How To Create A Transparent, Sustainable Food Supply Chain

Dr. Volker Keiner

Today’s farmer is in a tight spot. On one hand, the farm needs to produce a profit and run efficiently. On the other, consumers are demanding transparency and sustainability in farming. Digital transformation may seem like something that happens in other industries, but industry giants such as Cargill and John Deere are proving digital business transformation can lead to success in agriculture as well.

As our population grows, farms that embrace precision agriculture can see excellent gains. What kind of gains? Our research has found that early adopters are seeing an average 9% increase in revenue, 26% increase in profitability, and a 12% increase in market value.

Building transparency in the food supply chain

As communication improves, we’re seeing more impact in our industry from consumer opinion from food recalls, demand for locally sourced foods, and increased supply chain transparency. From ice cream to salad dressing, recalls are causing serious concerns for consumers and problems for agricultural production. Today’s consumers want farm-to-fork transparency to ensure their food safety. They’re also more aware and concerned about agricultural practices and how their food was produced. Many consumers are happy to pay more for food that is proven to be sourced using fair trade practices, which require the farmer to follow sustainable farming practices. But how do you build food traceability to that level?

Smallholder farming has answered this question in one fashion with the growing trend of direct marketing by farmers to the end consumer. The farmer creates a deep, one-on-one relationship with the consumer, who they see at farmers’ markets, on CSA days, and in the local community. This trend has been driven by society’s demand for further transparency in the food supply chain.

But clearly, this approach isn’t the answer for global agricultural supply chains. Consumers cannot maintain one-on-one relationships with all the farmers that produce input for their food, which provides a level of transparency while automating most of the communication needed.

Hyperconnectivity helps provide information, captured by digital farming solutions and processing practices, from the farm to the end consumer. It offers consumers the information they need, from the seeds and inputs used to the processes performed. It also eases the effort of maintaining so many one-on-one relationships. This process also affects the commodity markets because traders are limited as mixing and blending products impacts traceability.

Creating a sustainable agribusiness supply chain

Side by side with transparency is sustainability. The world’s population is expected to approach 10 billion people by 2050, which will require a 70% increase in food production. It’s no surprise that scarce resources such as water and arable land are becoming more valuable.

Additional transparency and networking also provides opportunities to optimize and increase the efficiency of food supply chains by reducing waste. It exceeds government and NGO scrutiny, affecting increasing and constantly changing regulations on farm operations, processing,and traceability. Digital transformation decreases the investment cost of transparency in the food supply chain: As more businesses digitalize, they can provide more information at a lower cost to the end consumer through mobile apps and QR codes. This level of transparency helps protect agribusiness and improves efficiency in farm operations.

Sustainable farming provides opportunities to improve yields while also preserving the environment. Precision farming is one area where technology and sustainability intersect, because inputs are used only where they are needed, reducing water, fertilizer, and fuel use. In California’s ongoing drought, for example, precision agriculture is expected to reduce water usage on farms by 25%.

Fresh water supply is significant concern for sustainable agriculture. Today, 80% of the world’s arable land is watered exclusively by rainfall and produces 60% of the world’s plant-based food. The remaining 20% is irrigated and produces 40% of the world’s plant-based food. As aquifers sink to record lows, the use of irrigation falls into a bad light. Precision agriculture can better match appropriate crops to soil and climate conditions and help protect our limited clean water supply. Such opportunities provide exciting opportunities for creativity and digital entrepreneurship in farming.

Another area where sustainability can play a role is in helping maintain and preserve the family farm. Family farms are becoming rarer as younger generations realize the challenges of profitability and leave in search of better opportunities. Precision farming limits inputs, automates tasks, and helps slow or eliminate the loss of experienced operators. This in turn boosts profitability, making the business of farming more appealing to younger generations.

Digitalizing agriculture improves transparency and sustainability. Fully 90% of executives recognize the impact the digital economy has on their business. Only 15% are creating a plan of action to adapt to these changes. Where will your agribusiness supply chain fall in this range? Will you get ahead of the curve or be left behind?

To learn more about digital transformation for agribusiness, click here.

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Dr. Volker Keiner

About Dr. Volker Keiner

Volker Keiner is a solution manager for commodities in general and for the agribusiness at SAP. As part of the Industry Solutions team for agribusiness and commodity management, he is driving, supporting, and positioning new SAP solutions for commodity trading, commodity logistics, farm to fork, and digital farming. He is working with various customers and partners in these areas.

Blockchain To The Rescue: We Can Be Much Better At Weathering Natural Disasters

Susan Galer

As a massive hurricane devastates a city, first responders immediately bring life-saving medical attention, food, water, fuel, and other resources to victims in real-time, hiring suppliers with the best prices to deliver items to the exact locations where people need it most.

Contrary to real-life events in the news lately, this is not wishful thinking. It’s a humanitarian relief scenario made entirely possible by a blockchain technology demo I saw at the recent SAP TechEd event in this video interview with Torsten Zube, blockchain lead at the SAP Innovation Center Network.

Bringing help where it’s needed most

Called the “pooling and sharing” scenario, this blockchain example offers a fundamentally disruptive approach to quickly mobilize public and private organizations when disaster strikes. Often the problem lies not so much in the lack of resources available to help, but in the logistics to efficiently direct and deliver that support to the right places.

“Blockchain’s trusted, decentralized transparency across numerous parties – government officials, community organizers, vendors, utilities, healthcare providers ­– makes it perfectly suited to help align citizen demands for relief with the most readily available supplies,” said Zube. “It’s a very simple way to bring help to where it’s needed most. Giving everyone involved the ability to write and read data on an open source platform speeds up disaster relief to a whole new level.”

“During natural disasters, blockchain can bring life-saving transparency to humanitarian relief missions”

Essentially operating as an ad hoc supply chain network on a mobile app, this blockchain example connected suppliers of clean drinking water with helicopter pilots to schedule deliveries at specific locations within certain time frames. Smart contract technology determined which offer was the best one based on community needs, triggering acceptance of the offer, and setting in motion the delivery through confirmation.

“We end up with a system of record, built from scratch and outside of any existing application, that everyone can use right away to help alleviate problems faster,” said Zube.

Blockchain can’t prevent natural disasters, but it’s top of mind as a solution right now when millions of people are struggling with this season’s record breaking natural disasters.

Distributed ledgers, smart contracts, and other blockchain technologies embed integrity and provenance in every digital asset and transaction. Learn more about the benefits of Running Future Cities on Blockchain.

Follow me: @smgaler

This article originally appeared on SAP News Center.

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Muru Walks A Pathway To The Future

Rick Price

When you think about office supplies, you probably think about things like the reams of paper it takes to get business done. But to Indigenous communities in Australia, that paper is a pathway to equality and a brighter future through an Indigenous-owned company called Muru Office Supplies.

Muru means pathway

Muru CEO Mitchell Ross explains that in the language of his people, Muru means “pathway”: “I’m an Indigenous man myself, and going into business… there was a huge drive for me to give back to other Indigenous people, so part of our vision as an organization is to create a pathway for the next generation of Indigenous people.” Ross explains that Muru gives part of its profits back to Indigenous community programs and has strong Indigenous employment goals.

Challenging history, new opportunities

This is a moment of opportunity for businesses like Muru. Challenged by a history that has often left First Australians behind, the Australian government a year ago created an Indigenous Procurement Policy. In its first year, the government awarded A$284.2 million in contracts to 493 Indigenous businesses. At the same time, many large Australian businesses are finding both purpose and profit in partnering with and buying from Indigenous suppliers. This policy is potentially even more powerful when combined with innovative, cloud-based procurement technology. The opportunity is ripe for smaller, Indigenous businesses like Muru to partner with other suppliers and also to get on the radar of larger buyers.

The power of the business network

Muru has found an expert partner in Complete Office Supplies or COS, Australia’s largest family-owned office products supplier, which has 41 years of experience. At SAP Ariba Live in Sydney in August, COS’s Sarah Trueman explained: “Over the years, we’ve helped Indigenous-owned small businesses, whether distributing their product or helping with logistics and services.” And a partnership with COS can help small Indigenous companies compete with larger organizations: “We support Muru Office Supplies with logistics, with supply chain, customer service, and IT, to make sure that they have the same service level as a company the size of COS.”

Iron…and paper

This effort is putting Muru in a position to work with Fortescue, the world’s fourth-largest iron ore producer. Chelsea Gray, Fortescue’s procurement systems and services manager explains: “Ending Aboriginal disparity has always been a core part of Fortescue.” Beginning in 2011, Fortescue’s Billion Opportunities program has awarded nearly A$2 billion in contracts to over 100 Aboriginal-owned businesses and joint ventures, including Muru.

COS has been a vendor of Fortescue for many years and saw an opportunity to build Muru’s capability by forming the joint venture Muru Office Supplies (MOS). MOS was successful in an open tender to provide Fortescue’s stationery requirements a few years back. COS’s Sarah Trueman says “the joint venture with Muru has been very successful and has resulted in MOS winning further business.”

The digital pathway

Muru, COS, and Fortescue are linked through technology that automates the procurement process and keeps business moving on the pathway between the three companies. Ross says that helps Muru fulfill its purpose in several ways: “It really comes down to streamlining processes for our customers and our buyers, so it reduces the administration costs, particularly in the high-transaction environment that we’re in. It reduces the human error rate because of the integration and automation that’s involved; it’s extremely helpful.” That helps Muru stay competitive, build its credibility, and grow so it can help more people.

SAP Ariba president Alex Atzberger notes: “Across procurement, we see people trying to tackle issues that impact the global supply chain such as slavery, poverty, and diversity. But they are struggling because they lack visibility and data on their suppliers. We can help deliver the intelligence and transparency they need to manage these challenges and effect change.”

The value of purpose

Including Indigenous businesses in procurement benefits companies around the globe. Atzberger points out: “Procurement is in a unique position to address these issues and, beyond saving money and creating efficiencies, improve lives.” Ariba vice president, products and innovation, Padmini Ranganathan points out: “Companies have seen value, cost efficiencies, and have enhanced their brand reputation.” Trueman agrees, saying it brings COS and its employees: “a sense of pride that we are helping Indigenous communities and giving back. As Muru talks about providing education to small children in these communities it’s really touching, it really makes you want to do more.”

Muru’s Ross adds: “As an Indigenous person, it’s easy to think about doing business with a purpose. It’s who we are as a people, so for other organizations and other buyers and suppliers out there, think about the bigger picture and about the world you want to live in, and come up with a purpose that you’re happy to strive towards.”

Interested in the ways procurement can help you make a difference? Click here for more stories like this one.

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Rick Price

About Rick Price

Rick Price is an Emmy Award-winning journalist who now works at SAP, where he tells stories of customers' digital transformation.

More Than Noise: Digital Trends That Are Bigger Than You Think

By Maurizio Cattaneo, David Delaney, Volker Hildebrand, and Neal Ungerleider

In the tech world in 2017, several trends emerged as signals amid the noise, signifying much larger changes to come.

As we noted in last year’s More Than Noise list, things are changing—and the changes are occurring in ways that don’t necessarily fit into the prevailing narrative.

While many of 2017’s signals have a dark tint to them, perhaps reflecting the times we live in, we have sought out some rays of light to illuminate the way forward. The following signals differ considerably, but understanding them can help guide businesses in the right direction for 2018 and beyond.

When a team of psychologists, linguists, and software engineers created Woebot, an AI chatbot that helps people learn cognitive behavioral therapy techniques for managing mental health issues like anxiety and depression, they did something unusual, at least when it comes to chatbots: they submitted it for peer review.

Stanford University researchers recruited a sample group of 70 college-age participants on social media to take part in a randomized control study of Woebot. The researchers found that their creation was useful for improving anxiety and depression symptoms. A study of the user interaction with the bot was submitted for peer review and published in the Journal of Medical Internet Research Mental Health in June 2017.

While Woebot may not revolutionize the field of psychology, it could change the way we view AI development. Well-known figures such as Elon Musk and Bill Gates have expressed concerns that artificial intelligence is essentially ungovernable. Peer review, such as with the Stanford study, is one way to approach this challenge and figure out how to properly evaluate and find a place for these software programs.

The healthcare community could be onto something. We’ve already seen instances where AI chatbots have spun out of control, such as when internet trolls trained Microsoft’s Tay to become a hate-spewing misanthrope. Bots are only as good as their design; making sure they stay on message and don’t act in unexpected ways is crucial.

This is especially true in healthcare. When chatbots are offering therapeutic services, they must be properly designed, vetted, and tested to maintain patient safety.

It may be prudent to apply the same level of caution to a business setting. By treating chatbots as if they’re akin to medicine or drugs, we have a model for thorough vetting that, while not perfect, is generally effective and time tested.

It may seem like overkill to think of chatbots that manage pizza orders or help resolve parking tickets as potential health threats. But it’s already clear that AI can have unintended side effects that could extend far beyond Tay’s loathsome behavior.

For example, in July, Facebook shut down an experiment where it challenged two AIs to negotiate with each other over a trade. When the experiment began, the two chatbots quickly went rogue, developing linguistic shortcuts to reduce negotiating time and leaving their creators unable to understand what they were saying.

Do we want AIs interacting in a secret language because designers didn’t fully understand what they were designing?

The implications are chilling. Do we want AIs interacting in a secret language because designers didn’t fully understand what they were designing?

In this context, the healthcare community’s conservative approach doesn’t seem so farfetched. Woebot could ultimately become an example of the kind of oversight that’s needed for all AIs.

Meanwhile, it’s clear that chatbots have great potential in healthcare—not just for treating mental health issues but for helping patients understand symptoms, build treatment regimens, and more. They could also help unclog barriers to healthcare, which is plagued worldwide by high prices, long wait times, and other challenges. While they are not a substitute for actual humans, chatbots can be used by anyone with a computer or smartphone, 24 hours a day, seven days a week, regardless of financial status.

Finding the right governance for AI development won’t happen overnight. But peer review, extensive internal quality analysis, and other processes will go a long way to ensuring bots function as expected. Otherwise, companies and their customers could pay a big price.

Elon Musk is an expert at dominating the news cycle with his sci-fi premonitions about space travel and high-speed hyperloops. However, he captured media attention in Australia in April 2017 for something much more down to earth: how to deal with blackouts and power outages.

In 2016, a massive blackout hit the state of South Australia following a storm. Although power was restored quickly in Adelaide, the capital, people in the wide stretches of arid desert that surround it spent days waiting for the power to return. That hit South Australia’s wine and livestock industries especially hard.

South Australia’s electrical grid currently gets more than half of its energy from wind and solar, with coal and gas plants acting as backups for when the sun hides or the wind doesn’t blow, according to ABC News Australia. But this network is vulnerable to sudden loss of generation—which is exactly what happened in the storm that caused the 2016 blackout, when tornadoes ripped through some key transmission lines. Getting the system back on stable footing has been an issue ever since.

Displaying his usual talent for showmanship, Musk stepped in and promised to build the world’s largest battery to store backup energy for the network—and he pledged to complete it within 100 days of signing the contract or the battery would be free. Pen met paper with South Australia and French utility Neoen in September. As of press time in November, construction was underway.

For South Australia, the Tesla deal offers an easy and secure way to store renewable energy. Tesla’s 129 MWh battery will be the most powerful battery system in the world by 60% once completed, according to Gizmodo. The battery, which is stationed at a wind farm, will cover temporary drops in wind power and kick in to help conventional gas and coal plants balance generation with demand across the network. South Australian citizens and politicians largely support the project, which Tesla claims will be able to power 30,000 homes.

Until Musk made his bold promise, batteries did not figure much in renewable energy networks, mostly because they just aren’t that good. They have limited charges, are difficult to build, and are difficult to manage. Utilities also worry about relying on the same lithium-ion battery technology as cellphone makers like Samsung, whose Galaxy Note 7 had to be recalled in 2016 after some defective batteries burst into flames, according to CNET.

However, when made right, the batteries are safe. It’s just that they’ve traditionally been too expensive for large-scale uses such as renewable power storage. But battery innovations such as Tesla’s could radically change how we power the economy. According to a study that appeared this year in Nature, the continued drop in the cost of battery storage has made renewable energy price-competitive with traditional fossil fuels.

This is a massive shift. Or, as David Roberts of news site Vox puts it, “Batteries are soon going to disrupt power markets at all scales.” Furthermore, if the cost of batteries continues to drop, supply chains could experience radical energy cost savings. This could disrupt energy utilities, manufacturing, transportation, and construction, to name just a few, and create many opportunities while changing established business models. (For more on how renewable energy will affect business, read the feature “Tick Tock” in this issue.)

Battery research and development has become big business. Thanks to electric cars and powerful smartphones, there has been incredible pressure to make more powerful batteries that last longer between charges.

The proof of this is in the R&D funding pudding. A Brookings Institution report notes that both the Chinese and U.S. governments offer generous subsidies for lithium-ion battery advancement. Automakers such as Daimler and BMW have established divisions marketing residential and commercial energy storage products. Boeing, Airbus, Rolls-Royce, and General Electric are all experimenting with various electric propulsion systems for aircraft—which means that hybrid airplanes are also a possibility.

Meanwhile, governments around the world are accelerating battery research investment by banning internal combustion vehicles. Britain, France, India, and Norway are seeking to go all electric as early as 2025 and by 2040 at the latest.

In the meantime, expect huge investment and new battery innovation from interested parties across industries that all share a stake in the outcome. This past September, for example, Volkswagen announced a €50 billion research investment in batteries to help bring 300 electric vehicle models to market by 2030.

At first, it sounds like a narrative device from a science fiction novel or a particularly bad urban legend.

Powerful cameras in several Chinese cities capture photographs of jaywalkers as they cross the street and, several minutes later, display their photograph, name, and home address on a large screen posted at the intersection. Several days later, a summons appears in the offender’s mailbox demanding payment of a fine or fulfillment of community service.

As Orwellian as it seems, this technology is very real for residents of Jinan and several other Chinese cities. According to a Xinhua interview with Li Yong of the Jinan traffic police, “Since the new technology has been adopted, the cases of jaywalking have been reduced from 200 to 20 each day at the major intersection of Jingshi and Shungeng roads.”

The sophisticated cameras and facial recognition systems already used in China—and their near–real-time public shaming—are an example of how machine learning, mobile phone surveillance, and internet activity tracking are being used to censor and control populations. Most worryingly, the prospect of real-time surveillance makes running surveillance states such as the former East Germany and current North Korea much more financially efficient.

According to a 2015 discussion paper by the Institute for the Study of Labor, a German research center, by the 1980s almost 0.5% of the East German population was directly employed by the Stasi, the country’s state security service and secret police—1 for every 166 citizens. An additional 1.1% of the population (1 for every 66 citizens) were working as unofficial informers, which represented a massive economic drain. Automated, real-time, algorithm-driven monitoring could potentially drive the cost of controlling the population down substantially in police states—and elsewhere.

We could see a radical new era of censorship that is much more manipulative than anything that has come before. Previously, dissidents were identified when investigators manually combed through photos, read writings, or listened in on phone calls. Real-time algorithmic monitoring means that acts of perceived defiance can be identified and deleted in the moment and their perpetrators marked for swift judgment before they can make an impression on others.

Businesses need to be aware of the wider trend toward real-time, automated censorship and how it might be used in both commercial and governmental settings. These tools can easily be used in countries with unstable political dynamics and could become a real concern for businesses that operate across borders. Businesses must learn to educate and protect employees when technology can censor and punish in real time.

Indeed, the technologies used for this kind of repression could be easily adapted from those that have already been developed for businesses. For instance, both Facebook and Google use near–real-time facial identification algorithms that automatically identify people in images uploaded by users—which helps the companies build out their social graphs and target users with profitable advertisements. Automated algorithms also flag Facebook posts that potentially violate the company’s terms of service.

China is already using these technologies to control its own people in ways that are largely hidden to outsiders.

According to a report by the University of Toronto’s Citizen Lab, the popular Chinese social network WeChat operates under a policy its authors call “One App, Two Systems.” Users with Chinese phone numbers are subjected to dynamic keyword censorship that changes depending on current events and whether a user is in a private chat or in a group. Depending on the political winds, users are blocked from accessing a range of websites that report critically on China through WeChat’s internal browser. Non-Chinese users, however, are not subject to any of these restrictions.

The censorship is also designed to be invisible. Messages are blocked without any user notification, and China has intermittently blocked WhatsApp and other foreign social networks. As a result, Chinese users are steered toward national social networks, which are more compliant with government pressure.

China’s policies play into a larger global trend: the nationalization of the internet. China, Russia, the European Union, and the United States have all adopted different approaches to censorship, user privacy, and surveillance. Although there are social networks such as WeChat or Russia’s VKontakte that are popular in primarily one country, nationalizing the internet challenges users of multinational services such as Facebook and YouTube. These different approaches, which impact everything from data safe harbor laws to legal consequences for posting inflammatory material, have implications for businesses working in multiple countries, as well.

For instance, Twitter is legally obligated to hide Nazi and neo-fascist imagery and some tweets in Germany and France—but not elsewhere. YouTube was officially banned in Turkey for two years because of videos a Turkish court deemed “insulting to the memory of Mustafa Kemal Atatürk,” father of modern Turkey. In Russia, Google must keep Russian users’ personal data on servers located inside Russia to comply with government policy.

While China is a pioneer in the field of instant censorship, tech companies in the United States are matching China’s progress, which could potentially have a chilling effect on democracy. In 2016, Apple applied for a patent on technology that censors audio streams in real time—automating the previously manual process of censoring curse words in streaming audio.

In March, after U.S. President Donald Trump told Fox News, “I think maybe I wouldn’t be [president] if it wasn’t for Twitter,” Twitter founder Evan “Ev” Williams did something highly unusual for the creator of a massive social network.

He apologized.

Speaking with David Streitfeld of The New York Times, Williams said, “It’s a very bad thing, Twitter’s role in that. If it’s true that he wouldn’t be president if it weren’t for Twitter, then yeah, I’m sorry.”

Entrepreneurs tend to be very proud of their innovations. Williams, however, offers a far more ambivalent response to his creation’s success. Much of the 2016 presidential election’s rancor was fueled by Twitter, and the instant gratification of Twitter attracts trolls, bullies, and bigots just as easily as it attracts politicians, celebrities, comedians, and sports fans.

Services such as Twitter, Facebook, YouTube, and Instagram are designed through a mix of look and feel, algorithmic wizardry, and psychological techniques to hang on to users for as long as possible—which helps the services sell more advertisements and make more money. Toxic political discourse and online harassment are unintended side effects of the economic-driven urge to keep users engaged no matter what.

Keeping users’ eyeballs on their screens requires endless hours of multivariate testing, user research, and algorithm refinement. For instance, Casey Newton of tech publication The Verge notes that Google Brain, Google’s AI division, plays a key part in generating YouTube’s video recommendations.

According to Jim McFadden, the technical lead for YouTube recommendations, “Before, if I watch this video from a comedian, our recommendations were pretty good at saying, here’s another one just like it,” he told Newton. “But the Google Brain model figures out other comedians who are similar but not exactly the same—even more adjacent relationships. It’s able to see patterns that are less obvious.”

A never-ending flow of content that is interesting without being repetitive is harder to resist. With users glued to online services, addiction and other behavioral problems occur to an unhealthy degree. According to a 2016 poll by nonprofit research company Common Sense Media, 50% of American teenagers believe they are addicted to their smartphones.

This pattern is extending into the workplace. Seventy-five percent of companies told research company Harris Poll in 2016 that two or more hours a day are lost in productivity because employees are distracted. The number one reason? Cellphones and texting, according to 55% of those companies surveyed. Another 41% pointed to the internet.

Tristan Harris, a former design ethicist at Google, argues that many product designers for online services try to exploit psychological vulnerabilities in a bid to keep users engaged for longer periods. Harris refers to an iPhone as “a slot machine in my pocket” and argues that user interface (UI) and user experience (UX) designers need to adopt something akin to a Hippocratic Oath to stop exploiting users’ psychological vulnerabilities.

In fact, there is an entire school of study devoted to “dark UX”—small design tweaks to increase profits. These can be as innocuous as a “Buy Now” button in a visually pleasing color or as controversial as when Facebook tweaked its algorithm in 2012 to show a randomly selected group of almost 700,000 users (who had not given their permission) newsfeeds that skewed more positive to some users and more negative to others to gauge the impact on their respective emotional states, according to an article in Wired.

As computers, smartphones, and televisions come ever closer to convergence, these issues matter increasingly to businesses. Some of the universal side effects of addiction are lost productivity at work and poor health. Businesses should offer training and help for employees who can’t stop checking their smartphones.

Mindfulness-centered mobile apps such as Headspace, Calm, and Forest offer one way to break the habit. Users can also choose to break internet addiction by going for a walk, turning their computers off, or using tools like StayFocusd or Freedom to block addictive websites or apps.

Most importantly, companies in the business of creating tech products need to design software and hardware that discourages addictive behavior. This means avoiding bad designs that emphasize engagement metrics over human health. A world of advertising preroll showing up on smart refrigerator touchscreens at 2 a.m. benefits no one.

According to a 2014 study in Cyberpsychology, Behavior and Social Networking, approximately 6% of the world’s population suffers from internet addiction to one degree or another. As more users in emerging economies gain access to cheap data, smartphones, and laptops, that percentage will only increase. For businesses, getting a head start on stopping internet addiction will make employees happier and more productive. D!


About the Authors

Maurizio Cattaneo is Director, Delivery Execution, Energy, and Natural Resources, at SAP.

David Delaney is Global Vice President and Chief Medical Officer, SAP Health.

Volker Hildebrand is Global Vice President for SAP Hybris solutions.

Neal Ungerleider is a Los Angeles-based technology journalist and consultant.


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

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Death Of An IT Salesman

Jesper Schleimann

As software shifts from supporting the strategy to becoming the strategy of most companies, the relationship and even the sales process between the vendor side and the customer side in the IT industry is subsequently also undergoing some remarkable changes. The traditional IT salesman is an endangered species.

I recently had the pleasure of participating in a workshop with one of Scandinavia’s largest companies to create new business models in the company’s operations business area. As an IT vendor, we worked with the customer in an open process using the design thinking methodology—a creative process in which we jointly visualized, defined, and solidified how new flows of data can change business processes and their business models.

By working with “personas” relevant to their business, we could better understand how technology can help different roles in the involved departments deliver their contributions faster and more efficiently. The scope was completely open. We put our knowledge and experience with technological opportunities in parallel with the company’s own knowledge of the market, processes, and business.

The results may trigger a sale of software from our side at a point, but we do not know exactly which solution—or even if it will happen. What we did do was innovate together and better understand our customer’s future and viable routes to success. Such is the reality of the strategic work of digitizing here on the verge of year 2018.

Solution selling is not enough

In my view, the transgressive nature of technology is radically changing the way businesses and the sales process works. The IT industry—at least parts of it—must focus on completely different types of collaboration with the customer.

Historically, the sales process has already realized major changes. In the past, you’d find a product-fixated “used-car-sales” approach, which identified the characteristics of the box or solution and left it to the customer to find the hole in the cheese. Since then, a generation of IT key account managers learned “solution selling,” with a sharp focus on finding and defining a “pain point” at the customer and then position the solution against this. But today, even that approach falls short.

Endangered species

The challenge is that software solutions now support the formation of new, yet unknown business models. They transverse processes and do not respect silo borders within organizations. Consequently, businesses struggle to define a clear operational road. Top management faces a much broader search of potential for innovation. The creation of a compelling vision itself requires a continuous and comprehensive study of what digitization can do for the value chain and for the company’s ecosystem.

Vendors abandon their customers if they are too busy selling different tools and platforms without entering into a committed partnership to create the new business model. Therefore, the traditional IT salesperson, preoccupied with their own goals, is becoming an endangered species. The customer-driven process requires even key account managers to dig deep and endeavor to understand the customer’s business. The best in the IT industry will move closer to the role of trusted adviser, mastering the required capabilities and accepting the risks and rewards that follow.

Leaving the comfort zone

This obviously has major consequences for the sales culture in the IT industry. Reward mechanisms and incentive structures need to be reconsidered toward a more behavioral incentive. And the individual IT salesperson is going on a personal journey, as the end goal is no longer to close an order, but to create visions and deliver value in partnership with the customer and to do so in an ever-changing context, where the future is volatile and unpredictable.

A key account manager is the customer’s traveling companion. Do not expect to be able to reduce complexity and stay in your comfort zone and not be affected by this change. Vendors should think bigger, and as an IT salesperson, you need to show your ability for transformational thinking. Everyone must be prepared to take the first baby steps, but there will definitely also be some who cannot handle the change. Disruption is not just something you, as a vendor, deliver to a customer. The noble art of being a digital vendor is facing some serious earthquakes.

For more on how tech innovation is disrupting traditional business models, see Why You Should Consider Disrupting Your Own Business.

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Jesper Schleimann

About Jesper Schleimann

Chief Technology Officer, Nordic & Baltic region In his role as Nordic CTO, Jesper's mission is to help customers unlock their business potential by simplifying their digital transformation. Jesper has a Cand.polit. from the University of Copenhagen as well as an Executive MBA from Copenhagen Business School.