What Is The CFO’s Role In Preventing A Cyber Attack?

Thack Brown

Cybersecurity is a top concern for companies across industries in today’s increasingly data-driven, digital world. From political headlines to email phishing attacks directed at our inboxes, or across a growing number of smart devices, we face a growing challenge in ensuring that data can be protected within our organizations.

Cybersecurity concerns are top-of-mind for all departments across the enterprise, but finance remains one of the most vulnerable areas for malicious attacks. A recent report from Deloitte noted that U.S. financial services companies lost on average $23.6 million from cybersecurity breaches in 2013 – the highest average loss across all industries.

Today, information equates to power, and customer information is not the only data that is at risk. A company’s internal assets, including financial and strategic plans, can also be targets. An attack on this data (either for leakage, manipulation, ransom, or other malicious intent) could endanger a CFO’s relationships and trust with a number of important parties. It could also lead to business disruptions and loss of market share, not to mention potentially hefty fines.

In this environment, how can CFOs and their organizations more broadly implement an effective cybersecurity strategy?

Provide continuous security education. Education should be a key priority for the CFO to make sure that the risk of cyber attacks is understood and potential impacts are addressed, especially when it comes to protecting critical financial planning documents. Beyond IT it is essential that every employee, from line managers to the C-suite, receive training on cybersecurity trends and threats, whether it’s setting up a company-wide training or nominating a cybersecurity subject matter expert whose role is to set overall standards and advise the board. Given the high stakes, understanding a company’s risk is a critical component in fending off a potential breach.

Understand your data and map assets. As the number of breaches continues to grow at a rapid pace, many companies have decided to strictly protect all of their data. Not only does this come with a hefty price tag, but since resources are often limited, it could also mean overlooking some valuable assets. Not all information is critical or confidential. To best prioritize data protection needs, CFOs should work with their finance teams to evaluate which data is critical and rank it appropriately. Once data is evaluated and ranked, it is also important to know where the data lives and how it can be accessed. This might seem like common sense, but a recent EY study found that only 40% of companies hold an accurate inventory of their data ecosystem. In order to truly protect information, CFOs and finance teams need to understand how sensitive information is being accessed in order to get a full picture of potential vulnerabilities.

Evaluate existing risk and resolve vulnerabilities. The CFO is responsible for managing the risk created by or impacting their finance operations, and cybersecurity is no different than any other risk assessment that a CFO needs to perform in order to keep the finance department running smoothly. Applying a root cause approach is very relevant in this case, as it will help find the weakest link, but it is important to not stop at IT impacts. To understand the real exposure of each vulnerability, roll up the risk chain and assess the business, strategic, and also operational impacts resulting from a data breach.

Stay a step ahead. When it comes to cybersecurity, the best defense is a good offense: CFOs should routinely run test scenarios to make sure that protective measures are working and weaknesses in the structure are rectified. While it may not be the best idea to encourage finance teams to attempt to hack their own data, partnering with your IT department and letting the experts run some tests can be a positive exercise. By being proactive, CFOs can deter future breaches before they happen, as well as protect their own personal liability in the event of a breach.

While a company cannot always prevent a breach from occurring, the organization – and finance executives in particular – can take steps to ensure that their organization is best prepared to mitigate an attack and control the impact to the finance function. By educating the workforce from the ground up, taking the time to understand the data at risk, resolving any known vulnerabilities and being proactive, companies can be effective in fending off a potential cyber attack.

This article originally appearing The Huffington Post and is republished by permission.

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Thack Brown

About Thack Brown

Thack Brown is General Manager and Global Head for SAP’s Line of Business Finance. In this capacity, he is responsible for the full suite of SAP solutions for the Office of the CFO. SAP has the market’s most robust portfolio of solutions for finance professionals, covering all the major financial process, including: Financial Planning and Analysis, Managerial and Statutory Accounting, Treasury, Risk and Compliance and core finance operations such as Shared Services, Real Estate, Travel and Expense Reimbursement, Accounts Payable and Accounts Receivable, etc.

How Machine Learning Helps Improve Security: Part 1

Lane Leskela

As our businesses become more digital in all dimensions, high-profile information security breaches are making the news headlines with increasing frequency. The recently announced card-hacking activity at online travel service Orbitz is just one of the latest examples. On March 20, Orbitz announced a security breach that exposed information derived from at least 880,000 customer payment cards. The breach took place between October and December 2017 involving customer transaction records dating from 2016 and 2017. Although data captured on Orbitz.com was not affected, the company advised customers using Orbitz travel services within the past two years to check their credit and debit card billing statements from this period and to contact their banks if fraudulent charges were identified.

At-risk organizations around the world are increasing their investments in cybersecurity protection. According to Gartner, worldwide cybersecurity spending will climb to US$96 billion in 2018. Unfortunately, some of this spending is not aligned with actual security threats and their known sources. Surveys continue to show that solutions such as network antivirus, malware detection, and website firewalls continue to receive the most investment, although misuse and abuse of user credentials is the most common source of data breaches.

The reasons for persistent misalignment of security breach causes and remediation solutions are not well documented. One of the reasons may be the proliferation of specific security tools in IT departments over a fair number of years. The fact remains that human (mis)behavior confounds, supersedes, or works around many of the go-to security technology “fixes.”

With regard to this gap, a number of interesting findings were revealed in a recently released Dow Jones Customer Intelligence study (learn more in “CEO Disconnect on Cybersecurity Increases Risk of Breaches”). Among other revelations, this study found that:

  • 55% of responding CEOs admit their organizations have experienced at least one breach, while 79% of CTOs acknowledge breaches have occurred. One in four CEOs (24%) was not aware whether their companies have had even a single security breach.
  • 68% of responding executives whose companies experienced “significant” breaches now believe that these incidents could have been prevented by more mature identity and access management strategies.

One of the most valuable findings from this study was that CEOs can reduce the risk of a security breach by improving their identity and access management capabilities. Nevertheless, 62% of the responding CEOs said they believe that “multi-factor authentication” is difficult to manage. Thus, a related primary concern of these CEOs is how to avoid delivering poor user experiences with an increase in user security controls.

In the context of this general misunderstanding, machine learning approaches can help strengthen the foundation of authentication and screening techniques to improve security effectiveness without complicating user experiences.

Role of machine learning in preventing major security issues

Machine learning tools can help resolve an ongoing dilemma faced by many organizations. The problem is, we spend millions of dollars each year to strengthen information security, yet experience major breaches that threaten our stability and ability to grow. Thus, we continue to look for better answers.

It turns out there are many ways machine learning can be used to help improve enterprise security. With identity authentication and password authorization being primary points of attack, there are several ways machine learning can be leveraged to help minimize data breach incidents.

In Part 2 of this series, we’ll examine some key examples of machine learning applied to user access authorizations that improve information security. In addition, we’ll highlight some related areas in which machine-learning security capabilities are being embedded today.

The SAP GRC team will be exhibiting at several events related to cybersecurity this year. We hope you’ll join us there.

Learn more about the full range of SAP security offerings, and please continue to read all of the blogs in our GRC series.

This article originally appeared on the SAP Analytics blog and is republished by permission.

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Lane Leskela

About Lane Leskela

Lane Leskela, global business development director, Finance and Risk, for SAP, is an accomplished enterprise software leader with years of experience in customer advisory, marketing, market research, and business development. He is an expert in risk and compliance management software functions, solution road maps, implementation strategy, and channel partner management.

Three Technology Areas to Consider For Continuous Accounting: Automation, Scheduling, And Monitoring

Elizabeth Milne

Part 9 in the “Continuous Accounting Action Plan” series

So far in our series, we’ve discussed various steps to execute a continuous accounting action plan, from quick wins to big wins, controls to analytics. Like any finance transformation journey, people and process play a major role. It’s about having the vision and courage to step back and look at an existing process and ask if it really is the most scalable and efficient process going forward, while also challenging the finance and accounting team not to simply settle for the status quo.

But moving towards continuous accounting requires technology. Depending on your organization, your people, and your processes, different technologies may help your transformation toward continuous accounting. Let’s discuss three areas you might consider investigating: automation, scheduling, and monitoring.

Automation: basic and advanced

The term “automation” is bandied about often. But what’s changed in recent years is the complexity of tasks that can be automated. Let’s break it down to clarify basic and advanced automation.

Let’s start with the basics. A calculator is an automation and, stepping up, so is a spreadsheet. But basic automation in this context is all about automating rote, repetitive tasks. Many journal entries are done manually; by leveraging technology they can be automated. Consolidation calculations can be automated, including reconciliations, eliminations, and essentially any calculation that is done every period for the close process. It’s all about implementing purpose-built functionality that is designed to automate specific, repetitive accounting tasks. The difference with this level of automation from years past is that accounting can easily configure the rules themselves, rather than relying on consultants. Manual spreadsheets should be replaced with software that is designed for automation of accounting processes.

Then there’s the more advanced automation stuff. This is where technologies like machine learning (ML), predictive analytics (PA), and artificial intelligence (AI) come into play. They don’t simply apply one-size-fits-all logic; instead, they can look at prior decisions, patterns in data, or results and make decisions based on what they have learned. Historically, a data scientist might be employed to develop algorithms or do sophisticated analysis on data sets. Today, with better, faster access to bigger volumes of data, much automation comes out of the box. It’s all about anticipating outcomes. You can use predictive algorithms and machine learning to assess the likelihood of future outcomes and steer your business in the right direction. Again, depending on your organization, your people, your processes, and your requirements, the possibilities of these advanced automation tools are limitless.

Scheduling: supervising automation

Long gone are the days of scheduling tasks using batch scripts or simply time-based scheduling. Think of today’s scheduling technology as almost like an “automation supervisor,” overseeing tasks, deciding what should be performed next, considering dependencies, and then kicking off those tasks based on what needs to happen next. Today’s scheduling technology provides a cockpit where accounting can watch how the overarching schedule is proceeding, such as the financial close.

Modern scheduling is visual, and it enables accounting to make changes to the process at the end of or during the period. It enables accounting teams to change the actual overarching process itself and the sequencing and dependencies. It’s an essential tool for moving to continuous accounting.

Monitoring: putting accounting in the driver’s seat

Automating and scheduling at scale used to be much harder to do. The process often required IT and consultants to get everything set up and working properly. The two technology capabilities we’ve discussed help accounting achieve them without creating baggage and maintenance. But the old way of automation used to come with another problem: lack of visibility in the process, which often doesn’t provide reporting and analytics on the health of the process. This issue causes a lack of ability to identify opportunities for improvement. Often the results were buried in log files, email alerts, or simply not even logged at all.

Modern monitoring technology changes all that. At a granular level, it supports audits by recording the output and history of all tasks performed (and who did them) to ensure tasks don’t fall through the cracks – which is especially important if the organization is undergoing finance transformation. However, monitoring is also vital for continuous improvement. Coupled with reporting and analytics, it can provide a clear perspective into opportunities to improve, such as whether the corporate close is often delayed waiting for a certain local-entity file, and in turn, where the delay is in that entity’s close. Monitoring provides accounting with the toolbox needed to understand the integrity of the process and to identify and make the case for where to apply continuous improvements.

Beyond accounting: How FP&A can apply a continuous approach

In the next blog, we’ll be covering how a continuous approach can be just as readily applied to common financial planning and analysis (FP&A) activities. We’ll also examine how accounting and FP&A can partner to build a data supply chain, continuously flowing data from accounting to model, and plan on the results.

Find out how to enhance your business processes.

Follow SAP Finance online: @SAPFinance (Twitter) | LinkedIn | Facebook | YouTube

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Elizabeth Milne

About Elizabeth Milne

Elizabeth Milne has over 20 years of experience improving the software solutions for multi-national, multi-billion dollar organizations. Her finance career began working at Walt Disney, then Warner Bros. in the areas of financial consolidation, budgeting, and financial reporting. She subsequently moved to the software industry and has held positions including implementation consultant and manager, account executive, pre-sales consultant, solution management team at SAP, Business Objects and Cartesis. She graduated with an Executive MBA from Northwestern University’s Kellogg Graduate School of Management. In 2014 she published her first book “Accelerated Financial Closing with SAP.” She currently manages the accounting and financial close portfolio for SAP Product Marketing. You can follow her on twitter @ElizabethEMilne

The Blockchain Solution

By Gil Perez, Tom Raftery, Hans Thalbauer, Dan Wellers, and Fawn Fitter

In 2013, several UK supermarket chains discovered that products they were selling as beef were actually made at least partly—and in some cases, entirely—from horsemeat. The resulting uproar led to a series of product recalls, prompted stricter food testing, and spurred the European food industry to take a closer look at how unlabeled or mislabeled ingredients were finding their way into the food chain.

By 2020, a scandal like this will be eminently preventable.

The separation between bovine and equine will become immutable with Internet of Things (IoT) sensors, which will track the provenance and identity of every animal from stall to store, adding the data to a blockchain that anyone can check but no one can alter.

Food processing companies will be able to use that blockchain to confirm and label the contents of their products accordingly—down to the specific farms and animals represented in every individual package. That level of detail may be too much information for shoppers, but they will at least be able to trust that their meatballs come from the appropriate species.

The Spine of Digitalization

Keeping food safer and more traceable is just the beginning, however. Improvements in the supply chain, which have been incremental for decades despite billions of dollars of technology investments, are about to go exponential. Emerging technologies are converging to transform the supply chain from tactical to strategic, from an easily replicable commodity to a new source of competitive differentiation.

You may already be thinking about how to take advantage of blockchain technology, which makes data and transactions immutable, transparent, and verifiable (see “What Is Blockchain and How Does It Work?”). That will be a powerful tool to boost supply chain speed and efficiency—always a worthy goal, but hardly a disruptive one.

However, if you think of blockchain as the spine of digitalization and technologies such as AI, the IoT, 3D printing, autonomous vehicles, and drones as the limbs, you have a powerful supply chain body that can leapfrog ahead of its competition.

What Is Blockchain and How Does It Work?

Here’s why blockchain technology is critical to transforming the supply chain.

Blockchain is essentially a sequential, distributed ledger of transactions that is constantly updated on a global network of computers. The ownership and history of a transaction is embedded in the blockchain at the transaction’s earliest stages and verified at every subsequent stage.

A blockchain network uses vast amounts of computing power to encrypt the ledger as it’s being written. This makes it possible for every computer in the network to verify the transactions safely and transparently. The more organizations that participate in the ledger, the more complex and secure the encryption becomes, making it increasingly tamperproof.

Why does blockchain matter for the supply chain?

  • It enables the safe exchange of value without a central verifying partner, which makes transactions faster and less expensive.
  • It dramatically simplifies recordkeeping by establishing a single, authoritative view of the truth across all parties.
  • It builds a secure, immutable history and chain of custody as different parties handle the items being shipped, and it updates the relevant documentation.
  • By doing these things, blockchain allows companies to create smart contracts based on programmable business logic, which can execute themselves autonomously and thereby save time and money by reducing friction and intermediaries.

Hints of the Future

In the mid-1990s, when the World Wide Web was in its infancy, we had no idea that the internet would become so large and pervasive, nor that we’d find a way to carry it all in our pockets on small slabs of glass.

But we could tell that it had vast potential.

Today, with the combination of emerging technologies that promise to turbocharge digital transformation, we’re just beginning to see how we might turn the supply chain into a source of competitive advantage (see “What’s the Magic Combination?”).

What’s the Magic Combination?

Those who focus on blockchain in isolation will miss out on a much bigger supply chain opportunity.

Many experts believe emerging technologies will work with blockchain to digitalize the supply chain and create new business models:

  • Blockchain will provide the foundation of automated trust for all parties in the supply chain.
  • The IoT will link objects—from tiny devices to large machines—and generate data about status, locations, and transactions that will be recorded on the blockchain.
  • 3D printing will extend the supply chain to the customer’s doorstep with hyperlocal manufacturing of parts and products with IoT sensors built into the items and/or their packaging. Every manufactured object will be smart, connected, and able to communicate so that it can be tracked and traced as needed.
  • Big Data management tools will process all the information streaming in around the clock from IoT sensors.
  • AI and machine learning will analyze this enormous amount of data to reveal patterns and enable true predictability in every area of the supply chain.

Combining these technologies with powerful analytics tools to predict trends will make lack of visibility into the supply chain a thing of the past. Organizations will be able to examine a single machine across its entire lifecycle and identify areas where they can improve performance and increase return on investment. They’ll be able to follow and monitor every component of a product, from design through delivery and service. They’ll be able to trigger and track automated actions between and among partners and customers to provide customized transactions in real time based on real data.

After decades of talk about markets of one, companies will finally have the power to create them—at scale and profitably.

Amazon, for example, is becoming as much a logistics company as a retailer. Its ordering and delivery systems are so streamlined that its customers can launch and complete a same-day transaction with a push of a single IP-enabled button or a word to its ever-attentive AI device, Alexa. And this level of experimentation and innovation is bubbling up across industries.

Consider manufacturing, where the IoT is transforming automation inside already highly automated factories. Machine-to-machine communication is enabling robots to set up, provision, and unload equipment quickly and accurately with minimal human intervention. Meanwhile, sensors across the factory floor are already capable of gathering such information as how often each machine needs maintenance or how much raw material to order given current production trends.

Once they harvest enough data, businesses will be able to feed it through machine learning algorithms to identify trends that forecast future outcomes. At that point, the supply chain will start to become both automated and predictive. We’ll begin to see business models that include proactively scheduling maintenance, replacing parts just before they’re likely to break, and automatically ordering materials and initiating customer shipments.

Italian train operator Trenitalia, for example, has put IoT sensors on its locomotives and passenger cars and is using analytics and in-memory computing to gauge the health of its trains in real time, according to an article in Computer Weekly. “It is now possible to affordably collect huge amounts of data from hundreds of sensors in a single train, analyse that data in real time and detect problems before they actually happen,” Trenitalia’s CIO Danilo Gismondi told Computer Weekly.

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials.

The project, which is scheduled to be completed in 2018, will change Trenitalia’s business model, allowing it to schedule more trips and make each one more profitable. The railway company will be able to better plan parts inventories and determine which lines are consistently performing poorly and need upgrades. The new system will save €100 million a year, according to ARC Advisory Group.

New business models continue to evolve as 3D printers become more sophisticated and affordable, making it possible to move the end of the supply chain closer to the customer. Companies can design parts and products in materials ranging from carbon fiber to chocolate and then print those items in their warehouse, at a conveniently located third-party vendor, or even on the client’s premises.

In addition to minimizing their shipping expenses and reducing fulfillment time, companies will be able to offer more personalized or customized items affordably in small quantities. For example, clothing retailer Ministry of Supply recently installed a 3D printer at its Boston store that enables it to make an article of clothing to a customer’s specifications in under 90 minutes, according to an article in Forbes.

This kind of highly distributed manufacturing has potential across many industries. It could even create a market for secure manufacturing for highly regulated sectors, allowing a manufacturer to transmit encrypted templates to printers in tightly protected locations, for example.

Meanwhile, organizations are investigating ways of using blockchain technology to authenticate, track and trace, automate, and otherwise manage transactions and interactions, both internally and within their vendor and customer networks. The ability to collect data, record it on the blockchain for immediate verification, and make that trustworthy data available for any application delivers indisputable value in any business context. The supply chain will be no exception.

Blockchain Is the Change Driver

The supply chain is configured as we know it today because it’s impossible to create a contract that accounts for every possible contingency. Consider cross-border financial transfers, which are so complex and must meet so many regulations that they require a tremendous number of intermediaries to plug the gaps: lawyers, accountants, customer service reps, warehouse operators, bankers, and more. By reducing that complexity, blockchain technology makes intermediaries less necessary—a transformation that is revolutionary even when measured only in cost savings.

“If you’re selling 100 items a minute, 24 hours a day, reducing the cost of the supply chain by just $1 per item saves you more than $52.5 million a year,” notes Dirk Lonser, SAP go-to-market leader at DXC Technology, an IT services company. “By replacing manual processes and multiple peer-to-peer connections through fax or e-mail with a single medium where everyone can exchange verified information instantaneously, blockchain will boost profit margins exponentially without raising prices or even increasing individual productivity.”

But the potential for blockchain extends far beyond cost cutting and streamlining, says Irfan Khan, CEO of supply chain management consulting and systems integration firm Bristlecone, a Mahindra Group company. It will give companies ways to differentiate.

“Blockchain will let enterprises more accurately trace faulty parts or products from end users back to factories for recalls,” Khan says. “It will streamline supplier onboarding, contracting, and management by creating an integrated platform that the company’s entire network can access in real time. It will give vendors secure, transparent visibility into inventory 24×7. And at a time when counterfeiting is a real concern in multiple industries, it will make it easy for both retailers and customers to check product authenticity.”

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials. Although the key parts of the process remain the same as in today’s analog supply chain, performing them electronically with blockchain technology shortens each stage from hours or days to seconds while eliminating reams of wasteful paperwork. With goods moving that quickly, companies have ample room for designing new business models around manufacturing, service, and delivery.

Challenges on the Path to Adoption

For all this to work, however, the data on the blockchain must be correct from the beginning. The pills, produce, or parts on the delivery truck need to be the same as the items listed on the manifest at the loading dock. Every use case assumes that the data is accurate—and that will only happen when everything that’s manufactured is smart, connected, and able to self-verify automatically with the help of machine learning tuned to detect errors and potential fraud.

Companies are already seeing the possibilities of applying this bundle of emerging technologies to the supply chain. IDC projects that by 2021, at least 25% of Forbes Global 2000 (G2000) companies will use blockchain services as a foundation for digital trust at scale; 30% of top global manufacturers and retailers will do so by 2020. IDC also predicts that by 2020, up to 10% of pilot and production blockchain-distributed ledgers will incorporate data from IoT sensors.

Despite IDC’s optimism, though, the biggest barrier to adoption is the early stage level of enterprise use cases, particularly around blockchain. Currently, the sole significant enterprise blockchain production system is the virtual currency Bitcoin, which has unfortunately been tainted by its associations with speculation, dubious financial transactions, and the so-called dark web.

The technology is still in a sufficiently early stage that there’s significant uncertainty about its ability to handle the massive amounts of data a global enterprise supply chain generates daily. Never mind that it’s completely unregulated, with no global standard. There’s also a critical global shortage of experts who can explain emerging technologies like blockchain, the IoT, and machine learning to nontechnology industries and educate organizations in how the technologies can improve their supply chain processes. Finally, there is concern about how blockchain’s complex algorithms gobble computing power—and electricity (see “Blockchain Blackouts”).

Blockchain Blackouts

Blockchain is a power glutton. Can technology mediate the issue?

A major concern today is the enormous carbon footprint of the networks creating and solving the algorithmic problems that keep blockchains secure. Although virtual currency enthusiasts claim the problem is overstated, Michael Reed, head of blockchain technology for Intel, has been widely quoted as saying that the energy demands of blockchains are a significant drain on the world’s electricity resources.

Indeed, Wired magazine has estimated that by July 2019, the Bitcoin network alone will require more energy than the entire United States currently uses and that by February 2020 it will use as much electricity as the entire world does today.

Still, computing power is becoming more energy efficient by the day and sticking with paperwork will become too slow, so experts—Intel’s Reed among them—consider this a solvable problem.

“We don’t know yet what the market will adopt. In a decade, it might be status quo or best practice, or it could be the next Betamax, a great technology for which there was no demand,” Lonser says. “Even highly regulated industries that need greater transparency in the entire supply chain are moving fairly slowly.”

Blockchain will require acceptance by a critical mass of companies, governments, and other organizations before it displaces paper documentation. It’s a chicken-and-egg issue: multiple companies need to adopt these technologies at the same time so they can build a blockchain to exchange information, yet getting multiple companies to do anything simultaneously is a challenge. Some early initiatives are already underway, though:

  • A London-based startup called Everledger is using blockchain and IoT technology to track the provenance, ownership, and lifecycles of valuable assets. The company began by tracking diamonds from mine to jewelry using roughly 200 different characteristics, with a goal of stopping both the demand for and the supply of “conflict diamonds”—diamonds mined in war zones and sold to finance insurgencies. It has since expanded to cover wine, artwork, and other high-value items to prevent fraud and verify authenticity.
  • In September 2017, SAP announced the creation of its SAP Leonardo Blockchain Co-Innovation program, a group of 27 enterprise customers interested in co-innovating around blockchain and creating business buy-in. The diverse group of participants includes management and technology services companies Capgemini and Deloitte, cosmetics company Natura Cosméticos S.A., and Moog Inc., a manufacturer of precision motion control systems.
  • Two of Europe’s largest shipping ports—Rotterdam and Antwerp—are working on blockchain projects to streamline interaction with port customers. The Antwerp terminal authority says eliminating paperwork could cut the costs of container transport by as much as 50%.
  • The Chinese online shopping behemoth Alibaba is experimenting with blockchain to verify the authenticity of food products and catch counterfeits before they endanger people’s health and lives.
  • Technology and transportation executives have teamed up to create the Blockchain in Transport Alliance (BiTA), a forum for developing blockchain standards and education for the freight industry.

It’s likely that the first blockchain-based enterprise supply chain use case will emerge in the next year among companies that see it as an opportunity to bolster their legal compliance and improve business processes. Once that happens, expect others to follow.

Customers Will Expect Change

It’s only a matter of time before the supply chain becomes a competitive driver. The question for today’s enterprises is how to prepare for the shift. Customers are going to expect constant, granular visibility into their transactions and faster, more customized service every step of the way. Organizations will need to be ready to meet those expectations.

If organizations have manual business processes that could never be automated before, now is the time to see if it’s possible. Organizations that have made initial investments in emerging technologies are looking at how their pilot projects are paying off and where they might extend to the supply chain. They are starting to think creatively about how to combine technologies to offer a product, service, or business model not possible before.

A manufacturer will load a self-driving truck with a 3D printer capable of creating a customer’s ordered item en route to delivering it. A vendor will capture the market for a socially responsible product by allowing its customers to track the product’s production and verify that none of its subcontractors use slave labor. And a supermarket chain will win over customers by persuading them that their choice of supermarket is also a choice between being certain of what’s in their food and simply hoping that what’s on the label matches what’s inside.

At that point, a smart supply chain won’t just be a competitive edge. It will become a competitive necessity. D!


About the Authors

Gil Perez is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Tom Raftery is Global Vice President, Futurist, and Internet of Things Evangelist, at SAP.

Hans Thalbauer is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Dan Wellers is Global Lead, Digital Futures, at SAP.

Fawn Fitter is a freelance writer specializing in business and technology.

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

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CEO Priorities And Challenges In The Digital World

Dr. Chakib Bouhdary

Digital transformation is here, and it is moving fast. Companies are starting to realize the enormous power of digital technologies like artificial intelligence (AI), Internet of things (IoT) and blockchain. These technologies will drive massive opportunities—and threats—for every company, and they will impact all aspects of business, including the business model. In fact, business velocity has never been this fast, yet it will never be this slow again.

To move quickly, companies need to be clear on what they want to achieve through digital transformation and understand the possible roadblocks. Based on my meetings with customer executives across regions and industries, I have learned that CEOs often have the same three priorities and face the same three challenges:

1. Customer experience – No longer defined by omnichannel and personalized marketing.

Not surprisingly, 92 percent of digital leaders focus on customer experience. However, this is no longer just about omnichannel and personalized marketing – it is about the total customer experience. Businesses are realizing that they need to reimagine their value proposition and orchestrate changes across the value chain – from the first point of interaction to manufacturing, to shipment, to service – and be able to deliver the total customer experience. In some cases, it will even be necessary to change the core product or service itself.

2. Step change in productivity – Transform productivity and cost structure through digital technologies.

Businesses have been using technology to achieve growth for decades, but by combining emerging technologies, they can now achieve a significant productivity boost and reduce costs. For this to happen, companies must first identify the scenarios that will drive significant change in productivity, prioritize them based on value, and then determine the right technologies and solutions. Both Mckinsey and Boston Consulting Group expect a 15 to 30 percent improvement in productivity through digital advancements – blowing the doors off business-as-usual and its incremental productivity growth of 1 to 2 percent.

3. Employee engagement – Fostering a culture of innovation should be at the core of any business.

Companies are looking to create an environment that encourages creativity and innovation. Leaders are attracting the needed talent and building the right skill sets. Additionally, they aim for ways to attract a diverse workforce, improve collaborations, and empower employees – because engaged employees are crucial in order to achieve the best results. This Gallup study reveals that approximately 85 percent of employees worldwide are performing below their potential due to engagement issues.

As CEOs work towards achieving these three desired outcomes, they face some critical challenges that they must address. I define the top three challenges as follows: run vs. innovate, corporate cholesterol, and digital transformation roadmap.

1. Run vs. innovate – To be successful you must prioritize the future.

The foremost challenge that CEOs are facing is how they can keep running current profitable businesses while investing in future innovations. Quite often these two conflict as most executives mistakenly prioritize the first and spend much less time on the latter. This must change. CEOs and their management teams need to spend more time thinking about what digital is for them, discuss new ideas, and reimagine the future. According to Gartner, approximately 50 percent of boards are pushing their CEOs to make progress on digital. Although this is a promising sign, digital must become a priority on every CEOs agenda.

2. Corporate cholesterol – Do not let company culture get in the way of change.

The older the company is, the more stuck it likely is with policies, procedures, layers of management, and risk averseness. When a company’s own processes get in the way of change, that is what I call “corporate cholesterol.” CEOs need to change the culture, encourage cross-team collaborations, and bring in more diverse thinking to reduce the cholesterol levels. In fact, both Mckinsey and Capgemini conclude that culture is the number-one obstacle to digital effectiveness.

3. Digital transformation roadmap – Digital transformation is a journey without a destination.

Many CEOs struggle with their digital roadmap. Questions like: Where do I start? Can a CDO or another executive run this innovation for me? What is my three- to five-year roadmap? often come up during the conversations. Most companies think that there is a set roadmap, or a silver bullet, for digital transformation, but that is not the case. Digital transformation is a journey without a destination, and each company must start small, acquire the necessary skills and knowledge, and continue to innovate.

It is time to face the digital reality and make it a priority. According to KPMG, 70 percent to 80 percent of CEOs believe that the next three years are more critical for their company than the last fifty. And there is good reason to worry, as 75 percent of S&P 500 companies from 2012 will be replaced by 2027 at the current disruption rate.

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Dr. Chakib Bouhdary

About Dr. Chakib Bouhdary

Dr. Chakib Bouhdary is the Digital Transformation Officer at SAP. Chakib spearheads thought leadership for the SAP digital strategy and advises on the SAP business model, having led its transformation in 2010. He also engages with strategic customers and prospects on digital strategy and chairs Executive Digital Exchange (EDX), which is a global community of digital innovation leaders. Follow Chakib on LinkedIn and Twitter