Preparing Youth In Emerging Nations For The Digital Economy

Preparing Youth In Emerging Nations For The Digital Economy

Daniel Schmid

Olpc-xo2Information and communications technology (ICT) is enabling transformation not only globally and regionally, but also individually. This is particularly evident with today’s youth, who are quickly becoming a vital part of the digital economy. In fact, a survey of U.S. parents revealed that 53% of all six-year-olds already have their own mobile phone, a clear indication that these children are already digitally empowered.

But what about children in other areas of the world — say, those in the emerging countries in Africa?

In these places, ICT can prepare children for the digital economy, but not necessarily through the use of mobile phones. The innovative application of ICT that enables education for children who currently have no access to it is making a difference in places like Africa. And education-based initiatives may be one of the most significant differentiators in the future economic development of these countries.

Education is key to Africa’s future

According to World Economic Forum, Africa has the largest youth demographic across the globe. Over the next 25 years, it is estimated that the continent’s working-age population will double to one billion, exceeding that of China and India. It is expected that 112 million workers will enter Africa’s labor force by 2020.

However, nearly 35% of Africa’s youth lack the basic skills required to perform a job, and in particular, they lack technology training. According to afriCoderDojo, the number of African children taught the language of computer programming is virtually zero. The ramifications of this are widespread and crippling, as government, private sector, and non-profit companies can’t find employees with these skills to fill open positions.

Opening the doors for children across the continent

How can we make education accessible to children across a continent as large as Africa? It takes commitments from people – and organizations – from around the world. Major international companies are already stepping in to help, and here’s a quick glimpse at how:

  • Connectivity and training. Coca-Cola South Africa, bottling partner Coca-Cola Fortune, and BT Global Services are teaming up to provide free Internet access to underserved communities in South Africa. This initiative hopes to enable students and schoolchildren to increase their knowledge through education and business training. Coca-Cola is installing refreshment-dispensing coolers, while BT is providing design and support, connectivity, Internet access, and business training.
  • Device-based education. The Vodafone Foundation has created a portable Instant Classroom with the intention of providing 15,000 child refugees across Africa with access to tablet-based education. According to the foundation, this digital “school in a box” can be set up in a matter of minutes and is designed for areas where electricity and Internet connectivity are unreliable or non-existent. This initiative comes with a laptop, 25 tablets pre-loaded with educational software, a projector, a speaker, and a hotspot modem with connectivity.
  • Technology skills., the Cape Town Science Centre, the Galway Education Centre, and SAP are joining together to launch Africa Code Week. This initiative hopes to empower future generations with the coding tools and skills they need to thrive in the 21st century digital workforce and further Africa’s economic development. The goal of this program, which will be offered in English and French, is to enable an estimated 20,000 children from 11 countries across the continent to participate in software coding workshops. The students, who range in age from 8 to 24 years, can attend on-site workshops or take a massive open online course (MOOC).

This is only a glimpse of how international companies are helping emerging economies prepare for the digital economy by providing their youth with ICT services and education. You can learn more about the commitment of SAP to Africa Code Week here. To learn more about the MOOC courses offered during Africa Code Week, you can visit openSAP. You will also find an interesting MOOC on Sustainability and Business, which discusses how sustainability and innovation are linked. You can also learn more about our efforts in improving the lives of youth around the world here.

Daniel Schmid was appointed the chief sustainability officer at SAP in 2014. Since 2008,  he has been engaged in transforming SAP into a role model of a sustainable organization, establishing mid- and long-term sustainability targets. Linking non-financial and financial performance are key achievements of Daniel and his team. Since last year, his focus was extended towards the wider impact of SAP’s business activities.


Daniel Schmid

About Daniel Schmid

Daniel Schmid was appointed Chief Sustainability Officer at SAP in 2014. Since 2008 he has been engaged in transforming SAP into a role model of a sustainable organization, establishing mid and long term sustainability targets. Linking non-financial and financial performance are key achievements of Daniel and his team.

This Woman’s Mission: To Make Diversity The Norm

Susan Galer

As a young, black Muslim woman working on a remote oil rig with an all-male crew, Yassmin Abdel-Magied knew she wasn’t her co-workers’ favorite person. That didn’t stop this engineer, author, broadcaster, and award-winning social advocate from forging ahead to change the world.

Born in Sudan, raised and educated in Australia, and now living in London, Abdel-Magied epitomizes the power of diversity for business and people. She’s written a best-selling book, currently owns a race car company, and by the way, recently took up skiing because well, why not?

Fortuitously, I heard her speak during the Diversity and Leadership Forum onsite at the SAP Ariba Live event in the week leading up to International Women’s Day. Here’s a sampling of insights from Abdel-Magied’s rousing talk during a luncheon session entitled “Surfacing Unconscious Bias.”

Challenge your assumptions

After walking on stage wearing traditional Muslim dress, Abdel-Magied ingeniously drove home her point that first impressions aren’t always accurate by changing her outfit two more times, becoming in rapid succession an oil rig worker complete with hard hat, followed by a casually attired office worker in black jeans and t-shirt. With each new costume, she challenged the audience to uncover their unconscious biases and overcome them.

“I’m the same person regardless of what I’m wearing…We get bombarded with tons of information at any given moment, but our brains can only handle about 40 pieces of information, so we create shortcuts, some of which are useful,” she said. “The assumptions you make about someone who looks like me, where did you get that information? The information creating those shortcuts isn’t necessarily accurate.”

Look past the superficial

Noting that we all have unconscious bias leading to business risk that hurts people and companies, Abdel-Magied encouraged the audience to sponsor someone different.

“Try to look beyond what you first see. So often we don’t look past the superficial. Each and every one of us in this room has incredible privilege. Don’t feel bad. Use that privilege,” she said. “Extend that to others. Find someone who doesn’t share your experience and open doors for them. Everyone in this room has the capacity to change someone else’s life.”

Question your habits and listen

Challenging cultural assumptions is core to diversity and inclusion in the workplace. Abdel-Magied suggested “unfreezing, changing and refreezing” accepted organizational norms as the path to real transformation. “These words like diversity and inclusion are the result of a history that’s difficult and a cultural context that lives outside our workplace. Everyone walks into the workplace with this baggage from the world around them.”

Abdel-Magied recommended people question their working and social habits, extending beyond the people and places they feel comfortable with. At the same time, she doesn’t ascribe to gender blindness. Here’s her response to a question from a man who wanted to learn more about diversity by joining other diversity groups.

“If you want to enter non-affiliated spaces, the most important thing for you is to listen with an open heart. When people are complaining, know that it’s not about youLearn to separate yourself so you can objectively say your experience is like this, how can I actually help,” she said. “We’re not interested in whether you call yourself a feminist or not. We’ll look at your actions.”

Listening to wise women

As uplifting as the session was, it didn’t end there. Host Julie Gerdeman, vice president of the Digital Transformation Organization at SAP Ariba, encouraged the audience to write down on post-it notes advice women in their lives have given them – whether a colleague, mentor, friend or family member. The notes were displayed on a whiteboard outside the meeting room and shared online supporting Bravo, a Procurious group celebrating the contributions of women in procurement.

I’m looking forward to a time when women won’t need a designated “day” of recognition, but until then there’s plenty of work for us all.

Follow me @smgaler

This article originally appeared on Forbes SAPVoice.


Jeannie Mai: Fight Against Human Trafficking

Jane Lu

Human trafficking is becoming the second largest crime in the world, and anyplace that’s war-torn and lacking in education is at risk. Listening to stories from victims of human trafficking and having personal experience with abuse made Jeannie Mai, producer, fashion expert, and host, an ambassador to fight the issue. On a SHE Innovates podcast, Michelle King, a leader in UN women’s gender innovation work, interviews Mai to discuss ways to end human trafficking.

Mai has worked with NightLight, a private organization in Thailand, to help mentor and encourage victims. Some people become victims of human trafficking because they owe money, while others are promised better lives and futures. The International Labor Organization estimates there are more than 20 million victims of human trafficking globally.

The global epidemic of human trafficking

Mai says that the business of bodies is very lucrative. When Libya lost its government, the first thing the country did was sell people as slaves. A lot of work had to be done, and sex is sought as a way to keep up the livelihood of the community.

There is no governmental structure that effectively punishes human trafficking. In countries where citizens receive little government protection, perpetrators receive a week in jail or the victim is blamed for being part of the business. Mai points out the United States’ inattention to human trafficking. She says there are 17 brothels on Los Angeles’ Sunset Boulevard – a popular street that hosts red carpet Hollywood parties. There are at least 10 Google News notifications each day about trafficking crimes in the United States.

Lack of gender equality furthers the problem. Mai emphasizes that toxic masculinity and social approval when men act in a hostile manner enable men to downplay women’s issues. Men are victimized as well, but they can play a big part in ending human trafficking by inviting women into the conversation and raising the bar for how they are treated.

The road to recovery

Only about 2% of human trafficking victims have been able to escape. Mai suggests working with organizations like Nightlight and Not For Sale to better understand the victim’s perspective. These organizations offer therapeutic solutions to remind people of their value. Finding employment is a big catalyst for a victim’s recovery, as jobs provide independence, security, and self-confidence.

As a community, we can help by collecting information and acting on it. Applications and technological solutions, such as Spotlight, a web-based tool created by actor Ashton Kutcher, can help law enforcement track perpetrators and rescue potential victims faster.

Mai recommends starting your fight against human trafficking by educating yourself on the topic. Stopping Traffic is a film that explores human trafficking in the United States, Mexico, Thailand, and Texas – all big ports for trafficking. At the end of the film, the creators present nine ways you can help stop trafficking. Everyone can play a role in ending the business of bodies.

Listen to Jeannie Mai’s interview on the SHE Innovates podcast.

SHE Innovates is a podcast that shares the stories, challenges and triumphs of women across innovation, technology and entrepreneurship. Listen to all our podcasts on PodBean.


Jane Lu

About Jane Lu

Jane is a writer and marketing intern at SAP. She is pursuing a Bachelor of Arts degree majoring in English at the University of Waterloo. While Jane is currently studying in Waterloo, she is originally from Toronto.

The Blockchain Solution

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

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

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

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

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

The Spine of Digitalization

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

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

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

What Is Blockchain and How Does It Work?

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

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

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

Why does blockchain matter for the supply chain?

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

Hints of the Future

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

But we could tell that it had vast potential.

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

What’s the Magic Combination?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Blockchain Is the Change Driver

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

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

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

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

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

Challenges on the Path to Adoption

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

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

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

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

Blockchain Blackouts

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

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

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

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

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

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

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

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

Customers Will Expect Change

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

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

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

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

About the Authors

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

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

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

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

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

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



Why Blockchain Is Crucial For FP&A: Part 1

Brian Kalish

Part 17 in the Dynamic Planning Series

In these times of almost continuous technological change, there is a natural tendency to be suspect of whatever is being heralded as the “flavor of the month” or the “next best bet.” In early 2017, I was graciously given the opportunity to speak on what I believed to be the technologies that were transforming finance and specifically, the FP&A function. The talk I ended up giving covered five areas:

  • Advanced analytics and forecasting
  • Robotic process automation
  • Cloud and Software-as-a-Service
  • Artificial intelligence
  • Blockchain

While all these topics deserve further investigation, for this article, I want to focus on blockchain. Part of the reason for diving deeper into blockchain is the lack of understanding of what it actually is and the great amount of time people in the finance function are currently spending talking about it. This has greatly changed in the past nine months.

Last March, while hosting an FP&A Roundtable in Boston, I ask a group of 25 senior FP&A professionals how familiar they were with the concept of blockchain. Out of this august group, there was only one participant who felt truly comfortable with the concept. I still get asked on a regular basis, all over the world, “Blockchain. What is it?”

Blockchain: What is it?

By allowing digital information to be distributed but not copied, blockchain technology has created the spine of a new type of Internet. Picture a spreadsheet that is duplicated thousands of times across a network of computers. Now imagine that this network is designed to regularly update this spreadsheet, and you have a basic understanding of blockchain.

Information held on a blockchain exists as a shared and continually reconciled database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly transparent and easily verifiable. No centralized version of this information exists for someone to corrupt. Hosted by many computers simultaneously, its data is accessible to any authorized user.

Blockchain technology is like the Internet in that it has a built-in robustness. By storing blocks of information that are identical across its network, the blockchain 1) cannot be controlled by any single entity and 2) has no single point of failure. The Internet itself has proven to be durable for almost 30 years. It’s a track record that bodes well for blockchain technology as it continues to be developed.

A self-auditing ecosystem

The blockchain network lives in a state of consensus, one that automatically checks in with itself on a regular basis. A kind of self-auditing ecosystem of a digital value, the network reconciles every transaction that happens at regular intervals. Each group of these transactions is referred to as a “block.” Two important properties result from this:

Transparency. Data is embedded within the network as a whole, and by definition, is available to all authorized users.

Incorruptibility. Altering any unit of information on the blockchain would mean using a huge amount of computing power to override the entire network. In theory, it is possible; however, in practice, it’s unlikely to happen.

A decentralized technology

By design, the blockchain is a decentralized technology, so anything that happens on it is a function of the network as a whole. Some important implications stem from this. By creating a new way to verify transactions, aspects of traditional commerce may become unnecessary.

Today’s Internet has security problems that are familiar to everyone. However, by storing data across its network, the blockchain eliminates the risks that come with data held centrally. There are no centralized points of vulnerability that can be exploited. In addition, while we all currently rely on the “username/password” system to protect our identity and assets online, blockchain security methods use encryption technology.

I hope this little tutorial helps describe what blockchain is. In my next article, I’ll discuss the value of blockchain to the FP&A profession.

For more on this topic, read the two-part “Blockchain and the CFO” series and “When Blockchain Fulfills CFOs’ Paperless Vision.”

2018 will be a busy year with FP&A Roundtables in St. Louis, Charlotte, Atlanta, San Diego, Las Vegas, London, Boston, Minneapolis, DFW, San Francisco, Hong Kong, Jeddah, and many other locations around the world to support the global FP&A community.

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


Brian Kalish

About Brian Kalish

Brian Kalish is founder and principal at Kalish Consulting. As a public speaker and writer addressing many of the most topical issues facing treasury and FP&A professionals today, he is passionately committed to building and connecting the global FP&A community. He hosts FP&A Roundtable meetings in North America, Europe, Asia, and South America. Brian is former executive director of the global FP&A Practice at AFP. He has over 20 years experience in finance, FP&A, treasury, and investor relations. Before joining AFP, he held a number of treasury and finance positions with the FHLB, Washington Mutual/JP Morgan, NRUCFC, Fifth Third Bank, and Fannie Mae. Brian attended Georgia Tech in Atlanta, GA for his undergraduate studies and the Pamplin College of Business at Virginia Tech for his graduate work. In 2014, Brian was awarded the Global Certified Corporate FP&A Professional designation.

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