What Electricity 1.0 Can Teach Us About Electricity 2.0

David Jonker

With The Current War premiering at Toronto International Film Festival on September 9 as part of Our Digital Future film series presented by SAP, it’s the perfect time to consider what the original race to bring electricity to the common citizen can teach us about today’s evolving power industry.

The Current War tells the story of Thomas Edison (played by Benedict Cumberbatch) and George Westinghouse (Tom Holland) competing to create and market the dominant electrical system in the United States during the late 1880s and early 1890s. Now known as the War of Currents, the battle between Edison’s direct current (DC) system and Westinghouse’s alternating current (AC) system was one of the defining moments of the Second Industrial Revolution.

Following ruthless propaganda campaigns led by Edison, debates over electrical safety, and a race to show the American people whose system was the most sustainable, the War of Currents settled down when the key players merged and consolidated in the early 1890s. AC power distribution from plants to homes ultimately triumphed, largely because it was cheaper, but DC would still prove very handy, eventually powering our smartphones, computers, cars, and more.

The second war of currents

The Current War feels especially relevant in a time when the Edisons and Westinghouses of today are competing to bring Electricity 2.0 to the mainstream. It’s a key component of the Fourth Industrial Revolution, which has been called a $364 billion opportunity. There will be winners, and there will be losers.

Unlike Electricity 1.0, however, the Second War of Currents has a third major player: the consumer, or perhaps more accurately, the prosumer. The electricity system is going through the biggest shakeup since its introduction 130 years ago. Digitization and decentralization of the grid, the rise of renewable sources like solar and wind, the impact of the Internet of Things, and more are coming together to totally reshape the utilities space, and it could give electricity-generating citizens the upper hand.

Electricity 1.0 was built around large, centralized systems, with the utility owning everything from the plant to the meter. Economies of scale worked to keep costs reasonable – a system that encouraged monopolies and fixed rates. Electricity 2.0 promises to remove the need for such centralization. As more easily decentralized sources like wind and solar become cheaper to generate and subsequently larger sources of electricity generation, power is shifting to the little guy.

Signs that democratization of the grid is really happening are already emerging, not least in the promise of blockchain technology. The cryptocurrency Solarcoin pays people in Solarcoin for generating solar power, and Transactive Grid has created a solar power microgrid for residents to buy and sell energy from each other using a blockchain. On the other hand, we are seeing moves from some of the biggest utilities to gain some influence and control over how blockchain is used in the industry, perhaps most notably from the Energy Web Foundation.

Electricity 2.0 isn’t the death knell for traditional utilities, rather an opportunity for them to facilitate the inevitable transition to new sources and usher in a more efficient, environmentally friendly, and flexible grid.

Utilities – though they might not yet admit it – realize that being slow or resistant to change will render them irrelevant in this new era of power generation and distribution. Some are already acting, reimagining themselves as systems that can work harmoniously alongside clean, decentralized power, storage, and consumer-controlled digital management. Others are suffering at the hands of their own inertia or stagnant government regulations that don’t fit with the looming market reality.

As SAP IoT futurist Tom Raftery writes in The Digitalist, “with the cost of generation dropping with no end in sight, and the cost of storage similarly falling…there is a strong possibility that utilities will have to switch to broadband-like “all-you-can-eat” business models, with the utilities differentiating and making their revenue on added services.”

Imagining a new era of peace in utilities

It all sounds very congenial and utopian, but if the War of Currents (or any free market competition, for that matter) taught us anything, it’s that the power-hungry will inevitably go to great lengths to turn it into a battle for dominance and money.

Human nature dictates that, while many will strive for collaboration in creating an Electricity 2.0 that benefits everyone, there will also be those seeking ways to manipulate and control the system for their own gains. As the devious visionary Edison showed us, however, even the most unsavory tactics can still inspire world-changing innovation.

The Second War of Currents is playing out before our eyes. Time will tell how much power falls into the hands of the prosumer, how much of the new infrastructure utilities own and control, and how governments choose to regulate the new system.

Though it’s partly a race to create and market the best technology, it will most likely be the cheapest energy system that prevails – just like the AC system did in the 1890s. Much of the smart money is on solar and wind power ultimately becoming the dominant sources, but the level of complexity we are capable of managing today means a diverse mix of sources could reduce the risk of price spikes. Whatever happens, it’s a thrilling time for the electricity industry – a time that would make Edison and Westinghouse proud.

Find out more about Our Digital Future film series presented by SAP at TIFF 17.

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David Jonker

About David Jonker

David Jonker is Senior Director of SAP Leonardo and predictive analytic solutions at SAP. He drives go-to-market and co-innovation initiatives across the SAP solution portfolio for Big Data and predictive analytics.

How Blockchain Can Restore Trust In The Wine Industry

Eric Annino

Blockchain is one of those things that everyone talks about but no one (myself included) really understands—like bitcoin or the stock market. I do understand, however, that blockchain is all about trust, and that’s the reason it’s going to revolutionize every industry. It’s also the reason it can revolutionize wine markets.

Fine wine has traditionally been bought and sold based on large measures of trust. A seller offers a bottle for sale, most likely something rare, old, or from an iconic maker; provides a reasonably good story of origin (or provenance) to establish that the wine is authentic and has been stored correctly; and buyers line up to shell out thousands, if not tens of thousands, of dollars.

That has changed in the last decade.

In 2008, Benjamin Wallace’s true crime hit The Billionaire’s Vinegar (soon to be a movie starring Matthew McConaughey) brought to light the story of a German music manager and wine collector who allegedly duped other wealthy collectors into buying counterfeit wine (i.e., wine that has been adulterated in some way, often passed off under a more expensive brand), including several bottles he claimed belonged to Thomas Jefferson.

Wallace’s book became a New York Times bestseller and planted a significant seed of doubt in the minds of collectors everywhere.

Half a decade later, the wine world was again shaken when wine-collector-turned-wine-forger Rudy Kurniawan was sentenced to ten years in prison for defrauding high-end collectors to the tune of at least $20 million. (For the whole story, check out Peter Hellman’s new book In Vino Duplicitas.) In the wake of the “Rudy affair,” auction houses began to withdraw lots of wine of suspicious provenance. Lawsuits followed, and one prominent collector—billionaire Bill Koch, who fell victim to both Rudy and the alleged forger of Wallace’s book, Hardy Rodenstock—even began a crusade against fake wine, hiring a team of experts and spending more than $20 million of his own money to ferret out counterfeiters.

Trust in fine wine markets has never been lower, but blockchain has brought hope.

Meet Everledger, a London-based blockchain technology firm and the first company to secure a wine’s provenance via blockchain. After making its mark fighting counterfeiting in the diamond industry, Everledger made the jump to wine, and has partnered with renowned wine fraud specialist Maureen Downey (who played an important role in the Rudy Kurniawan investigation) to create the Chai Wine Vault.

Using Maureen’s Chai Method, which identifies more than 90 data points on a bottle, along with high-resolution photographs and ownership and storage records, Everledger creates a permanent, digital representation of a bottle on the blockchain. This permanent record acts as a verification point as the bottle changes hands. The blockchain is updated along the way so anyone who buys or sells the bottle can rely on trustworthy provenance.

This level of supply chain security is increasingly vital to every industry. “If you can track and trace diamonds, you can track and trace anything,” says Joe Fox, SAP Ariba’s Senior VP of Business Development and Strategy.

“One of the things blockchain does is facilitate greater visibility and trust. In embedding it across our applications and network, we can enable supply chains that are smarter, faster and more transparent from sourcing all the way through settlement.”

Wine counterfeiting isn’t new—Pliny the Elder lamented the practice in first century Rome—but it’s certainly reaching new heights. Experts, Downey included, have suggested that as much as 20 percent of wine sold globally is fraudulent. An estimated 10,000 “Rudy bottles” are still in circulation, and just last week, police seized 6,000 bottles of counterfeit wine in China.

For wine markets everywhere, blockchain is a timely innovation that underscores the value of trust in any transaction.

For more on blockchain’s potential to impact business processes, see Improve User Experience With Internet Of Things, Blockchain, And Platforms.

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Eric Annino

About Eric Annino

Eric Annino works for Global Corporate Affairs at SAP.

Why Innovation Is A Blessing And A Curse For Legacy Banks

Judy Cubiss and Ginger Shimp

The financial services industry has typically moved at a glacial pace. The simple act of taking money out of an ATM or visiting a bank hasn’t changed in decades.

Yet even the most traditional industries aren’t immune to technology. Digital innovations in the banking field are coming at a furious rate. Blockchains, mobile payments and other newer technologies are creating tremendous opportunities in finance.

It’s no exaggeration to say that banking—once considered among the most staid and conventional of industries—is being roiled by innovation.

Recently, Brian Fanzo and Daniel Newman, co-hosts of the popular S.M.A.C. Talk (social, mobile, analytics, cloud) Technology Podcast, caught up with Falk Rieker, global vice president, Banking Industry Business Unit at SAP SE, on an episode of an extraordinary series entitled Digital Industries, which examines how digital transformation is affecting 16 different industries.

Rieker acknowledged the transformation that is taking place by noting that “innovation in banking is occurring at a rate that hasn’t been seen in decades.”

Banking is being transformed by digital technologies—but where they are coming from?

Like many industries, the impetus for change is not necessarily coming from within the industry. The innovations of financial technology firms and non-banks entering the market have put huge pressure on traditional banks to evolve.

Blockchain technology is one example. By creating a seamless series of tied transactions, banks can realize tremendous time and cost savings. Users, whether they are customers, bankers or auditors, can retrospectively peer into individual transactions without any holds. Thus the amount of tracking or reconciliation required is lowered significantly.

While it may sound counterintuitive, the development of this kind of digital technology often originates in emerging countries rather than developed nations, which just proves the old maxim that necessity is the mother of invention. Listen to a short clip of the podcast:

SMAC podcast

Have you all heard the stat that more people own a mobile device than own a toothbrush?1

Eek!

Well, in these markets many people may not have a laptop but they do have a cell phone, and this becomes the impetus for mobile innovation. Mind-bogglingly, in places such as the U.S. or the U.K., the pace of innovation often lags places such as China, Brazil or Africa.

Part of this is cultural. The banking industry in developed markets tend toward conservatism. Innovation occurring at a breakneck rate may be viewed as something to avoid. Which may help to explain why Americans are still using ATM cards while Chinese consumers don’t even want to use credit cards, preferring to be mobile. Whole ecosystems, such as Alibaba and WeChat, have grown to support these preferences. These platforms aren’t arising from the traditional banking space, but rather technology firms.

Brian Fanzo, S.M.A.C. Talk host agrees:

Gen Z and millennials in China go through their entire day doing all of their payment, transport, food buying through mobile apps

Ultimately, however, technology and consumer preference will determine how banking services are delivered. So how do banks prepare for this exciting new digital world while still protecting themselves from the effects of disruption?

Why banking is needed—but banks are not

The structure of banks as we know it is a relic. Were we to devise a banking system from scratch today, it would no doubt look very different.

banking is needed banks are not it is that simple

Rieker goes on to point out that retail banking services, wealth management, and corporate banking can all be delivered outside the traditional banking system. It’s simply a matter of how long it takes the transformation to occur.

The finance industry has been insulated from innovative competition due in part to regulatory and legal compliance, an ongoing struggle for organizations in the industry.

The protective regulatory walls of the finance industry have been breached: technology firms that provide banking services are often not regulated to the same degree, allowing them the flexibility to innovate while forcing banks to keep pace.

This doesn’t mean that banks are doomed. They still have two very large advantages: market share and data. Data is absolutely critical in terms of targeting and retaining customers. Banks with the best data can derive the most actionable insights into what people need.

Banks have an enormous amount of financial and personal data that they can use to discern the best way to earn and retain the loyalty of consumers. They are making massive investments in leveraging this data in a vast array of means, though it should be noted that non-bank challengers aren’t at a total disadvantage. In the U.K., open banking laws require banks to share customer data with third parties, providing the customer agrees. Should this idea find global traction, it could have profound consequences.  “This will bring a totally different game,” Rieker opines. “And it will be on a level playing field, unlike in the past when banking was an industry nobody could enter.”

Market share, of course, is a critical advantage in any business. Armed with millions of customers and billions in resources, banks have the cachet and capital to take the best innovations from smaller competitors and tweak them to fit their own aims. With these kinds of inherent advantages, it would take more than innovative new services to topple the existing banking structure.

 share of digital banking interactions exceeds 85 percent for most advance countries and is heading to more than 95% in the near future Ultimately, banks that use digital tools to expand their offerings beyond what we consider the traditional purview of banking will be positioned to prosper. The possibility of integrating banking services with energy or telco accounts is an idea that consumers will find appealing, for example.

Banks of the future will also need to focus on improving the customer experience. Banking should be a pleasant experience. It should be integrated with other relevant industries. The digital end-user experience should be compelling.

Banks that get this right will win the future. Those that don’t are almost certain to struggle.

“Banks have no choice,” Rieker said. “Either they adapt or they die.”

The takeaway

Banks have long operated in a traditional, conservative industry that has been protected to some degree from innovation. Today, however, innovations from outside industries and the developing world are occurring at a furious rate due to digitalization. Banks can no longer rely on regulatory protection.

The banks of the future should focus on a few key areas. First, an improved customer experience augmented by stellar digital offerings and services, rooted in a strong digital core. Second, tighter integration with other industries and providers. Third, leveraging the use of data to generate key insights about consumers.

By employing these strategies and keeping pace with the speed of innovation, legacy banks can ensure continued relevance in the digital world.

To listen to this episode of Digital Industries for the banking industry, co-produced by SAP and S.M.A.C. Talk Technology Podcast, click here.

Transforming into a truly digital business is so much more than just implementing new technology to meet the demands of a digital age. It’s more than keeping up with the deluge of transformation happening all around us. Digital transformation is about understanding how to harness these changes and incorporate them into your business strategy. It’s about driving agility, connectivity, analytics, and collaboration to run a Live Business. A digital core empowers you with real-time visibility into all mission critical business processes inside your four walls, and in your interactions with customers, suppliers, workforce, Big Data and the Internet of Things.

For more on how SAP can help you drive your own digital transformation in the banking industry, visit us online.

1Are there Really More Mobile Phone Owners than Toothbrush Owners? https://www.linkedin.com/pulse/really-more-mobile-phone-owners-than-toothbrush-jamie-turner

2Bain Retail Bank of the Future Benchmarking 2013 http://www.bain.com/publications/articles/building-the-retail-bank-of-the-future.aspx

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Judy Cubiss

About Judy Cubiss

Judy is director of content marketing for Finance at SAP. She has worked in the software industry for over 20 years in a variety of roles, including consulting, product management, solution management, and content marketing in both Europe and the United States.

About Ginger Shimp

With more than 20 years’ experience in marketing, Ginger Shimp has been with SAP since 2004. She has won numerous awards and honors at SAP, including being designated “Top Talent” for two consecutive years. Not only is she a Professional Certified Marketer with the American Marketing Association, but she's also earned her Connoisseur's Certificate in California Reds from the Chicago Wine School. She holds a bachelor's degree in journalism from the University of San Francisco, and an MBA in marketing and managerial economics from the Kellogg Graduate School of Management at Northwestern University. Personally, Ginger is the proud mother of a precocious son and happy wife of one of YouTube's 10 EDU Gurus, Ed Shimp.

Diving Deep Into Digital Experiences

Kai Goerlich

 

Google Cardboard VR goggles cost US$8
By 2019, immersive solutions
will be adopted in 20% of enterprise businesses
By 2025, the market for immersive hardware and software technology could be $182 billion
In 2017, Lowe’s launched
Holoroom How To VR DIY clinics

From Dipping a Toe to Fully Immersed

The first wave of virtual reality (VR) and augmented reality (AR) is here,

using smartphones, glasses, and goggles to place us in the middle of 360-degree digital environments or overlay digital artifacts on the physical world. Prototypes, pilot projects, and first movers have already emerged:

  • Guiding warehouse pickers, cargo loaders, and truck drivers with AR
  • Overlaying constantly updated blueprints, measurements, and other construction data on building sites in real time with AR
  • Building 3D machine prototypes in VR for virtual testing and maintenance planning
  • Exhibiting new appliances and fixtures in a VR mockup of the customer’s home
  • Teaching medicine with AR tools that overlay diagnostics and instructions on patients’ bodies

A Vast Sea of Possibilities

Immersive technologies leapt forward in spring 2017 with the introduction of three new products:

  • Nvidia’s Project Holodeck, which generates shared photorealistic VR environments
  • A cloud-based platform for industrial AR from Lenovo New Vision AR and Wikitude
  • A workspace and headset from Meta that lets users use their hands to interact with AR artifacts

The Truly Digital Workplace

New immersive experiences won’t simply be new tools for existing tasks. They promise to create entirely new ways of working.

VR avatars that look and sound like their owners will soon be able to meet in realistic virtual meeting spaces without requiring users to leave their desks or even their homes. With enough computing power and a smart-enough AI, we could soon let VR avatars act as our proxies while we’re doing other things—and (theoretically) do it well enough that no one can tell the difference.

We’ll need a way to signal when an avatar is being human driven in real time, when it’s on autopilot, and when it’s owned by a bot.


What Is Immersion?

A completely immersive experience that’s indistinguishable from real life is impossible given the current constraints on power, throughput, and battery life.

To make current digital experiences more convincing, we’ll need interactive sensors in objects and materials, more powerful infrastructure to create realistic images, and smarter interfaces to interpret and interact with data.

When everything around us is intelligent and interactive, every environment could have an AR overlay or VR presence, with use cases ranging from gaming to firefighting.

We could see a backlash touting the superiority of the unmediated physical world—but multisensory immersive experiences that we can navigate in 360-degree space will change what we consider “real.”


Download the executive brief Diving Deep Into Digital Experiences.


Read the full article Swimming in the Immersive Digital Experience.

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Kai Goerlich

About Kai Goerlich

Kai Goerlich is the Chief Futurist at SAP Innovation Center network His specialties include Competitive Intelligence, Market Intelligence, Corporate Foresight, Trends, Futuring and ideation. Share your thoughts with Kai on Twitter @KaiGoe.heif Futu

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Jenny Dearborn: Soft Skills Will Be Essential for Future Careers

Jenny Dearborn

The Japanese culture has always shown a special reverence for its elderly. That’s why, in 1963, the government began a tradition of giving a silver dish, called a sakazuki, to each citizen who reached the age of 100 by Keiro no Hi (Respect for the Elders Day), which is celebrated on the third Monday of each September.

That first year, there were 153 recipients, according to The Japan Times. By 2016, the number had swelled to more than 65,000, and the dishes cost the already cash-strapped government more than US$2 million, Business Insider reports. Despite the country’s continued devotion to its seniors, the article continues, the government felt obliged to downgrade the finish of the dishes to silver plating to save money.

What tends to get lost in discussions about automation taking over jobs and Millennials taking over the workplace is the impact of increased longevity. In the future, people will need to be in the workforce much longer than they are today. Half of the people born in Japan today, for example, are predicted to live to 107, making their ancestors seem fragile, according to Lynda Gratton and Andrew Scott, professors at the London Business School and authors of The 100-Year Life: Living and Working in an Age of Longevity.

The End of the Three-Stage Career

Assuming that advances in healthcare continue, future generations in wealthier societies could be looking at careers lasting 65 or more years, rather than at the roughly 40 years for today’s 70-year-olds, write Gratton and Scott. The three-stage model of employment that dominates the global economy today—education, work, and retirement—will be blown out of the water.

It will be replaced by a new model in which people continually learn new skills and shed old ones. Consider that today’s most in-demand occupations and specialties did not exist 10 years ago, according to The Future of Jobs, a report from the World Economic Forum.

And the pace of change is only going to accelerate. Sixty-five percent of children entering primary school today will ultimately end up working in jobs that don’t yet exist, the report notes.

Our current educational systems are not equipped to cope with this degree of change. For example, roughly half of the subject knowledge acquired during the first year of a four-year technical degree, such as computer science, is outdated by the time students graduate, the report continues.

Skills That Transcend the Job Market

Instead of treating post-secondary education as a jumping-off point for a specific career path, we may see a switch to a shorter school career that focuses more on skills that transcend a constantly shifting job market. Today, some of these skills, such as complex problem solving and critical thinking, are taught mostly in the context of broader disciplines, such as math or the humanities.

Other competencies that will become critically important in the future are currently treated as if they come naturally or over time with maturity or experience. We receive little, if any, formal training, for example, in creativity and innovation, empathy, emotional intelligence, cross-cultural awareness, persuasion, active listening, and acceptance of change. (No wonder the self-help marketplace continues to thrive!)

The three-stage model of employment that dominates the global economy today—education, work, and retirement—will be blown out of the water.

These skills, which today are heaped together under the dismissive “soft” rubric, are going to harden up to become indispensable. They will become more important, thanks to artificial intelligence and machine learning, which will usher in an era of infinite information, rendering the concept of an expert in most of today’s job disciplines a quaint relic. As our ability to know more than those around us decreases, our need to be able to collaborate well (with both humans and machines) will help define our success in the future.

Individuals and organizations alike will have to learn how to become more flexible and ready to give up set-in-stone ideas about how businesses and careers are supposed to operate. Given the rapid advances in knowledge and attendant skills that the future will bring, we must be willing to say, repeatedly, that whatever we’ve learned to that point doesn’t apply anymore.

Careers will become more like life itself: a series of unpredictable, fluid experiences rather than a tightly scripted narrative. We need to think about the way forward and be more willing to accept change at the individual and organizational levels.

Rethink Employee Training

One way that organizations can help employees manage this shift is by rethinking training. Today, overworked and overwhelmed employees devote just 1% of their workweek to learning, according to a study by consultancy Bersin by Deloitte. Meanwhile, top business leaders such as Bill Gates and Nike founder Phil Knight spend about five hours a week reading, thinking, and experimenting, according to an article in Inc. magazine.

If organizations are to avoid high turnover costs in a world where the need for new skills is shifting constantly, they must give employees more time for learning and make training courses more relevant to the future needs of organizations and individuals, not just to their current needs.

The amount of learning required will vary by role. That’s why at SAP we’re creating learning personas for specific roles in the company and determining how many hours will be required for each. We’re also dividing up training hours into distinct topics:

  • Law: 10%. This is training required by law, such as training to prevent sexual harassment in the workplace.

  • Company: 20%. Company training includes internal policies and systems.

  • Business: 30%. Employees learn skills required for their current roles in their business units.

  • Future: 40%. This is internal, external, and employee-driven training to close critical skill gaps for jobs of the future.

In the future, we will always need to learn, grow, read, seek out knowledge and truth, and better ourselves with new skills. With the support of employers and educators, we will transform our hardwired fear of change into excitement for change.

We must be able to say to ourselves, “I’m excited to learn something new that I never thought I could do or that never seemed possible before.” D!

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