Blockchain: New Perspectives May Change Finance For Good

Peter David

Part 1 of a 2-part series, “Blockchain and the CFO

Finance is certainly no stranger to create new ways to establish trust. I believe that Luca Pacioli, a Franciscan friar and collaborator with Leonardo da Vinci, may have inspired a chain of innovations when he first codified the double-entry bookkeeping system in his mathematics textbook in 1494. For over 500 years, this widely adopted practice enabled trust between trading partners by providing greater insight into each party’s economic viability. Even in times of in-memory computing, which allowed financial books to be closed at any time and within minutes, these principles are still valid.

Innovations transformed how things were done, but each of them had a drawback that did not deliver the ideal state of a high-performing finance organization. Double-entry bookkeeping created more work in an already laborious and tedious process. Meanwhile, accelerated financial closings had limited value if the correctness of information still had to be confirmed using manual, traditional methods.

The real value of these breakthroughs can be realized through an underlying digital layer that automatically certifies all numbers going into the closing process. The finance team would have not only the full transparency it needs to ensure accuracy, but also a platform for securely shared information.

Take, for example, the hype and excitement around blockchain’s potential outside of Bitcoin – potentially impacting a variety of industries and lines of business, especially the finance function. The World Economic Forum foresees an opportunity for CFOs to provide a trusted platform for financial, contract, and voting activities, as blockchain reaches a tipping point in maturity when it stores 10% of the world’s gross domestic product (GDP) within the next 10 years. Many even believe that land titles, loans, intellectual property, corporate brands, currencies, and other digital assets could be better managed, secured, tracked, and monetized ecosystem as process efficiency increases and new market opportunities emerge.

If any of these predictions pan out, the gains achieved by CFOs will be nothing short of revolutionary. However, the skeptic in me always wonders why finance has yet to bring any of these innovations to life. The technology itself is not necessarily new, but I still find that we are in the infancy of demonstrating proof points of blockchain’s relevance that separates this distributed digital ledger from its initial role as a cryptocurrency enabler.

Reaching beyond technology myths to find real bottom-line value

When I hear any of our CFO clients’ thoughts about blockchain, the conversation always begins with Bitcoin and the drawbacks people have seen over the years; namely, security, data and performance concerns, and resistance of existing players. And now that banks are beginning to abandon the Bitcoin technology, finance leaders are having a tough time finding a valid reason to invest in it.

This line of thinking is faulty at best. Blockchain is much more than technology; it’s a framework that allows the creation of a trusted, publicly available registry to securely log information. It’s all about trust between business partners – and it requires innovative applications and new processes to make use of it.

Reconsider my observation about the banking industry, for example. The distributed digital ledger uses specialized algorithms that validate and authenticate transactions within a decentralized architecture and protected by digital encryption. This level of security will replace the role of third parties, such as banks, in guaranteeing information integrity and coordinating agreement among parties. So as you can see, the fear among banks is not that blockchain doesn’t deliver its promises. Rather, it works so well that financial services executives fear that adoption could be a suicide mission for the overall business.

Perhaps banks will not profit from blockchain, or perhaps they will. But this certainly shouldn’t skew a CFO’s perceptions of how the finance area can potentially benefit from a technology of distributed ledgers and registries. As Roy Amara, past president of The Institute for the Future, once noted, “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” And many CFOs are guilty of the latter.

Driving a revolution that makes a CFO’s dreams come true

Blockchain may be that opportunity CFOs need to finally tap into the full potential of their investments in digitization. With trusted public registries, they might go from securing and handling digital rights to transferring them smoothly and immediately without anyone in the middle and with full traceability. The ramifications of this advantage are significant, ranging from real estate processes, stock market performance validations, entitlements, and recycle registries to smart contract protocols that digitally facilitate negotiations, verify the agreement, and enforce compliance with terms.

But at the same time, CFOs must be aware that the use cases and processes around blockchain are still immature. They would do their business a grave disservice by not fully expanding their own understanding of blockchain and flexing their creative muscle to make the finance organization a true center of excellence.

Learn more

Listen to Joel Bernstein, SAP CFO, Global Operations and Jack Shaw  from Blockchain Executive talking about technology, innovation, blockchain, and the CFO at SAPPHIRE NOW to learn more about the potential of blockchain.

The next installment to my blog series Blockchain and the CFO will examine how blockchain can be the engine of finances smart contracts capabilities.

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

Comments

Peter David

About Peter David

Peter David has been regional chief financial officer of Europe Middle East and Africa at SAP since December 2014 and served as its chief financial officer of Latin America and The Caribbean from September 2012 to July 2013. Mr. David established a strategic direction and oversees its financial and operational activities region-wide. He joined SAP in 1995 and served as its chief financial officer and chief operating officer in the past.

Blockchain Meets Life Science: Where Trust Is A Matter Of Life Or Death

Susan Galer

Walt Disney, Bill Gates, and Shakespeare have more in common than anyone could imagine, united by the business imperatives embodied in the promise of blockchain technology.

This was just one of the things I learned after tuning into a recent SAP Game-Changers Radio broadcast entitled “Changing the Game in Life Sciences.” Host Bonnie D. Graham adroitly guided three experts through a fascinating exploration of blockchain’s potential to transform the life sciences industry with undreamed-of trust and efficiency for everything from drug discovery and tracking, to patient control of their own data.

Dream it, do it

Peter Ebert, senior vice president of business development and sales at Cryptowerk Corp., had every right to quote Walt Disney’s maxim, “If you can dream it, you can do it.” I saw proof of his company’s co-innovation during a VIDEO interview at SAP TechEd demonstrating a blockchain POC to help the pharmaceutical industry better track drugs. On the radio, Ebert was unsurprisingly optimistic, comparing Disney’s vision for Mickey Mouse in 1928 with blockchain’s potential to change people’s lives.

“Blockchain will not only be a technical technology or technical thing in our lives. It will impact all our experiences,” said Ebert. “If you go to the doctor and you’re getting blood drawn or you’re taking a pill…you want to make sure that this pill is not a counterfeit, that the technology around you and the devices are not counterfeit. Think about the doctor or other people treating you—you want to make sure that they have the education [and] the skills to treat you well and correctly.”

Blockchain’s trust has special significance to #lifescience where digital assets actually mean life or death @SAPRadio 

Ebert thought blockchain’s ability to prove authenticity to any digital asset had special significance to life sciences. “You can infuse this irrefutable trust into your supply chain of digital data assets,” said Ebert. “In life sciences, digital assets actually mean life or death. They’re not just any old assets; they are very precious data that relates to your life, to my life.”

Find blockchain architects for life science

While Deloitte reported 35 percent of surveyed health and life sciences organizations plan to deploy blockchain by 2018, Eric Piscini, principal, financial services practices, injected some caveats. His inspiration was a Bill Gates quote that stated, “We always overestimate the change that will occur in the next two years, and underestimate the change that will occur in the next 10. Don’t let yourself be lulled into inaction.”

“In the next two years we’ll talk about the blockchain, and 10 years from today we will not talk about blockchain anymore because blockchain will be embedded into everything that we do,” said Piscini.

The number-one challenge is finding people who understand both blockchain and life sciences.

“You need someone who understands what blockchain is capable of, the limitations, the challenges, and the opportunities from a technology point of view,” said Piscini. “You also need someone who can understand clinical trials, content management, and adverse effect management from a business point of view, and bring all of that together.”

Love all, trust a few

Joe Miles, global vice president of life sciences at SAP, turned to Shakespeare’s quote “Love all, but trust a few,” to describe how blockchain can deliver trust that helps patients and the medical industry.

“Blockchain is one of the many things that has a capability to really help simplify and automate trust,” he said. “To ensure that the appropriate people are seeing your information or your business information across all the different constituents that you deal with daily in a way that is productive and efficient.”

Miles thinks blockchain can streamline clinical trials, getting lifesaving products to market faster and more safely. “How do we reduce the time from compound to approval? How do we get this in the hands of the patients who need it to save lives all over? It’s expensive, it takes a lot of years,” he said. “Blockchain presents an opportunity to streamline that process to make it more transparent.”

Follow me on TwitterSAP Business Trends, or Facebook. Read all of my Forbes articles here.

Comments

How Will Digitization Effectively Transform Agriculture?

Cedrik Kern

“If you eat, you’re in agriculture.”

That old adage is more true today than ever before. It’s expected that by 2050 our world population will approach 10 billion. That’s double what it was only thirty years ago in 1987. Increased land, water, and resource use for the growing population competes directly with farming needs to feed that population. It’s fortunate that digitization is helping to connect agricultural concerns around the world. But what will the future of farming look like?

How will digitalization effectively transform agriculture?

Though robotic farming may seem far-fetched, it’s here today. Much like yesteryear’s use of satellites for precision agriculture, the additional data provided through the Internet of Things (IoT) allows us to grow more food with fewer resources on less land. With analytics, a farmer in Kenya uses a drone to release beneficial insects in a problem patch. A Kansas wheat farmer helps keep the water table pure by only fertilizing areas in need. Yields are boosted without waste through very specific irrigation management. Total corn production savings can reach 4.5% with yield mapping, 2.4% with GPS soil mapping and 2.7% with guidance systems. Here are some recent innovations we’ve helped bring to life.

What does palm oil’s future look like?

Planting a palm oil plantation requires strong long-term planning. But what does the future hold for this important crop? As palm oil’s popularity has grown, so have the industries it services. Biofuels, cosmetics, and other industries are all impacted by palm oil production in addition to its traditional uses in food. Fortunately, there’s a strong push to improve sustainability in the palm oil industry.

Most palm oil production in the past has been based on overall yields. But tomorrow’s plantation can determine production by every plant. IoT technology allows tracking the exact growing conditions of the palm tree. This means its exact needs are met to maximize yield and minimize waste. But how does this happen?

Aerial photos play a vital role in this process. Drones, planes, and satellites provide imagery to help producers make smart decisions in oil palm plantation management. Sensors provide climate, soil condition, and other data. This collection of data and strong analytics options let the producer manage stressed areas while boosting production in other parts of the plantation.

This process is being moved forward through collaboration across multiple sectors. Research, genetics, machinery, inputs, and the farmer all work hand-in-hand to provide more palm oil with less waste and a more sustainable environmental impact.

The future is sweet with sugarcane production

Though it’s still one of the world’s top sweeteners, sugarcane has also branched out recently into the biofuel and electrical production sectors. A single ton of sugarcane produces 120 kilograms of sugar, 85 liters of ethanol and 25 kilowatt-hours of electricity. But the tropical origins of the plant means it’s always been planted in developing countries with plenty of land and labor. That made it a cheap crop to grow.

Today’s population growth is limiting sugarcane production. This means more care must be taken in crop techniques and inputs to provide maximum results on minimal land. To complicate matters even further, the land it is raised on is often very different. This requires different approaches to achieve these results.

Different climates require the use of different techniques and methods. Ratoon planting allows the crop to be grown from the prior year’s plant stubble. But the number of years can vary greatly. Production-leading Brazil replants new cane every 5 or 6 years. As second-highest producer, India’s climate demands planting new cane every two or three years.

Hand harvesting uses manpower and a sharp hand-tool while providing 500 kg per hour, with rising labor rates making this practice less profitable than in the past. Mechanizing the process allows manual labor to be focused in different area as a single harvester will handle 100 tons of sugarcane per hour. Except for on steep slopes, mechanical harvesting provides a more ecologically sound approach. Satellite-based tractor navigation uses permanent wheel tracks to maximize production while minimizing wasted time and fuel.

Combining sustainable farming practices with economical technological advancement allows us to grow as a people and as a planet. Smarter crop rotation, precision pesticide and fertilizer application, yield mapping and weed sensors are only a few of the advancements farmers will see in the years to come. IoT technology is expected to see a 20% annual compounded growth from 2015 to 2020. New agricultural business models are expected to see a 15%–25% growth in revenue above the industry average.

Farms that add IoT capabilities, Big Data analytics, and similar connected agriculture tools are making strong strides. Imagine yields 10%–20% higher than in the past. They’re also seeing an average increase in profits of 18%. Some farms have seen profit increases of up to 76%.

Learn how to bring new technologies and services together to power digital transformation by downloading The IoT Imperative for Consumer Industries. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?

Comments

Cedrik Kern

About Cedrik Kern

Cedrik Kern is Solution Owner of Digital Farming at SAP. He drives the development of the SAP platform for digital farming as a key innovation for agribusiness. Cedrik is part of the SAP solution management team for Agribusiness and Commodity Management. This team is responsible for defining our global strategy for agribusiness and commodity management. As an expert for agribusiness and commodity markets, he influences the SAP solution portfolio and has architected co-innovation solutions with global leaders in the commodity trading and consumer products industry. He is a regular speaker at events and conferences presenting SAP’s solution portfolio and innovations for this space.

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.


Comments

Dan Wellers

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

Tags:

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.


Comments

Dan Wellers

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