42 Facts On Technologies Driving The Digital Economy

Peter Johnson

Part 2 of the six-part blog series “Facts on the Future of Business

Innovation in the business world is accelerating exponentially, with new, disruptive technologies and trends emerging that are fundamentally changing how businesses and the global economy operate. To adapt, thrive, and innovate, we all need to be aware of these evolutionary technologies and trends and understand the opportunities or threats they might present to our organizations, our careers, and society on a whole.

With this in mind, I recently had the opportunity to compile 99 Facts on the Future of Business in the Digital Economy. This presentation includes facts, predictions, and research findings on some of the most impactful technologies and trends that are driving the future of business in the digital economy.

To make it easier to find facts for specific topics, I have grouped the facts into six subsets; in this post I’ll share the second subset.

Artificial intelligence and machine learning

By 2020, the average person will have more conversations with bots than with their spouse.

Source: “Top Strategic Predictions for 2017 and Beyond: Surviving the Storm Winds of Digital Disruption,” Gartner.

In initial tests, a machine-learning algorithm created at Carnegie Mellon was able to predict heart attacks four hours in advance with 80% accuracy.

Source: “Of Prediction and Policy,” The Economist.

Artificial intelligence can predict where epidemics will happen. AIME developed a platform with 87% accuracy in predicting dengue fever outbreaks three months in advance. Now they hope to similarly target other diseases such as Ebola and Zika.

Source: “Artificial Intelligence Innovation Report,” Deloitte.

After watching 5,000 hours of TV, Google’s DeepMind AI was able to lip read 34% more accurately than a professional lip reader.

Source: “Google’s DeepMind AI Can Lip-Read TV Shows Better than a Pro,” New Scientist.

After watching just 600 hours of TV, an MIT deep-learning AI algorithm was able to predict future human interactions after two people met 60.5% as accurately as human subjects.

Source: “Teaching Machines to Predict the Future,” MIT News.

By 2019, 75% of workers who use enterprise applications will have access to intelligent personal assistants to augment their skills and expertise.

Source: “IDC FutureScape: Worldwide Big Data, Business Analytics, and Cognitive Software 2017 Predictions,” IDC Research Inc.

By 2030, the largest company on the Internet is going to be an education-based company, with smart-bot instructors able to personalize lessons for each individual student.

Source: “A Top Futurist Predicts the Largest Internet Company of 2030 Will Be an Online School,” South China Morning Post.

Problem: In the last two decades, 9.6% of the earth’s total wilderness areas has been lost, equaling an estimated 3.3 million square kilometers.

Source: “Catastrophic Declines in Wilderness Areas Undermine Global Environment Targets,” Current Biology.

Solution: Many Latin American governments are turning to artificial intelligence to aid in their forest conservation efforts.

Source: “10 Innovations That Are Changing Conservation,” Cool Green Science.

The Internet of Things

IoT car safety technology already reduces crashes significantly and will save insurance companies $45 billion over the next five years in the United States alone.

Source: “IoT Insurance: Trends in Home, Life, and Auto Insurance Industries,” Business Insider.

Self-driving vehicles have the potential to save millions of lives, given that 1.25 million people die and 50 million are injured each year in auto accidents, nearly 95% of which are caused by human error.

Source: “Will Self-Driving Vehicles Save Lives?” Together for Safer Roads.

Self-driving trucks are hauling iron ore in Australia, convoying across Europe, and appearing on roadways across the globe. And because they offer business savings, self-driving trucks are expected to be more rapidly adopted than self-driving cars.

Source: “Self-Driving Trucks: What’s the Future for America’s 3.5 Million Truckers?” The Guardian.

Barcelona uses the IoT to optimize urban systems and enhance citizen services. To date, it has saved $95 million annually from reduced water and electricity consumption, increased parking revenues by $50 million a year, and generated 47,000 new jobs.

Source: “How Smart City Barcelona Brought the Internet of Things to Life,” Data-Smart City Solutions, Ash Center for Democratic Governance and Innovation at Harvard Kennedy School.

By 2019, 40% of local and regional governments will use the IoT to turn infrastructure such as roads, streetlights, and traffic signals into assets instead of liabilities.

Source: “IDC FutureScape: Worldwide Internet of Things (IoT) 2017 Predictions,” IDC Research Inc.

Usage-based auto insurance enabled by the Internet of Things will grow nearly 1,200% by 2023. This insurance uses real-time information about a driver’s actual driving to assess actuarial risk.

Source: “Usage-Based Insurance Expected to Grow to 142 Million Subscribers Globally by 2023, IHS Says,” IHS Markit.

The Internet of Everything could be worth $19 trillion over the next decade thanks to cost savings and profits for businesses and increased revenues for the public sector.

Source: “The Internet of Everything Is Closer than You Think,” EY.

Problem: With the coming and going of ice ages over the last 400,000+ years, CO2 in the Earth’s atmosphere fluctuated between 180 ppm and 300 ppm. However, CO2 levels have skyrocketed and now exceed 400 ppm for the first time in recorded history.

Source: “The Relentless Rise of Carbon Dioxide,” NASA Global Climate Change: Vital Signs of the Planet.

Solution: New digital technologies can enable a 20% reduction in global carbon emissions by 2030. This is equivalent to eliminating 100% of China’s CO2 emissions, plus another 1.5 billion tons.

Source: “SMARTer2030: Australian Opportunity for ICT Enabled Emission Reductions,” Telstra Corporation.

Augmented reality and virtual reality

By 2020, 100 million consumers will shop in augmented reality.

Source: “Top Strategic Predictions for 2017 and Beyond: Surviving the Storm Winds of Digital Disruption,” Gartner.

And by 2021, over 1 billion people worldwide will regularly use an AR/VR platform (augmented reality/virtual reality) to access apps, content, and data.

Source: “IDC FutureScape: Worldwide IT Industry 2017 Predictions,” IDC Research Inc.

Within just two months, the augmented reality video game Pokémon Go was downloaded 500 million times globally, and after 90 days, the app had generated $600 million in revenue.

Source: “75 Incredible Pokemon Go Statistics,” DMR.

Renault uses virtual reality and immersive simulation technologies to allow its design team, partners, and suppliers to experience, interact with, and test drive new car designs without any physical prototypes.

Source: “Designing the Workplace of the Future: Virtual Reality and 3D Panoramas,” CNN.

Mobile

Two billion individuals and 200 million small businesses in emerging economies lack access to basic financial services and credit. Broad adoption of mobile banking in developing nations could create 95 million new jobs and increase GDP by $3.7 trillion by 2025.

Source: “How Digital Finance Could Boost Growth in Emerging Economies,” McKinsey Global Institute.

Once fully available, 5G data speeds will be 1,000-times faster than today. This revolutionary leap will enable ubiquitous connections across the Internet of Things, engagement across virtual environments with only millisecond latency, and whole new Big Data applications and services.

Source: “2017 Predictions: Behind the Scenes with 5G – 2017 Lays Groundwork for Telecom Revolution,” Canadian Wireless Trade Show.

By 2020, approximately 70% of online purchases in China will be made via a mobile phone. This is significantly higher adoption than estimates for other countries: United States, 46%; United Kingdom, 40%; Japan, 40%; and India, 30%.

Source: “The New Connected Consumer Code: Unlocking Digital Commerce Opportunities,” Euromonitor International.

Robots and drones

Amazon uses 30,000 Kiva robots in its global warehouses, which reduce operating expenses by approximately 20%. Bringing robots to its distribution centers that have not yet implemented them would save Amazon a further $2.5 billion.

Source: “How Amazon Triggered a Robot Arms Race,” Bloomberg Technology.

The European Union is proposing new laws that require robots to be equipped with emergency “kill switches” and to be programmed in accordance to Isaac Asimov’s “laws of robotics” stipulating that robots must never harm a human.

Source: “Europe Calls for Mandatory ‘Kill Switches’ on Robots,” CNN.

Only 13% of U.S. and Canadian manufacturing jobs recently lost were due to international trade. Fully 85% of the job losses stemmed from productivity growth – another way of saying machines replaced human workers.

Source: “Industrial Robots Will Replace Manufacturing Jobs – and That’s a Good Thing,” TechCrunch.

Fully 88% of U.S. consumers say free shipping makes them more likely to shop online, and 79% would select drones as a delivery option if it meant they could receive packages within an hour.

Source: “Reinventing Retail: What Businesses Need to Know for 2016,” Walker Sands Communications.

Taxi drones will start flying passengers in Dubai in July 2017. Passengers will select destinations on a touch screen and will be able to travel up to 30 minutes at a top speed of around 100 kph.

Source: “Taxi Drones Set for July Launch of Passenger Service Over Dubai,” RT News.

Platforms and blockchains

Car sharing could reduce the number of cars needed by 90% by 2035, resulting in only 17% as many cars as there are today.

Source: “Self-Driving Cars Are a Disaster for the Car Industry, But Great for the Rest of Us,” Seeking Alpha.

Millennials are more than twice as willing to car share as Generation X, and five times more likely than baby boomers.

Source: “Cars 2025,” Goldman Sachs.

A large majority – 82% – of executives believe platforms will be the glue that brings organizations together in the digital economy. The top 15 public platforms already have a market capitalization of $2.6 trillion.

Source: “Accenture Technology Vision 2016,” Accenture.

By 2020, over 80% of the G500 will be digital services suppliers through Industry Collaborative Cloud (ICC) platforms.

Source: “IDC FutureScape: Worldwide IT Industry 2017 Predictions,” IDC Research Inc.

The world’s biggest banks have taken the first steps to move onto blockchain, the technology introduced to the world by the virtual currency Bitcoin.

Source: “Wall Street Clearinghouse to Adopt Bitcoin Technology,” The New York Times.

By 2027, blockchains could store as much as 10% of global GDP.

Source: “Making The Next Moves With Blockchain,” D!gitalist Magazine.

Africa is leapfrogging the developed world’s traditional banking systems through fast adoption of mobile and Internet-based technology and is poised to take advantage of the disruptive opportunity that blockchains offer.

Source: “The Blockchain Opportunity, How Cryptocurrencies and Tokens Could Scale Disruptive Solutions Across Africa,” BitHub.Africa.

Problem: To combat corruption and tax evasion in its cash economy (only 2.6% of its citizens pay taxes), the Indian government devalued 80% of its currency in three hours.

Source: “Demonetization: This Is a New Indian Sunrise,” DNA India.

Solution: India could eliminate the need for credit cards, debit cards, and ATMs in three years by switching to biometric payments, as nearly 1.1 billion citizens have already registered their biometric data.

Source: “First Cash, Now India Could Ditch Card Payments by 2020,” CNN.

Other Big Data and analytics

In-memory computing speeds are 1,000 to 1 million times faster than the previous most advanced computing techniques, enabling Big Data analytics processing to be reduced from hours or days to real time.

Source: “Global In-Memory Computing Market – Growth, Trends & Forecasts (2016 – 2021),” Research and Markets.

Among executives, 80.7% characterize their Big Data investments as successful, while only 1.6% deemed them failures. In spite of the successes, executives see lingering cultural barriers hindering full adoption and value realization.

Source: “Big Data Executive Survey 2017,” New Vantage Partners.

Problem: An estimated 45.8 million people are trapped in some form of slavery in 167 countries.

Source: “Global Findings,” Walk Free Foundation: The Global Slavery Index.

Solution: Advanced analytics and Big Data are enabling coordinated efforts to combat human trafficking networks and engage rapid responses when victims are located.

Source: “Tracing a Web of Destruction: Can Big Data Fight Human Trafficking?” HBS Digital Initiative.

Cloud

By 2018, 90% of the population will have unlimited and free data storage in the cloud that will ultimately be supported by ads.

Source: “21 Technology Tipping Points We Will Reach by 2030,” Business Insider.

By 2018, 60% of enterprise IT will be off-premises and in the cloud, driven in large part by the shift to public cloud services.

Source: “IDC FutureScape: Worldwide IT Industry 2017 Predictions,” IDC Research Inc.

In 2020, the top five cloud IaaS/PaaS providers will control 75% of the market, up from 50% in 2016.

Source: “IDC FutureScape: Worldwide IT Industry 2017 Predictions,” IDC Research Inc.

To view all of the 99 Facts on the Future of Business in the Digital Economy, check out the Slideshare below.

To see the rest of the series, check out our page Facts on the Future of Business,” every Thursday, in which we will cover the six topics:

  • The value imperative to embrace the digital economy
  • Technologies driving the digital economy
  • Customer experience and marketing in digital economy
  • The future of work in the digital economy
  • Purpose and sustainability in the digital economy
  • Supply networks in the digital economy
Comments

Peter Johnson

About Peter Johnson

Peter Johnson is a Senior Director of Marketing Strategy and Thought Leadership at SAP, responsible for developing easy to understand corporate level and cross solution messaging. Peter has proven experience leading innovative programs to accelerate and scale Go-To-Market activities, and drive operational efficiencies at industry leading solution providers and global manufactures respectively.

Connecting Cities And Citizens

Holger Tallowitz

Mobility is not restricted to moving people or physical assets from A to B. Mobility is about connecting people and assets – things – and ideas, events, objects, locations, and data. Connectivity needs to be managed in a way that fulfills one task: putting digital at the service of the analog.

Mark Zuckerberg asked: “Is connectivity a human right?” Of course it is. It enables us to make use of the technological and technical progress, which is mainly driven by data and information processing. Connectivity is a human right because: “Everyone has the right of freedom to expression. This shall include freedom to hold opinions and impart information and ideas without interference by public authority and regardless of frontiers…. “ (European Convention on Human Rights – Art. 10)

This means that public bodies have the obligation to provide the framework to build and extend the necessary infrastructure (i.e., 5G networks, public WiFi, LoRa, etc.), including the necessary legal framework. The challenge is that public bodies make decisions based on political expectations and interests rather than on real understanding of technical facts and evidence-based policy requirements. However, self-developing ecosystems (see cryptocurrency, shared economy, 3D printing, etc.) do not ask public authorities whether they can work or what directions to go. They just do it.

Many of these self-developing ecosystems happen in medium to large cities where academia, non-governmental organizations (NGOs), utilities, transportation companies, startups, and municipal government leaders foster the power of connectivity.

Mobile connectivity can, with the right support by governments, NGOs, academia, companies, and international bodies (like the UN), help the human race address a lot of today’s challenges such as:

  • Access to education and healthcare
  • Fight against hunger and poverty
  • Better use of natural resources, instead of just consuming them
  • Improvements that make travel more convenient and safe

With over 50% of humans living in cities, the impacts of these improvements are amplified in urban environments.

It’s not all gold that glitters

We have not fully explored the ethical impacts of a connected world. AI will soon be stronger than many of us expect. AI is poised to become a full part of the connected world and needs to be designed with society’s interested in mind. The same is true with nanotechnologies or biological progress (e.g., transplanted organs grown from the patient’s own stem cells, CRISPR/CAS, etc.)

We need to ensure that security of connectivity is built-in by design. We still face security issues with various IoT interface protocols, for everything from traffic signals to transport management to the telecom networks that are the backbone of smart cities. This is an essential element of making connectivity useful for society.

All new devices, apps, data lakes, and other technologies must be made by design to serve the people. They must enable participation by and accept people with different attitudes, backgrounds, cognition, and cultures. Today’s standardization might be efficient for some, but it should be at the service of connecting people and their individuality, supporting exponential growth of knowledge, and improving life in cities and beyond.

Learn more about how urban innovation is improving and simplifying people’s lives.

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Holger Tallowitz

About Holger Tallowitz

Holger Tallowitz is Director of Future Cities (Blockchain) at SAP. After finishing his studies in economics and foreign trade, he worked as a sales representative for a company in Berlin exporting electrical equipment and then joined SAP. Since 1990, Holger has been involved in various positions across SAP including a consultant for software implementation, manager for SAP R/3 basis and logistics solutions, account manager for a top 10 automotive customer, and a director of support for the Middle and Eastern Europe region.

Embracing Digital Transformation: The Future Of Banking

Falk Rieker

The face of the banking industry has changed in the last few years.

Financial technology companies (fintechs) have begun disrupting the market with cryptocurrency, bitcoin, blockchain, and more. In the United Kingdom, a new breed of banks called “challenger banks” have emerged, focusing on delivering digital-only services and exceptional customer interactions. In the United Kingdom alone, there are currently more than 20 challenger banks.

Forward-thinking banks have responded to these market disruptions by expanding their in-house capabilities. Others have partnered with fintechs to develop new digital offerings. And some simply acquired their competitors.

Banking goes digital

Digital transformation looks different in every industry and every company. In general terms, it is the integration of digital technology into all areas of a business. That integration leads to fundamental changes in how the business operates and delivers value to its customers.

Banks running on a digital core can see reduced costs and streamlined processes. This end-to-end integration also helps provide a more seamless, engaging customer experience. And it makes room for further business transformation with new digital technologies like blockchain and artificial intelligence.

Going digital has also affected the banking workforce, with automation sometimes resulting in layoffs and staff reductions. But there is a growing demand for data scientists with banking experience—a skill set not easy to find in today’s market. It is time for the industry to develop a new workforce model to educate existing staff and recruit new talent.

Big Data and its impact on the customer journey

The banking industry is among the most data-driven of industries. Regulatory and insurance requirements mean banks must store many years of transaction data. The challenge is knowing how to translate that information into meaningful insights.

Big Data provides significant opportunities for banks to outshine their competition. Moving data onto a cloud platform provides a 360-degree view of every customer. This deep insight shows banks where they can provide a higher level of service and create more value. Big Data also allows the use of disruptive technologies like artificial intelligence, blockchain, and IoT to map the customer journey and gain a competitive edge.

Leveraging technology to reinvent the banking business model

New advanced technologies allow banks to strengthen customer engagement with personalized, innovative offerings. The industry already leverages IoT with mobile apps, swipe cards, ATMs, card readers, and sensors. It also provides a new opportunity for real-time asset financing.

Some banks are already using blockchain technology to transform their business processes, as it offers secure, convenient alternatives to traditional bank processes. Lately, blockchain has been in the spotlight because of its ability to reduce fraud in the financial world. Blockchain is already used in the financial instruments areas of banking, including payments (cross-border, peer-to-peer, corporate and interbank); private equity asset transfers; tracking derivative commodities; the management of trading, spending, mortgage and loan records, microfinance applications, and customer service records.

Looking at cross-border payments, for example, blockchain can be used to reduce processing time to minutes from standard times of three to six days. This elevates the customer experience to a new level with lower cost real-time transactions. Stack processes improved by blockchain include clearing networks; international transfers; clearing and settlement; auditing, reconciliation, and reporting; and asset ownership.

Other technologies, such as machine learning, can help automate manual processes, of benefit to trading, fraud management, and customer segmentation activities.

Banking on the cloud

Banks are racing to take advantage of market opportunities available through digital transformation. At the same time, they must manage the risks created by the new digital economy. There is a critical need for affordable computing platforms that provide greater agility.

There is no doubt new digital technologies are changing the banking industry. Banks that embrace innovation and adopt new technologies have unprecedented opportunities to change and improve how they provide financial services including offering the ability to:

  1. Collaborate with financial technology partners to develop digital products.
  2. Provide customers with seamless real-time, multichannel digital interactions.
  3. Simplify and optimize business processes through standardization, optimization, and adoption of cloud solutions.
  4. Build an open and agile platform that makes it easy to meet regulatory requirements.
  5. Innovate with disruptive technologies like artificial intelligence (AI), IoT, and blockchain.

Restructuring the business model and processes is critical to any bank’s successful digitalization. Leveraging innovative capabilities in a cloud deployment can not only speed up digital transformation initiatives but also deliver business-wide process improvements as well.

For more insight on digital leaders, check out the SAP Center for Business Insight report, conducted in collaboration with Oxford Economics, “SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart.”

Comments

Falk Rieker

About Falk Rieker

Falk Rieker, Global Vice President and Global Head of the Banking Business Unit at SAP, is a senior level financial services professional and SAP veteran with over 20 years’ experience. He is responsible for leading the SAP banking solution strategy and connecting bankers with the technology they need to succeed in today´s workplace. As a thought leader in the banking space, Falk frequently speaks at international banking conferences and has been published and quoted in leading industry publications like Forbes, American Banker, IDG and Wall Street and Technology. Follow Falk on Twitter (@FalkRieker), LinkedIn, Youtube, and Instagram.

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.

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Four Retail Technology Trends To Take Off In 2018

Shaily Kumar

Over the past few years, technology has seen a significant shift from cyclical, invention-led spending on point solutions to investments targeting customer-driven, end-to-end value. The next wave of disruption and productivity improvements is here, which means a huge opportunity for digital-focused enterprises – if you are following the right roadmap.

Technology trends have significant potential over the next few years. Establishing a digital platform will not only set the stage for business innovation to provide competitive advantage, but it will also create new business models that will change the way we do business. Technology trends in 2018 will lay the foundation for the maturity of innovative technologies like artificial intelligence and machine learning and will prepare both businesses and shoppers to be ready for their consumption.

Like any other industry, retail is being disrupted. It is no longer enough to simply stock racks with alluring products and wait for customers to rush through the door. Technological innovation is changing the way we shop. Customers can find the lowest price for any product with just a few screen touches. They can read online reviews, have products sent to their home, try them, and return anything they don’t want – all for little or nothing out of pocket. If there are problems, they can use social networks to call out brands that come up short.

Retailers are making their products accessible from websites and mobile applications, with many running effective Internet business operations rather than brick-and-mortar stores. They convey merchandise to the customer’s front entry and are set up with web-based networking media if things turn out badly.

Smart retailers are striving to fulfill changing customer needs and working to guarantee top customer service regardless of how their customer interacts with them.

2017 saw the development of some progressive technology in retail, and 2018 will be another energizing year for the retail industry. Today’s informed customers expect a more engaging shopping experience, with a consistent mix of both online and in-store recommendations. The retail experience is poised to prosper throughout next couple of years – for retailers that are prepared to embrace technology.

Here are four areas of retail technology I predict will take off in 2018:

In-store GPS-driven shopping trolleys

Supermarkets like Tesco and Sainsbury’s now enable their customers to scan and pay for products using a mobile app instead of waiting in a checkout line. The next phase of this involves intelligent shopping trolleys, or grocery store GPS: Customers use a touch screen to load shopping lists, and the system helps them find the items in the store. Customers can then check off and pay for items as they go, directly on-screen. These shopping trolleys will make their way into stores around the last quarter of 2018.

Electronic rack edge names

Electronic rack edge names are not yet broadly utilized, but this could change in 2018 as more retailers adopt this technology. Currently, retail workers must physically select and update printed labels to reflect changes in price, promotions, etc. This technology makes the process more efficient by handling such changes electronically.

Reference point technology

Despite the fact that it’s been around since 2013, reference point technology hasn’t yet been utilized to its fullest potential. In the last few years, however, it’s started to pick up in industries like retail. It’s now being used by a few retailers for area-based promotions.

Some interesting uses I’ve observed: Retailers can send messages to customers when they’re nearby a store location, and in-store mannequins can offer information about the clothing and accessories they’re wearing. I anticipate that this innovation will take off throughout 2018 and into 2019.

Machine intelligence

The technological innovations describe above will also provide retailers with new data streams. These data sources, when merged with existing customer data, online, and ERP data, will lead to new opportunities. Recently Walmart announced it would begin utilizing rack examining robots to help review its stores. The machines will check stock, prices, and even help settle lost inventory. It will also help retailers learn more about changing customer behavior in real time, which will boost engagement.

Clearly, technology and digital transformation in retail have changed the way we live and shop. 2018 will see emerging technologies like machine learning and artificial intelligence using structured and unstructured data to deliver innovation. As technology develops, it will continue to transform and enhance the retail experience.

For more insight on e-commerce, see Cognitive Commerce In The Digital World: Enhancing The Customer Journey.

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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.