Sabine Soellheim

Many companies today are choosing open-sourced software-defined infrastructures and application-delivery solutions for accelerated innovation of their digital transformations. They are not only achieving greater control, scalability, and flexibility of their IT environments; they are also experiencing business benefits such as agility, stability, and cost savings. And this is all while driving their transformation at a greater velocity than ever before.

Driving better outcomes in companies across the globe

So what kinds of companies are taking advantage of open-sourced technology? Let’s take a look at a few of them that are using an in-memory computing platform running on an open-sourced server with innovative software to meet their individual business transformation needs.

Take a look at Accenture Plc., a well-known Fortune 500 global company that provides strategy, consulting, digital, technology, and operations services. As the company entered its transformation into a digital and more diverse enterprise, it wanted to create a faster pace of change, with growth at hyper scale. Accenture wanted to operate its organization with more insight, agility, and efficiency while increasing compliance across multiple business units. And the firm needed to find a way to better manage larger volumes of data and increase analytics insights. The company met and exceeded these requirements, with results including a 25-50% transaction performance improvement, a 50% improvement in disaster recovery speed, and a 50% reduction in its disk storage footprint. And now Accenture is better prepared to support its future projected growth and performance goals.

Another example is Lenovo, another global Fortune 500 company and a leading technology company. The organization wanted to digitally transform its Chinese sales operation, so it set out to optimize system capabilities, simplify user operations, develop a more convenient work style, and increase customer satisfaction. To realize these goals, the company migrated to a new platform and provided its sales force with a user-centric interface and mobile apps to create a better, more efficient user experience. As a result, the company is now delivering greater business value by supporting tens of thousands of business channels that allow customers to purchase products quicker and more competently. Business operations are faster, as well, and system performance improved significantly as sales were further accelerated.

Open-sourced platforms aren’t only for international companies. Sutter Health is a not-for-profit health system in Northern California that serves over 10 million patients through a network of 24 hospitals and 5,000 primary care physicians. The organization wanted to take advantage of Big Data and data science to drive evidence-based decision-making and guide operations and patient care. Through business intelligence solutions running on a new platform, Sutter Health revolutionized its computing capabilities and redefined its daily operations. It analyzed unstructured data and used natural language processing to automate error and duplication detection. By doing so, the organization eliminated 1.6 million errors in its 9 billion medical imaging records that are sourced from 34 separate databases. Sutter Health also reduced the computation of 11 million patient records from over six hours down to less than 10 minutes.

Finally, let’s look at how the Türk Telekom Group, a 176-year-old company that is Turkey’s first integrated telecommunication and technology service provider, is taking advantage of open-sourced technology. To accelerate profitable growth, the company wanted to analyze financial and performance data more efficiently. Türk consolidated its financial and ERP operations from two customized separate systems onto one in-memory computing platform and automated all associated processes with an enhanced user experience. It created flexible and simplified reporting functionality, and started using financial data modeling with real-time analytics prediction and simulation. The results were once again quite remarkable. The company increased operational efficiency by 80% while achieving a 100-times faster reporting and query processing time and a 75% faster timeframe for its financial close and budget preparation processes.

Is it time for your company to pick up velocity?

Thousands of companies are already taking advantage of open-sourced technology and the rapid innovation it provides, including many SAP customers. They are discovering how to accelerate and transform their business in ways they never could before.

To learn more about the use cases above, and to find out how other companies are taking advantage of innovative technology to achieve award-winning results, download this e-book now.

Do you have an innovative use case to share? The SAP Innovation Awards 2018 is now open! Submit your use case today to have a chance to be recognized by your peers and a ticket to SAPPHIRE NOW 2018.

Comments

Sabine Soellheim

About Sabine Soellheim

Sabine Soellheim is SAP Alliance Marketing Manager at SUSE with expertise and general focus on open source and SAP. She has over 20 years of experience in the IT industry working as marketer and consultant with and for top global IT companies.

Cloud BI: The Time Is Now

Carsten Bange

Data and applications are now being used as platform and software-as-a-service (SaaS) offers. Now is the time to start thinking about business intelligence and analytics in the cloud.

According to the BARC (Business Application Research Center), 43% of the 370 participants who took part in the “Cloud BI and Data Management” user survey at the end of 2016 are already operating a component of their data management and BI architecture in the cloud. This shows almost 50% growth against the 29% recorded in 2013. Although this figure is not entirely representative, as it only includes experimental usage of individual components, it nevertheless shows a clear trend. And note that adoption is radically higher in North America (48%) than it is in Europe (32%).

Why using cloud BI solutions is increasingly attractive

  • Generally speaking, cloud adoption has increased significantly, not least because the infrastructure of cloud providers can now also meet the requirements fulfilled by a guaranteed data storage in a data center.
  • With the growing number of cloud-based systems, the amount of original data in the cloud is also on the increase, which is ideally analyzed using BI software-as-a-service.
  • The maturity of many BI solutions, software-as-a-service, means that they can now be deployed in even larger scenarios. In developing the strategic BI SaaS analytics cloud tool, SAP has also tackled the integration of BI, planning, and predictive analytics.
  • Users now have the flexibility to implement “hybrid” scenarios, in which BI tools, BI servers, and databases can either be used in the cloud, or combined with on-premise. A good example here is an analytics cloud, whereby data does not need to be copied into the cloud, but can only be shown as metadata in the browser.

The diversity of drivers in the cloud

For most companies, flexibility is paramount. In this day and age, who can reliably predict user figures, data volumes, or load profiles at the start of a project? The leasing model for the software, the technical scalability and the elasticity of data storage, and computing power are attractive prospects, just like the speed of implementation.

Currently, data warehouses and classic BI tools such as dashboards and reporting are being implemented in the cloud. However, the study also reveals increased interest in ad hoc analysis and exploration. It also shows that small and midsize enterprises currently use more components in the cloud than large enterprises do (see figure below). The usage of public cloud offers has also grown dramatically, as well as the deployment of hybrid solutions from the public and private cloud.

 

Figure 1: Deployment of BI and data management components in the cloud according to size of the company (BARC study “Cloud BI and Data Management” 2017, n=170)

Migration challenges

Of course, businesses are also confronted with a multitude of challenges when preparing to migrate to the cloud. Adjusting to new and unfamiliar systems, as well as evaluating and implementing security and data protection requirements is often difficult. The legal aspects, such as drafting contracts, also pose a challenge. The biggest technical problem is often down to the performance of the systems which can be inadequate for the transfer of data and when requesting information.

Priorities: lower costs, scalability

Yet the usage achieved through cloud BI and data management tools stands in comparison to these challenges, as confirmed by 166 system users (see figure below). The top priority is reducing the company’s own hardware and infrastructure costs, followed by scalability with regard to users and data volumes. A third of our study participants named low administration costs as one of the greatest user aspects of cloud BI, followed by reduced implementation time.

 

Figure 2: Benefits achieved through implementation of cloud BI and data management components (BARC Study “Cloud BI and Data Management” 2017, n=166)

 

The potential of cloud-based BI solutions

Offers for BI and data management in the cloud have made sufficiently good progress, and companies are now considering them for implementation. New tools such as SAP Analytics Cloud are not yet as functionally advanced as longstanding on-premise solutions, but they are already transforming good approaches such as BI integration, planning and predictive analytics, and supporting “hybrid” scenarios, in which data must be copied into the cloud. In contrast to the organizational, functional, and technical challenges, the cloud-based BI solutions nevertheless offer strong usability, flexibility, cost-saving potential, and scalability. It is therefore worthwhile for companies to properly inform themselves about the offers.

For more on this topic, see Business Intelligence Emboldens Digital Transformation.

This article originally appeared on SAP News Center. 

Comments

Carsten Bange

About Carsten Bange

Dr. Carsten Bange is founder and managing director of the Business Application Research Center (BARC), an IT market analysis and consulting group he founded in 1999 and later merged with Le CXP and PAC to form CXP Group, the largest European IT analyst group. Carsten holds a PhD in management information systems, is a frequent speaker at IT conferences and seminars and has served as an analyst and management consultant on business intelligence, data management and digitalization strategy, organization, architecture and technology selection for over 20 years. He can be reached at cbange@barc-research.com.

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.

Comments

Tags:

Human Is The Next Big Thing

Traci Maddox

One of my favorite movies of 2016 was Hidden Figures. The main character, Katherine Johnson, and her team of colleagues had an interesting job title: Computer. Here’s what Katherine said about her job: “On any given day, I analyze the binomial levels of air displacement, friction, and velocity. And compute over 10 thousand calculations by cosine, square root, and lately analytic geometry. By hand.”

That was the 1960s. It was amazing work, but work that took hours to complete – and something an in-memory computer could do in a fraction of a second today.

Just as in-memory computing transformed calculating by hand (and made jobs like Katherine’s much easier), digital technologies are transforming the way we work today – and making our day-to-day activities more efficient.

What’s the real impact of technology in today’s workplace?

We are surrounded by technology, both at home and at work. Machine learning and robotics are making their way into everyday life and are affecting the way we expect to engage with technology at work. That has a big impact on organizations: If a machine can do a job safely and more efficiently, a company, nonprofit, or government – and its employees – will benefit. Digital technologies are becoming increasingly more feasible, affordable, and desirable. The challenge for organizations now is effectively merging human talent and digital business to harness new capabilities.

How will jobs change?

What does this mean for humans in the workplace? In a previous blog, Kerry Brown showed that as enterprises continue to learn, human/machine collaboration increases. People will direct technology and hand over work that can be done more efficiently by machine. Does that mean people will go away? No – but they will need to leverage different skills than they have today.

Although we don’t know exactly how jobs will change, one thing is for sure: Becoming more digitally proficient will help every employee stay relevant (and prepare them to move forward in their careers). Today’s workforce demographic complicates how people embrace technology – with up to five generations in the workforce, there is a wide variety in digital fluency (i.e., the ability to understand which technology is available and what tools will best achieve desired outcomes).

What is digital fluency and how can organizations embrace it?

Digital fluency is the combination of several capabilities related to technology:

  • Foundation skills: The ability to use technology tools that enhance your productivity and effectiveness
  • Information skills: The ability to research and develop your own perspective on topics using technology
  • Collaboration skills: The ability to share knowledge and collaborate with others using technology
  • Transformation skills: The ability to assess your own skills and take action toward building your digital fluency

No matter how proficient you are today, you can continue to build your digital IQ by building new habits and skills. This is something that both the organization and employee will have to own to be successful.

So, what skills are needed?

In a Technical University of Munich study released in July 2017, 64% of respondents said they do not have the skills necessary for digital transformation.

Today's workplace reality

These skills will be applied not only to the jobs of today, but also to the top jobs of the future, which haven’t been imagined yet! A recent article in Fast Company mentions a few, which include Digital Death Manager, Corporate Disorganizer, and 3D Printing Handyman.

And today’s skills will be used differently in 2025, as reported by another Fast Company article:

  • Tech skills, especially analytical skills, will increase in importance. Demand for software developers, market analysts, and computer analysts will increase significantly between now and 2025.
  • Retail and sales skills, or any job related to soft skills that are hard for computers to learn, will continue to grow. Customer service representatives, marketing specialists, and sales reps must continue to collaborate and understand how to use social media effectively to communicate worldwide.
  • Lifelong learning will be necessary to keep up with the changes in technology and adapt to our fast-moving lives. Teachers and trainers will continue to be hot jobs in the future, but the style of teaching will change to adapt to a “sound bite” world.
  • Contract workers who understand how businesses and projects work will thrive in the “gig economy.” Management analysts and auditors will continue to be in high demand.

What’s next?

How do companies address a shortage of digital skills and build digital fluency? Here are some steps you can take to increase your digital fluency – and that of your organization:

  • Assess where you are today. Either personally or organizationally, knowing what skills you have is the first step toward identifying where you need to go.
  • Identify one of each of the skill sets to focus on. What foundational skills do you or your organization need? How can you promote collaboration? What thought leadership can your team share – and how can they connect with the right information to stay relevant?
  • Start practicing! Choose just one thing – and use that technology every day for a month. Use it within your organization so others can practice too.

And up next for this blog series – a look at the workplace of the future!

The computer made its debut in Hidden Figures. Did it replace jobs? Yes, for some of the computer team. But members of that team did not leave quietly and continue manual calculations elsewhere. They learned how to use that new mainframe computer and became programmers. I believe humans will always be the next big thing.

If we want to retain humanity’s value in an increasingly automated world, we need to start recognizing and nurturing Human Skills for the Digital Future.

Comments

Traci Maddox

About Traci Maddox

Traci Maddox is the Director of the North America Customer Transformation Office at SAP, where she is elevating customer success through innovation and digital transformation. Traci is also part of the Digital Workforce Taskforce, a team of SAP leaders whose mission is to help companies succeed by understanding and addressing workforce implications of digital technology.