Top Five CIO Blogs Of January 2018

Jean Loh

As we start the new year, the hottest topic is machine learning. In January’s number-one blog, experts from Deloitte advised that machine learning is only as good as the data, while another popular article summed up the latest developments in this technology. Trends in artificial intelligence (AI) and analytics continue to intrigue our readers. Also landing on the best-read list was a blog predicting the three most important tech trends: AI, voice-activated assistants, and Big Data and analytics. There’s a theme here!

Underfit Vs. Overfit: Why Your Machine Learning Model May Be Wrong

Top 10 Trends For Analytics In 2018

2018 Outlook For Machine Learning – An Innovation In Its Teen Years

Top Three Predictions For Enterprise Technology In 2018

Innovate Your Business Model With Conversational AI: Part 3

Gain insight on other top issues to consider in More Than Noise: Digital Trends That Are Bigger Than You Think.


Jean Loh

About Jean Loh

Jean Loh is the director, Global Audience Marketing at SAP. She is an experienced marketing and communication professional, currently responsible for developing thought leadership content that is unbiased and audience-led while addressing market challenges to illuminate and solve the unmet needs of CFOs, CIOs, and the wider global finance and IT audience.

Growing Businesses Prepare For Act 2 Of Their Digital Evolution

Meaghan Sullivan

Competing against a slate of long-established brands and disruptive startups is a stressful and exhausting reality for many small and midsize businesses. They are not only up against rivals with extensive resources, capital, and brand recognition, but also first-mover visionaries fueled by nonstop creativity, out-of-the-box thinking, and an “everything to gain, nothing to lose” spirit.

This environment may appear as the death knell for small and midsize businesses, but according to Oxford Economics’ 2017 “The Transformation Imperative for Small and Midsize Companies,” sponsored by SAP, digital transformation initiatives are helping them stay competitive. The survey of 3,000 executives across 17 countries reveals that over half of growing companies view digital transformation as a core survival objective that will increase in urgency by as much as 32% over the next five years.


Source:The Transformation Imperative for Small and Midsize Companies,” Oxford Economics, sponsored by SAP, 2017.


What’s compelling most small and midsize businesses to pay attention and invest in digital transformation? It seems that the answer to this question points to the buzzworthy wave of next-generation technology that’s emerging as a viable – sometimes, necessary – enabler of capabilities required to operate competitively.

Sweeping, technology-driven changes advance the importance of digital transformation

For small and midsize businesses, the road to digital transformation has been hard-won. This level of technology-driven change was once considered an option reserved for large enterprises that could afford it. However, the growth and improvement they are experiencing now from their digital initiatives closely resemble those realized by their much larger rivals. According to the Oxford Economics report, businesses with annual revenues between US$100 million and $499.9 million are using digital transformation to attract and retain the right talent and increase profitability – nearly as much as companies generating millions and billions more.


Source:The Transformation Imperative for Small and Midsize Companies,” Oxford Economics, sponsored by SAP, 2017.


While this is all excellent news, small and midsize businesses are far from done with digital transformation. Emerging technologies such as self-service analytics, the Internet of Things, artificial intelligence, machine learning, and blockchain are finding their way into conversations among business leaders, analysts, and trusted solution providers.

For any growing company that is already evolving their practices with analytics, cloud solutions, mobile applications, or digital commerce platforms, the capabilities enabled by these new digital investments are highly accessible. For example, the Internet of Things is enabling anything from high-precision hyperlocal advertising and online search to the tracking of shipments and customers. Companies can now take their seemingly random collection of data to pull insights on product performance, customer behavior, and brand sentiment. And with information like this, decision-makers can have a better sense of how they can increase revenue while avoiding oncoming risks and preventable costs.

Taking advantage of these next-generation technologies doesn’t necessarily mean that you have to actually implement them. It is highly likely that you are using – or will use – software or services that tap into these advanced technologies. Machine learning is turning data analytics is a simpler, more-decisive tool. Cybersecurity solutions are leveraging blockchain to validate authentication and secure data governance. Artificial intelligence is being embedded in business applications to guide users through processes, workflows, and information search.

So here’s my bet for 2018: Every company will touch technology more than ever before – whether through active adoption or passive use. Small and midsize businesses that know how to take advantage of these opportunities will reap tremendous rewards. But as their digital transformation matures, companies will be able to pick out the digital winners that will make their employees’ lives easier, add value to the customer experience, and build a stronger brand name.

Help ensure that your small or midsize business is ready to take on digital transformation to continually improve operations, processes, and products, and services. Check out Oxford Economics’ study, “The Transformation Imperative for Small and Midsize Companies,” sponsored by SAP.

This article originally appeared on Growth Matters Network and is republished by permission.


Meaghan Sullivan

About Meaghan Sullivan

Meaghan Sullivan is the vice president of Global Channel Marketing at SAP. In this role, she is tasked with accelerating global indirect revenue through channel marketing practices with a focus on VARs and Distributors. Sullivan focuses on Partner-Lead Demand Generation activities to provide SAP partners with innovative programs, campaigns and resources that enable them to more efficiently market their SAP solutions and services.

How To Select The Right Partners To Maximize Success

Robert Werkema

You’re ready to embark on a digital transformation project. You’ve established a budget and an idea of what you will accomplish through your digital transformation.

Now you must bring in the right outside teams to ensure your success. I recently wrote about blending your technology partner, systems integrator, and internal teams. But how do you select the right partners in the first place?

Selecting a technology partner

Selecting a technology partner is not as easy as it seems. Organizations often start with a list of features and functions they need, which is not necessarily a bad approach. But if you are creating your feature list ahead of your mission statement, there is a chance you will build your feature set without knowing where you are going.

Your selection of a technology partner can help you align both your mission statement and the feature set you will need to accomplish your mission. Using the feature set as the primary lever to evaluate your technology partner can result in missing valuable components that you might not have considered.

Your technology partner should get measured on a few criteria – the weighting of which will vary substantially based on the impact and scope of your project.

Roadmap: If you start with your defined features and functions, you might not get to a point of understanding where a vendor is headed. It is typically a much better approach to ask your vendor to do a roadmap session for you. Don’t forget to look at the product you have an immediate need for, as well as the other areas that might apply to your business. Don’t dig yourself into a dead-end hole that causes integration and functional challenges in the future.

Leadership: Is the partner a stable, ongoing entity? Study their leadership team, and see if they have longevity in the area you care about. Nothing is worse than getting well down the deployment path, only to discover that the product you are deploying is not very strategic to the vendor’s business.

Development: This is hand in hand with both roadmap and leadership, but worth calling out separately. No matter how great the roadmap is, your vendor is going to struggle to get there if they don’t have a focused team on the product you care about. How many people does the vendor have in development? How many of them are aligned to your product?

Flexibility: Some technology partners are good at a single thing, but if you assume that makes them good at everything, you might be in trouble down the road. Does your technology partner have a track record of meeting market demand? One way to look at this is to study some of the major hurdles over the past years, and ask how quickly the vendor was able to respond. Some good examples include the move to cloud computing, delivery of mobile capability, GDPR, and other security compliance. The list is long, but gives you an idea.

Another area of flexibility is the vendor’s technical alignment. Before you look at the business-level features and functions, you should go through an architectural review. You might be surprised at the degree to which the product you are considering is structured to interact in your architecture. A closed architecture can mean you will have more trouble maintaining down the road, and can also cause headaches with integration. Don’t assume that all products are created equal here. Ask questions about integration standards like “does the offering have open APIs, and what standards do they support?” On architecture, when was the last major technology rewrite? Sometimes there are things hidden in the architecture you won’t hear about until you have started down the path.

Support: This is a key topic – and maybe as important as any of the above. IT takes a substantial commitment on the part of a technology vendor to go beyond the sale. When you ask the question about who will support you after the sale, you should hear a concise outline of the non-sales team that will be carrying the responsibility for your success. It can’t be the sales team! They may be great people, but they are measured on selling – not on getting customers live. If the vendor has a customer success team that is measured on the success of customers, survey scores, and customer retention, then you are much more likely to get the attention you need once you sign up. Don’t settle for a lukewarm answer here!

Selecting a systems integrator

Most digital transformation technology vendors have a pretty wide set of systems integrators available to support customers in their transformation efforts. Quantity is not a reflection of quality, though, and you are not looking for many SIs – just the right one to fit your business. The SI will likely have a sales team that is charged with selling the effort, but that team will not be the one actually delivering. The more work you do up front to protect your success, the more likely you will get the on-time and on-budget delivery you are looking for.

There are a few criteria that will help you boil things down to what’s important. The level of importance of these will be different for every project. If you are doing a version upgrade, your SI needs are very different from doing a full-blown transformation of your business.

Certification: You should look at the investment the SI has made in the technology you are considering. Do they have a large bench of certified consultants? Do those consultants cover all of the aspects of your project? Take a look at the resumes of a representative set of consultants from the SI so you can get an idea of if they have people with the right depth of experience.

Once you have gotten a general sense of the capabilities of the SI firm, it is time to get to specific. Make sure you know who the SI team is that will be starting your project. The more of them you meet, the better your chances are that there will be good chemistry between your teams. At the very least, you need to look at all of the resumes and talk to the lead consultant about how long they have worked together. If there is not a lot of prior interlock within the team coming in, you should anticipate that it will take longer to get your project running at full speed.

Focus: What other things are your SI focused on besides the technology you are looking to deploy? This can have a double-edged effect.  Having a partner with skills in future components of your effort can mean a short time to deploy for those phase two and three projects. On the other hand, there are great SIs out there that focus effectively on just one technology.

Scope: Matching the scope of your project with the skills and abilities of your SI is important. There are some SIs that gravitate to large and challenging year-long projects. If your intent is to deliver a quick-strike, Minimum Viable Product (MVP) in a few months, then you should take that into consideration when selecting your SI.

The best approach is to review your scope with the SIs you are feeling most comfortable with and let them come back with recommendations for the project. This is a chance for the SI to show their stuff.

Demo: Often overlooked is asking the SI to show their knowledge by demoing the product and talking about the fit to your business. It will give two great insights. First, you will find out how much they really know about the product, and second, you will hear how well they have been listening to you.

References: Companies often ask for references, but how you ask for them and what you do with them can vary widely. Every SI is going to have two or three good references. It is to your benefit to ask for a list of all customers who had projects like yours and make a few calls to look for consistency of the SI’s delivery abilities. I also like to ask SIs to talk about a project where things went wrong. How the SI approached the resolution can give great insight into the way that SI will work when things get tough.

Longevity: Get a perspective of how many of the SI’s customers came back for second and third deployments. You can’t afford to have an SI that has consistent delivery issues and does not get follow-on business from customers.

When evaluating your SI choices, you should consider both chemistry and the hard evidence of success. A great SI can make your transformation effort hugely successful.

Uncertainty is here to stay. By imagining multiple destinies and working back to the present, you can prepare for anything. That’s Why Strategic Plans Need Multiple Futures.

This article originally appeared in the Future of Customer Engagement and Commerce, and is republished by permission.


The Blockchain Solution

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

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

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

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

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

The Spine of Digitalization

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

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

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

What Is Blockchain and How Does It Work?

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

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

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

Why does blockchain matter for the supply chain?

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

Hints of the Future

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

But we could tell that it had vast potential.

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

What’s the Magic Combination?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Blockchain Is the Change Driver

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

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

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

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

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

Challenges on the Path to Adoption

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

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

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

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

Blockchain Blackouts

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

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

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

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

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

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

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

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

Customers Will Expect Change

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

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

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

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

About the Authors

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

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

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

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

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

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



The Differences Between Machine Learning And Predictive Analytics

Shaily Kumar

Many people are confused about the specifics of machine learning and predictive analytics. Although they are both centered on efficient data processing, there are many differences.

Machine learning

Machine learning is a method of computational learning underlying most artificial intelligence (AI) applications. In ML, systems or algorithms improve themselves through data experience without relying on explicit programming. ML algorithms are wide-ranging tools capable of carrying out predictions while simultaneously learning from over trillions of observations.

Machine learning is considered a modern-day extension of predictive analytics. Efficient pattern recognition and self-learning are the backbones of ML models, which automatically evolve based on changing patterns in order to enable appropriate actions.

Many companies today depend on machine learning algorithms to better understand their clients and potential revenue opportunities. Hundreds of existing and newly developed machine learning algorithms are applied to derive high-end predictions that guide real-time decisions with less reliance on human intervention.

Business application of machine learning: employee satisfaction

One common, uncomplicated, yet successful business application of machine learning is measuring real-time employee satisfaction.

Machine learning applications can be highly complex, but one that’s both simple and very useful for business is a machine learning algorithm that compares employee satisfaction ratings to salaries. Instead of plotting a predictive satisfaction curve against salary figures for various employees, as predictive analytics would suggest, the algorithm assimilates huge amounts of random training data upon entry, and the prediction results are affected by any added training data to produce real-time accuracy and more helpful predictions.

This machine learning algorithm employs self-learning and automated recalibration in response to pattern changes in the training data, making machine learning more reliable for real-time predictions than other AI concepts. Repeatedly increasing or updating the bulk of training data guarantees better predictions.

Machine learning can also be implemented in image classification and facial recognition with deep learning and neural network techniques.

Predictive analytics

Predictive analytics can be defined as the procedure of condensing huge volumes of data into information that humans can understand and use. Basic descriptive analytic techniques include averages and counts. Descriptive analytics based on obtaining information from past events has evolved into predictive analytics, which attempts to predict the future based on historical data.

This concept applies complex techniques of classical statistics, like regression and decision trees, to provide credible answers to queries such as: ‘’How exactly will my sales be influenced by a 10% increase in advertising expenditure?’’ This leads to simulations and “what-if” analyses for users to learn more.

All predictive analytics applications involve three fundamental components:

  • Data: The effectiveness of every predictive model strongly depends on the quality of the historical data it processes.
  • Statistical modeling: Includes the various statistical techniques ranging from basic to complex functions used for the derivation of meaning, insight, and inference. Regression is the most commonly used statistical technique.
  • Assumptions: The conclusions drawn from collected and analyzed data usually assume the future will follow a pattern related to the past.

Data analysis is crucial for any business en route to success, and predictive analytics can be applied in numerous ways to enhance business productivity. These include things like marketing campaign optimization, risk assessment, market analysis, and fraud detection.

Business application of predictive analytics: marketing campaign optimization

In the past, valuable marketing campaign resources were wasted by businesses using instincts alone to try to capture market niches. Today, many predictive analytic strategies help businesses identify, engage, and secure suitable markets for their services and products, driving greater efficiency into marketing campaigns.

A clear application is using visitors’ search history and usage patterns on e-commerce websites to make product recommendations. Sites like Amazon increase their chance of sales by recommending products based on specific consumer interests. Predictive analytics now plays a vital role in the marketing operations of real estate, insurance, retail, and almost every other sector.

How machine learning and predictive analytics are related

While businesses must understand the differences between machine learning and predictive analytics, it’s just as important to know how they are related. Basically, machine learning is a predictive analytics branch. Despite having similar aims and processes, there are two main differences between them:

  • Machine learning works out predictions and recalibrates models in real-time automatically after design. Meanwhile, predictive analytics works strictly on “cause” data and must be refreshed with “change” data.
  • Unlike machine learning, predictive analytics still relies on human experts to work out and test the associations between cause and outcome.

Explore machine learning applications and AI software with SAP Leonardo.


Shaily Kumar

About Shaily Kumar

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