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Using Digital Technology To Rethink Cities

John Graham

While one could argue that cities became “smart” the moment the first automatic traffic lights were switched on in Houston, Texas in 1922, digital hyper-connectivity and the pervasiveness of data have loaded the term “smart city” with the considerable gravitas it carries today.

Urbanization and technology have become closely interrelated, to the point where technology now directly influences where and how urbanization happens. In 2014, India’s prime minister, upon announcing plans to build 100 smart cities, said cities used to be built on riverbanks, but they are now built along highways. And in the future, they will be built around the availability of optical fiber networks.

In the end, it won’t matter if we call them smart cities, future cities, sharing cities, or something else, but the driving force behind the idea is the need for continued digital innovation to meet the demands of rapidly growing and increasingly complex urban environments.

With a term like “smart city,” it’s easy to be carried away by glamorous idealisms of what that might mean. The truth is, however, that a lot of the real execution happening under the tag today involves the use of digital technology to streamline the essentials of urban living for ever-growing populations – clean drinking water, efficient sewage systems, road traffic and logistical systems, fire and flood control. Smart cities are ultimately about meeting citizen’s fundamental needs in new, innovative ways, such as using data feeds from vast networks of millions of sensors.

Like previous miracles of engineering – modern plumbing, electrical distribution, and so on – allowed us to come together as civilizations of millions of people, digital is enabling us to continue along that path of managing the even more intense levels of urbanization ahead of us. It’s projected that 75% of the earth’s population will be living in urban environments by 2050. That’s 7.5 billion people, compared with the 55% (around 3.8 billion people) today. In my mind, that makes it a necessity to use data and digital technology as the foundation for rethinking how we run cities.

Smart city means different things to different cities

For government leaders and city planners, the idea of smart cities is very much “what you make it.” It’s highly contextual in terms of how devices and data can help a city deal with unique challenges. For Buenos Aires (which suffered flooding that claimed 101 lives in 2013), a priority was creating a network of sensors that measured the direction and speed of water flowing through the city, identifying areas that need attention in real time. It’s telling that in 2014 the city went flood-free, while neighboring areas got soaked. Here we see how the smart city mindset brings simple, contextual solutions to serious problems.

While listening to public sector speakers at Smart Cities Forum, a gathering of public sector leaders in Toronto in February, there was plenty to suggest North American cities are equally committed to investing in smart city infrastructure. City of Toronto’s Fazal Husain has a vision of the city’s future where the need to build and maintain infrastructure is reduced and replaced by an increased reliance on connectedness and data. He imagines digital crowd-based discussions broadening the scale at which Torontonians interact with each other, where events that now only impact 10 people will be weighed in by thousands.

Shawn Slack, CIO of the City of Mississauga (a city of more than 800,000 near Toronto), acknowledged that plans around using data to become more responsive to citizen safety and efficiency led to the city’s almost accidental recognition as a smart city. Since then, it has fully converted to an LED traffic light system and has a flood sensor network that notifies crews of emergencies in real time.

Shawn said the city’s future depends on achieving complete situational awareness, removing the need to do things on a granular level. Doing that takes a long-term plan for putting data analysis and connected infrastructure to action.

Getting citizens on board with smart city innovation

Speaking along similar lines, Stephen Goldsmith, the former deputy mayor of New York and mayor of Indianapolis, explained why he feels smart city means responsive city. “Smartness” is measured by how effectively it can anticipate and solve problems before they occur, as well as how quickly it can mobilize to fix things that go wrong.

During his time working for Michael Bloomberg in New York, his office made huge strides in enabling public service agencies to handle assignments much more efficiently, using predictive analytics to improve by 1000% the accuracy of responses to fire emergencies. He said it was about being smarter with the deployment of limited public resources, which is where data analysis comes in.

On the point of limited public resources, there are challenges in communicating the benefits of smart city investment to tax-paying citizens. Hardik Bhatt, State of Illinois CIO, said bureaucracy and procurement barriers often mean technology has become obsolete by the time it’s implemented into city infrastructure. His way of tackling that is getting ahead of the curve; leapfrogging where possible to go from, for example, mainframe to cloud, where the impact is obvious and profound to citizens. And for Anthony Iannucci, CIO of Toronto Transit Commission, it’s about making the long road to modernization a business-wide transformation project with tangible returns, rather than a series of isolated technology projects.

It’s that forward-thinking mentality and willingness to innovate that will inspire the cities of the future, where life as a human being in a densely populated environment will be safer, easier and more enjoyable than could have been imagined in 1922 when those first Houston traffic lights switched to green.

Read more about how digitization is improving city infrastructures: A Call For A Shared Connectivity Blueprint For Cities.

This story originally appeared on SAP Business Trends.

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Transform Or Die: What Will You Do In The Digital Economy?

Scott Feldman and Puneet Suppal

By now, most executives are keenly aware that the digital economy can be either an opportunity or a threat. The question is not whether they should engage their business in it. Rather, it’s how to unleash the power of digital technology while maintaining a healthy business, leveraging existing IT investments, and innovating without disrupting themselves.

Yet most of those executives are shying away Businesspeople in a Meeting --- Image by © Monalyn Gracia/Corbisfrom such a challenge. According to a recent study by MIT Sloan and Capgemini, only 15% of CEOs are executing a digital strategy, even though 90% agree that the digital economy will impact their industry. As these businesses ignore this reality, early adopters of digital transformation are achieving 9% higher revenue creation, 26% greater impact on profitability, and 12% more market valuation.

Why aren’t more leaders willing to transform their business and seize the opportunity of our hyperconnected world? The answer is as simple as human nature. Innately, humans are uncomfortable with the notion of change. We even find comfort in stability and predictability. Unfortunately, the digital economy is none of these – it’s fast and always evolving.

Digital transformation is no longer an option – it’s the imperative

At this moment, we are witnessing an explosion of connections, data, and innovations. And even though this hyperconnectivity has changed the game, customers are radically changing the rules – demanding simple, seamless, and personalized experiences at every touch point.

Billions of people are using social and digital communities to provide services, share insights, and engage in commerce. All the while, new channels for engaging with customers are created, and new ways for making better use of resources are emerging. It is these communities that allow companies to not only give customers what they want, but also align efforts across the business network to maximize value potential.

To seize the opportunities ahead, businesses must go beyond sensors, Big Data, analytics, and social media. More important, they need to reinvent themselves in a manner that is compatible with an increasingly digital world and its inhabitants (a.k.a. your consumers).

Here are a few companies that understand the importance of digital transformation – and are reaping the rewards:

  1. Under Armour:  No longer is this widely popular athletic brand just selling shoes and apparel. They are connecting 38 million people on a digital platform. By focusing on this services side of the business, Under Armour is poised to become a lifestyle advisor and health consultant, using his product side as the enabler.
  1. Port of Hamburg: Europe’s second-largest port is keeping carrier trucks and ships productive around the clock. By fusing facility, weather, and traffic conditions with vehicle availability and shipment schedules, the Port increased container handling capacity by 178% without expanding its physical space.
  1. Haier Asia: This top-ranking multinational consumer electronics and home appliances company decided to disrupt itself before someone else did. The company used a two-prong approach to digital transformation to create a service-based model to seize the potential of changing consumer behaviors and accelerate product development. 
  1. Uber: This startup darling is more than just a taxi service. It is transforming how urban logistics operates through a technology trifecta: Big Data, cloud, and mobile.
  1. American Society of Clinical Oncologists (ASCO): Even nonprofits can benefit from digital transformation. ASCO is transforming care for cancer patients worldwide by consolidating patient information with its CancerLinQ. By unlocking knowledge and value from the 97% of cancer patients who are not involved in clinical trials, healthcare providers can drive better, more data-driven decision making and outcomes.

It’s time to take action 

During the SAP Executive Technology Summit at SAP TechEd on October 19–20, an elite group of CIOs, CTOs, and corporate executives will gather to discuss the challenges of digital transformation and how they can solve them. With the freedom of open, candid, and interactive discussions led by SAP Board Members and senior technology leadership, delegates will exchange ideas on how to get on the right path while leveraging their existing technology infrastructure.

Stay tuned for exclusive insights from this invitation-only event in our next blog!
Scott Feldman is Global Head of the SAP HANA Customer Community at SAP. Connect with him on Twitter @sfeldman0.

Puneet Suppal drives Solution Strategy and Adoption (Customer Innovation & IoT) at SAP Labs. Connect with him on Twitter @puneetsuppal.

 

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About Scott Feldman and Puneet Suppal

Scott Feldman is the Head of SAP HANA International Customer Community. Puneet Suppal is the Customer Co-Innovation & Solution Adoption Executive at SAP.

What Is Digital Transformation?

Andreas Schmitz

Achieving quantum leaps through disruption and using data in new contexts, in ways designed for more than just Generation Y — indeed, the digital transformation affects us all. It’s time for a detailed look at its key aspects.

Data finding its way into new settings

Archiving all of a company’s internal information until the end of time is generally a good idea, as it gives the boss the security that nothing will be lost. Meanwhile, enabling him or her to create bar graphs and pie charts based on sales trends – preferably in real time, of course – is even better.

But the best scenario of all is when the boss can incorporate data from external sources. All of a sudden, information on factors as seemingly mundane as the weather start helping to improve interpretations of fluctuations in sales and to make precise modifications to the company’s offerings. When the gusts of autumn begin to blow, for example, energy providers scale back solar production and crank up their windmills. Here, external data provides a foundation for processes and decisions that were previously unattainable.

Quantum leaps possible through disruption

While these advancements involve changes in existing workflows, there are also much more radical approaches that eschew conventional structures entirely.

“The aggressive use of data is transforming business models, facilitating new products and services, creating new processes, generating greater utility, and ushering in a new culture of management,” states Professor Walter Brenner of the University of St. Gallen in Switzerland, regarding the effects of digitalization.

Harnessing these benefits requires the application of innovative information and communication technology, especially the kind termed “disruptive.” A complete departure from existing structures may not necessarily be the actual goal, but it can occur as a consequence of this process.

Having had to contend with “only” one new technology at a time in the past, be it PCs, SAP software, SQL databases, or the Internet itself, companies are now facing an array of concurrent topics, such as the Internet of Things, social media, third-generation e-business, and tablets and smartphones. Professor Brenner thus believes that every good — and perhaps disruptive — idea can result in a “quantum leap in terms of data.”

Products and services shaped by customers

It has already been nearly seven years since the release of an app that enables customers to order and pay for taxis. Initially introduced in Berlin, Germany, mytaxi makes it possible to avoid waiting on hold for the next phone representative and pay by credit card while giving drivers greater independence from taxi dispatch centers. In addition, analyses of user data can lead to the creation of new services, such as for people who consistently order taxis at around the same time of day.

“Successful models focus on providing utility to the customer,” Professor Brenner explains. “In the beginning, at least, everything else is secondary.”

In this regard, the private taxi agency Uber is a fair bit more radical. It bypasses the entire taxi industry and hires private individuals interested in making themselves and their vehicles available for rides on the Uber platform. Similarly, Airbnb runs a platform travelers can use to book private accommodations instead of hotel rooms.

Long-established companies are also undergoing profound changes. The German publishing house Axel Springer SE, for instance, has acquired a number of startups, launched an online dating platform, and released an app with which users can collect points at retail. Chairman and CEO Matthias Döpfner also has an interest in getting the company’s newspapers and other periodicals back into the black based on payment models, of course, but these endeavors are somewhat at odds with the traditional notion of publishing houses being involved solely in publishing.

The impact of digitalization transcends Generation Y

Digitalization is effecting changes in nearly every industry. Retailers will likely have no choice but to integrate their sales channels into an omnichannel approach. Seeking to make their data services as attractive as possible, BMW, Mercedes, and Audi have joined forces to purchase the digital map service HERE. Mechanical engineering companies are outfitting their equipment with sensors to reduce downtime and achieve further product improvements.

“The specific potential and risks at hand determine how and by what means each individual company approaches the subject of digitalization,” Professor Brenner reveals. The resulting services will ultimately benefit every customer – not just those belonging to Generation Y, who present a certain basic affinity for digital methods.

“Think of cars that notify the service center when their brakes or drive belts need to be replaced, offer parking assistance, or even handle parking for you,” Brenner offers. “This can be a big help to elderly people in particular.”

Chief digital officers: team members, not miracle workers

Making the transition to the digital future is something that involves not only a CEO or a head of marketing or IT, but the entire company. Though these individuals do play an important role as proponents of digital models, it also takes more than just a chief digital officer alone.

For Professor Brenner, appointing a single person to the board of a DAX company to oversee digitalization is basically absurd. “Unless you’re talking about Da Vinci or Leibnitz born again, nobody could handle such a task,” he states.

In Brenner’s view, this is a topic for each and every department, and responsibilities should be assigned much like on a soccer field: “You’ve got a coach and the players – and the fans, as well, who are more or less what it’s all about.”

Here, the CIO neither competes with the CDO nor assumes an elevated position in the process of digital transformation. Implementing new databases like SAP HANA or Hadoop, leveraging sensor data in both technical and commercially viable ways, these are the tasks CIOs will face going forward.

“There are some fantastic jobs out there,” Brenner affirms.

Want more insight on managing digital transformation? See Three Keys To Winning In A World Of Disruption.

Image via Shutterstock

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Andreas Schmitz

About Andreas Schmitz

Andreas Schmitz is a Freelance Journalist for SAP, covering a wide range of topics from big data to Internet of Things, HR, business innovation and mobile.

How Much Will Digital Cannibalization Eat into Your Business?

Fawn Fitter

Former Cisco CEO John Chambers predicts that 40% of companies will crumble when they fail to complete a successful digital transformation.

These legacy companies may be trying to keep up with insurgent companies that are introducing disruptive technologies, but they’re being held back by the ease of doing business the way they always have – or by how vehemently their customers object to change.

Most organizations today know that they have to embrace innovation. The question is whether they can put a digital business model in place without damaging their existing business so badly that they don’t survive the transition. We gathered a panel of experts to discuss the fine line between disruption and destruction.

SAP_Disruption_QA_images2400x1600_3

qa_qIn 2011, when Netflix hiked prices and tried to split its streaming and DVD-bymail services, it lost 3.25% of its customer base and 75% of its market capitalization.²︐³ What can we learn from that?

Scott Anthony: That debacle shows that sometimes you can get ahead of your customers. The key is to manage things at the pace of the market, not at your internal speed. You need to know what your customers are looking for and what they’re willing to tolerate. Sometimes companies forget what their customers want and care about, and they try to push things on them before they’re ready.

R. “Ray” Wang: You need to be able to split your traditional business and your growth business so that you can focus on big shifts instead of moving the needle 2%. Netflix was responding to its customers – by deciding not to define its brand too narrowly.

qa_qDoes disruption always involve cannibalizing your own business?

Wang: You can’t design new experiences in existing systems. But you have to make sure you manage the revenue stream on the way down in the old business model while managing the growth of the new one.

Merijn Helle: Traditional brick-and-mortar stores are putting a lot of capital into digital initiatives that aren’t paying enough back yet in the form of online sales, and they’re cannibalizing their profits so they can deliver a single authentic experience. Customers don’t see channels, they see brands; and they want to interact with brands seamlessly in real time, regardless of channel or format.

Lars Bastian: In manufacturing, new technologies aren’t about disrupting your business model as much as they are about expanding it. Think about predictive maintenance, the ability to warn customers when the product they’ve purchased will need service. You’re not going to lose customers by introducing new processes. You have to add these digitized services to remain competitive.

qa_qIs cannibalizing your own business better or worse than losing market share to a more innovative competitor?

Michael Liebhold: You have to create that digital business and mandate it to grow. If you cannibalize the existing business, that’s just the price you have to pay.

Wang: Companies that cannibalize their own businesses are the ones that survive. If you don’t do it, someone else will. What we’re really talking about is “Why do you exist? Why does anyone want to buy from you?”

Anthony: I’m not sure that’s the right question. The fundamental question is what you’re using disruption to do. How do you use it to strengthen what you’re doing today, and what new things does it enable? I think you can get so consumed with all the changes that reconfigure what you’re doing today that you do only that. And if you do only that, your business becomes smaller, less significant, and less interesting.

qa_qSo how should companies think about smart disruption?

Anthony: Leaders have to reconfigure today and imagine tomorrow at the same time. It’s not either/or. Every disruptive threat has an equal, if not greater, opportunity. When disruption strikes, it’s a mistake only to feel the threat to your legacy business. It’s an opportunity to expand into a different marke.

SAP_Disruption_QA_images2400x1600_4Liebhold: It starts at the top. You can’t ask a CEO for an eight-figure budget to upgrade a cloud analytics system if the C-suite doesn’t understand the power of integrating data from across all the legacy systems. So the first task is to educate the senior team so it can approve the budgets.

Scott Underwood: Some of the most interesting questions are internal organizational questions, keeping people from feeling that their livelihoods are in danger or introducing ways to keep them engaged.

Leon Segal: Absolutely. If you want to enter a new market or introduce a new product, there’s a whole chain of stakeholders – including your own employees and the distribution chain. Their experiences are also new. Once you start looking for things that affect their experience, you can’t help doing it. You walk around the office and say, “That doesn’t look right, they don’t look happy. Maybe we should change that around.”

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

To learn more about how to disrupt your business without destroying it, read the in-depth report Digital Disruption: When to Cook the Golden Goose.

Download the PDF (1.2MB)

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3 Ways To Convince Your Workforce To Stop Fearing Digital Transformation

Paul Kurchina

Change of any kind – especially when it’s foisted on you without your commitment – can be dreadful. It may even resemble the return home from a disappointing doctor’s appointment. After shocking the doctor with high numbers across the board, your spouse replaces all of your most-loved foods (the leftover pizza from last night!) and beverages (the after-work beer and soda!) with kale, quinoa, and juice that looks like algae purged by a blender. Immediately, you resist: “How dare my loved one change my diet without my consent! I have no control! Why eat if I can’t be happy with what’s on my plate?”

That’s exactly how most employees view digital transformation initiatives. During the Americas’ SAP User Group (ASUG) webcast “The Only Thing to Fear Is Fear Itself: Embracing Change and Seizing the Opportunity of the Digital Transformation,” Keith R. Sturgill, CIO of Eastman Chemical Company and ASUG Board Chair, said, “in times of transformative change, great opportunities are invaluable. But, it also comes at a great cost because it’s not easy.” Sometimes the process is so daunting that we stop it, ignore it, and resume using our ingrained habits.

While technology-enabled, the real change behind digital transformation is all about people: how they work, collaborate, and make decisions. And changing people is always harder than implementing new technology. But, it’s not impossible once everyone – including leadership, employees, and partners – accepts these three realities of our digital world.

Reality check #1: Digital disruption is not just evolving. It’s already here!

Hearing from customers directly, reacting to what they want, and correcting what they don’t like at hard-to-imagine speeds is raising the bar high for every business. “Connecting people worldwide isn’t just allowing them to self-organize ideas and share opinions; it’s creating a new environment [in which] new business models can emerge. Just ask any growing business,” says Sturgill.

Just think:

  • Amazon is changing the face of retail without a single brick-and-mortar store
  • Airbnb is surpassing traditional hotels and motels without building a physical resort
  • Uber is upending the whole notion of taxi service without a single cab

However, it’s not as easy as setting up a website and creating a network of people, assets, and capital to support it. According to Sturgill, “it’s impossible to know the impact of what’s going to occur [in the future.] We can’t even begin to imagine how this is going to change the world. But without a doubt, it will be huge.”

Reality check #2: Decision making will never – and cannot – be the same

In the past, computers were set up with rules to inject automation and efficiency into business processes. Yet, they failed to support more difficult, complex problem solving such as predictions and forecasting that went beyond the scope of a predefined set of algorithms.

Our digital era is bringing about a new approach to decision making. Not just improving or accelerating decisions, but ultimately changing how they are made. Without the confines of codified decision flows, machine learning will soon consume and process an incredible amount of data to “understand” patterns and correlations. And as more data enters the systems, decisions on complex issues will likely become more improved and accurate.

“Machine learning algorithms will augment human insights, not replace them. Let people do what they do best – create, design, establish relationships and capabilities, and knit together insights to innovate with better judgment and unimaginable ideas,” advises Sturgill. “Think of your business as a decision machine.”

Reality check #3: The user experience (not technology) matters most

Like I said earlier in this blog, digital transformation is not about the technology you implement; it’s about your people. This is why the user experience will always eclipse corporate standards. From your customer to your workforce, consumer-grade technology is increasingly expected to become the norm – and it’s even happening to business-to-business (B2B) companies quicker than anyone realizes.

Most digital transformation strategies place a bright spotlight on the customer experience. By understanding what customers value and their unique preferences, B2B companies are using technology as a differentiator that gives customers a reason to engage and purchase from the business.

However, digital transformation does not end with the customer experience. “It is about people in your organization – talented, empowered, and passionate people. Employees should expect the work environment to be at least as good as their home computing environment. It should be as easy to order a new laptop at work as it is at home,” remarks Sturgill. “You need to commit to improving the work experience of your employees.”

Get your workforce engaged and passionate about digital transformation. Watch the webcast replay The Only Thing to Fear Is Fear Itself: Embracing Change and Seizing the Opportunity of the Digital Transformationin a series hosted by ASUG.

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