Category Archives: SAP

Turn The Page: Amazon Bookstores Mean Retailers Must Focus On CX

275978 275978 l srgb s gl Turn The Page: Amazon Bookstores Mean Retailers Must Focus On CX

The Japanese culture has always shown a special reverence for its elderly. That’s why, in 1963, the government began a tradition of giving a silver dish, called a sakazuki, to each citizen who reached the age of 100 by Keiro no Hi (Respect for the Elders Day), which is celebrated on the third Monday of each September.

That first year, there were 153 recipients, according to The Japan Times. By 2016, the number had swelled to more than 65,000, and the dishes cost the already cash-strapped government more than US$ 2 million, Business Insider reports. Despite the country’s continued devotion to its seniors, the article continues, the government felt obliged to downgrade the finish of the dishes to silver plating to save money.

What tends to get lost in discussions about automation taking over jobs and Millennials taking over the workplace is the impact of increased longevity. In the future, people will need to be in the workforce much longer than they are today. Half of the people born in Japan today, for example, are predicted to live to 107, making their ancestors seem fragile, according to Lynda Gratton and Andrew Scott, professors at the London Business School and authors of The 100-Year Life: Living and Working in an Age of Longevity.

The End of the Three-Stage Career

Assuming that advances in healthcare continue, future generations in wealthier societies could be looking at careers lasting 65 or more years, rather than at the roughly 40 years for today’s 70-year-olds, write Gratton and Scott. The three-stage model of employment that dominates the global economy today—education, work, and retirement—will be blown out of the water.

It will be replaced by a new model in which people continually learn new skills and shed old ones. Consider that today’s most in-demand occupations and specialties did not exist 10 years ago, according to The Future of Jobs, a report from the World Economic Forum.

And the pace of change is only going to accelerate. Sixty-five percent of children entering primary school today will ultimately end up working in jobs that don’t yet exist, the report notes.

Our current educational systems are not equipped to cope with this degree of change. For example, roughly half of the subject knowledge acquired during the first year of a four-year technical degree, such as computer science, is outdated by the time students graduate, the report continues.

Skills That Transcend the Job Market

Instead of treating post-secondary education as a jumping-off point for a specific career path, we may see a switch to a shorter school career that focuses more on skills that transcend a constantly shifting job market. Today, some of these skills, such as complex problem solving and critical thinking, are taught mostly in the context of broader disciplines, such as math or the humanities.

Other competencies that will become critically important in the future are currently treated as if they come naturally or over time with maturity or experience. We receive little, if any, formal training, for example, in creativity and innovation, empathy, emotional intelligence, cross-cultural awareness, persuasion, active listening, and acceptance of change. (No wonder the self-help marketplace continues to thrive!)

These skills, which today are heaped together under the dismissive “soft” rubric, are going to harden up to become indispensable. They will become more important, thanks to artificial intelligence and machine learning, which will usher in an era of infinite information, rendering the concept of an expert in most of today’s job disciplines a quaint relic. As our ability to know more than those around us decreases, our need to be able to collaborate well (with both humans and machines) will help define our success in the future.

Individuals and organizations alike will have to learn how to become more flexible and ready to give up set-in-stone ideas about how businesses and careers are supposed to operate. Given the rapid advances in knowledge and attendant skills that the future will bring, we must be willing to say, repeatedly, that whatever we’ve learned to that point doesn’t apply anymore.

Careers will become more like life itself: a series of unpredictable, fluid experiences rather than a tightly scripted narrative. We need to think about the way forward and be more willing to accept change at the individual and organizational levels.

Rethink Employee Training

One way that organizations can help employees manage this shift is by rethinking training. Today, overworked and overwhelmed employees devote just 1% of their workweek to learning, according to a study by consultancy Bersin by Deloitte. Meanwhile, top business leaders such as Bill Gates and Nike founder Phil Knight spend about five hours a week reading, thinking, and experimenting, according to an article in Inc. magazine.

If organizations are to avoid high turnover costs in a world where the need for new skills is shifting constantly, they must give employees more time for learning and make training courses more relevant to the future needs of organizations and individuals, not just to their current needs.

The amount of learning required will vary by role. That’s why at SAP we’re creating learning personas for specific roles in the company and determining how many hours will be required for each. We’re also dividing up training hours into distinct topics:

  • Law: 10%. This is training required by law, such as training to prevent sexual harassment in the workplace.

  • Company: 20%. Company training includes internal policies and systems.

  • Business: 30%. Employees learn skills required for their current roles in their business units.

  • Future: 40%. This is internal, external, and employee-driven training to close critical skill gaps for jobs of the future.

In the future, we will always need to learn, grow, read, seek out knowledge and truth, and better ourselves with new skills. With the support of employers and educators, we will transform our hardwired fear of change into excitement for change.

We must be able to say to ourselves, “I’m excited to learn something new that I never thought I could do or that never seemed possible before.” D!

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Digitalist Magazine

Cybercrimes Now Force Rethinking Public Safety And Security

276248 276248 l srgb s gl Cybercrimes Now Force Rethinking Public Safety And Security

The Japanese culture has always shown a special reverence for its elderly. That’s why, in 1963, the government began a tradition of giving a silver dish, called a sakazuki, to each citizen who reached the age of 100 by Keiro no Hi (Respect for the Elders Day), which is celebrated on the third Monday of each September.

That first year, there were 153 recipients, according to The Japan Times. By 2016, the number had swelled to more than 65,000, and the dishes cost the already cash-strapped government more than US$ 2 million, Business Insider reports. Despite the country’s continued devotion to its seniors, the article continues, the government felt obliged to downgrade the finish of the dishes to silver plating to save money.

What tends to get lost in discussions about automation taking over jobs and Millennials taking over the workplace is the impact of increased longevity. In the future, people will need to be in the workforce much longer than they are today. Half of the people born in Japan today, for example, are predicted to live to 107, making their ancestors seem fragile, according to Lynda Gratton and Andrew Scott, professors at the London Business School and authors of The 100-Year Life: Living and Working in an Age of Longevity.

The End of the Three-Stage Career

Assuming that advances in healthcare continue, future generations in wealthier societies could be looking at careers lasting 65 or more years, rather than at the roughly 40 years for today’s 70-year-olds, write Gratton and Scott. The three-stage model of employment that dominates the global economy today—education, work, and retirement—will be blown out of the water.

It will be replaced by a new model in which people continually learn new skills and shed old ones. Consider that today’s most in-demand occupations and specialties did not exist 10 years ago, according to The Future of Jobs, a report from the World Economic Forum.

And the pace of change is only going to accelerate. Sixty-five percent of children entering primary school today will ultimately end up working in jobs that don’t yet exist, the report notes.

Our current educational systems are not equipped to cope with this degree of change. For example, roughly half of the subject knowledge acquired during the first year of a four-year technical degree, such as computer science, is outdated by the time students graduate, the report continues.

Skills That Transcend the Job Market

Instead of treating post-secondary education as a jumping-off point for a specific career path, we may see a switch to a shorter school career that focuses more on skills that transcend a constantly shifting job market. Today, some of these skills, such as complex problem solving and critical thinking, are taught mostly in the context of broader disciplines, such as math or the humanities.

Other competencies that will become critically important in the future are currently treated as if they come naturally or over time with maturity or experience. We receive little, if any, formal training, for example, in creativity and innovation, empathy, emotional intelligence, cross-cultural awareness, persuasion, active listening, and acceptance of change. (No wonder the self-help marketplace continues to thrive!)

These skills, which today are heaped together under the dismissive “soft” rubric, are going to harden up to become indispensable. They will become more important, thanks to artificial intelligence and machine learning, which will usher in an era of infinite information, rendering the concept of an expert in most of today’s job disciplines a quaint relic. As our ability to know more than those around us decreases, our need to be able to collaborate well (with both humans and machines) will help define our success in the future.

Individuals and organizations alike will have to learn how to become more flexible and ready to give up set-in-stone ideas about how businesses and careers are supposed to operate. Given the rapid advances in knowledge and attendant skills that the future will bring, we must be willing to say, repeatedly, that whatever we’ve learned to that point doesn’t apply anymore.

Careers will become more like life itself: a series of unpredictable, fluid experiences rather than a tightly scripted narrative. We need to think about the way forward and be more willing to accept change at the individual and organizational levels.

Rethink Employee Training

One way that organizations can help employees manage this shift is by rethinking training. Today, overworked and overwhelmed employees devote just 1% of their workweek to learning, according to a study by consultancy Bersin by Deloitte. Meanwhile, top business leaders such as Bill Gates and Nike founder Phil Knight spend about five hours a week reading, thinking, and experimenting, according to an article in Inc. magazine.

If organizations are to avoid high turnover costs in a world where the need for new skills is shifting constantly, they must give employees more time for learning and make training courses more relevant to the future needs of organizations and individuals, not just to their current needs.

The amount of learning required will vary by role. That’s why at SAP we’re creating learning personas for specific roles in the company and determining how many hours will be required for each. We’re also dividing up training hours into distinct topics:

  • Law: 10%. This is training required by law, such as training to prevent sexual harassment in the workplace.

  • Company: 20%. Company training includes internal policies and systems.

  • Business: 30%. Employees learn skills required for their current roles in their business units.

  • Future: 40%. This is internal, external, and employee-driven training to close critical skill gaps for jobs of the future.

In the future, we will always need to learn, grow, read, seek out knowledge and truth, and better ourselves with new skills. With the support of employers and educators, we will transform our hardwired fear of change into excitement for change.

We must be able to say to ourselves, “I’m excited to learn something new that I never thought I could do or that never seemed possible before.” D!

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Digitalist Magazine

Modernize Your Business, And Consequently Cover GDPR: Part 1

When outspoken venture capitalist and Netscape co-founder Marc Andreessen wrote in The Wall Street Journal in 2011 that software is eating the world, he was only partly correct. In fact, business services based on software platforms are what’s eating the world.

Companies like Apple, which remade the mobile phone industry by offering app developers easy access to millions of iPhone owners through its iTunes App Store platform, are changing the economy. However, these world-eating companies are not just in the tech world. They are also emerging in industries that you might not expect: retailers, finance companies, transportation firms, and others outside of Silicon Valley are all at the forefront of the platform revolution.

These outsiders are taking platforms to the next level by building them around business services and data, not just apps. Companies are making business services such as logistics, 3D printing, and even roadside assistance for drivers available through a software connection that other companies can plug in to and consume or offer to their own customers.

SAP Q317 DigitalDoubles Feature1 Image2 Modernize Your Business, And Consequently Cover GDPR: Part 1There are two kinds of players in this business platform revolution: providers and participants. Providers create the platform and create incentives for developers to write apps for it. Developers, meanwhile, are participants; they can extend the reach of their apps by offering them through the platform’s virtual shelves.

Business platforms let companies outside of the technology world become powerful tech players, unleashing a torrent of innovation that they could never produce on their own. Good business platforms create millions in extra revenue for companies by enlisting external developers to innovate for them. It’s as if strangers are handing you entirely new revenue streams and business models on the street.

Powering this movement are application programming interfaces (APIs) and software development kits (SDKs), which enable developers to easily plug their apps into a platform without having to know much about the complex software code that drives it. Developers get more time to focus on what they do best: writing great apps. Platform providers benefit because they can offer many innovative business services to end customers without having to create them themselves.

Any company can leverage APIs and SDKs to create new business models and products that might not, in fact, be its primary method of monetization. However, these platforms give companies new opportunities and let them outflank smaller, more nimble competitors.

Indeed, the platform economy can generate unbelievable revenue streams for companies. According to Platform Revolution authors Geoffrey G. Parker, Marshall W. Van Alstyne, and Sangeet Paul Choudary, travel site Expedia makes approximately 90% of its revenue by making business services available to other travel companies through its API.

In TechCrunch in May 2016, Matt Murphy and Steve Sloane wrote that “the number of SaaS applications has exploded and there is a rising wave of software innovation in APIs that provide critical connective tissue and increasingly important functionality.” ProgrammableWeb.com, an API resource and directory, offers searchable access to more than 15,000 different APIs.

According to Accenture Technology Vision 2016, 82% of executives believe that platforms will be the “glue that brings organizations together in the digital economy.” The top 15 platforms (which include companies built entirely on this software architecture, such as eBay and Priceline.com) have a combined market capitalization of US$ 2.6 trillion.

It’s time for all companies to join the revolution. Whether working in alliance with partners or launching entirely in-house, companies need to think about platforms now, because they will have a disruptive impact on every major industry.

SAP Q317 DigitalDoubles Feature1 Image3 1024x572 Modernize Your Business, And Consequently Cover GDPR: Part 1

To the Barricades

Several factors converged to make monetizing a company’s business services easier. Many of the factors come from the rise of smartphones, specifically the rise of Bluetooth and 3G (and then 4G and LTE) connections. These connections turned smartphones into consumption hubs that weren’t feasible when high-speed mobile access was spottier.

One good example of this is PayPal’s rise. In the early 2000s, it functioned primarily as a standalone web site, but as mobile purchasing became more widespread, third-party merchants clamored to integrate PayPal’s payment processing service into their own sites and apps.

In Platform Revolution, Parker, Van Alstyne, and Choudary claim that “platforms are eating pipelines,” with pipelines being the old, direct-to-consumer business methods of the past. The first stage of this takeover involved much more efficient digital pipelines (think of Amazon in the retail space and Grubhub for food delivery) challenging their offline counterparts.

What Makes Great Business Platforms Run?

SAP Q317 DigitalDoubles Feature1 Image8 Modernize Your Business, And Consequently Cover GDPR: Part 1

The quality of the ecosystem that powers your platform is as important as the quality of experience you offer to customers. Here’s how to do it right.

Although the platform economy depends on them, application programming interfaces (APIs) and software development kits (SDKs) aren’t magic buttons. They’re tools that organizations can leverage to attract users and developers.

To succeed, organizations must ensure that APIs include extensive documentation and are easy for developers to add into their own products. Another part of platform success is building a general digital enterprise platform that includes both APIs and SDKs.

A good platform balances ease of use, developer support, security, data architecture (that is, will it play nice with a company’s existing systems?), edge processing (whether analytics are processed locally or in the cloud), and infrastructure (whether a platform provider operates its own data centers and cloud infrastructure or uses public cloud services). The exact formula for which elements to embrace, however, will vary according to the use case, the industry, the organization, and its customers.

In all cases, the platform should offer a value proposition that’s a cut above its competitors. That means a platform should offer a compelling business service that is difficult to duplicate.

By creating open standards and easy-to-work-with tools, organizations can greatly improve the platforms they offer. APIs and SDKs may sound complicated, but they’re just tools for talented people to do their jobs with. Enable these talented people, and your platform will take off.

In the second stage, platforms replace pipelines. Platform Revolution’s authors write: “The Internet no longer acts merely as a distribution channel (a pipeline). It also acts as a creation infrastructure and a coordination mechanism. Platforms are leveraging this new capability to create entirely new business models.” Good examples of second-stage companies include Airbnb, DoubleClick, Spotify, and Uber.

Allstate Takes Advantage of Its Hidden Jewels

Many companies taking advantage of platforms were around long before APIs, or even the internet, existed. Allstate, one of the largest insurers in the United States, has traditionally focused on insurance services. But recently, the company expanded into new markets—including the platform economy.

Allstate companies Allstate Roadside Services (ARS) and Arity, a technology company founded by Allstate in late 2016, have provided their parent company with new sources of revenue, thanks to new offerings. ARS launched Good Hands Rescue APIs, which allow third parties to leverage Allstate’s roadside assistance network in their own apps. Meanwhile, Arity offers a portfolio of APIs that let third parties leverage Allstate’s aggregate data on driver behavior and intellectual property related to risk prediction for uses spanning mobility, consumer, and insurance solutions.

SAP Q317 DigitalDoubles Feature1 Image4 Modernize Your Business, And Consequently Cover GDPR: Part 1For example, Verizon licenses an Allstate Good Hands Rescue API for its own roadside assistance app. And automakers GM and BMW also offer roadside assistance service through Allstate.

Potential customers for Arity’s API include insurance providers, shared mobility companies, automotive parts makers, telecoms, and others.

“Arity is an acknowledgement that we have to be digital first and think about the services we provide to customers and businesses,” says Chetan Phadnis, Arity’s head of product development. “Thinking about our intellectual property system and software products is a key part of our transformation. We think it will create new ways to make money in the vertical transportation ecosystem.”

One of Allstate’s major challenges is a change in auto ownership that threatens the traditional auto insurance model. No-car and one-car households are on the rise, ridesharing services such as Uber and Lyft work on very different insurance models than passenger cars or traditional taxi companies, and autonomous vehicles could disrupt the traditional auto insurance model entirely.

This means that companies like Allstate are smart to look for revenue streams beyond traditional insurance offerings. The intangible assets that Allstate has accumulated over the years—a massive aggregate collection of driver data, an extensive set of risk models and predictive algorithms, and a network of garages and mechanics to help stranded motorists—can also serve as a new revenue stream for the future.

By offering two distinct API services for the platform economy, Allstate is also able to see what customers might want in the future. While the Good Hands Rescue APIs let third-party users integrate a specific service (such as roadside assistance) into their software tools, Arity instead lets third-party developers leverage huge data sets as a piece of other, less narrowly defined projects, such as auto maintenance. As Arity gains insights into how customers use and respond to those offerings, it gets a preview into potential future directions for its own products and services.

SAP Q317 DigitalDoubles Feature1 Image5 1024x572 Modernize Your Business, And Consequently Cover GDPR: Part 1

Farmers Harvest Cash from a Platform

Another example of innovation fueling the platform economy doesn’t come from a boldfaced tech name. Instead, it comes from a relatively small startup that has nimbly built its business model around data with an interesting twist: it turns its customers into entrepreneurs.

Farmobile is a Kansas City–based agriculture tech company whose smart device, the Passive Uplink Connection (PUC), can be plugged into tractors, combines, sprayers, and other farm equipment.

Farmobile uses the PUC to enable farmers to monetize data from their fields, which is one of the savviest routes to success with platforms—making your platform so irresistible to end consumers that they foment the revolution for you.

Once installed, says CEO Jason Tatge, the PUC streams second-by-second data to farmers’ Farmobile accounts. This gives them finely detailed reports, called Electronic Field Records (EFRs), that they can use to improve their own business, share with trusted advisors, and sell to third parties.

The PUC gives farmers detailed records for tracking analytics on their crops, farms, and equipment and creates a marketplace where farmers can sell their data to third parties. Farmers benefit because they generate extra income; Farmobile benefits because it makes a commission on each purchase and builds a giant store of aggregated farming data.

This last bit is important if Farmobile is to successfully compete with traditional agricultural equipment manufacturers, which also gather data from farmers. Farmobile’s advantage (at least for now) is that the equipment makers limit their data gathering to their existing customer bases and sell it back to them in the form of services designed to improve crop yields and optimize equipment performance.

Farmobile, meanwhile, is trying to appeal to all farmers by sharing the wealth, which could help it leapfrog the giants that already have large customer bases. “The ability to bring data together easily is good for farmers, so we built API integrations to put data in one place,” says Tatge.

Farmers can resell their data on Farmobile’s Data Store to buyers such as reinsurance firm Guy Carpenter. To encourage farmers to opt in, says Tatge, “we told farmers that if they run our device over planting and harvest season, we can guarantee them $ 2 per acre for their EFRs.”

So far, Farmobile’s customers have sent the Data Store approximately 4,200 completed EFRs for both planting and harvest, which will serve as the backbone of the company’s data monetization efforts. Eventually, Farmobile hopes to expand the offerings on the Data Store to include records from at least 10 times as many different farm fields.

SAP Q317 DigitalDoubles Feature1 Image6 1024x572 Modernize Your Business, And Consequently Cover GDPR: Part 1

Under Armour Binges on APIs

Another model for the emerging business platform world comes from Under Armour, the sports apparel giant. Alongside its very successful clothing and shoe lines, Under Armour has put its platform at the heart of its business model.

But rather than build a platform itself, Under Armour has used its growing revenues to create an industry-leading ecosystem. Over the past decade, it has purchased companies that already offer APIs, including MapMyFitness, Endomondo, and MyFitnessPal, and then linked them all together into a massive platform that serves 30 million consumers.

This strategy has made Under Armour an indispensable part of the sprawling mobile fitness economy. According to the company’s 2016 annual results, its business platform ecosystem, known as the Connected Fitness division, generated $ 80 million in revenue that year—a 51% increase over 2015.

SAP Q317 DigitalDoubles Feature1 Image7 Modernize Your Business, And Consequently Cover GDPR: Part 1By combining existing APIs from its different apps with original tools built in-house, extensive developer support, and a robust SDK, third-party developers have everything they need to build their own fitness app or web site.

Depending on their needs, third-party developers can sign up for several different payment plans with varying access to Under Armour’s APIs and SDKs. Indeed, the company’s tiered developer pricing plan for Connected Fitness, which is separated into Starter, Pro, and Premium levels, makes Under Armour seem more like a tech company than a sports apparel firm.

As a result, Under Armour’s APIs and SDKs are the underpinnings of a vast platform cooperative. Under Armour’s apps seamlessly integrate with popular services like Fitbit and Garmin (even though Under Armour has a fitness tracker of its own) and are licensed by corporations ranging from Microsoft to Coca-Cola to Purina. They’re even used by fitness app competitors like AthletePath and Lose It.

A large part of Under Armour’s success is the sheer amount of data its fitness apps collect and then make available to developers. MyFitnessPal, for instance, is an industry-leading calorie and food tracker used for weight loss, and Endomondo is an extremely popular running and biking record keeper and route-sharing platform.

One way of looking at the Connected Fitness platform is as a combination of traditional consumer purchasing data with insights gleaned from Under Armour’s suite of apps, as well as from the third-party apps that Under Armour’s products use.

Indeed, Under Armour gets a bonus from the platform economy: it helps the company understand its customers better, creating a virtuous cycle. As end users use different apps fueled by Under Armour’s services and data-sharing capabilities, Under Armour can then use that data to fuel customer engagement and attract additional third-party app developers to add new services to the ecosystem.

What Successful Platforms Have in Common

The most successful business platforms have three things in common: They’re easy to work with, they fulfill a market need, and they offer data that’s useful to customers.

For instance, Farmobile’s marketplace fulfills a valuable need in the market: it lets farmers monetize data and develop a new revenue stream that otherwise would not exist. Similarly, Allstate’s Arity experiment turns large volumes of data collected by Allstate over the years into a revenue stream that drives down costs for Arity’s clients by giving them more accurate data to integrate into their apps and software tools.

Meanwhile, Under Armour’s Connected Fitness platform and API suite encourage users to sign up for more apps in the company’s ecosystem. If you track your meals in MyFitnessPal, you’ll want to track your runs in Endomondo or MapMyRun. Similarly, if you’re an app developer in the health and fitness space, Under Armour has a readily available collection of tools that will make it easy for users to switch over to your app and cheaper for you to develop your app.

As the platform economy grows, all three of these approaches—Allstate’s leveraging of its legacy business data, Farmobile’s marketplace for users to become data entrepreneurs, and Under Armour’s one-stop fitness app ecosystem—are extremely useful examples of what happens next.

In the coming months and years, the platform economy will see other big changes. In 2016 for example, Apple, Microsoft, Facebook, and Google all released APIs for their AI-powered voice assistant platforms, the most famous of which is Apple’s Siri.

The introduction of APIs confirms that the AI technology behind these bots has matured significantly and that a new wave of AI-based platform innovation is nigh. (In fact, Digitalistpredicted last year that the emergence of an API for these AIs would open them up beyond conventional uses.) New voice-operated technologies such as Google Home and Amazon Alexa offer exciting opportunities for developers to create full-featured, immersive applications on top of existing platforms.

We will also see AI- and machine learning–based APIs emerge that will allow developers to quickly leverage unstructured data (such as social media posts or texts) for new applications and services. For instance, sentiment analysis APIs can help explore and better understand customers’ interests, emotions, and preferences in social media.

As large providers offer APIs and associated services for smaller organizations to leverage AI and machine learning, these companies can in turn create their own platforms for clients to use unstructured data—everything from insights from uploaded photographs to recognizing a user’s emotion based on facial expression or tone of voice—in their own apps and products. Meanwhile, the ever-increasing power of cloud platforms like Amazon Web Services and Microsoft Azure will give these computing-intensive app platforms the juice they need to become deeper and richer.

These business services will depend on easy ways to exchange and implement data for success. The good news is that finding easy ways to share data isn’t hard and the API and SDK offerings that fuel the platform economy will become increasingly robust. Thanks to the opportunities generated by these new platforms and the new opportunities offered to end users, developers, and platform businesses themselves, everyone stands to win—if they act soon. D!


About the Authors

Bernd Leukert is a member of the Executive Board, Products and Innovation, for SAP.

Björn Goerke is Chief Technology Officer and President, SAP Cloud Platform, for SAP.

Volker Hildebrand is Global Vice President for SAP Hybris solutions.

Sethu M is President, Mobile Services, for SAP.

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


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

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Digitalist Magazine

Courier Service Thrives Under Radical Business Model

When outspoken venture capitalist and Netscape co-founder Marc Andreessen wrote in The Wall Street Journal in 2011 that software is eating the world, he was only partly correct. In fact, business services based on software platforms are what’s eating the world.

Companies like Apple, which remade the mobile phone industry by offering app developers easy access to millions of iPhone owners through its iTunes App Store platform, are changing the economy. However, these world-eating companies are not just in the tech world. They are also emerging in industries that you might not expect: retailers, finance companies, transportation firms, and others outside of Silicon Valley are all at the forefront of the platform revolution.

These outsiders are taking platforms to the next level by building them around business services and data, not just apps. Companies are making business services such as logistics, 3D printing, and even roadside assistance for drivers available through a software connection that other companies can plug in to and consume or offer to their own customers.

SAP Q317 DigitalDoubles Feature1 Image2 Courier Service Thrives Under Radical Business ModelThere are two kinds of players in this business platform revolution: providers and participants. Providers create the platform and create incentives for developers to write apps for it. Developers, meanwhile, are participants; they can extend the reach of their apps by offering them through the platform’s virtual shelves.

Business platforms let companies outside of the technology world become powerful tech players, unleashing a torrent of innovation that they could never produce on their own. Good business platforms create millions in extra revenue for companies by enlisting external developers to innovate for them. It’s as if strangers are handing you entirely new revenue streams and business models on the street.

Powering this movement are application programming interfaces (APIs) and software development kits (SDKs), which enable developers to easily plug their apps into a platform without having to know much about the complex software code that drives it. Developers get more time to focus on what they do best: writing great apps. Platform providers benefit because they can offer many innovative business services to end customers without having to create them themselves.

Any company can leverage APIs and SDKs to create new business models and products that might not, in fact, be its primary method of monetization. However, these platforms give companies new opportunities and let them outflank smaller, more nimble competitors.

Indeed, the platform economy can generate unbelievable revenue streams for companies. According to Platform Revolution authors Geoffrey G. Parker, Marshall W. Van Alstyne, and Sangeet Paul Choudary, travel site Expedia makes approximately 90% of its revenue by making business services available to other travel companies through its API.

In TechCrunch in May 2016, Matt Murphy and Steve Sloane wrote that “the number of SaaS applications has exploded and there is a rising wave of software innovation in APIs that provide critical connective tissue and increasingly important functionality.” ProgrammableWeb.com, an API resource and directory, offers searchable access to more than 15,000 different APIs.

According to Accenture Technology Vision 2016, 82% of executives believe that platforms will be the “glue that brings organizations together in the digital economy.” The top 15 platforms (which include companies built entirely on this software architecture, such as eBay and Priceline.com) have a combined market capitalization of US$ 2.6 trillion.

It’s time for all companies to join the revolution. Whether working in alliance with partners or launching entirely in-house, companies need to think about platforms now, because they will have a disruptive impact on every major industry.

SAP Q317 DigitalDoubles Feature1 Image3 1024x572 Courier Service Thrives Under Radical Business Model

To the Barricades

Several factors converged to make monetizing a company’s business services easier. Many of the factors come from the rise of smartphones, specifically the rise of Bluetooth and 3G (and then 4G and LTE) connections. These connections turned smartphones into consumption hubs that weren’t feasible when high-speed mobile access was spottier.

One good example of this is PayPal’s rise. In the early 2000s, it functioned primarily as a standalone web site, but as mobile purchasing became more widespread, third-party merchants clamored to integrate PayPal’s payment processing service into their own sites and apps.

In Platform Revolution, Parker, Van Alstyne, and Choudary claim that “platforms are eating pipelines,” with pipelines being the old, direct-to-consumer business methods of the past. The first stage of this takeover involved much more efficient digital pipelines (think of Amazon in the retail space and Grubhub for food delivery) challenging their offline counterparts.

What Makes Great Business Platforms Run?

SAP Q317 DigitalDoubles Feature1 Image8 Courier Service Thrives Under Radical Business Model

The quality of the ecosystem that powers your platform is as important as the quality of experience you offer to customers. Here’s how to do it right.

Although the platform economy depends on them, application programming interfaces (APIs) and software development kits (SDKs) aren’t magic buttons. They’re tools that organizations can leverage to attract users and developers.

To succeed, organizations must ensure that APIs include extensive documentation and are easy for developers to add into their own products. Another part of platform success is building a general digital enterprise platform that includes both APIs and SDKs.

A good platform balances ease of use, developer support, security, data architecture (that is, will it play nice with a company’s existing systems?), edge processing (whether analytics are processed locally or in the cloud), and infrastructure (whether a platform provider operates its own data centers and cloud infrastructure or uses public cloud services). The exact formula for which elements to embrace, however, will vary according to the use case, the industry, the organization, and its customers.

In all cases, the platform should offer a value proposition that’s a cut above its competitors. That means a platform should offer a compelling business service that is difficult to duplicate.

By creating open standards and easy-to-work-with tools, organizations can greatly improve the platforms they offer. APIs and SDKs may sound complicated, but they’re just tools for talented people to do their jobs with. Enable these talented people, and your platform will take off.

In the second stage, platforms replace pipelines. Platform Revolution’s authors write: “The Internet no longer acts merely as a distribution channel (a pipeline). It also acts as a creation infrastructure and a coordination mechanism. Platforms are leveraging this new capability to create entirely new business models.” Good examples of second-stage companies include Airbnb, DoubleClick, Spotify, and Uber.

Allstate Takes Advantage of Its Hidden Jewels

Many companies taking advantage of platforms were around long before APIs, or even the internet, existed. Allstate, one of the largest insurers in the United States, has traditionally focused on insurance services. But recently, the company expanded into new markets—including the platform economy.

Allstate companies Allstate Roadside Services (ARS) and Arity, a technology company founded by Allstate in late 2016, have provided their parent company with new sources of revenue, thanks to new offerings. ARS launched Good Hands Rescue APIs, which allow third parties to leverage Allstate’s roadside assistance network in their own apps. Meanwhile, Arity offers a portfolio of APIs that let third parties leverage Allstate’s aggregate data on driver behavior and intellectual property related to risk prediction for uses spanning mobility, consumer, and insurance solutions.

SAP Q317 DigitalDoubles Feature1 Image4 Courier Service Thrives Under Radical Business ModelFor example, Verizon licenses an Allstate Good Hands Rescue API for its own roadside assistance app. And automakers GM and BMW also offer roadside assistance service through Allstate.

Potential customers for Arity’s API include insurance providers, shared mobility companies, automotive parts makers, telecoms, and others.

“Arity is an acknowledgement that we have to be digital first and think about the services we provide to customers and businesses,” says Chetan Phadnis, Arity’s head of product development. “Thinking about our intellectual property system and software products is a key part of our transformation. We think it will create new ways to make money in the vertical transportation ecosystem.”

One of Allstate’s major challenges is a change in auto ownership that threatens the traditional auto insurance model. No-car and one-car households are on the rise, ridesharing services such as Uber and Lyft work on very different insurance models than passenger cars or traditional taxi companies, and autonomous vehicles could disrupt the traditional auto insurance model entirely.

This means that companies like Allstate are smart to look for revenue streams beyond traditional insurance offerings. The intangible assets that Allstate has accumulated over the years—a massive aggregate collection of driver data, an extensive set of risk models and predictive algorithms, and a network of garages and mechanics to help stranded motorists—can also serve as a new revenue stream for the future.

By offering two distinct API services for the platform economy, Allstate is also able to see what customers might want in the future. While the Good Hands Rescue APIs let third-party users integrate a specific service (such as roadside assistance) into their software tools, Arity instead lets third-party developers leverage huge data sets as a piece of other, less narrowly defined projects, such as auto maintenance. As Arity gains insights into how customers use and respond to those offerings, it gets a preview into potential future directions for its own products and services.

SAP Q317 DigitalDoubles Feature1 Image5 1024x572 Courier Service Thrives Under Radical Business Model

Farmers Harvest Cash from a Platform

Another example of innovation fueling the platform economy doesn’t come from a boldfaced tech name. Instead, it comes from a relatively small startup that has nimbly built its business model around data with an interesting twist: it turns its customers into entrepreneurs.

Farmobile is a Kansas City–based agriculture tech company whose smart device, the Passive Uplink Connection (PUC), can be plugged into tractors, combines, sprayers, and other farm equipment.

Farmobile uses the PUC to enable farmers to monetize data from their fields, which is one of the savviest routes to success with platforms—making your platform so irresistible to end consumers that they foment the revolution for you.

Once installed, says CEO Jason Tatge, the PUC streams second-by-second data to farmers’ Farmobile accounts. This gives them finely detailed reports, called Electronic Field Records (EFRs), that they can use to improve their own business, share with trusted advisors, and sell to third parties.

The PUC gives farmers detailed records for tracking analytics on their crops, farms, and equipment and creates a marketplace where farmers can sell their data to third parties. Farmers benefit because they generate extra income; Farmobile benefits because it makes a commission on each purchase and builds a giant store of aggregated farming data.

This last bit is important if Farmobile is to successfully compete with traditional agricultural equipment manufacturers, which also gather data from farmers. Farmobile’s advantage (at least for now) is that the equipment makers limit their data gathering to their existing customer bases and sell it back to them in the form of services designed to improve crop yields and optimize equipment performance.

Farmobile, meanwhile, is trying to appeal to all farmers by sharing the wealth, which could help it leapfrog the giants that already have large customer bases. “The ability to bring data together easily is good for farmers, so we built API integrations to put data in one place,” says Tatge.

Farmers can resell their data on Farmobile’s Data Store to buyers such as reinsurance firm Guy Carpenter. To encourage farmers to opt in, says Tatge, “we told farmers that if they run our device over planting and harvest season, we can guarantee them $ 2 per acre for their EFRs.”

So far, Farmobile’s customers have sent the Data Store approximately 4,200 completed EFRs for both planting and harvest, which will serve as the backbone of the company’s data monetization efforts. Eventually, Farmobile hopes to expand the offerings on the Data Store to include records from at least 10 times as many different farm fields.

SAP Q317 DigitalDoubles Feature1 Image6 1024x572 Courier Service Thrives Under Radical Business Model

Under Armour Binges on APIs

Another model for the emerging business platform world comes from Under Armour, the sports apparel giant. Alongside its very successful clothing and shoe lines, Under Armour has put its platform at the heart of its business model.

But rather than build a platform itself, Under Armour has used its growing revenues to create an industry-leading ecosystem. Over the past decade, it has purchased companies that already offer APIs, including MapMyFitness, Endomondo, and MyFitnessPal, and then linked them all together into a massive platform that serves 30 million consumers.

This strategy has made Under Armour an indispensable part of the sprawling mobile fitness economy. According to the company’s 2016 annual results, its business platform ecosystem, known as the Connected Fitness division, generated $ 80 million in revenue that year—a 51% increase over 2015.

SAP Q317 DigitalDoubles Feature1 Image7 Courier Service Thrives Under Radical Business ModelBy combining existing APIs from its different apps with original tools built in-house, extensive developer support, and a robust SDK, third-party developers have everything they need to build their own fitness app or web site.

Depending on their needs, third-party developers can sign up for several different payment plans with varying access to Under Armour’s APIs and SDKs. Indeed, the company’s tiered developer pricing plan for Connected Fitness, which is separated into Starter, Pro, and Premium levels, makes Under Armour seem more like a tech company than a sports apparel firm.

As a result, Under Armour’s APIs and SDKs are the underpinnings of a vast platform cooperative. Under Armour’s apps seamlessly integrate with popular services like Fitbit and Garmin (even though Under Armour has a fitness tracker of its own) and are licensed by corporations ranging from Microsoft to Coca-Cola to Purina. They’re even used by fitness app competitors like AthletePath and Lose It.

A large part of Under Armour’s success is the sheer amount of data its fitness apps collect and then make available to developers. MyFitnessPal, for instance, is an industry-leading calorie and food tracker used for weight loss, and Endomondo is an extremely popular running and biking record keeper and route-sharing platform.

One way of looking at the Connected Fitness platform is as a combination of traditional consumer purchasing data with insights gleaned from Under Armour’s suite of apps, as well as from the third-party apps that Under Armour’s products use.

Indeed, Under Armour gets a bonus from the platform economy: it helps the company understand its customers better, creating a virtuous cycle. As end users use different apps fueled by Under Armour’s services and data-sharing capabilities, Under Armour can then use that data to fuel customer engagement and attract additional third-party app developers to add new services to the ecosystem.

What Successful Platforms Have in Common

The most successful business platforms have three things in common: They’re easy to work with, they fulfill a market need, and they offer data that’s useful to customers.

For instance, Farmobile’s marketplace fulfills a valuable need in the market: it lets farmers monetize data and develop a new revenue stream that otherwise would not exist. Similarly, Allstate’s Arity experiment turns large volumes of data collected by Allstate over the years into a revenue stream that drives down costs for Arity’s clients by giving them more accurate data to integrate into their apps and software tools.

Meanwhile, Under Armour’s Connected Fitness platform and API suite encourage users to sign up for more apps in the company’s ecosystem. If you track your meals in MyFitnessPal, you’ll want to track your runs in Endomondo or MapMyRun. Similarly, if you’re an app developer in the health and fitness space, Under Armour has a readily available collection of tools that will make it easy for users to switch over to your app and cheaper for you to develop your app.

As the platform economy grows, all three of these approaches—Allstate’s leveraging of its legacy business data, Farmobile’s marketplace for users to become data entrepreneurs, and Under Armour’s one-stop fitness app ecosystem—are extremely useful examples of what happens next.

In the coming months and years, the platform economy will see other big changes. In 2016 for example, Apple, Microsoft, Facebook, and Google all released APIs for their AI-powered voice assistant platforms, the most famous of which is Apple’s Siri.

The introduction of APIs confirms that the AI technology behind these bots has matured significantly and that a new wave of AI-based platform innovation is nigh. (In fact, Digitalistpredicted last year that the emergence of an API for these AIs would open them up beyond conventional uses.) New voice-operated technologies such as Google Home and Amazon Alexa offer exciting opportunities for developers to create full-featured, immersive applications on top of existing platforms.

We will also see AI- and machine learning–based APIs emerge that will allow developers to quickly leverage unstructured data (such as social media posts or texts) for new applications and services. For instance, sentiment analysis APIs can help explore and better understand customers’ interests, emotions, and preferences in social media.

As large providers offer APIs and associated services for smaller organizations to leverage AI and machine learning, these companies can in turn create their own platforms for clients to use unstructured data—everything from insights from uploaded photographs to recognizing a user’s emotion based on facial expression or tone of voice—in their own apps and products. Meanwhile, the ever-increasing power of cloud platforms like Amazon Web Services and Microsoft Azure will give these computing-intensive app platforms the juice they need to become deeper and richer.

These business services will depend on easy ways to exchange and implement data for success. The good news is that finding easy ways to share data isn’t hard and the API and SDK offerings that fuel the platform economy will become increasingly robust. Thanks to the opportunities generated by these new platforms and the new opportunities offered to end users, developers, and platform businesses themselves, everyone stands to win—if they act soon. D!


About the Authors

Bernd Leukert is a member of the Executive Board, Products and Innovation, for SAP.

Björn Goerke is Chief Technology Officer and President, SAP Cloud Platform, for SAP.

Volker Hildebrand is Global Vice President for SAP Hybris solutions.

Sethu M is President, Mobile Services, for SAP.

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


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

Comments

Let’s block ads! (Why?)

Digitalist Magazine

Why Executives Should Follow Kylie Jenner

When outspoken venture capitalist and Netscape co-founder Marc Andreessen wrote in The Wall Street Journal in 2011 that software is eating the world, he was only partly correct. In fact, business services based on software platforms are what’s eating the world.

Companies like Apple, which remade the mobile phone industry by offering app developers easy access to millions of iPhone owners through its iTunes App Store platform, are changing the economy. However, these world-eating companies are not just in the tech world. They are also emerging in industries that you might not expect: retailers, finance companies, transportation firms, and others outside of Silicon Valley are all at the forefront of the platform revolution.

These outsiders are taking platforms to the next level by building them around business services and data, not just apps. Companies are making business services such as logistics, 3D printing, and even roadside assistance for drivers available through a software connection that other companies can plug in to and consume or offer to their own customers.

SAP Q317 DigitalDoubles Feature1 Image2 Why Executives Should Follow Kylie JennerThere are two kinds of players in this business platform revolution: providers and participants. Providers create the platform and create incentives for developers to write apps for it. Developers, meanwhile, are participants; they can extend the reach of their apps by offering them through the platform’s virtual shelves.

Business platforms let companies outside of the technology world become powerful tech players, unleashing a torrent of innovation that they could never produce on their own. Good business platforms create millions in extra revenue for companies by enlisting external developers to innovate for them. It’s as if strangers are handing you entirely new revenue streams and business models on the street.

Powering this movement are application programming interfaces (APIs) and software development kits (SDKs), which enable developers to easily plug their apps into a platform without having to know much about the complex software code that drives it. Developers get more time to focus on what they do best: writing great apps. Platform providers benefit because they can offer many innovative business services to end customers without having to create them themselves.

Any company can leverage APIs and SDKs to create new business models and products that might not, in fact, be its primary method of monetization. However, these platforms give companies new opportunities and let them outflank smaller, more nimble competitors.

Indeed, the platform economy can generate unbelievable revenue streams for companies. According to Platform Revolution authors Geoffrey G. Parker, Marshall W. Van Alstyne, and Sangeet Paul Choudary, travel site Expedia makes approximately 90% of its revenue by making business services available to other travel companies through its API.

In TechCrunch in May 2016, Matt Murphy and Steve Sloane wrote that “the number of SaaS applications has exploded and there is a rising wave of software innovation in APIs that provide critical connective tissue and increasingly important functionality.” ProgrammableWeb.com, an API resource and directory, offers searchable access to more than 15,000 different APIs.

According to Accenture Technology Vision 2016, 82% of executives believe that platforms will be the “glue that brings organizations together in the digital economy.” The top 15 platforms (which include companies built entirely on this software architecture, such as eBay and Priceline.com) have a combined market capitalization of US$ 2.6 trillion.

It’s time for all companies to join the revolution. Whether working in alliance with partners or launching entirely in-house, companies need to think about platforms now, because they will have a disruptive impact on every major industry.

SAP Q317 DigitalDoubles Feature1 Image3 1024x572 Why Executives Should Follow Kylie Jenner

To the Barricades

Several factors converged to make monetizing a company’s business services easier. Many of the factors come from the rise of smartphones, specifically the rise of Bluetooth and 3G (and then 4G and LTE) connections. These connections turned smartphones into consumption hubs that weren’t feasible when high-speed mobile access was spottier.

One good example of this is PayPal’s rise. In the early 2000s, it functioned primarily as a standalone web site, but as mobile purchasing became more widespread, third-party merchants clamored to integrate PayPal’s payment processing service into their own sites and apps.

In Platform Revolution, Parker, Van Alstyne, and Choudary claim that “platforms are eating pipelines,” with pipelines being the old, direct-to-consumer business methods of the past. The first stage of this takeover involved much more efficient digital pipelines (think of Amazon in the retail space and Grubhub for food delivery) challenging their offline counterparts.

What Makes Great Business Platforms Run?

SAP Q317 DigitalDoubles Feature1 Image8 Why Executives Should Follow Kylie Jenner

The quality of the ecosystem that powers your platform is as important as the quality of experience you offer to customers. Here’s how to do it right.

Although the platform economy depends on them, application programming interfaces (APIs) and software development kits (SDKs) aren’t magic buttons. They’re tools that organizations can leverage to attract users and developers.

To succeed, organizations must ensure that APIs include extensive documentation and are easy for developers to add into their own products. Another part of platform success is building a general digital enterprise platform that includes both APIs and SDKs.

A good platform balances ease of use, developer support, security, data architecture (that is, will it play nice with a company’s existing systems?), edge processing (whether analytics are processed locally or in the cloud), and infrastructure (whether a platform provider operates its own data centers and cloud infrastructure or uses public cloud services). The exact formula for which elements to embrace, however, will vary according to the use case, the industry, the organization, and its customers.

In all cases, the platform should offer a value proposition that’s a cut above its competitors. That means a platform should offer a compelling business service that is difficult to duplicate.

By creating open standards and easy-to-work-with tools, organizations can greatly improve the platforms they offer. APIs and SDKs may sound complicated, but they’re just tools for talented people to do their jobs with. Enable these talented people, and your platform will take off.

In the second stage, platforms replace pipelines. Platform Revolution’s authors write: “The Internet no longer acts merely as a distribution channel (a pipeline). It also acts as a creation infrastructure and a coordination mechanism. Platforms are leveraging this new capability to create entirely new business models.” Good examples of second-stage companies include Airbnb, DoubleClick, Spotify, and Uber.

Allstate Takes Advantage of Its Hidden Jewels

Many companies taking advantage of platforms were around long before APIs, or even the internet, existed. Allstate, one of the largest insurers in the United States, has traditionally focused on insurance services. But recently, the company expanded into new markets—including the platform economy.

Allstate companies Allstate Roadside Services (ARS) and Arity, a technology company founded by Allstate in late 2016, have provided their parent company with new sources of revenue, thanks to new offerings. ARS launched Good Hands Rescue APIs, which allow third parties to leverage Allstate’s roadside assistance network in their own apps. Meanwhile, Arity offers a portfolio of APIs that let third parties leverage Allstate’s aggregate data on driver behavior and intellectual property related to risk prediction for uses spanning mobility, consumer, and insurance solutions.

SAP Q317 DigitalDoubles Feature1 Image4 Why Executives Should Follow Kylie JennerFor example, Verizon licenses an Allstate Good Hands Rescue API for its own roadside assistance app. And automakers GM and BMW also offer roadside assistance service through Allstate.

Potential customers for Arity’s API include insurance providers, shared mobility companies, automotive parts makers, telecoms, and others.

“Arity is an acknowledgement that we have to be digital first and think about the services we provide to customers and businesses,” says Chetan Phadnis, Arity’s head of product development. “Thinking about our intellectual property system and software products is a key part of our transformation. We think it will create new ways to make money in the vertical transportation ecosystem.”

One of Allstate’s major challenges is a change in auto ownership that threatens the traditional auto insurance model. No-car and one-car households are on the rise, ridesharing services such as Uber and Lyft work on very different insurance models than passenger cars or traditional taxi companies, and autonomous vehicles could disrupt the traditional auto insurance model entirely.

This means that companies like Allstate are smart to look for revenue streams beyond traditional insurance offerings. The intangible assets that Allstate has accumulated over the years—a massive aggregate collection of driver data, an extensive set of risk models and predictive algorithms, and a network of garages and mechanics to help stranded motorists—can also serve as a new revenue stream for the future.

By offering two distinct API services for the platform economy, Allstate is also able to see what customers might want in the future. While the Good Hands Rescue APIs let third-party users integrate a specific service (such as roadside assistance) into their software tools, Arity instead lets third-party developers leverage huge data sets as a piece of other, less narrowly defined projects, such as auto maintenance. As Arity gains insights into how customers use and respond to those offerings, it gets a preview into potential future directions for its own products and services.

SAP Q317 DigitalDoubles Feature1 Image5 1024x572 Why Executives Should Follow Kylie Jenner

Farmers Harvest Cash from a Platform

Another example of innovation fueling the platform economy doesn’t come from a boldfaced tech name. Instead, it comes from a relatively small startup that has nimbly built its business model around data with an interesting twist: it turns its customers into entrepreneurs.

Farmobile is a Kansas City–based agriculture tech company whose smart device, the Passive Uplink Connection (PUC), can be plugged into tractors, combines, sprayers, and other farm equipment.

Farmobile uses the PUC to enable farmers to monetize data from their fields, which is one of the savviest routes to success with platforms—making your platform so irresistible to end consumers that they foment the revolution for you.

Once installed, says CEO Jason Tatge, the PUC streams second-by-second data to farmers’ Farmobile accounts. This gives them finely detailed reports, called Electronic Field Records (EFRs), that they can use to improve their own business, share with trusted advisors, and sell to third parties.

The PUC gives farmers detailed records for tracking analytics on their crops, farms, and equipment and creates a marketplace where farmers can sell their data to third parties. Farmers benefit because they generate extra income; Farmobile benefits because it makes a commission on each purchase and builds a giant store of aggregated farming data.

This last bit is important if Farmobile is to successfully compete with traditional agricultural equipment manufacturers, which also gather data from farmers. Farmobile’s advantage (at least for now) is that the equipment makers limit their data gathering to their existing customer bases and sell it back to them in the form of services designed to improve crop yields and optimize equipment performance.

Farmobile, meanwhile, is trying to appeal to all farmers by sharing the wealth, which could help it leapfrog the giants that already have large customer bases. “The ability to bring data together easily is good for farmers, so we built API integrations to put data in one place,” says Tatge.

Farmers can resell their data on Farmobile’s Data Store to buyers such as reinsurance firm Guy Carpenter. To encourage farmers to opt in, says Tatge, “we told farmers that if they run our device over planting and harvest season, we can guarantee them $ 2 per acre for their EFRs.”

So far, Farmobile’s customers have sent the Data Store approximately 4,200 completed EFRs for both planting and harvest, which will serve as the backbone of the company’s data monetization efforts. Eventually, Farmobile hopes to expand the offerings on the Data Store to include records from at least 10 times as many different farm fields.

SAP Q317 DigitalDoubles Feature1 Image6 1024x572 Why Executives Should Follow Kylie Jenner

Under Armour Binges on APIs

Another model for the emerging business platform world comes from Under Armour, the sports apparel giant. Alongside its very successful clothing and shoe lines, Under Armour has put its platform at the heart of its business model.

But rather than build a platform itself, Under Armour has used its growing revenues to create an industry-leading ecosystem. Over the past decade, it has purchased companies that already offer APIs, including MapMyFitness, Endomondo, and MyFitnessPal, and then linked them all together into a massive platform that serves 30 million consumers.

This strategy has made Under Armour an indispensable part of the sprawling mobile fitness economy. According to the company’s 2016 annual results, its business platform ecosystem, known as the Connected Fitness division, generated $ 80 million in revenue that year—a 51% increase over 2015.

SAP Q317 DigitalDoubles Feature1 Image7 Why Executives Should Follow Kylie JennerBy combining existing APIs from its different apps with original tools built in-house, extensive developer support, and a robust SDK, third-party developers have everything they need to build their own fitness app or web site.

Depending on their needs, third-party developers can sign up for several different payment plans with varying access to Under Armour’s APIs and SDKs. Indeed, the company’s tiered developer pricing plan for Connected Fitness, which is separated into Starter, Pro, and Premium levels, makes Under Armour seem more like a tech company than a sports apparel firm.

As a result, Under Armour’s APIs and SDKs are the underpinnings of a vast platform cooperative. Under Armour’s apps seamlessly integrate with popular services like Fitbit and Garmin (even though Under Armour has a fitness tracker of its own) and are licensed by corporations ranging from Microsoft to Coca-Cola to Purina. They’re even used by fitness app competitors like AthletePath and Lose It.

A large part of Under Armour’s success is the sheer amount of data its fitness apps collect and then make available to developers. MyFitnessPal, for instance, is an industry-leading calorie and food tracker used for weight loss, and Endomondo is an extremely popular running and biking record keeper and route-sharing platform.

One way of looking at the Connected Fitness platform is as a combination of traditional consumer purchasing data with insights gleaned from Under Armour’s suite of apps, as well as from the third-party apps that Under Armour’s products use.

Indeed, Under Armour gets a bonus from the platform economy: it helps the company understand its customers better, creating a virtuous cycle. As end users use different apps fueled by Under Armour’s services and data-sharing capabilities, Under Armour can then use that data to fuel customer engagement and attract additional third-party app developers to add new services to the ecosystem.

What Successful Platforms Have in Common

The most successful business platforms have three things in common: They’re easy to work with, they fulfill a market need, and they offer data that’s useful to customers.

For instance, Farmobile’s marketplace fulfills a valuable need in the market: it lets farmers monetize data and develop a new revenue stream that otherwise would not exist. Similarly, Allstate’s Arity experiment turns large volumes of data collected by Allstate over the years into a revenue stream that drives down costs for Arity’s clients by giving them more accurate data to integrate into their apps and software tools.

Meanwhile, Under Armour’s Connected Fitness platform and API suite encourage users to sign up for more apps in the company’s ecosystem. If you track your meals in MyFitnessPal, you’ll want to track your runs in Endomondo or MapMyRun. Similarly, if you’re an app developer in the health and fitness space, Under Armour has a readily available collection of tools that will make it easy for users to switch over to your app and cheaper for you to develop your app.

As the platform economy grows, all three of these approaches—Allstate’s leveraging of its legacy business data, Farmobile’s marketplace for users to become data entrepreneurs, and Under Armour’s one-stop fitness app ecosystem—are extremely useful examples of what happens next.

In the coming months and years, the platform economy will see other big changes. In 2016 for example, Apple, Microsoft, Facebook, and Google all released APIs for their AI-powered voice assistant platforms, the most famous of which is Apple’s Siri.

The introduction of APIs confirms that the AI technology behind these bots has matured significantly and that a new wave of AI-based platform innovation is nigh. (In fact, Digitalistpredicted last year that the emergence of an API for these AIs would open them up beyond conventional uses.) New voice-operated technologies such as Google Home and Amazon Alexa offer exciting opportunities for developers to create full-featured, immersive applications on top of existing platforms.

We will also see AI- and machine learning–based APIs emerge that will allow developers to quickly leverage unstructured data (such as social media posts or texts) for new applications and services. For instance, sentiment analysis APIs can help explore and better understand customers’ interests, emotions, and preferences in social media.

As large providers offer APIs and associated services for smaller organizations to leverage AI and machine learning, these companies can in turn create their own platforms for clients to use unstructured data—everything from insights from uploaded photographs to recognizing a user’s emotion based on facial expression or tone of voice—in their own apps and products. Meanwhile, the ever-increasing power of cloud platforms like Amazon Web Services and Microsoft Azure will give these computing-intensive app platforms the juice they need to become deeper and richer.

These business services will depend on easy ways to exchange and implement data for success. The good news is that finding easy ways to share data isn’t hard and the API and SDK offerings that fuel the platform economy will become increasingly robust. Thanks to the opportunities generated by these new platforms and the new opportunities offered to end users, developers, and platform businesses themselves, everyone stands to win—if they act soon. D!


About the Authors

Bernd Leukert is a member of the Executive Board, Products and Innovation, for SAP.

Björn Goerke is Chief Technology Officer and President, SAP Cloud Platform, for SAP.

Volker Hildebrand is Global Vice President for SAP Hybris solutions.

Sethu M is President, Mobile Services, for SAP.

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


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

Comments

Let’s block ads! (Why?)

Digitalist Magazine

How To Improve Customer Service With Video

When outspoken venture capitalist and Netscape co-founder Marc Andreessen wrote in The Wall Street Journal in 2011 that software is eating the world, he was only partly correct. In fact, business services based on software platforms are what’s eating the world.

Companies like Apple, which remade the mobile phone industry by offering app developers easy access to millions of iPhone owners through its iTunes App Store platform, are changing the economy. However, these world-eating companies are not just in the tech world. They are also emerging in industries that you might not expect: retailers, finance companies, transportation firms, and others outside of Silicon Valley are all at the forefront of the platform revolution.

These outsiders are taking platforms to the next level by building them around business services and data, not just apps. Companies are making business services such as logistics, 3D printing, and even roadside assistance for drivers available through a software connection that other companies can plug in to and consume or offer to their own customers.

SAP Q317 DigitalDoubles Feature1 Image2 How To Improve Customer Service With VideoThere are two kinds of players in this business platform revolution: providers and participants. Providers create the platform and create incentives for developers to write apps for it. Developers, meanwhile, are participants; they can extend the reach of their apps by offering them through the platform’s virtual shelves.

Business platforms let companies outside of the technology world become powerful tech players, unleashing a torrent of innovation that they could never produce on their own. Good business platforms create millions in extra revenue for companies by enlisting external developers to innovate for them. It’s as if strangers are handing you entirely new revenue streams and business models on the street.

Powering this movement are application programming interfaces (APIs) and software development kits (SDKs), which enable developers to easily plug their apps into a platform without having to know much about the complex software code that drives it. Developers get more time to focus on what they do best: writing great apps. Platform providers benefit because they can offer many innovative business services to end customers without having to create them themselves.

Any company can leverage APIs and SDKs to create new business models and products that might not, in fact, be its primary method of monetization. However, these platforms give companies new opportunities and let them outflank smaller, more nimble competitors.

Indeed, the platform economy can generate unbelievable revenue streams for companies. According to Platform Revolution authors Geoffrey G. Parker, Marshall W. Van Alstyne, and Sangeet Paul Choudary, travel site Expedia makes approximately 90% of its revenue by making business services available to other travel companies through its API.

In TechCrunch in May 2016, Matt Murphy and Steve Sloane wrote that “the number of SaaS applications has exploded and there is a rising wave of software innovation in APIs that provide critical connective tissue and increasingly important functionality.” ProgrammableWeb.com, an API resource and directory, offers searchable access to more than 15,000 different APIs.

According to Accenture Technology Vision 2016, 82% of executives believe that platforms will be the “glue that brings organizations together in the digital economy.” The top 15 platforms (which include companies built entirely on this software architecture, such as eBay and Priceline.com) have a combined market capitalization of US$ 2.6 trillion.

It’s time for all companies to join the revolution. Whether working in alliance with partners or launching entirely in-house, companies need to think about platforms now, because they will have a disruptive impact on every major industry.

SAP Q317 DigitalDoubles Feature1 Image3 1024x572 How To Improve Customer Service With Video

To the Barricades

Several factors converged to make monetizing a company’s business services easier. Many of the factors come from the rise of smartphones, specifically the rise of Bluetooth and 3G (and then 4G and LTE) connections. These connections turned smartphones into consumption hubs that weren’t feasible when high-speed mobile access was spottier.

One good example of this is PayPal’s rise. In the early 2000s, it functioned primarily as a standalone web site, but as mobile purchasing became more widespread, third-party merchants clamored to integrate PayPal’s payment processing service into their own sites and apps.

In Platform Revolution, Parker, Van Alstyne, and Choudary claim that “platforms are eating pipelines,” with pipelines being the old, direct-to-consumer business methods of the past. The first stage of this takeover involved much more efficient digital pipelines (think of Amazon in the retail space and Grubhub for food delivery) challenging their offline counterparts.

What Makes Great Business Platforms Run?

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The quality of the ecosystem that powers your platform is as important as the quality of experience you offer to customers. Here’s how to do it right.

Although the platform economy depends on them, application programming interfaces (APIs) and software development kits (SDKs) aren’t magic buttons. They’re tools that organizations can leverage to attract users and developers.

To succeed, organizations must ensure that APIs include extensive documentation and are easy for developers to add into their own products. Another part of platform success is building a general digital enterprise platform that includes both APIs and SDKs.

A good platform balances ease of use, developer support, security, data architecture (that is, will it play nice with a company’s existing systems?), edge processing (whether analytics are processed locally or in the cloud), and infrastructure (whether a platform provider operates its own data centers and cloud infrastructure or uses public cloud services). The exact formula for which elements to embrace, however, will vary according to the use case, the industry, the organization, and its customers.

In all cases, the platform should offer a value proposition that’s a cut above its competitors. That means a platform should offer a compelling business service that is difficult to duplicate.

By creating open standards and easy-to-work-with tools, organizations can greatly improve the platforms they offer. APIs and SDKs may sound complicated, but they’re just tools for talented people to do their jobs with. Enable these talented people, and your platform will take off.

In the second stage, platforms replace pipelines. Platform Revolution’s authors write: “The Internet no longer acts merely as a distribution channel (a pipeline). It also acts as a creation infrastructure and a coordination mechanism. Platforms are leveraging this new capability to create entirely new business models.” Good examples of second-stage companies include Airbnb, DoubleClick, Spotify, and Uber.

Allstate Takes Advantage of Its Hidden Jewels

Many companies taking advantage of platforms were around long before APIs, or even the internet, existed. Allstate, one of the largest insurers in the United States, has traditionally focused on insurance services. But recently, the company expanded into new markets—including the platform economy.

Allstate companies Allstate Roadside Services (ARS) and Arity, a technology company founded by Allstate in late 2016, have provided their parent company with new sources of revenue, thanks to new offerings. ARS launched Good Hands Rescue APIs, which allow third parties to leverage Allstate’s roadside assistance network in their own apps. Meanwhile, Arity offers a portfolio of APIs that let third parties leverage Allstate’s aggregate data on driver behavior and intellectual property related to risk prediction for uses spanning mobility, consumer, and insurance solutions.

SAP Q317 DigitalDoubles Feature1 Image4 How To Improve Customer Service With VideoFor example, Verizon licenses an Allstate Good Hands Rescue API for its own roadside assistance app. And automakers GM and BMW also offer roadside assistance service through Allstate.

Potential customers for Arity’s API include insurance providers, shared mobility companies, automotive parts makers, telecoms, and others.

“Arity is an acknowledgement that we have to be digital first and think about the services we provide to customers and businesses,” says Chetan Phadnis, Arity’s head of product development. “Thinking about our intellectual property system and software products is a key part of our transformation. We think it will create new ways to make money in the vertical transportation ecosystem.”

One of Allstate’s major challenges is a change in auto ownership that threatens the traditional auto insurance model. No-car and one-car households are on the rise, ridesharing services such as Uber and Lyft work on very different insurance models than passenger cars or traditional taxi companies, and autonomous vehicles could disrupt the traditional auto insurance model entirely.

This means that companies like Allstate are smart to look for revenue streams beyond traditional insurance offerings. The intangible assets that Allstate has accumulated over the years—a massive aggregate collection of driver data, an extensive set of risk models and predictive algorithms, and a network of garages and mechanics to help stranded motorists—can also serve as a new revenue stream for the future.

By offering two distinct API services for the platform economy, Allstate is also able to see what customers might want in the future. While the Good Hands Rescue APIs let third-party users integrate a specific service (such as roadside assistance) into their software tools, Arity instead lets third-party developers leverage huge data sets as a piece of other, less narrowly defined projects, such as auto maintenance. As Arity gains insights into how customers use and respond to those offerings, it gets a preview into potential future directions for its own products and services.

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Farmers Harvest Cash from a Platform

Another example of innovation fueling the platform economy doesn’t come from a boldfaced tech name. Instead, it comes from a relatively small startup that has nimbly built its business model around data with an interesting twist: it turns its customers into entrepreneurs.

Farmobile is a Kansas City–based agriculture tech company whose smart device, the Passive Uplink Connection (PUC), can be plugged into tractors, combines, sprayers, and other farm equipment.

Farmobile uses the PUC to enable farmers to monetize data from their fields, which is one of the savviest routes to success with platforms—making your platform so irresistible to end consumers that they foment the revolution for you.

Once installed, says CEO Jason Tatge, the PUC streams second-by-second data to farmers’ Farmobile accounts. This gives them finely detailed reports, called Electronic Field Records (EFRs), that they can use to improve their own business, share with trusted advisors, and sell to third parties.

The PUC gives farmers detailed records for tracking analytics on their crops, farms, and equipment and creates a marketplace where farmers can sell their data to third parties. Farmers benefit because they generate extra income; Farmobile benefits because it makes a commission on each purchase and builds a giant store of aggregated farming data.

This last bit is important if Farmobile is to successfully compete with traditional agricultural equipment manufacturers, which also gather data from farmers. Farmobile’s advantage (at least for now) is that the equipment makers limit their data gathering to their existing customer bases and sell it back to them in the form of services designed to improve crop yields and optimize equipment performance.

Farmobile, meanwhile, is trying to appeal to all farmers by sharing the wealth, which could help it leapfrog the giants that already have large customer bases. “The ability to bring data together easily is good for farmers, so we built API integrations to put data in one place,” says Tatge.

Farmers can resell their data on Farmobile’s Data Store to buyers such as reinsurance firm Guy Carpenter. To encourage farmers to opt in, says Tatge, “we told farmers that if they run our device over planting and harvest season, we can guarantee them $ 2 per acre for their EFRs.”

So far, Farmobile’s customers have sent the Data Store approximately 4,200 completed EFRs for both planting and harvest, which will serve as the backbone of the company’s data monetization efforts. Eventually, Farmobile hopes to expand the offerings on the Data Store to include records from at least 10 times as many different farm fields.

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Under Armour Binges on APIs

Another model for the emerging business platform world comes from Under Armour, the sports apparel giant. Alongside its very successful clothing and shoe lines, Under Armour has put its platform at the heart of its business model.

But rather than build a platform itself, Under Armour has used its growing revenues to create an industry-leading ecosystem. Over the past decade, it has purchased companies that already offer APIs, including MapMyFitness, Endomondo, and MyFitnessPal, and then linked them all together into a massive platform that serves 30 million consumers.

This strategy has made Under Armour an indispensable part of the sprawling mobile fitness economy. According to the company’s 2016 annual results, its business platform ecosystem, known as the Connected Fitness division, generated $ 80 million in revenue that year—a 51% increase over 2015.

SAP Q317 DigitalDoubles Feature1 Image7 How To Improve Customer Service With VideoBy combining existing APIs from its different apps with original tools built in-house, extensive developer support, and a robust SDK, third-party developers have everything they need to build their own fitness app or web site.

Depending on their needs, third-party developers can sign up for several different payment plans with varying access to Under Armour’s APIs and SDKs. Indeed, the company’s tiered developer pricing plan for Connected Fitness, which is separated into Starter, Pro, and Premium levels, makes Under Armour seem more like a tech company than a sports apparel firm.

As a result, Under Armour’s APIs and SDKs are the underpinnings of a vast platform cooperative. Under Armour’s apps seamlessly integrate with popular services like Fitbit and Garmin (even though Under Armour has a fitness tracker of its own) and are licensed by corporations ranging from Microsoft to Coca-Cola to Purina. They’re even used by fitness app competitors like AthletePath and Lose It.

A large part of Under Armour’s success is the sheer amount of data its fitness apps collect and then make available to developers. MyFitnessPal, for instance, is an industry-leading calorie and food tracker used for weight loss, and Endomondo is an extremely popular running and biking record keeper and route-sharing platform.

One way of looking at the Connected Fitness platform is as a combination of traditional consumer purchasing data with insights gleaned from Under Armour’s suite of apps, as well as from the third-party apps that Under Armour’s products use.

Indeed, Under Armour gets a bonus from the platform economy: it helps the company understand its customers better, creating a virtuous cycle. As end users use different apps fueled by Under Armour’s services and data-sharing capabilities, Under Armour can then use that data to fuel customer engagement and attract additional third-party app developers to add new services to the ecosystem.

What Successful Platforms Have in Common

The most successful business platforms have three things in common: They’re easy to work with, they fulfill a market need, and they offer data that’s useful to customers.

For instance, Farmobile’s marketplace fulfills a valuable need in the market: it lets farmers monetize data and develop a new revenue stream that otherwise would not exist. Similarly, Allstate’s Arity experiment turns large volumes of data collected by Allstate over the years into a revenue stream that drives down costs for Arity’s clients by giving them more accurate data to integrate into their apps and software tools.

Meanwhile, Under Armour’s Connected Fitness platform and API suite encourage users to sign up for more apps in the company’s ecosystem. If you track your meals in MyFitnessPal, you’ll want to track your runs in Endomondo or MapMyRun. Similarly, if you’re an app developer in the health and fitness space, Under Armour has a readily available collection of tools that will make it easy for users to switch over to your app and cheaper for you to develop your app.

As the platform economy grows, all three of these approaches—Allstate’s leveraging of its legacy business data, Farmobile’s marketplace for users to become data entrepreneurs, and Under Armour’s one-stop fitness app ecosystem—are extremely useful examples of what happens next.

In the coming months and years, the platform economy will see other big changes. In 2016 for example, Apple, Microsoft, Facebook, and Google all released APIs for their AI-powered voice assistant platforms, the most famous of which is Apple’s Siri.

The introduction of APIs confirms that the AI technology behind these bots has matured significantly and that a new wave of AI-based platform innovation is nigh. (In fact, Digitalistpredicted last year that the emergence of an API for these AIs would open them up beyond conventional uses.) New voice-operated technologies such as Google Home and Amazon Alexa offer exciting opportunities for developers to create full-featured, immersive applications on top of existing platforms.

We will also see AI- and machine learning–based APIs emerge that will allow developers to quickly leverage unstructured data (such as social media posts or texts) for new applications and services. For instance, sentiment analysis APIs can help explore and better understand customers’ interests, emotions, and preferences in social media.

As large providers offer APIs and associated services for smaller organizations to leverage AI and machine learning, these companies can in turn create their own platforms for clients to use unstructured data—everything from insights from uploaded photographs to recognizing a user’s emotion based on facial expression or tone of voice—in their own apps and products. Meanwhile, the ever-increasing power of cloud platforms like Amazon Web Services and Microsoft Azure will give these computing-intensive app platforms the juice they need to become deeper and richer.

These business services will depend on easy ways to exchange and implement data for success. The good news is that finding easy ways to share data isn’t hard and the API and SDK offerings that fuel the platform economy will become increasingly robust. Thanks to the opportunities generated by these new platforms and the new opportunities offered to end users, developers, and platform businesses themselves, everyone stands to win—if they act soon. D!


About the Authors

Bernd Leukert is a member of the Executive Board, Products and Innovation, for SAP.

Björn Goerke is Chief Technology Officer and President, SAP Cloud Platform, for SAP.

Volker Hildebrand is Global Vice President for SAP Hybris solutions.

Sethu M is President, Mobile Services, for SAP.

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


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

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Alexa, Help Me Better Serve My Customers

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Alexander Payne’s social satire Downsizing, premiering September 11 at Toronto International Film Festival as part of Our Digital Future film series presented by SAP, will have you questioning your role in our crowded and unsustainable future.

Right now, that future feels closer than ever. With Hurricane Harvey battering Texas on August 25 and Hurricane Irma following close behind, people are wondering if severe storms will become the “new normal” because of climate change. Meanwhile, recent tests on tap water samples around the world found that 83% were contaminated with plastic particles.

Reactions are mixed on such issues, with many scratching their heads, others skeptical, and some downright indifferent. After all, nobody wants to give up their gadgets, gizmos, and other gaudy wonders. Yet, our planet’s natural resources cannot sustain all that stuff for all the world’s ballooning population.

Among those who appreciate the dangers mankind presents to Earth and themselves are the scientists, technologists, and engineers seeking solutions to minimize our impact on the planet, as well as the ethical activists and artists who hold up mirrors for humanity to confront its unsustainable path.

What are we to do?

Population “downsizing”

Payne’s Downsizing explores tongue-in-cheek the idea of quite literally downsizing every human being. The film imagines a future in which scientists have found a way to shrink humans to five inches tall. The lead, played by Matt Damon, and his wife, played by Kirsten Wiig, decide to “do the drop,” figuring they can help save the planet from human destruction and solve their financial woes (your money goes a lot further when you’re tiny). It makes one wonder, “would I shrink myself to save the world and still have it all?”

It’s not the first time a controversial scientific solution to “too many people on Earth” has been imagined on the screen. The 1973 film Soylent Green [spoiler alert] is based on a dystopia in which human corpses are turned into green wafers and rationed out to those still alive. In the TV series Utopia, a protein is designed with the intention of sterilizing up to 95% of the population, leaving a perfect world in its wake for the survivors.

For now, such ideas for controlling population through scientific means remain firmly in the realm of science fiction; though the topic of population control is a favorite among conspiracy theorists, who say we might not know if governments employed these methods.

Use fewer resources, live more simply

In 1854, more than 100 years before we started taking climate change seriously, Henry David Thoreau was already writing of his resistance against industrial civilization by moving to the woods because he “wished to live deliberately.” Quartz called Thoreau the “original hipster minimalist,“ saying his “experiment is the prototypical guide to the simple life.”

This is a difficult pill to swallow for most, though a small but growing number of people are taking inspiration from thinkers like Thoreau, as well as modern minimalists like Marie Kondo, placing less value on “stuff.” Time will tell if the movement can grow big enough to make a real difference.

Colonize on other planets

Stephen Hawking thinks humans only have 100 years to escape Earth and colonize a new planet, and the likes of Elon Musk are set on making it happen. Philosopher John Zerzan, however, believes destroying this planet and moving on to the next is no kind of answer. Whatever your take, it’s hard to imagine a future in which moving to a new planet or living on the Starship Enterprise is anything other than physically arduous and emotionally distressing, if it’s even feasible at all.

Build sustainable technology and production practices

Electricity 2.0 is on its way. As I wrote in a previous post, digitization and decentralization of the grid, the rise of renewable sources like solar and wind, the impact of the Internet of Things, and more are coming together to reshape the utilities space. Furthermore, electric vehicles are building momentum as a solution to our reliance on fossil fuels to get from A to B. Created with eco-sensitivity, this new power infrastructure could significantly reduce greenhouse gas emissions.

Just as important, companies are exploring more sustainable practices for food and goods production, as is seen with circular economy concepts. These solutions aren’t radical, and look the most realistic and promising, if you take human nature for what it is. Nevertheless, it will be a monumental challenge requiring progressive government and corporate policies, plus a collective shift in our cultural mindset.

Whether it’s reducing consumption, embracing sustainable technologies, or shrinking ourselves to five inches tall, there is no doubt we need to find a way to downsize our human footprint. As Hurricane Harvey and Irma, along with mounting evidence elsewhere, might imply, it’s time to act, one way or another. The big question is, how?

Find out more about the Our Digital Future film series presented by SAP at TIFF 17Watch a thought-provoking discussion with David Jonker about how films show us our digital future.

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Making The World A Better Place With The Right Digital Tools

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How materials shape manufacturing

Manufacturers have always been at the mercy of the materials available to them, and every great leap in manufacturing technology has been influenced in some way by advances in materials science. Consider the Bronze Age giving way to the Iron Age, leading through history to the Age of Electronics and high tech. In every case, advances in materials enabled engineers to design new products and production methods that took advantage of the new material.

Today we have 3D printing, which started with a few polymers and has branched out into metals, food, ceramics, and even biological materials. As a result, engineers have developed innovative ways to design parts to be lighter in weight, more resilient, or lower cost by combining the unique capabilities of 3D printers and advanced materials created by the chemical industry.

3D printing and the supply chain

3D printing is having a major impact on the design and optimization of supply chains across all industries. Today, it’s not uncommon to see airlines, utilities, and manufacturers eliminating or reducing their inventory of spare parts via 3D printing. They no longer need to stock the same parts in multiple locations to reduce down time of expensive assets such as airplanes. As a result, they have increased asset utilization and reduced cost.

In many cases, rather than manufacturing and building components to be shipped to OEMS or higher-tier manufacturers, companies now print these parts in house as needed. While the printing speed may not be able to support high-volume manufacturing yet, it is more than adequate for prototypes, short runs, and spares. In the near future, companies may outsource much of their component manufacturing to nearby “printer farms” that will fulfill their requirements. This will reduce the volume of shipments around the globe, decreasing the environmental impact of manufacturing.

More than ever, chemical companies will be the backbone of all manufacturing as they create and deliver new materials designed to take advantage of 3D printing.

3D printing and the chemical industry

The most forward-thinking chemical companies are working directly with customers and the manufacturers of 3D printers to optimize materials with the right combination of characteristics to satisfy the customer’s needs and ensure that the printers run efficiently. Examples of this level of partnership include BASF working with HP, and Farsoon and Solvay working with Reico and Arevo Labs. These companies are inventing new resins, new polymers, and powdered metals that will advance manufacturing into a new era of productivity and innovation.

For more on 3D printing and the supply chain, see The 3D-Printed Future Needs A New Supply Chain.

This story also appeared on the SAP Community.

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Top Ten Digitalist Magazine Posts Of The Week [September 4, 2017]

Last August, a woman arrived at a Reno, Nevada, hospital and told the attending doctors that she had recently returned from an extended trip to India, where she had broken her right thighbone two years ago. The woman, who was in her 70s, had subsequently developed an infection in her thigh and hip for which she was hospitalized in India several times. The Reno doctors recognized that the infection was serious—and the visit to India, where antibiotic-resistant bacteria runs rampant, raised red flags.

When none of the 14 antibiotics the physicians used to treat the woman worked, they sent a sample of the bacterium to the U.S. Centers for Disease Control (CDC) for testing. The CDC confirmed the doctors’ worst fears: the woman had a class of microbe called carbapenem-resistant Enterobacteriaceae (CRE). Carbapenems are a powerful class of antibiotics used as last-resort treatment for multidrug-resistant infections. The CDC further found that, in this patient’s case, the pathogen was impervious to all 26 antibiotics approved by the U.S. Food and Drug Administration (FDA).

In other words, there was no cure.

This is just the latest alarming development signaling the end of the road for antibiotics as we know them. In September, the woman died from septic shock, in which an infection takes over and shuts down the body’s systems, according to the CDC’s Morbidity and Mortality Weekly Report.

Other antibiotic options, had they been available, might have saved the Nevada woman. But the solution to the larger problem won’t be a new drug. It will have to be an entirely new approach to the diagnosis of infectious disease, to the use of antibiotics, and to the monitoring of antimicrobial resistance (AMR)—all enabled by new technology.

sap Q217 digital double feature2 images2 Top Ten Digitalist Magazine Posts Of The Week [September 4, 2017]But that new technology is not being implemented fast enough to prevent what former CDC director Tom Frieden has nicknamed nightmare bacteria. And the nightmare is becoming scarier by the year. A 2014 British study calculated that 700,000 people die globally each year because of AMR. By 2050, the global cost of antibiotic resistance could grow to 10 million deaths and US$ 100 trillion a year, according to a 2014 estimate. And the rate of AMR is growing exponentially, thanks to the speed with which humans serving as hosts for these nasty bugs can move among healthcare facilities—or countries. In the United States, for example, CRE had been seen only in North Carolina in 2000; today it’s nationwide.

Abuse and overuse of antibiotics in healthcare and livestock production have enabled bacteria to both mutate and acquire resistant genes from other organisms, resulting in truly pan-drug resistant organisms. As ever-more powerful superbugs continue to proliferate, we are potentially facing the deadliest and most costly human-made catastrophe in modern times.

“Without urgent, coordinated action by many stakeholders, the world is headed for a post-antibiotic era, in which common infections and minor injuries which have been treatable for decades can once again kill,” said Dr. Keiji Fukuda, assistant director-general for health security for the World Health Organization (WHO).

Even if new antibiotics could solve the problem, there are obstacles to their development. For one thing, antibiotics have complex molecular structures, which slows the discovery process. Further, they aren’t terribly lucrative for pharmaceutical manufacturers: public health concerns call for new antimicrobials to be financially accessible to patients and used conservatively precisely because of the AMR issue, which reduces the financial incentives to create new compounds. The last entirely new class of antibiotic was introduced 30 year ago. Finally, bacteria will develop resistance to new antibiotics as well if we don’t adopt new approaches to using them.

Technology can play the lead role in heading off this disaster. Vast amounts of data from multiple sources are required for better decision making at all points in the process, from tracking or predicting antibiotic-resistant disease outbreaks to speeding the potential discovery of new antibiotic compounds. However, microbes will quickly adapt and resist new medications, too, if we don’t also employ systems that help doctors diagnose and treat infection in a more targeted and judicious way.

Indeed, digital tools can help in all four actions that the CDC recommends for combating AMR: preventing infections and their spread, tracking resistance patterns, improving antibiotic use, and developing new diagnostics and treatment.

Meanwhile, individuals who understand both the complexities of AMR and the value of technologies like machine learning, human-computer interaction (HCI), and mobile applications are working to develop and advocate for solutions that could save millions of lives.

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Keeping an Eye Out for Outbreaks

Like others who are leading the fight against AMR, Dr. Steven Solomon has no illusions about the difficulty of the challenge. “It is the single most complex problem in all of medicine and public health—far outpacing the complexity and the difficulty of any other problem that we face,” says Solomon, who is a global health consultant and former director of the CDC’s Office of Antimicrobial Resistance.

Solomon wants to take the battle against AMR beyond the laboratory. In his view, surveillance—tracking and analyzing various data on AMR—is critical, particularly given how quickly and widely it spreads. But surveillance efforts are currently fraught with shortcomings. The available data is fragmented and often not comparable. Hospitals fail to collect the representative samples necessary for surveillance analytics, collecting data only on those patients who experience resistance and not on those who get better. Laboratories use a wide variety of testing methods, and reporting is not always consistent or complete.

Surveillance can serve as an early warning system. But weaknesses in these systems have caused public health officials to consistently underestimate the impact of AMR in loss of lives and financial costs. That’s why improving surveillance must be a top priority, says Solomon, who previously served as chair of the U.S. Federal Interagency Task Force on AMR and has been tracking the advance of AMR since he joined the U.S. Public Health Service in 1981.

A Collaborative Diagnosis

Ineffective surveillance has also contributed to huge growth in the use of antibiotics when they aren’t warranted. Strong patient demand and financial incentives for prescribing physicians are blamed for antibiotics abuse in China. India has become the largest consumer of antibiotics on the planet, in part because they are prescribed or sold for diarrheal diseases and upper respiratory infections for which they have limited value. And many countries allow individuals to purchase antibiotics over the counter, exacerbating misuse and overuse.

In the United States, antibiotics are improperly prescribed 50% of the time, according to CDC estimates. One study of adult patients visiting U.S. doctors to treat respiratory problems found that more than two-thirds of antibiotics were prescribed for conditions that were not infections at all or for infections caused by viruses—for which an antibiotic would do nothing. That’s 27 million courses of antibiotics wasted a year—just for respiratory problems—in the United States alone.

And even in countries where there are national guidelines for prescribing antibiotics, those guidelines aren’t always followed. A study published in medical journal Family Practice showed that Swedish doctors, both those trained in Sweden and those trained abroad, inconsistently followed rules for prescribing antibiotics.

Solomon strongly believes that, worldwide, doctors need to expand their use of technology in their offices or at the bedside to guide them through a more rational approach to antibiotic use. Doctors have traditionally been reluctant to adopt digital technologies, but Solomon thinks that the AMR crisis could change that. New digital tools could help doctors and hospitals integrate guidelines for optimal antibiotic prescribing into their everyday treatment routines.

“Human-computer interactions are critical, as the amount of information available on antibiotic resistance far exceeds the ability of humans to process it,” says Solomon. “It offers the possibility of greatly enhancing the utility of computer-assisted physician order entry (CPOE), combined with clinical decision support.” Healthcare facilities could embed relevant information and protocols at the point of care, guiding the physician through diagnosis and prescription and, as a byproduct, facilitating the collection and reporting of antibiotic use.

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Cincinnati Children’s Hospital’s antibiotic stewardship division has deployed a software program that gathers information from electronic medical records, order entries, computerized laboratory and pathology reports, and more. The system measures baseline antimicrobial use, dosing, duration, costs, and use patterns. It also analyzes bacteria and trends in their susceptibilities and helps with clinical decision making and prescription choices. The goal, says Dr. David Haslam, who heads the program, is to decrease the use of “big gun” super antibiotics in favor of more targeted treatment.

While this approach is not yet widespread, there is consensus that incorporating such clinical-decision support into electronic health records will help improve quality of care, contain costs, and reduce overtreatment in healthcare overall—not just in AMR. A 2013 randomized clinical trial finds that doctors who used decision-support tools were significantly less likely to order antibiotics than those in the control group and prescribed 50% fewer broad-spectrum antibiotics.

Putting mobile devices into doctors’ hands could also help them accept decision support, believes Solomon. Last summer, Scotland’s National Health Service developed an antimicrobial companion app to give practitioners nationwide mobile access to clinical guidance, as well as an audit tool to support boards in gathering data for local and national use.

“The immediacy and the consistency of the input to physicians at the time of ordering antibiotics may significantly help address the problem of overprescribing in ways that less-immediate interventions have failed to do,” Solomon says. In addition, handheld devices with so-called lab-on-a-chip  technology could be used to test clinical specimens at the bedside and transmit the data across cellular or satellite networks in areas where infrastructure is more limited.

Artificial intelligence (AI) and machine learning can also become invaluable technology collaborators to help doctors more precisely diagnose and treat infection. In such a system, “the physician and the AI program are really ‘co-prescribing,’” says Solomon. “The AI can handle so much more information than the physician and make recommendations that can incorporate more input on the type of infection, the patient’s physiologic status and history, and resistance patterns of recent isolates in that ward, in that hospital, and in the community.”

Speed Is Everything

Growing bacteria in a dish has never appealed to Dr. James Davis, a computational biologist with joint appointments at Argonne National Laboratory and the University of Chicago Computation Institute. The first of a growing breed of computational biologists, Davis chose a PhD advisor in 2004 who was steeped in bioinformatics technology “because you could see that things were starting to change,” he says. He was one of the first in his microbiology department to submit a completely “dry” dissertation—that is, one that was all digital with nothing grown in a lab.

Upon graduation, Davis wanted to see if it was possible to predict whether an organism would be susceptible or resistant to a given antibiotic, leading him to explore the potential of machine learning to predict AMR.

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As the availability of cheap computing power has gone up and the cost of genome sequencing has gone down, it has become possible to sequence a pathogen sample in order to detect its AMR resistance mechanisms. This could allow doctors to identify the nature of an infection in minutes instead of hours or days, says Davis.

Davis is part of a team creating a giant database of bacterial genomes with AMR metadata for the Pathosystems Resource Integration Center (PATRIC), funded by the U.S. National Institute of Allergy and Infectious Diseases to collect data on priority pathogens, such as tuberculosis and gonorrhea.

Because the current inability to identify microbes quickly is one of the biggest roadblocks to making an accurate diagnosis, the team’s work is critically important. The standard method for identifying drug resistance is to take a sample from a wound, blood, or urine and expose the resident bacteria to various antibiotics. If the bacterial colony continues to divide and thrive despite the presence of a normally effective drug, it indicates resistance. The process typically takes between 16 and 20 hours, itself an inordinate amount of time in matters of life and death. For certain strains of antibiotic-resistant tuberculosis, though, such testing can take a week. While physicians are waiting for test results, they often prescribe broad-spectrum antibiotics or make a best guess about what drug will work based on their knowledge of what’s happening in their hospital, “and in the meantime, you either get better,” says Davis, “or you don’t.”

At PATRIC, researchers are using machine-learning classifiers to identify regions of the genome involved in antibiotic resistance that could form the foundation for a “laboratory free” process for predicting resistance. Being able to identify the genetic mechanisms of AMR and predict the behavior of bacterial pathogens without petri dishes could inform clinical decision making and improve reaction time. Thus far, the researchers have developed machine-learning classifiers for identifying antibiotic resistance in Acinetobacter baumannii (a big player in hospital-acquired infection), methicillin-resistant Staphylococcus aureus (a.k.a. MRSA, a worldwide problem), and Streptococcus pneumoniae (a leading cause of bacterial meningitis), with accuracies ranging from 88% to 99%.

Houston Methodist Hospital, which uses the PATRIC database, is researching multidrug-resistant bacteria, specifically MRSA. Not only does resistance increase the cost of care, but people with MRSA are 64% more likely to die than people with a nonresistant form of the infection, according to WHO. Houston Methodist is investigating the molecular genetic causes of drug resistance in MRSA in order to identify new treatment approaches and help develop novel antimicrobial agents.

sap Q217 digital double feature2 images6 1024x572 Top Ten Digitalist Magazine Posts Of The Week [September 4, 2017]

The Hunt for a New Class of Antibiotics

There are antibiotic-resistant bacteria, and then there’s Clostridium difficile—a.k.a. C. difficile—a bacterium that attacks the intestines even in young and healthy patients in hospitals after the use of antibiotics.

It is because of C. difficile that Dr. L. Clifford McDonald jumped into the AMR fight. The epidemiologist was finishing his work analyzing the spread of SARS in Toronto hospitals in 2004 when he turned his attention to C. difficile, convinced that the bacteria would become more common and more deadly. He was right, and today he’s at the forefront of treating the infection and preventing the spread of AMR as senior advisor for science and integrity in the CDC’s Division of Healthcare Quality Promotion. “[AMR] is an area that we’re funding heavily…insofar as the CDC budget can fund anything heavily,” says McDonald, whose group has awarded $ 14 million in contracts for innovative anti-AMR approaches.

Developing new antibiotics is a major part of the AMR battle. The majority of new antibiotics developed in recent years have been variations of existing drug classes. It’s been three decades since the last new class of antibiotics was introduced. Less than 5% of venture capital in pharmaceutical R&D is focused on antimicrobial development. A 2008 study found that less than 10% of the 167 antibiotics in development at the time had a new “mechanism of action” to deal with multidrug resistance. “The low-hanging fruit [of antibiotic development] has been picked,” noted a WHO report.

Researchers will have to dig much deeper to develop novel medicines. Machine learning could help drug developers sort through much larger data sets and go about the capital-intensive drug development process in a more prescriptive fashion, synthesizing those molecules most likely to have an impact.

McDonald believes that it will become easier to find new antibiotics if we gain a better understanding of the communities of bacteria living in each of us—as many as 1,000 different types of microbes live in our intestines, for example. Disruption to those microbial communities—our “microbiome”—can herald AMR. McDonald says that Big Data and machine learning will be needed to unlock our microbiomes, and that’s where much of the medical community’s investment is going.

He predicts that within five years, hospitals will take fecal samples or skin swabs and sequence the microorganisms in them as a kind of pulse check on antibiotic resistance. “Just doing the bioinformatics to sort out what’s there and the types of antibiotic resistance that might be in that microbiome is a Big Data challenge,” McDonald says. “The only way to make sense of it, going forward, will be advanced analytic techniques, which will no doubt include machine learning.”

Reducing Resistance on the Farm

Bringing information closer to where it’s needed could also help reduce agriculture’s contribution to the antibiotic resistance problem. Antibiotics are widely given to livestock to promote growth or prevent disease. In the United States, more kilograms of antibiotics are administered to animals than to people, according to data from the FDA.

One company has developed a rapid, on-farm diagnostics tool to provide livestock producers with more accurate disease detection to make more informed management and treatment decisions, which it says has demonstrated a 47% to 59% reduction in antibiotic usage. Such systems, combined with pressure or regulations to reduce antibiotic use in meat production, could also help turn the AMR tide.

sap Q217 digital double feature2 images7 1024x572 Top Ten Digitalist Magazine Posts Of The Week [September 4, 2017]

Breaking Down Data Silos Is the First Step

Adding to the complexity of the fight against AMR is the structure and culture of the global healthcare system itself. Historically, healthcare has been a siloed industry, notorious for its scattered approach focused on transactions rather than healthy outcomes or the true value of treatment. There’s no definitive data on the impact of AMR worldwide; the best we can do is infer estimates from the information that does exist.

The biggest issue is the availability of good data to share through mobile solutions, to drive HCI clinical-decision support tools, and to feed supercomputers and machine-learning platforms. “We have a fragmented healthcare delivery system and therefore we have fragmented information. Getting these sources of data all into one place and then enabling them all to talk to each other has been problematic,” McDonald says.

Collecting, integrating, and sharing AMR-related data on a national and ultimately global scale will be necessary to better understand the issue. HCI and mobile tools can help doctors, hospitals, and public health authorities collect more information while advanced analytics, machine learning, and in-memory computing can enable them to analyze that data in close to real time. As a result, we’ll better understand patterns of resistance from the bedside to the community and up to national and international levels, says Solomon. The good news is that new technology capabilities like AI and new potential streams of data are coming online as an era of data sharing in healthcare is beginning to dawn, adds McDonald.

The ideal goal is a digitally enabled virtuous cycle of information and treatment that could save millions of dollars, lives, and perhaps even civilization if we can get there. D!

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


About the Authors:

Dr. David Delaney is Chief Medical Officer for SAP.

Joseph Miles is Global Vice President, Life Sciences, for SAP.

Walt Ellenberger is Senior Director Business Development, Healthcare Transformation and Innovation, for SAP.

Saravana Chandran is Senior Director, Advanced Analytics, for SAP.

Stephanie Overby is an independent writer and editor focused on the intersection of business and technology.

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How To Keep Up With China’s Rapidly Changing Automotive Industry

282010 GettyImages 158259775 super e1504034958793 How To Keep Up With China’s Rapidly Changing Automotive Industry

Also, while WhatsApp has a large following, China’s 768 million WeChat users have access to far more advanced features, such as electronic payments and online gaming. It seems as if WeChat payments are ubiquitous in China and will soon replace both cash and credit card payments.

The bottom line

In a globally connected world, automotive companies are reinventing themselves. China is a great example of jumping technology stages in an effort to become the leader in electric mobility.

Technology companies recognize the gravitas of China becoming a leader in the automotive world. Recognizing also means listening to the specifics of the market, the tech infrastructure ecosystem, and consumer preferences, and providing breakthrough cloud-based technologies that enable fast-moving players to stay ahead of the game.

This story also appeared on the SAP Community. Follow me @ulimuench.

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