How Is Digital Transformation Changing The Game In The Chemical Industry?

Stefan Guertzgen

In a recent episode of Game Changers, host Bonnie Graham explored digital transformation in the chemical industry. I had the opportunity to participate in this radio program with two other industry experts: Bob Parker, group VP of research direction at IDC Manufacturing Insights and Retail Insights, and Michael Casey, managing director at Accenture North American Chemicals and Natural Resources Industry Group. Here’s what we discussed.

Buzzwords with real-world applications

Cloud and digital are two of today’s big buzzwords. But beyond those words is real technology that is tangible and available today to push ahead businesses and the industry as a whole. We have the opportunity to advance operations and behaviors to make the disruptive changes.

These changes are vital to a business’ future operations and profitability. Conventional business models are being challenged. New technology is entering the game, but it can be difficult to integrate into current operations. Reimagining business models, processes, and how people work will make a big difference in how competitive a business can be in the future.

How to get there

The challenges and the opportunities for new business models, products, and services can create problems. Innovation is accelerating; the problem is that there is no existing roadmap to get from one maturity level or stage to the next. How do you create a roadmap for a place you’ve never been?

A better analogy would be the historic explorers who used a compass or star navigation to figure out where they were headed. In today’s move towards digital innovation, we have a direction, even when we’re walking into completely new territory. Businesses need to abandon limited, conventional thinking during that journey. Refusing to go on the journey of digitization and innovation will simply leave you disrupted. Why? Competitors are not shy about making this exploration.

Digital transformation and maturation in the chemical industry

IDC industry research shows a multi-tiered maturity model. It contains over 100 elements based on over 1,000 companies across the industry. Most businesses are still early in maturity; behind in some areas and ahead in others. But it’s a sign that the market is ready to take off.

Chemical companies, from the CEO down, are making the decision to build technology capabilities; the Economist recently referred to the chemical industry as being in the golden age of materials.

Redefining the industry

In the past, the industry has been based around demand for particular chemicals. Now we’re seeing a shift from products sold in high-volume, well-margined markets. Digital transformation is streamlining the industry. It’s changing markets for commodity chemicals as well as specialty chemicals. Chemicals are now being tailored to their end application.

A third tier is developing beyond commodity and specialty markets, focusing on the versatile molecule. Molecular structures can be mapped, similar to a genome, and allow the industry to develop chemicals tailored for very specific purposes and customers. Having these tight specifications allows for finer control and specialty expertise within the industry.

Commodity chemical companies are losing ground with these new options and must be reimagined to remain competitive. New competitors are springing up all over the world. The commodity companies must adapt or lose out. But whether they move upstream or downstream in the value chain, a new business model is vital to success.

Examples from the industry

But what industry giants are making the shift to digitization and new business models? Here are a few examples discussed during the Game Changers program:

  • Asian Paints previously sold only paints and coatings. They’ve shifted to a downstream position with over 10,000 retailers. They sell color as a personalized experience for the end user.
  • Monsanto’s focus was selling seeds and agricultural chemicals. They’ve shifted to answering pain points for farmers. The company now provides increased yields based on proprietary recipes leveraging advanced analytics that are customized to a farmer’s field.
  • A chlorine company looked at its biggest customers. Instead of remaining in the commodity chemical business, it shifted to producing sensor-based automatic dispensing machines. This made it much easier for customers to keep their water chlorinated without testing and additional work. Instead of having to price based upon a commodity (chlorine), the company could price based upon value (pool cleanliness).

Industry collaboration

Similar businesses regularly run common equipment. What if you could share the data from that equipment to compare how it performs across the industry? You could even receive maintenance tips to improve asset availability.

In-memory engines and cloud computing add unprecedented levels of granularity and speed to data processing and analytics, helping you to gain real-time insight into things such as asset performance across your or your customers’ network in order to make innovative, service oriented business decisions.

Many companies are no longer selling chemicals. They’re selling solutions to customers’ problems. Muntajat in Qatar is selling millions of tons of chemicals without any production assets. It provides chemical logistics for companies. Its shift to more granular customer needs and experiences is creating an effective new business model.

Are you ready to make the change? Take the Digital Readiness Survey to learn where you stand on your Digital Journey and how we can help you plan your platform and roadmap for transition.

Learn more about SAPPHIRENOW and secure your spot today!

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About Stefan Guertzgen

Dr. Stefan Guertzgen is the Global Director of Industry Solution Marketing for Chemicals at SAP. He is responsible for driving Industry Thought Leadership, Positioning & Messaging and strategic Portfolio Decisions for Chemicals.

Connected Fleets Save Money

Barbara Flügge

Something unexpected began happening in journalist Mike Esposito’s inbox. Extra emails were demanding his attention, but they weren’t written by people.  His newly leased car was reminding him about its upkeep.

Esposito, who writes for Auto DeaIer Today, noted that among other matters, his vehicle “tells me when I’m low on fuel, when the tire pressure drops and what the outside temperature is.”

Like cars in many government fleets, Esposito’s car is “smart” due to Internet connectivity. It contains telematics–devices including a global positioning system (GPS)–that are part of the car’s operating system. Telematics are also part of the Internet of Things (IoT).

Connected fleet ecosystem

These days, IoT objects containing sensors often connect vehicles to the Internet and, in the case of fleets, to each other.

Esposito’s car can send him notes, because telematics let one machine (the car) share information with another machine (his computer).

Machine-to-machine communication is one part of an ecosystem with the Internet at its centre. The sensors in vehicles with telematics also can connect to parts of their environment–including roadway warning systems–which also contain IoT sensors.

Connected cars produce much data, including information about how carefully people drive them. A privately owned connected car might send this data to an insurance company, which would use it to adjust driver rates.

In contrast, data from public sector fleets would travel to the digital systems of the municipalities, central governments or authorities (such as ports) they serve. This information would include availability for use and maintenance issues in addition to driver care.

Many kinds of vehicles may be included in public sector fleets, including boats, grounds maintenance equipment, motorbikes, trucks, UAVs (drones), and warehouse forklifts.

Connecting fleets to correct problems

Retrofitting vehicles for connectivity or buying new vehicles with factory-installed telematics is expensive. But fleet connectivity provides payback in a number of ways. To understand why organisations would develop these fleets, it helps to consider some actual examples.

Traffic congestion in a mountain resort. Mountain sports, glamorous celebrity lifestyles, and fresh air are among the attractions of Aspen, Colorado. But the city is so popular that it is choking on auto traffic from commuters, residents, and tourists.

Government Fleet magazine reports that Aspen is considering a plan to create a quiet, low-pollution transit system. It would be a connected fleet of mopeds, on-demand shuttles, buses and self-driving mini-vans. The plan also includes improving traffic flow on downtown streets and providing lockers for commuters.

School bus delays. The Chesapeake, Virginia, public school district received many complaints about bus inefficiency in the 2015-2016 school year. Local TV station WAVY reports that the district is responding by equipping each school bus with a GPS and automatic vehicle location system.

Smartport. Truck drivers traveling to the Port of Hamburg in northern Germany no longer have to access many message boards throughout the container port to get updated on traffic and bridge conditions as well as parking availability.

According to tech publisher ZDNet, the port now connects truckers to get current information through a mobile app made possible by a digital platform.

The platform, which is equipped with IoT-solution software, gathers and analyzes huge volumes of data. The IoT software connects to the port’s traffic management system as well as the telematics of trucks visiting the port. This provides a real-time picture of traffic flow.

IoT traffic tracking solutions

IoT software solutions for connected fleets provide government organizations with insights into fleet management, logistics and delivery, insurance telematics (such as monitoring driver-related events), and vehicle diagnostics.

Fleet management solutions include tracking vehicles in real time, monitoring the health of vehicles, and analysing fuel consumption.

Diagnostics involve analysing trouble codes, providing alerts based on vehicle events, and predicting driving performance. One of the logistics matters that solutions analyze concerns arrival times and routing.

IoT solutions help the public sector increase productivity without increasing facilities. ZDNet notes that container turnover at the Port of Hamburg was nine million units in 2014 and likely will double by 2024.

Speaking to the magazine, Hamburg Port Authority representative Sascha Westermann said, “It’s not possible to build more roads. It takes a long time and there’s no space.”

Westermann, who leads IT traffic management for the authority, told ZDNet, “We need smart solutions. IT solutions.”

Year of the connected fleet?

Automobile technology reporter Mike Esposito says he thinks 2017 finally marks the “official arrival” of connected cars. It’s estimated, he says, that 60% to 80% of the cars in which manufacturers have installed telematics will sell this year.

Esposito predicts that “smaller, less expensive cars” will comprise 75% of connected car sales by 2022.

As prices decrease, it’s likely that more public-sector fleets will become connected. The year of the connected fleet is coming soon.

To learn more about SAP Leonardo and our digital innovations, download the “IoT Imperative white paper for the public sector.”

This article originally appeared on Cities Today.

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Barbara Flügge

About Barbara Flügge

Barbara Flügge leads smart cities and regions efforts at SAP. As a thought leader, she advises executives, forward thinkers, and innovation leaders in this area. She dedicates her activities to entire ecosystems beocming cities, ports, and mega events in digital and sustainable transformation. Barbara is a strong believer of innovation and digitization as a public good for everyone. She works on global scale and has in depth knowledge in public sector, automotive, manufacturing, telecommunications, and many other industries. Barbara is a recognized speaker, editor,and author.

Transportation And Logistics Services: Is It Moving Radically Enough?

Juergen Roehricht

Exponential technologies like 3D printing, artificial intelligence, digital assistants, networks, blockchain, and many others are transforming the world we live in faster than we ever imagined. Recently, I joined a panel discussion about digital innovations and their impact on the transportation and logistics services industry. In fact, the discussion inspired me to start this new series of blogs, not just to share my thoughts but to challenge us as (digital) leaders by asking: Are we thinking radically enough? How do exponential technologies and the digital transformation impact our industry? Are we really making the most of digital innovations?

3D printing: It’s now or never

One of the questions the panel discussed was how 3D printing affects business. Interestingly enough, this turned out to be quite controversial.

Many companies are not taking 3D printing seriously. Some don’t see any need to engage with it, and others think it does not offer use cases for their business. Other companies clearly understand the benefits, such as being able to print spare parts for rolling stock. This becomes particularly relevant for older assets for which it is hard to obtain spare parts. Printing the parts they need, right where they need them, means companies can avoid supply-chain and logistics complexity, speed delivery, and potentially lower the costs of manufacturing and shipping.

Though I agree with this argument, I felt that the discussion lacked another angle to move it on to common ground. I asked whether it would be an option for companies to incorporate 3D printing into their core business or even to create a new business by offering 3D printing themselves or via a partner. That would give them an extended production workbench for customers and differentiate them from the competition in multi-modal transport. Companies could think about that model, regardless of any existing leading companies, competitors, or new kids arriving on the block.

The reason for this question is, for each new technology, I first ask myself whether it is likely to affect one or all three of the fundamental pillars of a business: the business model, the business processes, and the way we work. And in the case of 3D printing, I can confidently say that I see that all three pillars are affected.

To summarize the discussion around 3D printing, while I fully understand both perspectives, I have a different standpoint. For years, many transportation and logistics services companies have been providing value-added services like warehousing for their clients and charging premiums on top of the pure transportation service, which is a commoditizing market with declining margins, despite a growing transport volume. Why not extend this now to become an even bigger contributor to manufacturers’ value chains by starting a 3D printing division, closely connected with logistics and, potentially, with warehousing services as well?

A related option is to use outsourcing and leveraging partners, i.e., to work with companies specializing in 3D printing through a dedicated network.

There are already some transportation and logistics companies that are actively using 3D printing, like UPS. Why should printing a sneaker for a consumer differ from printing spare parts for a business customer?

Big Data, predictive analytics, and the Internet of Things: Untapped opportunities

Another interesting topic is how Big Data and predictive analytics are being used and how both will develop. Limiting the conversation to Big Data and predictive analytics is too narrow, unless you combine them with sensors and Internet of Things scenarios. Consider the example of a sensor attached to a container that uses signals, geofencing, and transmission into an analytics-based UI to track containers anywhere at any time. Imagine how much value this could bring to transportation and logistics services providers and to the shipping and receiving companies.

By knowing where a given container is at any time, companies can take action to prevent problems such as not meeting the contracted expected time of arrival (ETA); security problems such as intrusions or high-risk routes; or incorrect handling of the containers (such as temperature irregularities or physical shocks). In addition, these technologies can enable companies to save on operational costs by optimizing logistics to better handle empty transport resources. Sensors that can track, analyze, and predict relevant data could be a solution in all these scenarios.

Not everyone is convinced that these technologies are the way forward. You may hear comments like: “Our customers would not pay for this, and we are operating with very low margins.” Others might complain about the high costs associated with such an approach. While these concerns are understandable, I think they are short-sighted when considering the future impact on business and services. Sensors are now much cheaper, and adding them to a cloud solution that receives, streams, and interprets the data before displaying it on a user interface, and even adding machine learning and prediction algorithms, can be done very fast.

You cannot argue only from a cost perspective. Especially when it comes to ETA as a key metric for transportation companies and the risks of not meeting the contractual agreement. Would you prefer paying unreasonably high compensatory costs instead of installing a system that would help you avoid costly delays?

By decreasing the risk of insurance events, companies can negotiate better rates. Especially when combined with blockchain, technology can put all key data (contracts, IoT and geo-signals, payments, etc.) into a secure, transparent, auditable, and risk- and fraud-minimizing blockchain. And, with the right proposition, why should a customer not be willing to pay a few cents more for better service? Why not leverage this to set yourself apart from your competitors?

Last but not least…

In a world driven by exponential digital technology advances, the average life span of a Fortune 500 company has shrunk from 75 to 15 years over the past 50 years. There are more digital-native and digital technology companies in the Standard & Poor Top 12 ranking than ever before. Startups are popping up everywhere, driving change, and chasing and partially taking over markets that were owned by established companies for years. And companies are realizing that their existing organization might not be capable of changing fast enough, so they are creating digital venture funds and startup programs to drive those new business models and processes, sometimes with ideas that even disrupt themselves. In this world we always need to ask ourselves: Are we thinking radically enough?

The costs of managing, powering, and moving products and services are about to change dramatically. Tick Tock: Start Preparing for Resource Disruption.

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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.

Human Skills for the Digital Future

Dan Wellers and Kai Goerlich

Technology Evolves.
So Must We.


Technology replacing human effort is as old as the first stone axe, and so is the disruption it creates.
Thanks to deep learning and other advances in AI, machine learning is catching up to the human mind faster than expected.
How do we maintain our value in a world in which AI can perform many high-value tasks?


Uniquely Human Abilities

AI is excellent at automating routine knowledge work and generating new insights from existing data — but humans know what they don’t know.

We’re driven to explore, try new and risky things, and make a difference.
 
 
 
We deduce the existence of information we don’t yet know about.
 
 
 
We imagine radical new business models, products, and opportunities.
 
 
 
We have creativity, imagination, humor, ethics, persistence, and critical thinking.


There’s Nothing Soft About “Soft Skills”

To stay ahead of AI in an increasingly automated world, we need to start cultivating our most human abilities on a societal level. There’s nothing soft about these skills, and we can’t afford to leave them to chance.

We must revamp how and what we teach to nurture the critical skills of passion, curiosity, imagination, creativity, critical thinking, and persistence. In the era of AI, no one will be able to thrive without these abilities, and most people will need help acquiring and improving them.

Anything artificial intelligence does has to fit into a human-centered value system that takes our unique abilities into account. While we help AI get more powerful, we need to get better at being human.


Download the executive brief Human Skills for the Digital Future.


Read the full article The Human Factor in an AI Future.


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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.

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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The Human Factor In An AI Future

Dan Wellers and Kai Goerlich

As artificial intelligence becomes more sophisticated and its ability to perform human tasks accelerates exponentially, we’re finally seeing some attempts to wrestle with what that means, not just for business, but for humanity as a whole.

From the first stone ax to the printing press to the latest ERP solution, technology that reduces or even eliminates physical and mental effort is as old as the human race itself. However, that doesn’t make each step forward any less uncomfortable for the people whose work is directly affected – and the rise of AI is qualitatively different from past developments.

Until now, we developed technology to handle specific routine tasks. A human needed to break down complex processes into their component tasks, determine how to automate each of those tasks, and finally create and refine the automation process. AI is different. Because AI can evaluate, select, act, and learn from its actions, it can be independent and self-sustaining.

Some people, like investor/inventor Elon Musk and Alibaba founder and chairman Jack Ma, are focusing intently on how AI will impact the labor market. It’s going to do far more than eliminate repetitive manual jobs like warehouse picking. Any job that involves routine problem-solving within existing structures, processes, and knowledge is ripe for handing over to a machine. Indeed, jobs like customer service, travel planning, medical diagnostics, stock trading, real estate, and even clothing design are already increasingly automated.

As for more complex problem-solving, we used to think it would take computers decades or even centuries to catch up to the nimble human mind, but we underestimated the exponential explosion of deep learning. IBM’s Watson trounced past Jeopardy champions in 2011 – and just last year, Google’s DeepMind AI beat the reigning European champion at Go, a game once thought too complex for even the most sophisticated computer.

Where does AI leave human?

This raises an urgent question for the future: How do human beings maintain our economic value in a world in which AI will keep getting better than us at more and more things?

The concept of the technological singularity – the point at which machines attain superhuman intelligence and permanently outpace the human mind – is based on the idea that human thinking can’t evolve fast enough to keep up with technology. However, the limits of human performance have yet to be found. It’s possible that people are only at risk of lagging behind machines because nothing has forced us to test ourselves at scale.

Other than a handful of notable individual thinkers, scientists, and artists, most of humanity has met survival-level needs through mostly repetitive tasks. Most people don’t have the time or energy for higher-level activities. But as the human race faces the unique challenge of imminent obsolescence, we need to think of those activities not as luxuries, but as necessities. As technology replaces our traditional economic value, the economic system may stop attaching value to us entirely unless we determine the unique value humanity offers – and what we can and must do to cultivate the uniquely human skills that deliver that value.

Honing the human advantage

As a species, humans are driven to push past boundaries, to try new things, to build something worthwhile, and to make a difference. We have strong instincts to explore and enjoy novelty and risk – but according to psychologist Mihaly Csikszentmihalyi, these instincts crumble if we don’t cultivate them.

AI is brilliant at automating routine knowledge work and generating new insights from existing data. What it can’t do is deduce the existence, or even the possibility, of information it isn’t already aware of. It can’t imagine radical new products and business models. Or ask previously unconceptualized questions. Or envision unimagined opportunities and achievements. AI doesn’t even have common sense! As theoretical physicist Michio Kaku says, a robot doesn’t know that water is wet or that strings can pull but not push. Nor can robots engage in what Kaku calls “intellectual capitalism” – activities that involve creativity, imagination, leadership, analysis, humor, and original thought.

At the moment, though, we don’t generally value these so-called “soft skills” enough to prioritize them. We expect people to develop their competency in emotional intelligence, cross-cultural awareness, curiosity, critical thinking, and persistence organically, as if these skills simply emerge on their own given enough time. But there’s nothing soft about these skills, and we can’t afford to leave them to chance.

Lessons in being human

To stay ahead of AI in an increasingly automated world, we need to start cultivating our most human abilities on a societal level – and to do so not just as soon as possible, but as early as possible.

Singularity University chairman Peter Diamandis, for example, advocates revamping the elementary school curriculum to nurture the critical skills of passion, curiosity, imagination, critical thinking, and persistence. He envisions a curriculum that, among other things, teaches kids to communicate, ask questions, solve problems with creativity, empathy, and ethics, and accept failure as an opportunity to try again. These concepts aren’t necessarily new – Waldorf and Montessori schools have been encouraging similar approaches for decades – but increasing automation and digitization make them newly relevant and urgent.

The Mastery Transcript Consortium is approaching the same problem from the opposite side, by starting with outcomes. This organization is pushing to redesign the secondary school transcript to better reflect whether and how high school students are acquiring the necessary combination of creative, critical, and analytical abilities. By measuring student achievement in a more nuanced way than through letter grades and test scores, the consortium’s approach would inherently require schools to reverse-engineer their curricula to emphasize those abilities.

Most critically, this isn’t simply a concern of high-tuition private schools and “good school districts” intended to create tomorrow’s executives and high-level knowledge workers. One critical aspect of the challenge we face is the assumption that the vast majority of people are inevitably destined for lives that don’t require creativity or critical thinking – that either they will somehow be able to thrive anyway or their inability to thrive isn’t a cause for concern. In the era of AI, no one will be able to thrive without these abilities, which means that everyone will need help acquiring them. For humanitarian, political, and economic reasons, we cannot just write off a large percentage of the population as disposable.

In the end, anything an AI does has to fit into a human-centered value system that takes our unique human abilities into account. Why would we want to give up our humanity in favor of letting machines determine whether or not an action or idea is valuable? Instead, while we let artificial intelligence get better at being what it is, we need to get better at being human. That’s how we’ll keep coming up with groundbreaking new ideas like jazz music, graphic novels, self-driving cars, blockchain, machine learning – and AI itself.

Read the executive brief Human Skills for the Digital Future.

Build an intelligent enterprise with AI and machine learning to unite human expertise and computer insights. Run live with SAP Leonardo.


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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.

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