At this very moment, somewhere in the world, a drone is taking a picture of an insurgent’s hidden outpost — or a tropical sunrise. Launching a missile over a battlefield — or bringing a beer to someone’s table. Racing through an obstacle course for fun — or slipping into an environment too distant or dangerous for a human. That barely scratches the surface of what drones will become in the not-too-distant future.

The first drones were remote-controlled model planes used by the military in World War I to surveil battlefields. Today, a drone is commonly thought of as any unmanned aerial vehicle that combines a power source, sensors or cameras, intelligent software, and most critically, a communication link. But they are much more. Drones essentially take the Internet — and exponential technologies — anywhere we humans want to send them.  What’s more, they’re getting exponentially simpler, safer, smaller, and more powerful with each turn of the Moore’s Law crank.  We’re hurtling toward a future in which drones are widely available, incredibly capable, and increasingly autonomous. It’s not too soon to start considering the possibilities and challenges.

Already flying high

Today’s drones are an ideal platform for putting the already countless variety of sensors (thermal, pressure, audio, chemical, biological, imaging, and many more) into places where it’s difficult, dangerous, or physically impossible for a human to go. More efficient energy storage and fast-improving solar technologies make batteries lighter, smaller, and longer-lasting, allowing drones to operate for longer periods of time. And while software already lets users set up geofences to control where drones can travel, advances in automation and artificial intelligence software will extend their capabilities even further. In the future, drones will carry 3D printers, robotic arms, and all manner of technologies to enable them not just to sense, but dramatically affect, the world around them.

No wonder drones are being put to use in a wide range of industries, both to augment humans and to perform tasks that were previously impossible. These are just a handful of the ways drones are already at work around the world:

• Agriculture: Assessing crop health, monitoring irrigation systems, and tracking livestock

• Emergency response: Spotting forest fires, conducting search and rescue missions, and delivering food and medical supplies to war zones and remote villages

• Utilities: Inspecting wires, towers, power plants, and pipelines

• Scientific research: Tracking animal migrations, reporting on weather patterns, and identifying archaeology

• Real estate: Inspecting construction and improving security

• News and entertainment: Taking photos and videos from previously unreachable vantage points

A South African music festival has even successfully tested beer delivery by drone at one of its campsites. In the U.S., however, the Federal Aviation Administration currently bans drones for most commercial uses. This has delayed Amazon’s plans to introduce package delivery by drone — and disappointed Wisconsin ice fishers whose drone deliveries of twelve-packs from a nearby brewery got shut down. Nonetheless, despite the conservatism of some regulatory agencies drone technology is advancing so rapidly that broad commercial applications are imminent.

A drone of your own

The first GPS receiver weighed 50 pounds and cost more than $100,000. Today, you can buy a 0.3-gram GPS chip for less than $5. The Apollo space program spent millions of dollars to develop an Inertial Measurement Unit to track an object’s position and movement through three-dimensional space, but today it costs just a dollar to do it on a few chips. Digital cameras are many thousands of times smaller, cheaper, and higher-resolution than when they were introduced in 1976.

Now, imagine applying the same rules of exponential growth to other technologies integral to drones. In the next five to ten years, drones could be one thousand times better, but what does “better” mean?

Incredible capabilities. Even as they shrink — some experts predict drones the size of a housefly, a gnat, or even smaller — they’ll have a bigger impact on their environment. As nanotechnology evolves, tiny injectable drones could even work within the body to diagnose health issues, deliver medication with pinpoint accuracy, and perform microsurgery. As they evolve, drones of all sizes could take on ever more tasks: pollinating flowers, seeding rainclouds, even combining 3D printing and drone delivery to repair and even supplant crumbling infrastructure. In fact, J.M. Ledgard, director of the futurist Red Line emergency robotics initiative at the Swiss Federal Institute of Technology, predicts that cargo drones could turbocharge economic development in Africa, where only 16 percent of roads are paved, by relieving countries of the need to upgrade their transportation infrastructure in much the same way that cellular technology let them avoid building a wired phone infrastructure.

Astonishing intelligence. Software will support drones in making autonomous decisions about what to seek out, sense, and transmit. They may learn to work seamlessly in swarms, flying together in formation and communicating data that lets them avoid obstacles and choose the most efficient routes. Imagine, for example, a squadron of solar-powered ultralight drones delivering inexpensive wireless Internet and cellular coverage to residents of an area that previously had no good broadband options. Facebook is already exploring this with its Aquila initiative.

Wide availability. Better materials, batteries, and propulsion will bring the cost of individual drones down to the point where they deliver high performance for just a few dollars. Organizations and even individuals will be able to afford a dozen — or an entire flotilla.

All of these things, in turn, will create enormous economic opportunities. Global market research firm MarketsandMarkets estimates the total market for commercial drones was $15.22 million in 2014 and predicts it will grow to $1.27 billion by 2020. That incredible growth rate is an order of magnitude faster than Moore’s Law.

Drone, no?

Like self-driving cars, which will use exponential technologies to take us where we want to go without our involvement, drones will use these technologies to take us places we can’t physically be. A world full of drones promises to transform many industries. At the same time, drones will also have enormous ramifications for personal security and privacy. The same personal drone with a high-resolution camera and facial recognition software that follows your child home from school on busy streets could be a tool for a clothing manufacturer to keep tabs on everyone wearing its products — or for a thief to choose which home to break into. And what happens to society when microdrones are everywhere, forcing us to assume that everything we do and say is recorded, monitored, indexed, and infinitely searchable?

Future drones will be able to capture any kind of information from any location.  They will vastly expand our ability to understand and, importantly, affect environments in ways that we’re barely beginning to imagine.  They’ll even bring you a bottle of your favorite beer while they’re at it.

Download the Executive Brief: Drones: Tomorrow’s “I” in the Sky

To learn more about how exponential technology will affect business and life, see SAP Digital Futures.

The future will be what we make it. Unlike the past or the present, it’s the only arena where we have any control. But the future, as the saying goes, isn’t what it used to be. As digital technology rockets through the exponential growth curve, there’s only one way to ensure long-term competitive advantage: Be better at seeing the future than everyone else.

Walking 30 normal steps takes you about 30 meters. But 30 exponential steps – where each is double the one before – will take you on a round trip to the moon. Astonishingly, the last two steps are 75% of the total distance, with the final step reaching from the moon back to earth!  This reveals why advances in digital technology are coming at us so rapidly. We’re about 30 exponential steps into the march of Moore’s Law.

Digital Futures examines the powerful digital forces reshaping the world over the next 5–10 years. These stories will help you prepare for the amazing opportunities they hold and anticipate the risks you’ll want to avoid.

Here’s a sample:

• Are self-driving cars a joyride or a wrong turn? Either way, there are sharp curves ahead. Cars that drive themselves will be a profound shift that touches almost every industry, geography, and aspect of life: our hometowns, car design, liability, safety and even the car industry itself.

• Drones generate a lot of buzz. We are hurtling toward a future in which drones are widely available, increasingly autonomous, and capable of tasks we have not begun to imagine. They will augment human capabilities in a range of commercial industries including agriculture, utilities, scientific research, and emergency response.

• Virtual reality, and its digital sibling augmented reality, is emerging from science fiction into the real world and will soon change everything from shopping and entertainment to healthcare. Future uses may even transform our very definition of reality.

• Bitcoin’s blockchain could disrupt our financial system. Its model of trust, through massively distributed digital consensus, is challenging our assumptions about what makes transactions secure. As a result, this computer science breakthrough might reshape commerce across the entire digital economy.

• The future of robotics will be more like Ironman  than Terminator. While robots excel at lifting heavy objects, working in dangerous places, moving with precision, and performing repetitive tasks, human advantages suggest we should blend the best of people and machines.

“It’s difficult to make predictions, especially about the future” is a quote with hazy provenance. What’s clear, though, is that exponential technologies like self-driving cars, drones, and virtual reality are not just hot, trending topics in your social feed. They will – individually and in combination – disrupt industries, create new winners and losers, and radically change many aspects of society.

The purpose of Digital Futures is to give you the foresight to help ensure the very best outcomes – to make business and the world run better.

Digital transformation is no longer a fuzzy buzzword in industry, rather it is now a well understood and a credible approach to achieving business value. With increasing maturation of transformative technologies, it’s becoming a lot easier for organizations to chart their approach and digital transformation journeys.

The oil and gas industry was slow to leverage transformative technologies like the Internet of Things, machine learning, blockchain, artificial intelligence, and virtual reality. However, progressive companies have started to experiment with these new technologies to drive incremental value for their organization. These early adopters are showing how digital transformation is driving cost reduction, improving reliability, and increasing safety of people across the industry value chain and, in the process, attracting more companies and investment in these technologies.

Key challenges

The oil and gas industry faces the unique challenge of ensuring the efficient and safe operation of assets that are distributed geographically or in areas that are not easily accessible. In these cases, technologies like drones and machine learning could become very relevant. Drone-based aerial surveys of inaccessible areas can provide rich insights into the condition of the assets. Well platforms or areas above and near underground pipelines are some of the places where drone based inspection can work wonders.

How drones and machine learning can help overcome challenges

A common and simple use of a drone is to inspect inaccessible areas that would typically require scaffolding, rope, or a physical setups. By taking pictures of assets, such as flares, refinery columns, offshore platforms, or large crude oil tanks, and using them for visual inspections, oil and gas companies can prioritize detailed inspection and maintenance activities.

However, drone inspection’s true potential can be unleashed if machine learning is used to analyze the large volume of images to identify patterns and/or map the images to look for abnormalities. In this regard, a deep-learning algorithm based on a convolutional neural network (CNN) can help. In machine learning, a CNN (or ConvNet) is a class of deep, feed-forward artificial neural networks used for analyzing visual imagery. Simply put, it’s learning based on imagery.

In an oil and gas installation, a CNN-based algorithm running on a geoservice-enabled machine learning platform can be used to create a digital representation of a remote platform, a crude oil tank farm, an over-ground layout for an underground pipeline, etc., by feeding standard images (a test data set) to train the algorithm to identify an asset on the ground. This enables a CNN algorithm to understand the details in imagery. Any new photograph captured with drone-based inspection can then be evaluated based on the CNN algorithm

For example, standard images of the surface over an underground pipeline can be fed into the algorithm to train it. Afterwards, every time a visual survey is done, the new images can be analyzed based on the learning in the CNN algorithm, and any abnormality that can’t be mapped with the existing data set can be highlighted in the analysis. Human intervention can target this exception for inspection, instead of reviewing the entire information.

Summary

Drone-based aerial imagery has the potential to significantly transform maintenance and inspection processes for oil and gas installations. A geoservice-enabled machine learning platform with a CNN-based algorithm can analyze the results from aerial inspection, and recommend human intervention only if there are mismatches between the new imagery and the imagery used for training the algorithm.

For more on how technology is transforming the supply chain, see Tick Tock: Start Preparing for Resource Disruption.

Today’s briefing looks at how a partnership between drones and machine learning algorithms is helping the oil and gas industry.

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Read more on today’s topic

Keller Rinaudo, co-founder and CEO, Zipline
Image Credit: Flickr CC: TED Conference

Drones get a bad rap. Unmanned aerial vehicles (UAVs), first introduced decades ago, have a largely negative connotation in modern life—from the Predator drones used to conduct targeted killings to law enforcement drones engaging in potentially unwarranted surveillance to mishandled consumer drones menacing the public.

Credit: Zipline

Keller Rinaudo, co-founder and CEO of Zipline International, sees the technology instead as a lifesaving mode of transport. In 2016, the Half Moon Bay, California, based drone delivery service signed its first partnership with the government of Rwanda to make the last-mile delivery of blood to transfusion facilities throughout the country. In August 2017, the company signed a larger deal with the government of Tanzania to provide 2,000 medical deliveries a day to its far-flung health facilities.

But Rinaudo’s drone dreams are even bigger: to enable on-demand, low-cost delivery of medicines and other products for the planet.

Pivotal Pivots

Rinaudo earned a degree in biotech from Harvard, where he built DNA computers. After spending a few years on the professional rock-climbing circuit, he shifted to robotics. Rinaudo was particularly interested in how smartphone components could open up new doors for robotics, ultimately launching the company Romotive in 2012 with the Vegas Tech Fund.

Romotive raised some US$7 million and spent more than two years developing an app-controlled robotic toy for iOS devices before Rinaudo determined he wanted to do something more impactful with robotics. Robots are really good at repetitive tasks, so Rinaudo spent a year exploring seemingly mundane tasks that were ripe for disruption, ultimately settling on an area where he thought robots could have the most impact: medical logistics and delivery.

The Last-Mile Problem

Zipline’s aircraft, called “Zips” can fly 10 times the distance of existing commercial UAVs. Credit: Zipline

In 2014, Rinaudo traveled to Ifakara Health Institute in Tanzania, where he met a grad student working to digitalize part of the country’s medical supply chain. The student had built a mobile alert system that enabled health workers to text requests for emergency blood and medical supplies for critically ill patients. However, owing to the country’s difficult topography and its slow and inefficient medical supply chain, there was no way for the government to deliver many of these materials.

Browsing the growing backlog of medical supply requests that the student had collected, Rinaudo says he realized he was looking at a “database of death.” More than 2 billion people around the world lack adequate access to essential medical products, according to the World Health Organization, often due to challenging terrain and gaps in infrastructure. Over 2.9 million children under age five die every year and up to 150,000 pregnancy-related deaths result from lack of access to safe blood.

Robotic aircraft could solve the problem. Rinaudo established Zipline and moved to develop the Zip, a first-of-its-kind drone delivery service, as the final link in the medical supply chain for problematic geographies.

An Inside Job

Zipline’s team of 60 includes seasoned aerospace engineers recruited from companies like SpaceX, Google, Boeing, and NASA. “They’ve been drawn to the mission,” Rinaudo says, “using cutting-edge technology to save lives.”

The fixed-wing aircraft that Zipline has developed are capable of flying farther on less power and in more variable weather than the multirotor machines typically referred to as drones. The Zips can fly 10 times the distance of existing commercial UAVs. The company has built the robotic systems for launching and landing their Zips, as well as the algorithms in the flight computer and air traffic control software, in-house. “Off-the-shelf quadcopters can’t get the job done,” Rinaudo explains. “We need a purpose-driven vehicle capable of making deliveries at a national scale.”

Rwanda’s Leap of Faith

Zipline began its deliveries in Rwanda, which is known as the country of a thousand hills. The topography makes for a striking landscape but challenging logistics. “The government was ready to step forward and make a national commitment to expanding healthcare access with technology,” Rinaudo says. Because Rwanda is one of the most densely populated countries in Africa, with a land area the size of Maryland, Zipline could serve almost half of the nation’s population from its single distribution center. (Ultimately, the Rwandan government has said it wants to ensure that delivery of essential medical supplies is no more than 30 minutes away from all 12 million Rwandans.)

“Millions of people across the world die each year because they can’t get the medicine they need when they need it. It’s a problem in both developed and developing countries.We can help solve it with on-demand drone delivery.”

Zipline launched its first blood drops from Rwanda’s capital, Kigali, late in 2016. The company flies 15 planes (which weigh about 14 kilograms fully loaded) simultaneously, using data provided by GPS and Rwanda’s Civil Aviation Authority to guide the flights. Powered by lithium-ion battery packs and twin electric motors, the Zips don’t have to be refueled.

To make deliveries, the planes fly about 40 feet above what Zipline calls the “mailbox” near a clinic (an area approximately the size of two parking spots) and drop the packages to it. The clinics do not need to install any infrastructure. To begin service to a new site, Zipline performs a survey flight to map the area and can start deliveries within two days.

One of Zipline’s central innovations is the aircraft landing system at its distribution centers. “We need to take off and land from the same place with limited space,” says Rinaudo. Mimicking the wire and tailhook systems the U.S. Navy uses to snag jets onto its carriers, Zipline engineers developed a pair of robotic arms that hold a wire. On approach, the plane sends a signal to the robotic arms, triggering them to raise the wire to the right height for the plane to snag it before stopping on an inflated landing mat nearby. The solution enables the planes to decelerate from 100 kilometers an hour to zero in half a second with no runway.

Developing the technology to operate and land the UAVs safely and effectively was easy, Rinaudo says, compared to integrating with Rwanda’s national health system. There were challenges with back-end systems integration. Zipline has also had to consider local air traffic and health regulations and develop education and training for distribution center workers. “We work hand in hand with military and civil aviation authorities, the national blood center, clinics around the country, hospital staff, and members of the surrounding community,” Rinaudo says. “All of them have a key role to play. And building those relationships while strengthening the overall operation takes time.”

Reverse Innovation

A healthcare professional collects air-delivered supplies. Credit: Zipline

Last summer, the government of Tanzania signed a deal with Zipline to develop the largest national drone delivery service in the world with four distribution centers and more than 100 drones. The initiative aims to serve 10 million Tanzanians (approximately the population of the U.S. state of Georgia). Zips in Tanzania will deliver not just blood but also emergency vaccines, HIV medications, antimalarial drugs, and critical medical supplies like sutures and IV tubes.

Although Zipline is focused on its East African operations, its approach could prove valuable anywhere. “Millions of people across the world die each year because they can’t get the medicine they need when they need it. It’s a problem in both developed and developing countries,” Rinaudo says. “We can help solve it with on-demand drone delivery. And African nations are showing the world how.”

The company has worked with the U.S. government to explore tests of medical supply drone delivery to remote communities such as Smith Island in Maryland, Pyramid Lake Tribal Health Clinic in Nevada, and the San Juan Islands in Washington. It plans to expand within the United States in 2018.

Taking Drones to New Heights

Rinaudo’s focus on using drones to deliver items that have a significant impact on someone’s life has attracted prominent funders, including Sequoia Capital, Google Ventures, Microsoft co-founder Paul Allen, and former Yahoo CEO Jerry Yang.

It’s not clear yet whether drone delivery cuts costs. A report published in 2016 by the Johns Hopkins Bloomberg School of Public Health and the Pittsburgh Supercomputing Center noted that using UAVs to deliver vaccines in low- and middle-income countries may save money and improve vaccination rates. Zipline executives have reported that its deliveries for routine restocking are more expensive than standard trips by road, but responding to emergencies costs less.

To evaluate Zipline’s impact, global health researchers from the Ifakara Health Institute and the University of Glasgow will assess how deliveries from one of its planned distribution centers affect the clinics the company serves.

The value in lives saved is clear, says Rinaudo, and that is fueling development. Costs will come down over time, he adds, and the practical use cases within healthcare will expand. Eventually, Rinaudo envisions, Zipline’s approach could be practical for a range of possibilities beyond medical supplies. Meanwhile, the success of companies like his could serve as a springboard for a new category of aircraft more reliable and durable than cheap consumer drones but less expensive than multimillion dollar unmanned military aircraft. D!

Unmanned aerial vehicles (UAVs)—better known as drones—are becoming important tools in mining and milling.

Yet UAVs might not have been so quick to take off in commerce without an ambitious announcement by Amazon in 2013 and the growth of what we now call the Internet of Things (IoT).

Today much innovation in business processes involves the IoT’s vast network of objects, such as drones and smartphones, which exchange information through the Internet.

Innovation on your doorstep

Five years ago, most people thought of drones as instruments of warfare. But Amazon revealed it was developing drones for doorstep delivery of customer orders.  The consumer fulfillment service estimated that in five years it would be able to deliver goods by drone within 30 minutes of customers placing orders.  The New Republic called the project a space-age cartoon “fantasy.” The magazine indicated that FedEx leadership considered Amazon’s plan a joke.

Last March, Amazon finally overcame enough obstacles to launch its first drone delivery within American public airspace. And by that time, drones were already aiding the mining and mill products industries.

It’s perilous to consider digital innovation a joke. Businesses may get left behind by failing to invest in technology that leads to improved performance and competitive advantage.

IoT and Big Data management

What seems like science fiction today may become tomorrow’s business success story.

From alarm clocks that connect with work computer systems to fleets of drones that share information, IoT objects provide machine-to-machine communication that people do not need to initiate.

These objects contain sensors that accumulate data. IoT-solution software gathers this data through the Internet, then sorts, analyzes, and responds to the information. Another more powerful level of software called a platform helps all the software programs work together.

Due to its quantity, the information gathered from IoT sensors is called Big Data. Mining UAVs produce huge amounts of data, because they are used for projects such as 3D mapping of company land.

Drones over Goonyella

The Australian Business Review described the mapping process in a March 2016 article about Queensland’s Goonyella Riverside open-pit coal mine. BHP Billiton and Mitsubishi own the mine.

Goonyella began using UAVs in 2015. Each is battery-powered, weighs 2.5 kg (about 5.5 lb) and flies up to 40 minutes at speeds up to 80 km/h (about 50 mph).

A flight plan uploaded to a drone’s memory card tells it where to fly over the mining site. Then the drone may cover up to 80 ha (roughly a third of a square mile) using IoT-connected sensors and cameras to gather data (such as volumes) and images for conversion to 3D maps.

The newspaper reports that the information gathered by a single drone in 40 minutes would take weeks for a team of surveyors to record. Now, surveyors are expanding into management of data produced by drones.

BHP Billiton is one of the world’s largest mining companies and is also known for production of metals and gas. Writing at the BHP Billiton blog, Frans Knox—head of mining production—says UAVs are less expensive and safer than planes for survey work.

Knox emphasizes that drones are helping BHP Billiton to improve worker safety overall. For example, he says, drones monitor road traffic and hazards at mine sites.

Also, Knox adds, drones can identify whether mining areas are clear before blasting. Afterward, they record any blast fumes. He adds that the UAVs also aid inspection of multi-story objects such as overhead cranes so employees can minimize dangerous work at heights.

Lessons from birds

Drones face dangers, too. One aspect of working with them that mining companies never expected is their destruction by eagles, which view them as prey.

Both South Africa’s Gold Fields mining company and BHP Billiton have tried camouflaging the vehicles. Gold Fields painted theirs to look like small eagles, but wedge-tailed eagles continued destroying them. By November 2016, the company had lost $100,000.

According to the avian conservation organization Audubon, wildlife biologists have encountered similar problems when using drones to study birds. Nevertheless, the magazine reports that UAVs save researchers’ lives.

In the past, these scientists flew in light aircraft to get close to bird nests in places that are difficult to reach. But crashes—many at low altitude—became the “number-one killer of wildlife biologists,” Audubon reports.

Audubon also reports that the price of UAVs is dropping as more manufacturers produce them. It adds that some UAV designers are finding ways to make the vehicles more durable.

UAV designers have gained ideas from birds. The magazine notes that innovations include arms for grabbing objects in mid-air, “kestrel-like legs that allow drones to perch” and the ability to glide on thermal updrafts.

Another improvement Audubon cites is UAVs with “vision-based navigation” to avoid obstacles.

Overcoming obstacles

Three of the biggest obstacles to commercial use of drones are legislation limiting their use in public airspace, cost, and managing the high volumes of data they produce. UAV design may ease the first problem as drones become less prone to crashes.

As for cost, development of UAVs for the consumer and academic research markets helps make them more affordable for industrial tasks.

Finally, the third obstacle is disappearing as digital technology designers create tools and IoT-solution software for harnessing Big Data.

Five years ago, few corporate executives knew much about the IoT and how it would create new tools for productivity such as UAVs. Now, industries such as mining and milling are showing business another way to take off digitally.

Learn how to bring new technologies and services together to power digital transformation: download The IoT Imperative for Energy and Natural Resource Companies. Explore how to bring Industry 4.0 insights into your business today: read Industry 4.0: What’s Next?

The wholesale distribution industry is facing unrelenting, competitive pressure from all directions. E-commerce giants are offering Web-friendly convenience, steep membership discounts, and same-day shipping. Retailers that once relied on shipping large volumes of inventory to brick-and-mortar stores are now closing hundreds of stores to focus more on their online sales channels. And even industrial manufacturers are jumping on the bandwagon by selling directly to contractors.

As retailers and manufacturers find ways to cut out the middleman in their supply chains, small and midsize distributors have to work harder than ever before just to stay in business. They need to reinsert themselves into the customer experience by reshaping the value chain; reimagining operational processes; and enabling compelling, value-added business models.

Changing the way an entire industry competes may not be an easy feat, but it’s not impossible. According to the Oxford Economics executive study “The Transformation Imperative for Small and Midsize Wholesale Distribution Firms,” sponsored by SAP, emerging digital tools can empower distributors to increase efficiencies in logistics and operations, offer tailored experiences for customers, and improve supply-chain visibility.

Engaging customers smarter, not harder, builds the foundation for growth

For many years, I have worked with a variety of wholesale distributors – most of which report revenues of US$500 million or less – to tip the direct-to-consumer effect in their favor. In every interaction with our customers, a common goal guides the conversation and technology investment: they hope to differentiate themselves from the competition in new and creative ways that will keep their customers happy.

E-commerce may seem like old news for retailers, but it’s a part of the customer experience that most small and midsize wholesalers are missing. This is a lost opportunity that cannot be regained any other way, considering that most B2B procurement officers and consumers prefer the ease, convenience, and immediacy of an e-commerce site. Very rarely does anyone like to talk to a sales representative on the phone or order an item through email.

However, creating an e-commerce site is not as easy as posting a digital catalog and an order form online. Instead, wholesalers need to think like highly revered digital retailers, such as Amazon and Alibaba, to engineer an online customer experience that optimizes the value of every customer interaction.

For example, a distributor can increase sales orders and improve its inventory hit-rate by making real-time price and stock-level information transparent to all customers online. By analyzing a few years of historical sales transactions with the help of an in-memory computing platform, a wholesale distributor is better equipped to ensure its customers can get the products when and where they need them.

As this scenario proves, the combination of consolidated transactional and inventory information and analytics can help deliver an experience that customers demand and the value wholesalers need to stay competitive. But this is only the beginning – wholesalers can take that customer experience a step further by integrating emerging technology such as:

• Artificial intelligence: Recommend alternatives or new offerings based on purchase history or items in the shopping cart.

• Drones or Uber drivers: Compete against the promise of same-day delivery by moving the order from submission to the customer’s job site or warehouse in a matter of hours, not days.

• In-house 3D printing: Give customers the power of choice. Allow them to purchase products that meet their specific requirements and preferences on demand and without having to be put on a waitlist as a special order or back order.

• Internet of Things: Work with the manufacturer by tapping into the information generated by sensors embedded in its products to notify customers when a replacement or maintenance may be needed.

• Process automation: Take every opportunity to collect rebates and charge-backs by automating the complex, high-volume process.

• Smart vending machines: Install smart vending machines at customer locations or job sites so buyers can access what they need – such as office supplies, safety equipment (including goggles and gloves), and other products – when they need them. By swiping their employee badge, the machine will automatically log the charge in the wholesaler’s invoicing system and can even trigger automatic replenishment.

As you can see, emerging technology brings tremendous value to the wholesale customer’s ordering experience. By realizing the importance of integrating information, workflows, and technology, small and midsize wholesale distributors can address the digital pillars of the buying experience – the customer, supplier, core business processes, and business networks. And for the customer, the level of convenience, ease, and speed that this approach offers will keep them coming back for more.

Get digital transformation right to help your wholesale distribution business leverage its inherent strengths to build a strong and customer-focused future. Read the Oxford Economics executive study “The Transformation Imperative for Small and Midsize Wholesale Distribution Firms,” sponsored by SAP.

The world talks a lot about digital transformation. Few relate it to agribusinesses where plantations and dairy, poultry, or fish farms immediately come to mind. Even fewer connect it to Southeast Asia (SEA) where buffaloes are still employed in the fields.

But agriculture businesses are not digital dinosaurs. Far from it; business owners, farmers, and other industry players are remarkably open to the promise of digital innovation.

Faced with supply-side challenges, as the world’s population and therefore food demand are progressively on the rise, why wouldn’t they be? Agribusinesses know they need to increase production and enhance yield while managing rising costs. With regulatory pressures mounting, they know they need to be smarter about safety and sustainability.

It’s about clearly defining the role that digital plays – especially for large farms in SEA

The issue arises when digital advocates talk incessantly about the big vision without articulating how any of the components make sense for each individual business, plantation, or farm.

Sure, drones, connected machines, and field sensors are more affordable than ever and are driving greater efficiency, agribusiness owners say. But how can they be utilized in my plantation, especially when it’s much larger than most farms?

Yes, they say, data-driven decisions are more precise than intuition for improving fertilizer planning. But what changes will I have to make to my infrastructure?

For agricultural businesses, going digital needs first to be about clearly articulating the wins that digital will afford the business, then clearly defining the role it plays, and subsequently mapping out the steps to get there. This is far more important than just obtaining newfangled digital capabilities.

It is particularly so for Southeast Asian agribusinesses, many of which deal with massive plots of land, making every new implementation that much more complex.

Taking baby steps now to future-proof tomorrow

With that in mind, it becomes clearer what agribusinesses’ next move towards digitization should be: pragmatic, baby steps.

Rather than talk about the seven new innovations at hand and how they can turn my farm into a digital enterprise, the more pertinent questions should be: How can we take one or two technologies and try it in one farm? How can we take the most relevant innovation and make it work harder for us? What are the benchmarks for success, and when do we start rolling out the successful pilots?

Take the idea of connected farming in palm oil plantations as an illustration. The ability to track individual palm trees to let each thrive at its optimum is valuable. But in large plantations, implementing a sensor per palm tree to attain the benefits of the Internet of Things (IoT) may not be practical cost-wise.

An alternative could be to deploy drones with multi-spectral imaging cameras. It takes way fewer drones than sensors to monitor the same area. Aerial imagery allowing individual palm identification is then fed into the cloud for analysis against a set of parameters. The outcomes could tell plantation owners if a palm tree – or a group of trees in a certain area – is short on nitrogen so they can apply fertilizers in the right areas. This targeted fertilization approach shaves unnecessary fertilizer costs – a large part of operating expense – and reducing the environmental footprint.

So what started out as an objective to let each individual palm tree thrive also ends up slashing costs and enhancing sustainability.

Baby steps, not-so-baby results.

Don’t underestimate the first-mover advantage

It is important to get an early start.

Industries, such as retail and media, that have already gone through this type of disruption have shown that the early mover will experience a significant advantage.

This is no different in digital agriculture. The good thing is: Agribusinesses can act now and still claim first-player gains. But the clock is ticking.

Wait too long, and enough innovations will come to alternative crops for them to take over the sweet spot. In the longstanding soybean vs. palm battle, this is a real concern.

What new innovations have you been considering? Can you try one out at one farm and make it a roaring success? Drop me a line; I’d be keen to exchange views.

Too many people worldwide are going hungry. This is Why We Must Rethink The Global Food System.

Safety is of paramount importance to all rail operators and a core strategic tenet for each of the Class I Railroads in NA. Accidents and incidents are reported to the Federal Railroad Administration (FRA), and a review of recent accident data shows an overall improvement in accident rates of 10.7% since 2014. However, derailments remain the most common train accident with track issues a leading cause.

Size, complexity, and manual processes limit the opportunity for improvement

In North America, Class I railroads own and maintain their respective networks and infrastructure, including assets like track and bridges. The size of these networks varies from 6,000 route miles across 10 U.S. states and Mexico to an impressive 32,500 route miles across 28 US states. Each railroad has developed a maintenance of way program to inspect and maintain their broad networks to ensure safe and efficient operations. Typical inspection programs call for inspection of every foot of track up to twice a week. The complexity in planning and scheduling the people and equipment necessary to accomplish this as well as fully leveraging the volume of data is daunting, not to mention prone to error due to the manually intensive processes.

It stands to reason that more frequent inspections would likely lead to increased safety and fewer track-related derailments; however, due to the size and complexity of the networks and many sections of track being in remote areas, increasing the frequency of manned inspections comes at great cost and inconvenience.

An intelligent enterprise can help overcome these challenges

Organizations have access to a plethora of data, but it tends to be siloed with no single version of the truth. This makes analysis and extracting insights challenging if not impossible. In the digital world, organizations need to be able to turn data into insight into automated actions in real-time while seamlessly connecting their supply chain for execution. Figure 1 illustrates this premise and offers a digital transformation framework.

Figure 1: Digital transformation framework

Furthermore, Figure 2 illustrates how the elimination of manual processes and tedious tasks through automation can have a profound impact on an organization’s ability to be proactive and spend more value-added time and energy on what matters most: the customer.

Figure 2: Intelligent enterprises elevate employees to focus on higher-value tasks

Applying the digital transformation framework to rail

Let’s apply this framework to rail inspections and ultimately improving rail safety. It starts with access to rich sources of data, including sensor, maintenance, and even high-fidelity image data. Incorporating drone inspection technology into engineering maintenance programs for linear assets and structures like bridges enables an increase in the quality and quantity of inspection work that can be accomplished by having a direct correlation on safety.

For example, being able to capture high-resolution exterior shots of bridges as well as the ability to fly underneath and inside recessed areas, which are difficult and dangerous to manually inspect, ensures critical load-bearing areas are captured from every possible angle. LIDAR equipped drones can detect hairline cracks in rail and ties often undetectable through visual inspection. Additionally, beyond the visual line of sight and autonomous operations are now enabling more efficient and cost-effective drone applications. But capturing the data is only the beginning.

The critical next step is to turn inspection data, which has now been enriched with high-volume, high-fidelity image data into real-time insight. Leveraging image recognition capabilities powered by machine learning offers a robust and extremely efficient way to automatically analyze and identify potential maintenance issues. The system is trained to look for cracking, crazing, discoloration or other indicators that often precede a failure. Machine learning technology offers a very high success rate which will continue to improve over time as the volume of data increases and it continues to learn.

Leveraging a business rules framework, it is possible to then automatically initiate the required intervention. For example, images reveal cracking on a gusset plate connecting structural members of a bridge. The image is identified as being out of tolerance and in need of repair. A work order (WO) is automatically created inside the asset management application within the digital core along with a requisition for materials to complete the repair.

Finally, integration with suppliers and partners completes the end-to-end process. For parts not on hand in inventory, a PO is automatically created and sent to a preferred supplier via a fully integrated business network. And communication and scheduling of the physical work with full time or contingent maintenance of way gangs can be seamlessly accomplished through tight integration with a total workforce management solution.

Figure 3: Drone inspection seamlessly incorporated into an end-to-end process

Delivering the intelligent enterprise to improve rail safety

Adoption of drone inspection capabilities to supplement and/or replace traditional inspection methods as part of a seamlessly connected end-to-end process (Figure 3), has the potential to further move the needle on an already impressive rail safety record. Many railways are starting to embark on pieces of this journey today, but critical to long-term success will be leveraging an integrated platform to bring it all together in real-time.

Beyond safety, additional benefits could include improved productivity, increased network velocity, as well as higher asset utilization. This is only one example of how SAP is uniquely positioned to help companies turn data into insight into automated action and to deliver the intelligent enterprise.

For more on emerging technologies in business, see Creating The Intelligent Company.

In 1897, an eight-year-old girl wrote to The Sun – a prominent New York city newspaper at the time – with an inquiry about whether or not Santa Claus existed. The paper responded with a now famous editorial that said: “Yes, Virginia, there is a Santa Claus.”

Logistics you can believe in

What does this have to do with logistics, you may ask? The point of the editorial was to give children of all ages a reason to believe – and I see a link to today’s retailers and manufacturers who are in a similar position as they compete to keep their customers believing in them.

At no time is this truer than during the holiday season, when retailers feel the demand for better customer outcomes more acutely than any other time of year. From what I can see, it looks like the field of competition this season is all about fast and free delivery.

Amazon, of course, offers free two-day shipping year-round as part of its Amazon Prime offering. But at a cost of $119 per year, Prime is hardly free. Seeing an opening to one-up Amazon, Walmart and Target are offering free shipping (with no yearly charge) for the 2018 holiday season. Amazon has responded by extending the same to non-Prime customers. The biggest players, it seems, are all striving to send the same message: Yes, Virginia, there is fast and free shipping.

The question is, as competition heats up, how will companies keep pace? Let’s a take a look.

Delivering across the last mile

As with Santa himself, getting the goods under the tree – or at least to the front door – is the name of the game. One advantage that Walmart and Target have over Amazon is that their physical retail outlets can act as distribution centers. Walmart says its network of stores puts the company within 10 miles of 90% of the U.S. population. Its associates, moreover, can be repurposed to provide service not only in-store but on the road as well – delivering packages to customers as needed. This is the kind of approach that ensures not only same day but same hour delivery.

To support the associated logistics, companies are moving to a range of intelligent technologies: Internet of Things (IoT) to track vehicles, machine learning to predict demand, integrated business planning to meet that demand – the list goes on.

Drones and robots

Many of these technologies play a role in an important trend for last-mile delivery: the rise of autonomously navigated drones and robots. While still in the earliest stages of adoption, advances are being made. Amazon has secured a patent that enables drones to detect screaming voices and flailing arms, which helps on the safety front. Meanwhile, one group already has a drone delivery pilot program up and running in Loveland, Ohio. Expect more advances.

Robots are further along. Take Kroger, for example. The grocery chain uses an autonomous robot vehicle shaped like a large toaster with wheels to deliver groceries to customers. Equipped with cameras and sensors, the 1,500-pound unit can carry 243 pounds of cargo. And because groceries need to be kept cool or hot, the unit includes IoT sensors to monitor conditions.

Some organizations envision a two-stage system for last-mile delivery. The idea involves a larger delivery van that acts as a roving hub in a dense population center – with robots deployed from the van for last-mile delivery. Who can say which kind of approach will take hold, but efforts are underway.

Fixing returns

A big part of Christmas is returning gifts – and for many consumers, a big part of free shipping is free returns. But for items such as clothing and shoes, free returns can be a losing proposition for companies footing the bill. It doesn’t help that some customers (no finger pointing here, you know who you are) intentionally order multiple sizes of the same item and return the ones that don’t fit.

Strategies such as minimum purchase amounts seem not to work all that well, and charging for returns is a sure way to send customers to the competition. What to do?

Many companies are turning to intelligent technologies. Some use sizing apps that create 3D images of the customer’s body. Others can get results from asking height, weight, and body type –  then analyzing this data in the context of other sizing data on file. Shoe companies, meanwhile, can build a database of shoe measurements and ask customers what size of a certain shoe they currently wear – then map the right size to the shoe they’re considering. Getting the size right up front helps cut down on costly returns.

Anticipating demand

Amazon is taking the idea of understanding demand to new heights with something the company calls “anticipatory shipping.” Recently, Amazon filed a patent for this new approach where it uses analytics to predict what customers will order in the future. Already, the company uses predictive analytics to provide recommendations on potential purchases based on order history. Why not take the next step and send the product along?

Not that Amazon plans on shipping unordered products to your house. The idea is to station popular products at local hubs – or on roving delivery vans. When you ultimately order the product – as predicted! – Amazon can get it to you for same-hour delivery.

I wonder if something similar was at play a few months back when I had to return a faulty laptop. I filled in the return form online and before I even packed up the original computer, a delivery person appeared at my door with a replacement. Was there a roving van nearby that received data on my replacement request? Do they really know when I am sleeping, and know when I‘m awake? Hard to say, but I can tell you I was turned into a believer. Indeed, with service like this, it’s easy to believe. Yes Virginia, there is a Santa … and free shipping … and one-hour delivery.

If you’re looking to perfect your supply chain for 2019, register for our on demand webinar Connect Digitally to Perfect Reality.

Happy holidays to all. Best wishes for the new year.

Another year is coming to a close. But before we drive home after a night of New Year’s Eve festivities, it’s time for a new round of wild and random thoughts about the year to come.

Last year, I suggested a little New Year’s Eve party game of predictions for 2018. Did you go for it? How accurate were your predictions?

While experienced prophets wait for events to unfold, we now have the benefit of looking back. Like many other industries, the wholesale distribution industry continues to be disrupted and transformed, forcing companies to evolve their strategy to survive in a continuously changing world. In some segments, businesses are already turned upside-down. Here are four examples of those changes.

1. Sales reps begin to rethink their role

A few days ago, we were shopping for a new refrigerator. We walked into a local electronics store and got a hold of a shop assistant who was less than thrilled to assist. She managed to answer virtually all our questions with some obscure guesses and a suggestion to research online. Needless to say, this money-for-nothing business model did not inspire us to purchase the appliance immediately. Additionally, after completing our research, we discovered that the two only decision factors for selecting a vendor were price and delivery conditions.

Admittedly this is a B2C example. But at a recent wholesale distribution forum, several presenters discussed the changing role of the sales rep in the industry as well. Customers, B2B and B2C alike, expect added value from a salesperson: advice, consulting, and information. Just being social and handing over a contract to sign will not satisfy customer requirements any longer.

2. Data is a critical part of creating lasting customer relationships

We have seen a lot of publications about data being the new oil, fueling business models of the future. With empowered and knowledgeable customers, I just outlined that the role of sales and their relationship with customers need to change. It’s all about the money, of course. But to get there, it is most importantly about building deep, lasting relationships and partnerships.

Some fundamental virtues are still critical or gaining importance, such as using insight and knowledge to fuel the ability to give good advice. But in an omnichannel business environment, the challenge is to spread such knowledge across your entire operations and ensure that everyone can use it. To achieve this, knowledge needs to be digitized. Then, we can apply advanced logic to drive more value, find new insights, and create new revenue streams.

3. Communication continues to evolve

While I was annoying my parents by keeping our telephone line busy for hours talking to friends, much of today’s communication has shifted to texting. While asynchronous by design, the expectation is still focused on speedy replies. It’s basically impossible to go out with friends or colleagues without half of them checking their messages and chatting with parties currently not present and ignoring the ones that are.

How is this new communication style changing expectations for business exchanges? And what opportunities are possible?

Technology advancements in chatbots and digital assistants have made huge leaps, both in written and direct voice communications. In many cases, it is becoming difficult to tell, whether you are talking to a human or a machine. So much so, that these virtual personas are frequently asked on dates and get marriage proposals. And really, as long as you get the right answers even quicker and don’t have to wait on hold, does it matter that you are talking to an artificial assistant? On the operational side, it means that your service teams can focus on cases that are more complex instead of answering the 50th routine question.

4. Robots enter a wider range of use cases

Like digital assistants and chatbots, robotic technology has made huge leaps in this field as well. Check out this cool video, to get a feel for just how revolutionary some of these breakthroughs are.

Robots and drones are becoming common in warehouse operations and will expand into other areas of logistics quickly, such as driverless vehicles or drone delivery. But we’ll also see them take over new roles in service, maintenance, and customer interaction. With some of these new capabilities, I think it is not too farfetched to be concerned about specific roles and jobs. And while I believe that not everyone’s a winner in this technological (r)evolution, I do think that, in many cases, there will be a symbiosis between human and machine. It will allow human employees to focus on tasks and situations where they can make a difference without being bogged down in routine operations.

My last word for 2018

While I am not as convinced that SkyNet is just science fiction as it was in 1984, the line between progress and threat is only the width of a spider’s web. Technology can take us either way, but I look forward to seeing it all unfold.

So before I let you celebrate or enjoy the final days of 2018, I would like to wish you peaceful and silent days and nights between now and throughout 2019. Have a happy, healthy, and prosperous year and let’s continue making the world a better place!

In 2018, the message of innovation was clear: the foundation of change is simplicity.

Through innovation simplicity, we are identifying everyday challenges at work and home and overcoming the problems we face collectively as global citizens. But more importantly, we are designing intelligent solutions to combat them in ways that work for everyone.

Pipes and tiles find new life with the Internet of Things

This brings me to the boring subject of water pipes and roofing tiles. In the UK, we waste on average 3 billion liters of water every day – a huge problem, considering the global water shortage. But how can you innovate a pipe?

At the UKISUG IoT Symposium in June 2018, AgilityWorks senior consultant Utsav Chobe showed attendees a live demo of how smart sensors in water pipes can be used to capture real-time data that is pushed into the backend for processing. This Internet of Things technology can generate automated requests and create work orders so field engineers can find and fix the faults faster. This results in a huge reduction in water waste and enables back-office staff and field engineers to work more efficiently. Suddenly, the humble water pipe becomes an everyday hero. How exciting is that?!

If that isn’t thrilling enough for you, don’t worry – roof tiles are also being innovated.

Last year, head of SAP technology Gareth Ryan discussed how imaging and machine learning can be used to assess objects (or “assets”) to identify whether there is minor damage that can be repaired or a full replacement is needed. Data from image assessments is captured and, similar to the water sensors, pushed into the backend where it can be used to automatically prioritize and assign work orders. Machine learning functionality enables this system to get more intelligent – assessing assets with increased efficiency and accuracy. Essentally, the modest roof tile becomes an unassuming vehicle for artificial intelligence.

The roof tile is only one application of this smart imaging technology. Take drones, which are primarily used for photography. These ultra-mobile and always-connected applications are used in a multitude of industries, including oil and gas, construction, mining, and transport. When you consider the roof tile example in the context of everything you could possibly photograph with a drone, suddenly, the possibilities are unlimited.

So, what about simplicity in designing the systems behind this?

It should come as no surprise to many that design thinking is behind this simplicity.

At the AgilityWorks Innovation Forum in June, we ran a design thinking session, which focused on the “explore” phase of the approach. Attendees went back to basics and did an exercise that asked them to think about the system’s end users. What is their name, their role, and what challenges do they encounter on a day-to-day basis? By taking this simple, granular approach at the beginning, you can create a system that is easy to use and solves real challenges, rather than innovating for the sake of it.

If you take away anything from this blog, I hope it is the understanding that even the most boring subjects can become some of the most exciting opportunities for innovation. You’ll never look the same way at a roof tile again.

Want to learn how SAP Leonardo can help your business to innovate the ordinary? Take a look at our SAP Leonardo Explore workshop.

The term “drone” simply refers to an unmanned aerial vehicle or machine; considering this definition, the earliest man-made unmanned aerial vehicle was a hot air balloon used for bombardment in 1839. The first modern, state of the art drone was made in 1916 by Great Britain based on Tesla’s design. Drone technology development increased after World War I, and drones subsequently become much smaller and more efficient.

While they were initially developed for war purposes, today drones are not just serving the armed forces but also helping multiple industries in areas such as surveillance, tracking, and other security purposes. They are doing important work in relatively little time, things that take humans weeks and months to do, and making our life much safer and better.

For example, drone technology is having a huge impact on warehouses and inventories in giant companies like Amazon and Walmart. These warehouses are getting bigger and bigger, and it would take humans weeks and months to scan every product, report those that are missing, and otherwise manage the inventory. Drone technology can quickly scan and automatically add, remove, and report missing products in inventory through direct interaction with software.

Drones have also benefited the retail industry by increasing efficiency, decreasing margins of error, and reducing manual intervention, thereby saving costs. Processes that used to take days and weeks to complete can be done rapidly using drones. Companies can now fully check inventory and report missing items in less than a day, which used to take months to do manually.

In the construction industry, manually doing real-time surveys, visiting sites, and tracking risks and dangers is quite difficult, and there are always margins of error that can cause big blunders and damage. Drones are now being used for real-time surveys and surveillance to quickly visit construction sites, collect information, and automate data delivery to organizations for better insights.

Defense is the “mother” of drone technology, as it first grew and prospered in the hands of the armed forces. It came out of the defense services’ desire to destroy an enemy’s equipment and accessories without risking million-dollar aircraft. They also wanted to discreetly keep an eye on their enemies’ posts and deposits. Drones carry missiles and explosives to hit targets with maximum accuracy and very low margins of error. Critical missions that previously used aircraft and manpower can now be done remotely by drones.

The benefits are huge; not only does it save million-dollar aircraft, but it also saves the lives of soldiers and gets work done with greater accuracy and efficiency.

As the technology matures, drones will extend into other areas, including:

• Drone as an ambulance: In the future, drones will serve as flying ambulances that can deliver medicines and first aid kits to patients anywhere, anytime. They can also be equipped with cameras so doctors can examine people remotely and give medical guidance in an emergency.

• Drone as a delivery vehicle: Drones can deliver products to people in less time than human delivery drivers. Large companies like Amazon and online food vendors are thinking about this concept and ways to implement it soon for customers’ benefit.

Drones, now in their seventh generation, are impacting our day-to-day lives and creating very positive impacts. They ease our daily lives in areas including transport, entertainment, defense, and security, and soon we will see drones hovering over us to contribute to our work. Drones are an extremely valuable invention, and their potential use cases suggest they will revolutionize our lives with a whole new era of technology.

For more on drone uses, see “Six Ways Airports Are Improving Safety.”