Leveraging IoT To Boost Business

JP George

Today‘s businesses implement IoT (Internet of Things) tools for a variety of purposes. IoT platforms provide access to integrated hardware and cloud tools that let companies perform remote inventory management, for example, and gather data-based insights, which in turn enables more autonomous business operations and improves profitability.

IoT is an advanced ecosystem that incorporates hardware, software, networking, and security, and it‘s easy for a business to underestimate the complexity of its implementation process. The fact that it overlaps multiple specialized sectors, from data science to sensor manufacturers, makes it vital for companies to collaborate with experts throughout their IoT deployment.

Gathering data from the physical world

From construction firms to retail stores, employers can collect useful data throughout their daily operations. Remote construction sites can gather weather conditions, for instance, and retail stores can collect product counts at multiple locations. IoT technology can not only gather data, it can also alert employers of abnormal situations, such as when temperatures reach over 100 degrees. Common IoT components include intelligent devices, communication networks, cloud services, application platforms, and security protocols. Companies that are implementing new IoT technology often choose to work with an existing platform rather than starting from scratch.

Existing IoT business solutions

Helium is an established IoT firm that specializes in integrated smart sensing solutions. One of its products is an intelligent refrigerator that senses temperature data and alerts clients when the temperature might cause food to spoil. IBM Watson IoT is another option for companies looking for practical IoT solutions. The company tailors its cloud-based platform for the automotive, electronics, insurance, manufacturing, and retail industries.

IBM’s IoT for Insurance package, for example, gives participating insurance companies information on policyholders’ location, security, weather, traffic, and health. This data, in turn, allows the insurer to provide personalized and immediate protection and services when necessary. Other well-known IoT solution providers include Microsoft, Google, VMware, and Harman.

Optimizing IoT technologies

It’s important for companies that are considering IoT implementation to align IoT development with their business needs. Often, this means ensuring that the IoT platform is optimized for actionable insight. For example, instead of asking a smart refrigerator to send data every five minutes, embedded logic enables it to send only abnormal temperature alerts. This approach will not only free up server space, it also decreases energy consumption.

The cost benefits of IoT optimization is especially pronounced when scaled for thousands of IoT devices. Leveraging an IoT solution provider that values secure software optimization and development can help a company’s long-term IoT aspirations.

IoT security is essential

Because IoT technology communicates through a network, businesses need strong security measures to prevent infrastructure intrusions. For client and business data, data encryption is a must; for IoT technologies, so are network security, authentication, encryption, PKI (public key infrastructure), API (application programming interface) security, and security analytics. A recent report by Forrester Research recommends using an end-to-end IoT security approach to protect proprietary data and prevent breaches. Companies should also ensure that their IoT platform is robust, scalable, and upgradable for future connectivity developments.

IoT benefits

For any industry, IoT integration requires careful planning, deployment, and management. According to experts at VMware, successful implementation requires a solution built upon a foundation of collaborations and partnerships of multiple digital spectrum; the right tools and team are needed to reap its benefits with efficiency and security.

Consulting established IoT experts can help companies avoid costly errors while achieving their technological goals more quickly. Conducting different types of employee training for IoT implementation and putting together a talented data team can also effectively complement a company’s future IoT development.

For more on the business value of IoT, see The IoT Transforms The Sum Of The Parts, Not Just The Whole.

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About JP George

JP George grew up in a small town in Washington. After receiving a Master's degree in Public Relations, JP has worked in a variety of positions, from agencies to corporations all across the globe. Experience has made JP an expert in topics relating to leadership, talent management, and organizational business.

Innovation: Parting With Traditional Industry Trends

Andreas Schmitz

Traditional business models are under pressure across all industries. Companies such as Knorr-Bremse, Daimler, and ARRI have already undergone a business transformation. According to Carsten Linz, head of SAP’s Center for Digital Leadership, it’s a question of keeping up, or falling behind.

Q: In your book “Radical Business Model Transformation: Gaining the Competitive Edge in a Disruptive World,” you closely analyzed 380 different companies. What is the distinguishing factor for a company’s success?

A: Successful companies show a willingness to learn and adapt. They seize new opportunities and take calculated, strategic risks with their minds set on creating a sustainable future, rather than simply reacting to changes in the market. When it comes to digitalization initiatives, the overwhelming majority of companies today are still focused on automation and increasing efficiency. Yet a small number of pioneer companies have realized that the real improvement potential lies in transforming their sales model or even their entire business model. This allows them to create game-changing innovations and new digital revenue streams instead of merely digitalizing long-standing processes and consolidating past achievements.

Successful companies show a willingness to learn and adapt

Can you give us an example of a company that achieved greater success by reinventing itself?

Absolutely. But it’s important not to mistake digital transformation with business model transformation. They are two separate topics. For example, ARRI, a global company in the motion picture media industry, transformed its product offerings from analog to digital video cameras, which put it back up to global leader in the market. No changes to its well-structured business model were necessary – all ARRI needed was to digitalize its products.

Yet this is the exception. Most companies do require a more comprehensive transformation of their business. In this case, our Business Transformation Board differentiates four different types of business models, which include the product, platform, project, and solution business models. They are differentiated based on the dimensions “completeness of transaction” and “product customization,” and there are predefined approaches for transformations between these business model types. These include recommended procedures for front-end (value proposition, customer interaction), back-end (value activities not perceived by customer), and revenue mechanism transformations. Structuring the process in this way will not only lend more control over the transformation, but also enables the leadership team to use a clear common language. We also published an article on our approach in the Harvard Business Manager.

What exactly is the platform business model?

Let’s look at Daimler to illustrate this business model. The car company created a mobility platform called moovel, which in addition to its own car-sharing service Car2Go, incorporates public transportation, the mytaxi platform, bicycle rentals, and Deutsche Bahn — none of which are related to Daimler in any way. The reason for this was to create a comprehensive mobility solution on a single platform, and due to the network effect, not many alternative platforms are still out there. The winner takes it all.

We are all familiar with this effect, like when Google completely took over the search engine market, or how hotel portals are dominated by booking.com. We can therefore assume that Daimler’s aim behind launching this platform is to become number one in the market. At the same time, Daimler is reinventing itself – not by changing everything all at once, but by making successive, small changes, starting with the outer borders of the company and the boundaries of their market, which are gradually disintegrating.

Becoming a solution provider isn’t exactly easy. Doesn’t that make transforming the entire business model as a first step seem like a crazy decision?

Depending on the starting point, some companies even require a two-phase transformation. For example, Knorr-Bremse, the world’s largest provider of rail vehicle braking systems, began by shifting from a product business model for rail braking systems to a platform business that offers multiple braking systems. From this point, it went on to offer customized sub-system solutions for rail and commercial vehicles.

This two-phase transformation is a huge challenge, especially for small and midsize businesses. Yet isn’t it remarkable that we still managed to find many hidden champions who dared to take this strategic risk, and implement a full transformation despite the challenges and uncertainties? It takes a lot of courage and conviction to follow this path, but it could end up paying off better than following general industry trends, especially considering the “winner takes it all” phenomenon across the platform world.

So as companies take a completely different course from their original business, the lines between industries are blurring?

Which means that digitalization involves breaking away from traditional industry perspectives. The basic business model types will remain, but the traditional boundaries that defined them will disappear. For example, if I spontaneously decide to go skiing in Switzerland for half a day during a business trip, I can book a skiing pass and an accident insurance daily using my smartphone or car ID, and will receive an additional assistance service in the event of a skiing accident. This allows insurance companies to offer entirely new service packages.

Innovation takes place predominantly at the borders where different industries intersect, and business model transformation requires companies to think from a business perspective, not just an industry perspective.

Innovation takes place at the borders where industries intersect

Everyone’s talking about digital transformation and trying to understand it and keep up with the changes.
Will the hype be over in 10 to 15 years?

It’s true that the term “digital transformation” is overused these days. Yet considering that only a small group of company managers have managed to achieve a higher level of digital maturity so far, the topic will most likely remain relevant for a long time—see the latest SAP Digital Transformation Executive Study.

More importantly though, we must learn to recognize digitalization as a potential driver for business model transformations. Our customers’ CEOs often ask me to help them define a blockchain strategy. What they don’t realize is that it’s not a blockchain or a digitalization strategy the need, but a transformation strategy. Digitalization is only the tool used to achieve this. Use cases are the main focus. The various technologies merely help companies realize them. Use cases often require a combination of several different technologies to solve a problem more efficiently.

After all, digital transformation itself is not an end in itself; it is a means to drive innovation and create new revenue streams and added value for the corporation. The technologies will change, but this core function will remain.

In the end, transformation must benefit mankind. Do you have a recent personal example of this?

As I am often away on business, I decided to use a mobility platform that integrates several different means of transport to plan my latest trip. The platform booked a car-sharing service for my journey to the airport and, at the same time, reserved a parking spot right by my terminal. This saved me the taxi fare, and the effort of finding a parking spot by myself, and it was all organized through a single app with hardly any effort on my part.

Which topic should CEOs add to their next executive board meeting agenda?

I would broach the topic with a question: “When was the last time you did something for the first time?”

More information

Dr. Carsten Linz is head of SAP’s Center for Digital Leadership, which helps SAP customers’ executive boards successfully overcome the leadership challenges of this digital era. Together with co-authors Günter Müller-Stewens and Alexander Zimmermann from the University of St. Gallen, Switzerland, Linz explains in his book “Radical Business Model Transformation” how companies can successfully transform their business model to gain a competitive advantage.

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Andreas Schmitz

About Andreas Schmitz

Andreas Schmitz is a Freelance Journalist for SAP, covering a wide range of topics from big data to Internet of Things, HR, business innovation and mobile.

Blockchain’s Value Underestimated, Despite The Hype

Susan Galer

Just when I thought blockchain hype was hitting the over-saturation mark, I had a conversation with Joe Fox, senior vice president of Business Development and Strategy at SAP Ariba.

My take now is that those companies cynically dismissing the buzz risk getting caught unawares by substantive disruption. Here are the high points of our conversation.

Be patient and prepared

The widespread emergence of blockchain will take some time because it’s a fundamental platform technology that will be embedded in various use cases—most of which are not yet defined. That doesn’t mean there’s nothing to do.

“IT organizations need to establish experiments with blockchain now to build their team and technical expertise, and keep a super-close eye on the business strategy side for potential blockchain-based disruptions in their industry,” said Fox. “IT needs to come up with blockchain ideas as the business team establishes the opportunities and threats. Don’t get caught by surprise by not understanding blockchain’s impact to your industry.”

Fox also advised companies to rely on strategy and consulting partners who can share valuable expertise, especially in these early days. Focus on bringing additional value for customers.

“For example, our strategy around blockchain is to enhance our existing solutions with targeted chain capabilities, create brand new chain-based capabilities on the platform, and expand our B2B collaboration by allowing business network members to collaborate with non-network members,” he said.

Automation and collaboration on steroids

Blockchain-enabled industries like insurance will gain unprecedented automation and collaboration capabilities to better manage risk and fraud, and operate more efficiently.

“Insurance firms will have greater trust in the authenticity of goods, as well as far more granularity into when it was shipped, where it traveled and what happened to it along the journey,” said Fox. “Insurers would be able to create risk profiles targeted to current stages of transit in real-time. The truck that picks up a million-dollar server from a vendor, and brings it to the shipping dock for overseas transport is less risky and may not require as much insurance. Maybe the risk increases when the server is traveling on the ship, and once delivered, the insurance costs decrease.”

#Blockchain cynics may sneer, but the real leaders are taking action now

Validating provenance benefits major industries

Energy, retail, aviation, and pharmaceuticals are among the complex industries that could benefit from blockchain’s ability to track and trace the billions of component parts, raw materials and food products traveling across inbound supply chains.

“With established provenance, the real goods can’t be swapped out for fakes, which does happen,” said Fox. “If components that arrive at an energy plant aren’t the authentic ones certified for that heavily regulated industry, that’s a major risk. The same applies to food, where retailers need to verify that items were grown from a certain location, harvested in a sustainable way, and shipped at a certain temperature the entire route. The dirty secret is that it’s been impossible for many of these industries to have trustworthy verification of their goods, and the stakes are high.”

Preventing fraudulent goods from entering the supply chains protects the brand while ensuring consumer safety. “Amazon is offering refunds to customers who purchased potentially counterfeit solar eclipse glasses, but blockchain validation might have prevented it from happening at all,” said Fox. “On the recall side, blockchain could help companies immediately contact consumers that purchased fraudulent, unsafe products.”

The growing role of banks

Fox sees banks operating from the side instead of in the middle, and increasingly responsible for creating trust and validating identity.

“Bitcoin likely won’t enter into B2B transactions because it’s a fluctuating asset, not a currency, and companies don’t traditionally pay each other that way. True currencies will be on the blockchain, requiring banks to validate and move the physical money, and settle transactions. Institutions that move fastest to create chain-based banking will win,” he said. “Banks will figure out new ways to generate revenue such as charging for currency conversion or providing interest on money that’s in the chain.”

Know your supplier’s supplier (KYSS)

Blockchain could help buyers make sure their suppliers aren’t using child labor, and are complying with safety and anti-corruption regulations. Information validated on the chain increases trust and lowers risk. Fox told me that SAP Ariba is partnering with Global Risk Management Solutions and Made in a Free World, and will use blockchain to validate suppliers, supporting not only good business, but competitive advantage.

“Similar to provenance, blockchain will allow third parties to post information to the chain about the authenticity of a company and its practices,” he said. “Blockchain is an opportunity to show what a high-quality company you are in a way that doesn’t exist right now.”

Blockchain’s cynics may sneer, but the real leaders are taking action now.

Turn insight into action, make better decisions, and transform your business. Learn how.

Follow me: @smgaler

 

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The Future Will Be Co-Created

Dan Wellers and Timo Elliott

 

Just 3% of companies have completed enterprise digital transformation projects.
92% of those companies have significantly improved or transformed customer engagement.
81% of business executives say platforms will reshape industries into interconnected ecosystems.
More than half of large enterprises (80% of the Global 500) will join industry platforms by 2018.

Link to Sources


Redefining Customer Experience

Many business leaders think of the customer journey or experience as the interaction an individual or business has with their firm.

But the business value of the future will exist in the much broader, end-to-end experiences of a customer—the experience of travel, for example, or healthcare management or mobility. Individual companies alone, even with their existing supplier networks, lack the capacity to transform these comprehensive experiences.


A Network Effect

Rather than go it alone, companies will develop deep collaborative relationships across industries—even with their customers—to create powerful ecosystems that multiply the breadth and depth of the products, services, and experiences they can deliver. Digital native companies like Baidu and Uber have embraced ecosystem thinking from their early days. But forward-looking legacy companies are beginning to take the approach.

Solutions could include:

  • Packaging provider Weig has integrated partners into production with customers co-inventing custom materials.
  • China’s Ping An insurance company is aggressively expanding beyond its sector with a digital platform to help customers manage their healthcare experience.
  • British roadside assistance provider RAC is delivering a predictive breakdown service for drivers by acquiring and partnering with high-tech companies.

What Color Is Your Ecosystem?

Abandoning long-held notions of business value creation in favor of an ecosystem approach requires new tactics and strategies. Companies can:

1.  Dispassionately map the end-to-end customer experience, including those pieces outside company control.

2.  Employ future planning tactics, such as scenario planning, to examine how that experience might evolve.

3.  Identify organizations in that experience ecosystem with whom you might co-innovate.

4.  Embrace technologies that foster secure collaboration and joint innovation around delivery of experiences, such as cloud computing, APIs, and micro-services.

5.  Hire, train for, and reward creativity, innovation, and customer-centricity.


Evolve or Be Commoditized

Some companies will remain in their traditional industry boxes, churning out products and services in isolation. But they will be commodity players reaping commensurate returns. Companies that want to remain competitive will seek out their new ecosystem or get left out in the cold.


Download the executive brief The Future Will be Co-Created.


Read the full article The Future Belongs to Industry-Busting Ecosystems.

Turn insight into action, make better decisions, and transform your business.  Learn how.

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About Dan Wellers

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

About Timo Elliott

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

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Blockchain: Much Ado About Nothing? How Very Wrong!

Juergen Roehricht

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

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

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

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

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

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

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

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

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

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

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

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

Connecting blockchain with the Internet of Things

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

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

Ideas to ignite thinking in specific industries

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

The future

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

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

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

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

Turn insight into action, make better decisions, and transform your business. Learn how.

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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.