News

The transformative business potential of AI, IoT and DLT – more than just a hollow promise?

News

The transformative business potential of AI, IoT and DLT – more than just a hollow promise?

Article

April 05, 2019

Digital revolution for industrial growth: The fourth industrial revolution has begun, and industry is actively searching for opportunities to deploy disruptive technologies, specifically artificial intelligence (AI), the Internet of Things (IoT), and distributed ledger technology (DLT), of which blockchain is one example. It is doing so with good reason. According to a 2018 report from McKinsey & Co., profitable growth in industrial sectors is stagnant. The report suggests that a successful digital transformation across the entire industrial sector could yield returns of up to USD 2 tn for shareholders. (1)

Experiments and initiatives with these technologies are already well underway. But with the current digital revolution mirroring the dot-com bubble of the 1990s so closely, business leaders should approach AI, IoT and DLT more circumspectly, carefully evaluating how these technologies can create sustained value while considering their social and environmental impact.

Reasons for pause

Technological breakthroughs in AI will increase the amount and types of work performed by machines, potentially enabling them to work more in areas where human strengths such as creativity or compassion are predominant success factors. But breakthroughs in AI could also drastically exacerbate inequality by eliminating jobs for workers. Similarly, IoT technology will continue to alter the value proposition of consumer and industrial goods, and it will have implications for consumption patterns and privacy concerns. Finally, the wild volatility of the cryptocurrency boom and the incredible hype surrounding it, most closely mirroring the dot-com boom, have caused DLT to be approached with trepidation.

Evaluating real potential

The question then for business leaders is how to navigate the promises of emerging technologies. MIT Sloan Business School professor Michael Casey and Wall Street Journal reporter Paul Vigna, who have co-authored two seminal books on DLT, offer a valuable perspective on the hype surrounding cryptocurrencies:

"The crypto bubble, like the dot-com bubble, is creating the infrastructure that will enable the technologies of the future to be built. But there’s also a key difference. This time, the money being raised isn’t underwriting physical infrastructure but social infrastructure. It’s creating incentives to form global networks... It is the foundation upon which the decentralized economy of the future will be built." (2) 

The value of a period like the dot-com or crypto boom is that foundations for the widespread use of technology can be laid. A valuable starting point then for confronting the possibilities of AI, IoT, and DLT is to consider what we want the future of our businesses to look like and to envisage the lasting impacts that we want these technologies to have on business operations.

 

In search of an enduring impact

But how do you separate fact from fiction? One young company that has been working with these three technologies is Modum. We at Modum have been striving since 2016 to put a valuable, regulatory-driven solution in our customers’ hands. Looking across industry sectors at both start-up companies with new offerings and established enterprises with new initiatives, we have noticed that true success stories involving these technologies are few and far between. A piecemeal approach to deploying technology is consistently what holds these projects back.

Speaking very broadly, IoT’s greatest value typically comes from creating a “digital twin” of a physical item within a digital ecosystem. AI’s strong suit is enabling root-cause analysis and predictions to drive automated decision-making. DLT’s advantage is enabling secure synchronization of information in a single transaction with no intermediary. When combined, the potential transformational value of these technologies in the industry comes from their ability to optimize and automate. The resulting new approaches to business and the fundamental shifts in operational practices will remain long after these technologies have matured and the hype cycles have ended.

Where it’s already happening

Transformational shifts are complicated. In terms of leveraging the potential of AI, IoT, and DLT, integrated and globalized business units can only move as fast as their slowest counterpart. However, the supply chain is an early access point for these technologies to make a transformational impact: from tokenized assets and serialization processes to establishing provenance and proof of origin, and to autonomous parcels and predictive routing. 

Modum began by developing a pharma-certified IoT data logger that can collect temperature data points from within a package while in transit and store them in a blockchain. This solution helps distributors of pharmaceutical products meet GDP (good distribution practice) regulations for medicinal products. The breadth of our supply chain monitoring solutions has since expanded to serve quality-sensitive supply chains in other sectors.

We are now developing additional automation and optimization solutions that further the potential of AI, IoT, and DLT to transform enterprise supply chains. Smart contracts can be utilized to initiate business processes or financial transactions without any manual intervention between independent parties in a supply chain. Processes such as the redelivery of goods, release of payments, or insurance settlements can then be automated. We are also using machine learning and predictive models to expose inefficiencies in distribution channels and to optimize packaging for sensitive goods. Smart contract automation and machine learning optimization both capitalize on the data that our loggers collect in the field, creating a feedback loop for continuous improvement. 

Swiss Post, Switzerland’s national postal carrier, has been working with Modum to integrate monitoring, automation, and optimization solutions to meet the needs of their clients in the healthcare sector and to streamline its own operations. Using collected data and predictive models, we are supporting Swiss Post to develop a smart solution for sensitive goods that increases delivery efficiency and protects consumers. The success of this collaboration earned Modum and Swiss Post a 2018 Innovation Award from PostEurop, the association of European public postal operators.

For the benefit of everyone

We at Modum believe in a holistic approach to transformation aimed at connecting the goals and sources of business value with the technologies that will help to achieve them. It is through the value chain that we can ignite transformative approaches by using today’s technologies to automate and optimize. We can create new connections and collaborations that will open enduring opportunities for AI, IoT, and DLT. 

The supply chain is a fantastic entry point for these technologies. It can begin to unlock the revenue gains and margin expansions that industry is relying on the digital revolution to deliver. Moreover, supply chain transformation using these technologies means cheaper and safer distribution by reducing the involvement of middlemen and lowering barriers to entry so that local suppliers can form new networks within a globalized supply chain. These networks can be inclusive to new businesses – in emerging economies, for example – and to new end users. The supply chain thus is an ideal place to start deploying AI, IoT, and DLT technologies to enable the fourth industrial revolution to usher in the next wave of growth through more efficient and productive business operations. And what’s more – innovative companies like Modum are already on the journey to realize the promise of these technologies in real world applications.

Written by Carl Spörri and Mike Taylor

Read the original publication of Credit Suisse Asset Management on Scope here.

Image credit: Credit Suisse 

(1) https://mck.co/2AqgIB1 
(2) https://bit.ly/2Hl6bMR