The Super Materials Revolution

Dan Wellers

Thousands of years ago, humans discovered they could heat rocks to get metal, and it defined an epoch. Later, we refined iron into steel, and it changed the course of civilization. More recently, we turned petroleum into plastic, with all that implies. Whenever we create new materials that push the limits of what’s possible, we send the world down an entirely new path.

Today, we’re on the verge of a revolution in materials science that will transform the world yet again. Scientists have developed tools that make it possible to design, build, and shape new “super materials” that will eclipse what we once believed were physical limits, create previously unimaginable opportunities, and expand the capabilities of what we already think of as exponential technologies in ways limited only by our imaginations.

Super strength in a pencil

The materials of the future are already being made in the present. One astonishing example is graphene, derived from the same graphite that’s in the pencil on your desk. A sheet just one atom thick, graphene is essentially two-dimensional. It weighs next to nothing, yet is up to 300 times stronger than steel. It conducts electricity more efficiently and faster than any other material. It dissipates heat faster than any other known material. It’s the only substance on earth that is completely impermeable by gas.

Excitement about graphene’s potential was high from the first, and it’s not ebbing. At least 13 conferences focusing on graphene, 2D substances, and nanotechnology are scheduled for 2016. The European Commission has created Graphene Flagship, Europe’s largest-ever research initiative, to bring graphene into the mainstream by 2026. And researchers have already developed an array of fascinating uses for graphene: new types of sensors, high-performance transistors, composites that are both super-light and super-strong, even a graphene-based gel for spinal cord injuries that can help nerve cells communicate by conducting electricity between them.

In 2015, IBM achieved a breakthrough in carbon nanotubes — graphene rolled into a tubular shape — that opens the door to faster transistors that will pack exponentially more computing power onto a single silicon chip. In fact, taken to its logical conclusion, the ability to shrink transistors to nanoscale could lead to processors that combine vast power and tiny size in a way that could be called “smart dust” (good news for those of us who don’t prioritize good housekeeping).

But that’s not all we’ll be doing with graphene. Here are just a few examples of what researchers say this single super material is likely to bring us in the not-too-distant future:

Transparent future mobile phone in hands. Concept.
  • batteries that last twice as long as they do now and could offer electric cars a 500-mile range on a single charge.
  • solar cells that are up to 1,000 times more efficient
  • clothing that conducts electricity and has wireless connectivity
  • bendable, highly conductive display screens
  • water desalinization using 15 to 50 percent less energy
  • coatings that can be applied to almost any surface that needs protection from water and air
  • meteor-resistant spacecraft and lightweight bulletproof armor, both enabled by graphene’s ability to dissipate energy from incoming projectiles

Marveling at the possibilities

Amazingly, graphene barely scratches the surface. Consider these advanced materials, all of them currently in development, and let yourself marvel at how we might put them to work:

Nanomaterials artificially engineered at molecular scale are giving rise to cotton-blend fabric that kills bacteria or conducts electricity, a coating that makes objects so frictionless they give no tactile feedback, and ceramics that bounce back from extreme pressure.

Recyclable carbon fiber composites that can be turned back into liquid form and remolded will replace the current versions that can only go into landfills when they’re broken.

Ultra-thin silicon circuits will lead to high-performance medical instruments that can be not just worn, but implanted or swallowed.

Flexible solar cells will replace large, unwieldy solar panels with thin film that can go almost anywhere and be incorporated into almost anything, from windows to tents to clothing.

Rechargeable metal-air batteries that can store electricity in grid-scale amounts will bring plentiful low-cost, reliable energy to places that currently have unreliable or no access to the traditional power grid.

Biomaterials will allow us to build robotic structures out of engineered materials that mimic organic ones. Soft materials that can be activated by an electric field will give us a whole new take on the human/machine interface. The next generation of prosthetics, for example, will be more comfortable, more functional, and harder to distinguish from living flesh.

Metamaterials, synthetic composites designed at the inter-atomic level, will have properties not found in nature. Those of you who love Star Trek and/or Harry Potter will be thrilled at this example: Scientists have already created a thin skin of metamaterial that makes whatever it covers undetectable. That’s right—an actual invisibility cloak. (Unfortunately, non-Romulans and Muggles will probably have to wait quite a while for the retail version.)

Designing the future, one molecule at a time

More mind-boggling developments in material science are on their way. The Materials Genome Initiative (MGI) is a multi-agency U.S. government project designed to help American institutions discover, develop, and deploy advanced materials at lower cost and bring them to market in less time. One central part of the initiative is a database attempting to map the hundreds of millions of different combinations of elements on the periodic table so that scientists can use artificial intelligence to predict what properties those combinations will have. As the database grows, scientists can draw on that data to determine how best to combine elements to create new super materials that have specific desired properties.

Of course, no technological advance is without its challenges, and the rise of the super materials is no exception. One technical hurdle that’s already pressing is the need to find ways to integrate graphene into a high-tech world in which industry and academia have already invested trillions of dollars in silicon. That sum is impossible to walk away from, so unless (until?) graphene supplants silicon entirely, factories, production lines, and research centers will have to be retooled so that both materials can co-exist in the same projects.

That said, advanced materials are a fundamental building block for change, so keep your eye on them as they develop. As super materials become exponentially easier to produce, we’ll start to see them in common use — imagine 3D printers that can create new objects with high-performance computing and battery power literally baked in. As they become more common, expect to see them weaving exponential technologies tightly into the fabric of daily life, both literally and figuratively, and bringing us ever-closer to a world of ambient intelligence. And as these foundation-shaking new materials become ubiquitous, it’s likely that they’ll make today’s technological marvels seem like a preschooler’s playthings.

Download the executive brief Super Materials: Building the Impossible

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To learn more about how exponential technology will affect business and life, see Digital Futures in the Digitalist Magazine.

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About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

The Future Belongs To Industry-Busting Ecosystems

Dan Wellers and Timo Elliott

The digital revolution has returned nearly absolute power to the customer – and that’s upsetting not simply legacy corporations, but long-held notions of business models, competition, and industry boundaries. As companies examine their customers’ journeys, they are realizing that they alone are not capable of optimizing them. The customer experience today transcends corporate and industry borders – and in order to transform them, companies must work with a much wider range of players than ever before. And, thanks to the advance of digital technologies that dramatically reduce the cost and effort required to connect and collaborate, they can.

Digitally native companies have been the first to explore this new world, where industry limitations serve little more purpose than maintaining an increasingly insignificant status quo. As pointed out in a recent McKinsey Quarterly article on the topic, one would be hard pressed to put a company like Amazon or Japan’s Rakuten Ichiba in a single industry box. After all, neither is simply an online retailer. Amazon is a cloud computing provider, a consumer electronics company, a grocer – just for starters. Rakuten Ichiba is a financial services company, a travel website, a social media provider, and a gaming company.

But legacy organizations, too, must look beyond their own walls – even beyond their own industries – to co-create their futures or risk losing market share to the other companies that do. They will have to take fuller advantage of digital advancements to combine the capabilities of multiple entities to develop not just new products and services, but new business models. A recent article in the Harvard Business Review says this shift is not only possible, but necessary, calling collaboration “the essential new secret sauce for startups and industry leaders alike.” A whitepaper sponsored by the World Economic Forum (WEF) goes a step further, arguing that “only operating models that support partnerships and platforms will survive in the future.”

A mere 3% of corporate leaders say their organizations have completed digital transformation projects across the enterprise, according to a recent survey of 3,100 global executives from the SAP Center for Business Insight. It may well be that the disruptive transformation required to meet ever-increasing customer demands is something companies simply cannot accomplish alone. The select few digital transformation leaders identified in the survey have successfully connected their customer-facing efforts to business processes across the enterprise and extended them to partners and suppliers. As a result, nearly all (92%) of have derived significant or transformational value from digital transformation in customer satisfaction and engagement, compared with 22% of others.

“By understanding the network-multiplier effect of platform-driven ecosystems, companies can digitally tap into the many networks of people who are working toward the same goals. They can then leverage these networks to drive sustainable growth in faster and economically smarter ways,” says the WEF report. Indeed, 81% of respondents to an Accenture survey believe that industry boundaries will dramatically blur as platforms reshape industries into interconnected ecosystems. By 2018, more than 50% of large enterprises – and more than 80% of the Global 500 – will create or partner with industry platforms, according to IDC.

Beyond partnerships to ecosystems

We will see the increasing formation of horizontal ecosystems built around experiences, such as wellness, mobility, or community, for example. Partnerships have long been an essential component of business. But when we’re talking about ecosystems, we’re talking about something more.

British ecologist Arthur Tansley first used the term “ecosystem” to describe the relationship between organisms and their environment in 1935. Nearly 60 years later, in a 1993 Harvard Business Review article, business strategist James F. Moore co-opted the word to describe the interconnected business world. “Innovative businesses can’t evolve in a vacuum,” he wrote. “They must attract resources of all sorts, drawing in capital, partners, suppliers, and customers to create cooperative networks.” Moore suggested that companies were not members a single industry but part of a business ecosystem in which they co-evolve “cooperatively and competitively to support new products, satisfy customer needs, and eventually incorporate the next round of innovations.”

Moore was ahead of his time. But the complex and multi-faceted nature of digital disruption and transformation highlights the appeal of business ecosystems today. “Business ecosystems are not just the province of the digital businesses,” said Marc Strohlein, adjunct research adviser with IDC’s Research Network. “Traditional businesses can adopt ecosystem thinking to evolve partner networks into powerful systems that increase the breadth and value of products and services, grow audiences, build strong competitive strengths, and deliver continuous innovation.”

Customer-centric transformation

Digital transformation is really about providing new and better customer experiences. However today’s complex customer journeys are not easily optimized – spanning not only devices and channels, but also businesses and industries. Taking them to the next level requires the input, innovation, and cooperation of ecosystem partners. Consider the experience of travel, which takes consumers through a series of interactions with multiple entities across sectors – airlines, airports, ground transportation, retail, hotels, government entities – each with different approaches and incentives and few working in collaboration to improve the customer journey. In the future, these entities might band together to innovate and deliver an improved customer experience across those touch points.

Ecosystems can deliver products, services, and experiences that would be difficult, costly, or even impossible for individual businesses on their own. It’s their differences – and their combined ability to learn, innovate, and execute – that make them successful. And in a world of commoditization, that network effect can prove invaluable.

China’s Ping An insurance company is aggressively expanding beyond its sector under a CEO who says the company’s role is not simply to provide insurance products, but help customers improve their lives. Some 89 million people are using Ping An Good Doctor, a platform to connect with doctors not only for online appointment booking but to receive diagnoses and suggested treatments – complete with the ability to share pictures and video.

Roche Diagnostics is innovating in the connected healthcare ecosystem by partnering with SAP to develop not just another blood glucose monitor, but a diabetes management platform. The Accu-Chek View offering integrates a blood glucose monitoring with a wearable fitness tracker and a mobile app so that a diabetes patient’s vital signs and blood sugar level are not only monitored remotely but can be analyzed in relation to their physical activity. The app and its connectivity to caregivers can encourage better lifestyle choices and empower individuals to take an active role in their disease management, improving outcomes.

Tire maker Michelin has created an ecosystem involving training, telematics, and electronics providers to sell not wheels, but a mobility service to help fleet managers control costs and environmental impact.

The CEO of Japan’s Softbank has stated that, “by providing all manner of services and content on (our) platforms, we are aiming to create a comprehensive ecosystem that other companies will never be able to rival.”

Customer co-innovation

Companies are beginning to explore the benefits of business ecosystems, from smart city consortia to mobility efforts, and borders are sure to be redrawn. That’s also true for the boundaries between businesses and their customers. As businesses and the ecosystems they create and participate in deliver more complex and customized products and services, the customer will take a larger role in their creation.

The $20 billion dollar online gaming business not only connects customers with each other, but involves them in continuous development of their products. In 2014, Coca-Cola rolled out its do-it-yourself soda fountains, which enable customers to mix their own beverage concoctions, and has since launched countertop versions and a mobile app.

It’s not just happening in consumer goods, but in the B2B space as well, with organizations working ever closer to provide complex, customized solutions developed with – rather than simply for – customers. Home appliance and electronics maker Haier turned itself around by focusing on customer-driven innovation. The company even created an open innovation platform that enables 670,000 users to communicate with suppliers and other customers searching for new business opportunities. Packaging provider Weig has transformed itself from a product-centric industrial company to a digital industrial service provider that’s integrating partners into production. Weig’s customers are increasingly working with the company to co-invent the perfect materials for their needs.

How to build an ecosystem

Transcending historical conceits and constraints won’t happen overnight. It will demand new mindsets and capabilities, more open corporate cultures, new business processes to support sharing, and technology infrastructures to underpin new cross-business and cross-industry networks. But it’s clear that business ecosystems will be the sources of new value and disruptive innovation in the future.

Company leaders who want to be a part of this collaborative future should start by taking a hard look at the end-to-end customer experience, including the aspects that aren’t controlled by the company’s own organization. Such customer journey mapping can help identify other members of the ecosystem with whom the company might want to collaborate or partner. Future planning and foresight exercises can enable companies to determine not just who the key players are today, but where the valuable partners will be in the future and where it’s best to buy, partner, invest, or incubate.

Technology will play a significant role in enabling the ecosystems of the future. Companies that want to spearhead or join such ecosystems will aggressively adopt systems that encourage open collaboration among stakeholders and iterative innovation such as cloud technologies, APIs, and micro-services. They will also want to create or join the kinds of platforms that will underpin ecosystem development.

Finally, embracing the ecosystem approach to value creation will require new mindsets and disciplines. Many corporate leaders have gotten to where they are because they excelled at coloring inside the lines. Companies will need to make sure those in strategic positions have the requisite creativity, open mindedness, and experience with more disruptive development approaches such as design thinking to re-imagine business models, customer experiences, and corporate value.

Read the executive brief The Future Will Be Co-Created.

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About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

About Timo Elliott

Timo Elliott is an Innovation Evangelist for SAP and a passionate advocate of innovation, digital business, analytics, and artificial intelligence. He was the eighth employee of BusinessObjects and for the last 25 years he has worked closely with SAP customers around the world on new technology directions and their impact on real-world organizations. His articles have appeared in articles such as Harvard Business Review, Forbes, ZDNet, The Guardian, and Digitalist Magazine. He has worked in the UK, Hong Kong, New Zealand, and Silicon Valley, and currently lives in Paris, France. He has a degree in Econometrics and a patent in mobile analytics. 

Swimming In The Immersive Digital Experience

Kai Goerlich

If you’ve chased a Pokémon down the street or visited Antarctica via the New York Times’ VR app, you’ve already experienced how quickly immersive digital experiences have begun to feel real. This first wave of virtual reality (VR) and augmented reality (AR) is using smartphones, glasses, and goggles to place users in the middle of a 360-degree digital environment or overlay digital artifacts on the physical world.

As machine learning and artificial intelligence (AI) become more sophisticated, so will immersive experiences. The devices that deliver those experiences will inevitably get smaller, with a higher image resolution, faster data handling, and inbuilt AI. They won’t just display information in ways we can interact with; they’ll also gather information from the environment in real time and pass it back to an AI for analysis that drives an equally rapid response. As that happens, digital experiences will become increasingly multi-sensory, making them even more convincingly “real” and creating new opportunities for forward-thinking businesses to deliver information to customers and employees alike.

Making a splash

Companies are anticipating remarkable business benefits from immersive digital experiences in areas as diverse as maintenance, logistics, field service, and medicine, in which critical hands-on tasks are more easily demonstrated than explained. VR and AR promise to accelerate, simplify, and extend existing business processes while creating new ones that weren’t previously possible. And although we’re still in the early stages of immersive technology, the pace of innovation and adoption is moving ever faster as new prototypes, pilot projects, and first movers emerge.

SAP, for example, is experimenting with multiple immersive reality use cases. One solution uses AR-enabled glasses to guide warehouse pickers to the right shelves or ensure truck loaders put the right cargo in the right truck in the most efficient way. Another AR solution overlays up-to-date blueprints, measurements, and supply tickets over construction sites in real time so project managers can see the current status of a project at a glance and identify assets that aren’t insured. SAP Analytics 3D is being used to build “digital twins” and prototypes of buildings and machinery — including helicopters — so they can be tested virtually and their maintenance cycles adjusted remotely.

Other early forms of immersive experiences have appeared elsewhere in the marketplace. For $8, anyone can buy a pair of Google Cardboard VR goggles to explore 360-degree visual environments on a smartphone, but that’s just the beginning. The British Army uses a 360-degree VR video for recruiting; Lowe’s has its VR Holoroom where customers can build a mockup of their kitchens and bathrooms with new cabinets and appliances. L’Oreal Cosmetics has deployed an AR application that lets customers try on makeup at their laptops; medical schools are adopting Microsoft’s HoloLens so students can learn from diagnostic information and surgical instructions overlaid on patients’ bodies.

Diving deeper into a digital world

VR and AR hardware has advanced so quickly that the boundaries of what’s possible seem to be expanding by the day. Nvidia’s Project Holodeck, launched in May, generates photorealistic VR environments that multiple people can use and interact in simultaneously. Lenovo’s New Vision AR subsidiary (LNV) and AR engine firm Wikitude announced in June that they’re collaborating on a cloud-based platform that will deliver industrial AR applications over LNV’s next-generation smartglasses. At the same time, Meta, which introduced the first commercially available AR system in 2014, unveiled its new AR Workspace and Meta 2 headset, which lets users interact with AR artifacts by simply touching them as if they were physical objects.

The speed at which these technologies are evolving — and, let’s face it, the sheer science fiction thrill of using them — are good reasons to get excited about the possible ways they could be used, from design and maintenance to customer service. It’s not just that we’ll use new tools to perform existing tasks like consuming content, viewing instructions, augmenting employee performance, or delivering more engaging customer experiences. It’s that we could create entirely new ways of doing things.

Before long, you’ll be able to create a VR avatar that looks like you, sounds like you, and can meet with other VR avatars in an entirely realistic virtual meeting space. You could sit around a table in a digital conference room — or tour the digital twin of a factory, or attend a keynote speech — with colleagues from around the world, and interact both with them and with your surroundings, all without leaving your desk or, if you prefer, your home. With sufficient computing power and a smart enough AI, you could even program your VR avatar to participate in a virtual meeting as your proxy, and (theoretically) to do a good enough job that your colleagues would never guess it wasn’t actually you. That will raise questions about how to tell an avatar being controlled live by a human from one being operated by a bot — and whether to make the difference both obvious and mandatory.

Soaking it in — and soaking in it

As of now, of course, a 100 percent immersive experience that’s indistinguishable from real life is impossible. For one thing, not every task is best done in a VR or AR environment. More importantly, though, current technologies don’t have the power, throughput, or battery life necessary to stream the level of data necessary to build an entirely convincing digital world outside the confines of a purpose-built facility with wired headsets. In addition, although the eyes are the primary user interface for VR and AR, making experiences even more immersive will require companies to engage other senses as well, especially touch and sound.

That said, to make technology truly immersive, we need to make it align with the physical world. That’s going to require more sensors to make more objects interactive; technology infrastructure powerful enough to create convincingly realistic 3D models; and screens, glasses, and other interfaces smart enough to not just show data, but interpret it and allow us to interact with it.

The smaller sensors get, the easier it will become to embed them in everything or even use 3D printers to make objects out of materials that are themselves sensor-sensitive. Our entire physical environment will be intelligent and interactive, gathering and responding to all kinds of information, from the ambient temperature to hand gestures, in real time.

Imagine being in a factory — or an operating room — in which every item has an AR overlay or VR presence that lets you drill into information about that item, handle a digital version of that object, or operate it remotely. Consider the possibilities of technology that lets you see your GPS location or visualize heat gradients, that automatically uses your unique biometrics to log you into your company’s network when you sit down at your desk, that launches a video chat when you make a certain hand gesture. When everything around us is intelligent and interactive, omnipresent sensors and ambient AI could even enable a true virtual assistant capable of responding to requests that you speak into thin air, or of inferring from your current actions what you’ll want to do next.

Potential use cases for immersive digital experiences will include both the highly specialized and the mass market. Areas like military combat, fire and rescue, remote maintenance and repair of delicate or dangerous equipment, professional handling of data, and extreme sports could give rise to niche immersive applications that require intensive training and sophisticated virtual twins.

Meanwhile, at the consumer level, we’re likely to see easy-to-handle devices that add data overlays and immersive input to all kinds of experiences, from shopping and education to gaming and movies. Those could in turn give rise to open source platforms that make it easy for the public to create, crowdsource, and share their own VR and AR experiences. As immersive digital technology becomes commonplace, we could also see a backlash against it, with trendsetters insisting there’s no substitute for the authenticity of the physical world.

The definition of “immersive” is always a few steps ahead of wherever we happen to be. Remember, the racing simulator arcade games of the early 1990s with their surrounding video screens, working pedals, and haptic feedback in the steering wheel seemed completely realistic at the time. Some say we’re still five to ten years away from a truly convincing immersive digital world, one that engages multiple senses and allows us to move through it in 360-degree space. If and when that world arrives, it will change our entire sense of what’s real, what’s relevant, and what we can tangibly affect.

Read the executive brief Diving Deep Into Digital Experiences.


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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

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

Link to Sources


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.

Comments

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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Blockchain: Much Ado About Nothing? How Very Wrong!

Juergen Roehricht

Let me start with a quote from McKinsey, that in my view hits the nail right on the head:

“No matter what the context, there’s a strong possibility that blockchain will affect your business. The very big question is when.”

Now, in the industries that I cover in my role as general manager and innovation lead for travel and transportation/cargo, engineering, construction and operations, professional services, and media, I engage with many different digital leaders on a regular basis. We are having visionary conversations about the impact of digital technologies and digital transformation on business models and business processes and the way companies address them. Many topics are at different stages of the hype cycle, but the one that definitely stands out is blockchain as a new enabling technology in the enterprise space.

Just a few weeks ago, a customer said to me: “My board is all about blockchain, but I don’t get what the excitement is about – isn’t this just about Bitcoin and a cryptocurrency?”

I can totally understand his confusion. I’ve been talking to many blockchain experts who know that it will have a big impact on many industries and the related business communities. But even they are uncertain about the where, how, and when, and about the strategy on how to deal with it. The reason is that we often look at it from a technology point of view. This is a common mistake, as the starting point should be the business problem and the business issue or process that you want to solve or create.

In my many interactions with Torsten Zube, vice president and blockchain lead at the SAP Innovation Center Network (ICN) in Potsdam, Germany, he has made it very clear that it’s mandatory to “start by identifying the real business problem and then … figure out how blockchain can add value.” This is the right approach.

What we really need to do is provide guidance for our customers to enable them to bring this into the context of their business in order to understand and define valuable use cases for blockchain. We need to use design thinking or other creative strategies to identify the relevant fields for a particular company. We must work with our customers and review their processes and business models to determine which key blockchain aspects, such as provenance and trust, are crucial elements in their industry. This way, we can identify use cases in which blockchain will benefit their business and make their company more successful.

My highly regarded colleague Ulrich Scholl, who is responsible for externalizing the latest industry innovations, especially blockchain, in our SAP Industries organization, recently said: “These kinds of use cases are often not evident, as blockchain capabilities sometimes provide minor but crucial elements when used in combination with other enabling technologies such as IoT and machine learning.” In one recent and very interesting customer case from the autonomous province of South Tyrol, Italy, blockchain was one of various cloud platform services required to make this scenario happen.

How to identify “blockchainable” processes and business topics (value drivers)

To understand the true value and impact of blockchain, we need to keep in mind that a verified transaction can involve any kind of digital asset such as cryptocurrency, contracts, and records (for instance, assets can be tangible equipment or digital media). While blockchain can be used for many different scenarios, some don’t need blockchain technology because they could be handled by a simple ledger, managed and owned by the company, or have such a large volume of data that a distributed ledger cannot support it. Blockchain would not the right solution for these scenarios.

Here are some common factors that can help identify potential blockchain use cases:

  • Multiparty collaboration: Are many different parties, and not just one, involved in the process or scenario, but one party dominates everything? For example, a company with many parties in the ecosystem that are all connected to it but not in a network or more decentralized structure.
  • Process optimization: Will blockchain massively improve a process that today is performed manually, involves multiple parties, needs to be digitized, and is very cumbersome to manage or be part of?
  • Transparency and auditability: Is it important to offer each party transparency (e.g., on the origin, delivery, geolocation, and hand-overs) and auditable steps? (e.g., How can I be sure that the wine in my bottle really is from Bordeaux?)
  • Risk and fraud minimization: Does it help (or is there a need) to minimize risk and fraud for each party, or at least for most of them in the chain? (e.g., A company might want to know if its goods have suffered any shocks in transit or whether the predefined route was not followed.)

Connecting blockchain with the Internet of Things

This is where blockchain’s value can be increased and automated. Just think about a blockchain that is not just maintained or simply added by a human, but automatically acquires different signals from sensors, such as geolocation, temperature, shock, usage hours, alerts, etc. One that knows when a payment or any kind of money transfer has been made, a delivery has been received or arrived at its destination, or a digital asset has been downloaded from the Internet. The relevant automated actions or signals are then recorded in the distributed ledger/blockchain.

Of course, given the massive amount of data that is created by those sensors, automated signals, and data streams, it is imperative that only the very few pieces of data coming from a signal that are relevant for a specific business process or transaction be stored in a blockchain. By recording non-relevant data in a blockchain, we would soon hit data size and performance issues.

Ideas to ignite thinking in specific industries

  • The digital, “blockchained” physical asset (asset lifecycle management): No matter whether you build, use, or maintain an asset, such as a machine, a piece of equipment, a turbine, or a whole aircraft, a blockchain transaction (genesis block) can be created when the asset is created. The blockchain will contain all the contracts and information for the asset as a whole and its parts. In this scenario, an entry is made in the blockchain every time an asset is: sold; maintained by the producer or owner’s maintenance team; audited by a third-party auditor; has malfunctioning parts; sends or receives information from sensors; meets specific thresholds; has spare parts built in; requires a change to the purpose or the capability of the assets due to age or usage duration; receives (or doesn’t receive) payments; etc.
  • The delivery chain, bill of lading: In today’s world, shipping freight from A to B involves lots of manual steps. For example, a carrier receives a booking from a shipper or forwarder, confirms it, and, before the document cut-off time, receives the shipping instructions describing the content and how the master bill of lading should be created. The carrier creates the original bill of lading and hands it over to the ordering party (the current owner of the cargo). Today, that original paper-based bill of lading is required for the freight (the container) to be picked up at the destination (the port of discharge). Imagine if we could do this as a blockchain transaction and by forwarding a PDF by email. There would be one transaction at the beginning, when the shipping carrier creates the bill of lading. Then there would be look-ups, e.g., by the import and release processing clerk of the shipper at the port of discharge and the new owner of the cargo at the destination. Then another transaction could document that the container had been handed over.

The future

I personally believe in the massive transformative power of blockchain, even though we are just at the very beginning. This transformation will be achieved by looking at larger networks with many participants that all have a nearly equal part in a process. Today, many blockchain ideas still have a more centralistic approach, in which one company has a more prominent role than the (many) others and often is “managing” this blockchain/distributed ledger-supported process/approach.

But think about the delivery scenario today, where goods are shipped from one door or company to another door or company, across many parties in the delivery chain: from the shipper/producer via the third-party logistics service provider and/or freight forwarder; to the companies doing the actual transport, like vessels, trucks, aircraft, trains, cars, ferries, and so on; to the final destination/receiver. And all of this happens across many countries, many borders, many handovers, customs, etc., and involves a lot of paperwork, across all constituents.

“Blockchaining” this will be truly transformational. But it will need all constituents in the process or network to participate, even if they have different interests, and to agree on basic principles and an approach.

As Torsten Zube put it, I am not a “blockchain extremist” nor a denier that believes this is just a hype, but a realist open to embracing a new technology in order to change our processes for our collective benefit.

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Juergen Roehricht

About Juergen Roehricht

Juergen Roehricht is General Manager of Services Industries and Innovation Lead of the Middle and Eastern Europe region for SAP. The industries he covers include travel and transportation; professional services; media; and engineering, construction and operations. Besides managing the business in those segments, Juergen is focused on supporting innovation and digital transformation strategies of SAP customers. With more than 20 years of experience in IT, he stays up to date on the leading edge of innovation, pioneering and bringing new technologies to market and providing thought leadership. He has published several articles and books, including Collaborative Business and The Multi-Channel Company.