The U.S. Senate held hearings Tuesday, quizzing the Federal Reserve about what went wrong with Silicon Valley Bank (SVB) and what could have been done to prevent its failure. The run on SVB and its subsequent collapse spread to other regional banks, some with the same problems and at least one other, First Republic Bank, just because of its association with San Francisco.

SAP’s Take

Falk Rieker, global head of SAP’s Industry Banking Unit, said that overall the banks that faltered — SVB, Signature Bank, Silvergate Bank and First Republic — had five things in common: a lack of a comprehensive risk management framework; weak internal controls and financial reporting; a specialized business model that focused on one industry instead of being diversified; the loss of customer and investors; and a rising interest rate environment that led to vulnerability to short sellers. In fact, from April 2022 to January 2023 during a rising interest rate environment, SVB had no chief risk officer.

“This created a perfect storm,” Rieker said. “I think what you learn from that is that all these institutions have to put a priority on all other institutions, a priority on technology and a priority on staying compliant in order to reduce the risk and to manage financial performance. Last but not least, it shines a spotlight on the human beings in these organizations: if you don’t have people who have the skills in place, even the best technology will not help you.”

Among the reasons why SVB — the bank of startups and venture capitalists (VCs) — failed is that its customers were tightly connected to the technology startup and venture capital industries. Its assets also were concentrated in U.S. Treasury bills, which lost value as interest rates spiked.

Silvergate Bank, which concentrated in cryptocurrency, failed next, a ruination exacerbated by the challenges facing the crypto industry and the failure of FTX trading platform. The contagion spread to New York-based Signature Bank because of its size and the fact that it had some exposure to cryptocurrency.

Finally, First Republic Bank failed by association to San Francisco, the source of 40% of its deposits. That means exposure to VCs and startups. Although 60% of its loans were mortgages on single-family homes, more than 10% of its borrowers are VCs and startups.

While technology cannot ensure that people pay attention or choose the right path, it can make an impact. First, it can make a big impact on financial reporting and analytics, which can gauge a bank’s health on a daily basis. “The table stakes of running a bank include understanding where you are with your business,” Rieker said.

Second is data management, because if the quality of the data is poor it can result in misleading results.

Third is enterprise risk management, helping manage interest rate risk, liquidity risk, credit risk and operation risk. Technology can produce scenarios that reflect how a bank fairs under any risk condition. “This is absolutely key,” Rieker said. “Otherwise, you’re driving without lights in the middle of the night.”

Last is human capital management solutions to help attract the best talent in an environment where new industries, such as technology or life sciences, now compete for the same talent.

Contact:
Ilaina Jonas, Senior Director of GlobalĚýPublic Relations, SAP
+1 (646) 923-2834, Ěýilaina.jonas@sap.com

, a not-for-profit community, released the results of , providing an analysis of the organizational and employee outcomes of a four-day work week. Nearly 3,000 workers at 61 companies in diverse industries participated in the six-month study. These companies, located in the UK, were each required to make a meaningful reduction in employees’ working time by creating and deploying a policy that is suited to their business needs, industry and work culture – while maintaining 100% of pay.

SAP’s Take

The key findings of the pilot included data showing that companies that adopted a four-day week experienced decreased absenteeism (65%) and reduced employee turnover (57%), while employees benefited from improved well-being, including reduced stress (39%) and levels of burnout (71%). These companies also maintained or even increased revenue (by 1.4%), despite the significant reduction in work hours.

An insight revealed on page 56 of the report underscores the scope of change these companies underwent due to their participation in the pilot: “Managers and staff alike repeatedly praised the value of the four-day week as a catalyst for organizational change.”

“When we say, ‘the four-day work week,’ that’s a pretty simplified definition,” said Dr. Lauren Park, organizational psychologist and human resources (HR) research scientist on the 51ˇçÁ÷SuccessFactors Growth and Insights team. “There is a lot of flexibility in how this is practiced and there are a lot of nuanced differences that organizations can benefit from. It doesn’t have to look the same for every organization, and it shouldn’t.”

Streamlining Processes for a Better Employee Experience

The companies participating in the pilot implemented a reduction in work hours using a variety of methods; Fridays off, staggered work schedules, annualized time off, performance-based time off, decentralized schedules at the department level and others.

In addition, many of these companies evaluated the concept and structure of their processes to find efficiencies alongside having a four-day work week. “For a lot of these organizations, this switch to a four-day work week also came with an overhaul of how work gets done,” Park said. “In order to realize the best outcomes of this effort, organizations can’t just say, ‘Okay, we’re going to expect you to get the same amount of work done in four days as you would in five days,’ but then not change anything about that work.”

Many companies reformed standard practices for meetings and emails to be more streamlined and effective. They also reorganized calendars and introduced “focus periods” for uninterrupted concentration. Some companies made process improvements for manufacturing and operations, automated workflows and implemented project management software. As a result, the improved through better use of time, better scheduling and more personal autonomy.

Companies benefit most from a four-day work week when they approach the project as an opportunity to really think about what work looks like for them. “It’s a way for organizations to be more impactful with the workforce that they have today,” Park said. “When you’re shortening the work week, employees and organizations are forced to rethink: What work is top priority? What work is most strategically important? What’s a good use of my time? Organizations and people managers should provide guidance to employees in making these decisions, but employees’ sense of empowerment to make these decisions for themselves can bring them a sense of purpose and renew their motivation and commitment.”

Productivity Where It Matters

Of the 61 companies that participated in the pilot, 56 indicated they will continue with the four-day week and 18 companies have made it permanent. Park believes more data is needed, although she is “cautiously optimistic” that the four-day work week will go mainstream.

“If it’s done right, I think both employees and organizations are going to benefit a lot,” she said, “because you’ll have employees with better work-life balance, less absenteeism, less presenteeism and organizations seeing productivity where it matters.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, Ěýilaina.jonas@sap.com

As the effects of global warming become ever more apparent, companies are stepping up their efforts to cut carbon emissions and embrace sustainability. But from Tata Consultancy Services (TCS) and Microsoft Cloud published this week confirms that many companies are still struggling to measure the true value of their sustainability and decarbonization efforts.

SAP’s Take

The study, based on data from 400 public companies with combined revenues of $10 trillion, found that a majority of these companies struggled to validate the emissions data and insights from their supply chain partners, so-called Scope 3 emissions.

“When you need to track Scope 2 and ĚýScope 3 emissions, you are talking about getting information from across all tiers of your business network,” said Richard Howells, a supply chain and sustainability expert at SAP. That includes data from suppliers, contract manufacturers, logistics service providers and other trading partners.

“How do you meet sustainability initiatives if you don’t know where emissions and waste are in your supply chain, or where slave labor and inequality is occurring across your business network? If you can’t track it, you can’t measure, manage and minimize it!”

51ˇçÁ÷has made providing tools for customers that help them track, analyze and manage emissions across their entire business chains one of its top priorities. “Sustainability is top of mind in most companies, driven by pressures from all directions,” said Howells. “We as consumers are constantly looking for sustainable products that are ethically sourced, manufactured and delivered with minimal or zero emissions.”

Howells adds that investors are also looking at a companies’ sustainability index before they pull the trigger on the “buy order.”

“Employees want to work for sustainable companies and do their research before accepting a new job,” he said. “And of course, regulatory bodies are driving new rules and regulations such as the Plastic Tax laws that have come into place in the UK and, most recently, Spain.”

New regulations are putting additional pressure on companies to substantiate and justify their sustainability claims and counter green washing claims. As Howells noted, companies’ supply chains sit right in the middle of the sustainability challenge — both as major contributors to the problem but also as key elements of the solution.

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

The European Union Parliament on the sales of new gasoline- and diesel-powered vehicles in the 27-country bloc by 2035, effectively accelerating the shift to electric cars and other zero-emissions vehicles. As an intermediate step, all cars sold as of 2030 will need to achieve a 50% reduction in carbon emissions compared to 2021 levels.

SAP’s Take

“This is the decision from the European side,” said Hagen Heubach, global vice president of the Automotive Industry Business Unit at SAP. Heubach provided a global context for the EU law that will accelerate the shift to electric vehicles (EVs) within the bloc. He said that it is foreseeable that some regions, such as India and Africa, will continue to rely on classical combustion, hybrid and hydrogen-powered vehicles for a much longer time.

Europe is home to many of the world’s biggest automakers, generating seven percent of the EU’s GDP; however, some members of the global automotive community have for the EU’s decision, which will reshape the industry.

Heubach noted, “The strategy of the EU is not per default shared across the globe.”

Key Priorities to Keep Europe Moving

For the EU to achieve its ambitious goals by 2035, Heubach said there are three areas of concern that must be prioritized for a successful transition: charging infrastructure, automotive circularity and improved options for personal mobility.

“Charging infrastructure is key,” said Heubach, who called for better communication between charging networks for cross-border travel. “It must be simple. It must be easy to go across the border with a seamless charging experience that is as efficient as it was during the combustion engine era.”

It took decades to build the infrastructure to support the network of gasoline stations that enables travelers to move freely throughout the EU. In comparison, the infrastructure for charging is relatively underdeveloped. Throughout Europe, including Turkey, there are . An by McKinsey concluded that 3.4 million charging stations will be needed in the EU by 2030. That would require installing 6,000 charging stations each week until 2030, starting 2021.

Heubach also emphasized the importance of the second key priority: , a manufacturing practice that maximizes materials efficiency through sustainable sourcing and reuse. “How do we set up the next generation of the EU market for a more sustainable mobility ecosystem? We cannot afford the same situation as we have with the combustion engine, where you only use seven to nine percent of the car at the end of its lifetime and everything else is scrapped. This is not possible for EVs,” he said, specifying the need to reuse battery components, lithium, raw materials, plastics, and chips from EVs.

The transition to circularity in the automotive industry – a collaborative undertaking involving the public sector, industry, and consumers – faces a number of , including lack of expertise, metrics, logistics, consumer tastes, and innovation. In Heubach’s view, however, time is of the essence. “This needs to be set up now because, if we don’t set it up now, we will be in big trouble – maybe in ten years when the first waves of electric cars are at the end of their lifetime.”

The third key priority will require a new definition of personal mobility that includes arrangements for car sharing, mobility budgets, and micro-mobility in cities. “The shift to electromobility is also connected to a shift in how we experience personal mobility. Electromobility does not always mean everyone has to have their own car,” said Heubach. “This definitely will also be something that needs to be solved in the EU over the next years.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

In his State of the Union address earlier this month, U.S. President Joe Biden both supported and chastised the oil and gas industry. On one hand, he said the U.S. would rely on these energy sources for at least the next 10 years. On the other hand, he criticized the industry for reporting “record profits,” he said.

“Last year, they made $200 billion in the midst of a global energy crisis.Ěý I think it’s outrageous.” He also said that “Big Oil” should be investing more, to increase production and bring down prices.

SAP’s Take

Biden was walking a fine line trying to balance the industry’s contribution to climate change, as well as its record profits last year, with the nation’s dependence on hydrocarbon fuels, not just to heat home and power automobiles, said Benjamin Beberness, 51ˇçÁ÷vice president and global head of the Oil & Gas Industry Business Unit.

Oil is used for a myriad of products, from medicine to the bodies of electric cars. Additionally, Biden underscored the reality that although U.S. policy is supporting the growth of alternative energy such as wind and solar, they remain a sliver — albeit a growing part — of the energy supply.

“I think the U.S. government is saying: ‘We can’t let them off the hook from cleaning up what they’re doing today, but we still need them to be around because they still are going to be producing oil for us to use to make these other products, as well as to continue to provide fuel for our cars, etcetera,’” Beberness said.

Addressing the criticism about profits and high energy costs due to supply, Beberness blamed the vagaries of federal policy toward drilling and limiting new exploration. Market forces already have brought down the price of oil. Brent Crude, one of the two main benchmark prices for purchases of oil globally, reached a peak of $123.92 per barrel and now stands about $83 per barrel.

“There has to be some commitment from the U.S. government that we can maintain, because what [oil companies] don’t want to do is to make this huge investment in the additional production and other things and then have the US government say: ‘We’re going to put all these regulations in place.’”

Using technology, oil and gas companies can reduce their negative impact on the environment, Beberness said. Although natural gas is by far the cleanest of the big three — coal and oil being the other two — they all can become cleaner though asset management.

Citing a McKinsey study, Beberness said a that a 10% improvement in asset operations of a normal gas company will result in a four percent reduction in CO2 emissions.

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

ChatGPT set a record in January for the fastest user growth when the generative artificial intelligence () tool reached 100 million active users just two months after it was launched by OpenAI.

The popularity of ChatGPT has sent tech giants scrambling to commercialize their own AI efforts while generating dire warnings (again) from some about the impact of the latest “hot tech”’ wave on jobs.

SAP’s Take

Every major technological advance — including the invention of the printing press, mechanized looms and steam engines — has been accompanied by warnings of resulting job losses. It seems likely that when the wheel was invented, people expressed concerns about the implications for sled pullers and water carriers.

“Technology eliminates jobs, but it creates more jobs than it eliminates because it fuels economic growth and the jobs it creates are, I would say, in some ways more human jobs,” said Steven Hunt, SAP’s chief expert on technology and work, as well as a noted author on the topic.

But the challenge is that our economic models do not necessarily reward the types of jobs technology creates, Hunt said. “The issue is not one of job elimination; the issue is how we help with job transition.”

In his recently published book, “Talent Tectonics,” Hunt writes: “Technology does not replace the need for people. But it does change what people need to do.”

Hunt said that when technology is applied to an existing job, it tends to create two new types. First, technical jobs focused on developing, maintaining and using the technology: these jobs tend to be associated with operations, engineering, maintenance, analytics and programming.ĚýĚýThe second are service jobs that engage or support customers who receive the products and experiences associated with the technology. This creates new jobs associated with marketing, sales and customer support.

Unfortunately, as a society, we have downplayed the value of service jobs, even going so far as to call them “unskilled” since they may not require extensive technical training, Hunt said. Providing effective service requires considerable interpersonal, time management and problem-solving skills, but we do not financially reward these skills at the same level we reward skills used to manufacture or maintain equipment.

For example, the person who installs an in-home hospital bed to support the needs of an elderly grandparent gets paid more than the home healthcare aid whose services enable that grandparent to live comfortably at home. One treated as more valuable than the other, when both jobs are necessary to provide effective home healthcare.

Another topic that does not get enough attention is the role society plays in the people’s ability to adjust to technology disruption, Hunt noted. ĚýFor example, how do we support truck drivers so their lives and the lives of their families are not totally upended by the inevitable creation of self-driving trucks? Our educational systems still largely reflect a 19th-century economic model that assumed people will learn a trade when they are young and then apply that trade for the rest of their lives.

We are not equipped to help large numbers of working adults with significant family care obligations or financial constraints learn entirely new trades, Hunt said.Ěý This is not just a problem for employees, it is also a problem for companies. Technology fuels economic growth but only if companies can find employees with the skills needed to build, deploy and support the technology.

Whether technology like ChatGPT is good or bad for our society will depend on our willingness to create a world where constant learning and frequent job transition is supported as a fundamental, expected and ongoing part of life.

Contact:
Ilaina Jonas, Senior Director ofĚýGlobal Public Relations, SAP
+1 (646) 923-2834,Ěýilaina.jonas@sap.com

On February 4, the U.S. military shot down a balloon suspected of being used by China to spy on the United States. The balloon had been flying across the U.S. for days before it was downed. At least three more suspected balloons were shot down by the U.S. and Canadian governments in the days that followed. Meanwhile, the Chinese government has insisted that the original balloon was a weather balloon that veered off course.

SAP’s Take

That leaves open the question: In the age of satellites and drones, what part do balloons play in understanding and predicting weather?

“Satellites really survey the middle part of the Earth, not the top ends,” said Torsten Welte, 51ˇçÁ÷global vice president and head of the industry business unit.

Balloons, on the other hand, can capture information on the Arctic and Antarctica. “Sometimes you want to see how big the ice is, or ice movements. [For that] you have to have some pictures and data from a balloon at that spot,” Welte explained.

Weather balloons can capture information about air flows and temperatures on the ground and the ocean and go back to the early 1950s during the Cold War. The cameras and sensors used to track weather and collect geological information were easily used for espionage.

Using the old technology is precisely why the balloons are so effective for spying today, Welte said. “It was something that the military was not really looking out for because they thought the technology was far too old. Very often we’re so focused on identifying new technology that going back to low tech beats the high tech.”

Weather balloons today are used mostly for research at the poles. Balloons are not steerable, but they can purposely slip into a particular air current. Most weather information comes from satellites, including Europe’s Copernicus program, which uses 30 satellites to help understand climate change.

Weather information today is a conglomeration of various sources of data, from satellites to balloons that are often the size of one or several trucks. This weather information has a myriad of users, including drink makers, who use it to try to anticipate how thirsty consumers in a particular area will get.

“You can take all this satellite information and incorporate it into your forecast and your business operations and plan accordingly,” Welte said.

It’s also used in weather apps. Using some of that weather information plus their ground observations, can help farmers efficiently plant seeds, use the correct amount of water and fertilizer and the gauge the right time to harvest. “That advice is based on weather information that’s coming down to agriculture,” said Welte.

Contact:
Ilaina Jonas, Senior Director ofĚýGlobal Public Relations, SAP
+1 (646) 923-2834,Ěýilaina.jonas@sap.com

On Sunday, about 100 million people are expected to watch Super Bowl LVII, the culmination of the National Football League’s 2022 season, played between the American Football Conference champion Kansas City Chiefs and the National Football Conference champion Philadelphia Eagles.

Aside from the action on the field, seasoned and casual football fans alike will attend Super Bowl parties across the nation and consume vast quantities of traditional finger foods including buffalo wings, pizza, nachos and dips.

SAP’s Take

“Before and during the event, businesses face a supply chain challenge: making sure supply meets demand at the event and for all the viewing parties around the country,” said Richard Howells, an 51ˇçÁ÷digital supply change expert.

An estimated 12.5 million pizzas will be ordered on Super Bowl Sunday, Howells noted. That’s a 40% increase over “any given Sunday” during the year.

“Planning for that surge in demand means a huge increase in [often fresh] ingredients,” he said.Ěý “You had better get your balance of toppings right, or you could have very disappointed and hungry football fans on your hands.”

A 30-second advertisement slot for Super Bowl LVII will reportedly cost $7 million — and that doesn’t include production costs or the celebrity endorsement that usually is involved. But gauging the inventory required to manage the demand the next day is equally important.

“If you have the trending advert, the demand could go through the roof,” Howells said. “A dud could leave you with millions of dollars of inventory sitting in warehouses and distribution centers.”

All this puts a premium on demand planning and analytics applications, as well as on the agility needed to cope with unexpected outcomes.

But there is another aspect to the Super Bowl that should factor into our thinking, Howells said: “Super Bowl Sunday is the second highest in food wastage, just behind Thanksgiving. We should think more sustainably this year and work out how to not over prepare. We also should have a plan in place for donating or at least recycling as much as possible if demand lags supply.”

Contact:
Ilaina Jonas, Senior Director ofĚýGlobal Public Relations, SAP
+1 (646) 923-2834,Ěýilaina.jonas@sap.com

Nine whales recently washed up dead or dying on U.S. northeast beaches, not far from where hundreds of wind turbines are being constructed in the Atlantic. Although the National Oceanic and Atmospheric Administration and the Bureau of Ocean Management said that to date no whale deaths have been attributed to offshore wind projects, some environmentalists are calling for a study.

The massive project is part of the Biden Administration’s goal for such windmills to provide 30 gigawatts of power by 2030. The effort represents a huge boost for American manufacturing and job creation.

SAP’s Take

Whale well-being is just one hurdle the fledgling wind energy industry faces.

“The complexity of what needs to be done is what folks are struggling with,” said Darcy MacClaren, 51ˇçÁ÷North America senior vice president for . “The supply chain to do this is extremely complicated.”

The equipment is complex and specialized materials are required to make the turbine blades. The logistics of transporting the blades, which can be as long as a football field, is also challenging. Additionally, constructing something in the middle of the ocean requires special ports and harbors.

“There’s also a lot of uncertainty about the scope of such a supply chain and the development time frames needed to build these critical resources,” MacClaren said.

The level of investment required, the benefits to local communities and workers, and the gaps in existing manufacturing, ports and vessels remain uncertain, MacClaren explained.

One wildcard is regulation — not just from the federal government, but also from the myriad of local municipalities that can have a say. That could impede production, which would add risk and impact the investment needed to bring these projects to fruition.

“You’ve got to break down those barriers,” she said. “You’ve got to get all these organizations working together.”

While technology cannot change the regulatory landscape, it can help from a design, procurement, supply chain, logistics and manufacturing prospective.

“We can help set up a sustainable, resilient intelligent supply chain with all these involved parties,” MacClaren said. “If we can solve the uncertainty of the future — the regulation issues that people are concerned with — we can set up a strong foundation to help create a supply chain for offshore and the wind energy industry.”

“The initiative needs a catalyst, an industry proponent that blasts through obstacles, brings disparate parties together and gets a viable industry off the ground.”

“We need an Elon Musk,” she said, referring to Tesla’s ability to successfully mass produce and sell electric cars. “We need a change agent. I’m not seeing that.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

The Federal Reserve Bank raised interest rates by a quarter point today, reflecting a cautious response to signs that inflation in the U.S. is slowing. But despite the Fed’s less aggressive stance, many uncertainties remain for both the U.S. and global economy.

SAP’s Take

“Global economies and risks are interconnected more than ever,” says Prashanth Reddy, an economics expert at SAP. “The interaction among concurrent risks creates a more significant impact than the sum of individual risks. For example, the Russia-Ukraine war is causing global energy and food crises.”

As Reddy notes, the World Economic Forum introduced the term “polycrisis” in its , in order to capture the interconnected nature of global risks and their impact on world economies.

“In this connected fast-changing world, the response to COVID-19 forced many countries to respond with near-zero interest rates, quantitative easing, and government transfers to support their unemployed citizens,” says Reddy. “These policies and supply shocks created a rapid increase in inflation in 2022. “

In response, many developed countries rapidly increased interest rates to curb the inflation causing a global economic slowdown. According to the , global growth is expected to decelerate sharply to 1.7% in 2023. The world’s three major engines of growth — the U.S., the eurozone, and China — are all undergoing a period of pronounced weakness.

Reddy believes the U.S. economy will experience a moderate recession in 2023, amid slow wage growth despite a historically low unemployment rate. According to FactSet, U.S. economic growth is expected to be around 0.4% with consumer price index (CPI) inflation at 3.8%. After the latest move, the Fed is expected to hold rates at between 4.5% and 4.75% for nearly all of 2023 before systematically easing.

According to FactSet, China is expected to grow 4.7 % in 2023, and the eurozone to decline at -0.1%. Economic growth in emerging markets (EMs) is forecast to remain essentially unchanged at 3.4% in 2023, according to the . EM economies face the prospect of being further hurt by the higher commodity prices, monetary policy tightening, rising debt service costs, higher interest rates in developed nations and a strong dollar, according to Reddy.

This also translates to slower IT spending in 2023 at three percent in the U.S. and 2.1% in the EU, according to a Morgan Stanley CIO survey. Nevertheless, CIOs expect software spending to outpace growth in other industries at 3.3% in 2023.

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

Supply chain issues are not over yet, say senior supply chain managers . Although supply chains have somewhat stabilized, half of the managers surveyed agreed that improvement is still needed. As supply chains undergo transformation, experts say that digital twins may be the key to more dynamic, agile supply chain models.

SAP’s Take

To mitigate volatility and manage uncertainty, businesses are increasingly looking to digital twins — virtual models of real-world objects, systems and processes that apply real-world data for real-time simulations. Some analysts believe that 2023 will be a year for of digital twins.

“This is a moment of opportunity to reevaluate how businesses operate,” said Andy Hancock, 51ˇçÁ÷global vice president of the Digital Supply Chain Center of Excellence. “Supply chains are under-performing and are in a recovery phrase. Businesses are looking to build risk resilience into their supply chain operations.”

Some businesses already are preparing for the next global disruption by assessing the potential for digital twins to reduce exposure in supply chains and increase adaptability. Although the business case for digital twins in supply chains is still in exploration, Hancock predicted that interest in digital twins will gain momentum as the technology proves its value for modeling agile supply chains.

“I think we’re going to see digital twins as more of a foundation for data models,” he said, emphasizing the difference of process modeling compared with the common use of digital twins to represent a physical asset, such as a vehicle, plant or person. “We’re also going to see digital process twins, which means modeling a supply chain to get a complete understanding of the different moving parts to gain visibility.”

Hancock is optimistic about the value that digital twins can deliver to supply chain operations.

“The digital twin will provide a foundational element for visibility,” he said. “This will support the overall objective of risk mitigation that a risk resilient and sustainable supply chain requires.”Ěý However, he cautioned, “digital twins are not new, and many supply-chain organizations have started their journey with them, but they have not yet delivered on the anticipated benefit. There is plenty of potential.”

Abundance of Data

There are two trends driving the application of digital twins in supply chains. The first is the inexpensive data storage and the abundance of Internet of Things (IoT) sensors and new equipment that can connect digitally.

“People have been collecting data for eons, and they’re really going to formalize it into a more structured environment, creating these digital twins across the organization,” Hancock said.

The second trend is a matter of business survival. With the pandemic, companies became painfully aware of the lack of visibility they had into their supply chain. After 20 years of globalization, these linear, static supply chains were not able to adapt fast enough to keep up with consumer demands.

A hurdle to adoption of this technology, however, may arise if businesses are unable to reach agreements with third-party suppliers to extend visibility into their operations.

Real-Time Visibility for Better Decision-Making

The benefits from the use of digital twins in the supply chain increases exponentially with the infusion of real-time data. By combining real-time operational data and business information, supply chain managers can provide a context to the data that will result in better decision-making. It will not only provide insight into the current state of the supply chain, but also provide the ability to do forecasting and simulation of various scenarios.

“If we have real-time data as the source of all decisions, the time to respond to anomalies is greatly reduced,” Hancock said. “This creates a high degree of confidence in the recommendation at the moment of action.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

The platforms and lenders — such as FTX, Celsius Network LLC, BlockFi Inc. and Genesis Global Trading Inc. — may have tarnished blockchain. But crypto’s underlying technology has many more successful uses than currency speculation, including helping build transit systems and ensuring medical equipment is clean.

SAP’s Take

Blockchain allows different enterprises, organizations or group members to work together on projects. It provides digitized, verifiable information to replace cumbersome, unreliable paper documents that go back and forth among many hands.

“Blockchain is used to create trust, verifiability and compliance in decentralized, cross-company processes,” explains Benjamin Stoeckhert, 51ˇçÁ÷business development manager for blockchain.

With blockchain, there is no central platform or person ensuring processes are trustworthy and reliable. Instead, blockchain creates a digital ledger that keeps track of digital information. The ledger is secure and tamper-proof because everyone in the group can see “blocks” but cannot change them. Interactions — such as new entries, work completed or work approved — are stored in blocks that are linked together. Each block contains a unique digital fingerprint of the previous block, called a hash, creating an unbreakable chain.

Blockchain is ideal for digitizing documents, pictures, receipts and other types of records and transactions to track workflow, the individual assignments it takes to get the job done. Instead of swapping work orders, which could be changed or lost, everyone in the group can see the digitized documents as the work progresses.

Blockchain is often referred to as “trustless” because there is no central control to ensure things are done correctly. Since each process is transparent, trust is built in.

“Creating this trustless approach or replacing the need for trust by cryptographically verifiable data: this is where blockchain can lay the foundation to really achieve a great business outcome,” Stoeckhert said.

Blockchain allows parties to collaborate more effectively while saving time and money. For example, 51ˇçÁ÷piloted the use of blockchain to support the building of HS2, a new high-speed railway that will form the backbone of Britain’s transport network. As one of the biggest construction projects in Europe, HS2 could be considered an amalgam of smaller projects, such as buildings, train stations, tracks and tunnels. The project involves hundreds of contractors, sub-contractors, suppliers, logistic companies, software vendors, regulators and designers — all of whom must know the project specifications, submit their orders and be paid, along with a host of other steps.

“You have a very decentralized setup, and this is always good for blockchain,” Stoeckhert said. “From a value perspective, it’s really about using these capabilities to orchestrate processes.”

In medicine, 51ˇçÁ÷and Sartorius, a global leader in manufacturing equipment for the pharmaceutical industry, used blockchain to help ensure that equipment is free from harmful microorganisms in cases where a single error would lead to drug contamination. Sterilization processes are directed and executed between medical equipment manufacturers and sterilization service providers while they are overseen by regulatory organizations and pharmaceutical companies. Blockchain helps orchestrate this process and provides verifiable data for compliance checks.

Stoeckhert sees this ability to collaborate in a decentralized way to be a major benefit for business: “The same way you can define your internal processes and automation flows, you can now do as we call cross-company.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

The U.S. labor for December 2022 points to a resilient labor market, characterized by solid job growth, moderate wage gains and unemployment at pre-pandemic lows (3.5%). News of mass layoffs in the tech sector, rising interest rates and a cooling housing market fan uncertainty and speculation about a possible . Caution is the watchword in 2023.

Until the economy stabilizes, organizations are understandably hesitant to either hire new full-time employees or dismiss valuable talent that may be difficult to rehire. For this reason, is gaining attention as a strategy for organizations to ensure they have the capabilities and skills to staff business-critical projects — without hiring new full-time employees. A combination of project-based assignments, short-term contract labor and upskilling/reskilling for new responsibilities, quiet hiring is emerging as the go-to human resources (HR) strategy for organizations to overcome their recruiting and retention challenges in the year ahead.

SAP’s Take

Hiring and retaining key talent is now the top challenge keeping HR leaders up at night, according to a recent survey by . With many organizations still filling positions left vacant from the Great Resignation, a possible hiring freeze due to an economic slowdown may result in work left undone, deadlines missed and customers disappointed.

To build a sustainable workforce, some organizations are putting their focus on the employee experience, which helps them stay resilient regardless of the economic conditions. As an intentional HR strategy, quiet hiring can enhance the employee experience and transform workplace culture, benefitting both employee and employer. Meg Bear, president and chief product officer of , advises organizations to “lean on this as an opportunity to expand the culture to be more human-centric.”

“Instead of trying to solve this with top-down and long-term solutions like hiring, use this as an opportunity to open up your culture,” she said. “This could include fostering more dynamic relationships between people who have capacity to do more and groups or people who need more done.”

Flexible Work Focused on Internal Mobility

Quiet hiring is the latest in a string of HR-related trends that includes quiet quitting and , and it is the most promising in terms of advancing human potential in the workplace. By offering employees the agency to strengthen their growth and development with meaningful opportunities, organizations benefit from a wider range of available skills and deepened employee engagement, directly impacting employee retention. “We call this flexible work with a strong focus on internal mobility,” says Bear, who believes quiet hiring will be a key talent strategy for organizations in 2023.

Internal mobility has long been an inscrutable process in traditional workplaces, with open opportunities and projects typically advertised by word-of-mouth. It’s no wonder that hardworking employees may feel overlooked or passed by for choice opportunities.

New HR software applications are bringing transparency to the process of internal mobility and making quiet hiring feasible and fair. In the modern digital workplace, short-term assignments that foster upskilling are posted in an opportunity marketplace that is accessible to employees at all levels of the organization for self-directed career development, based on their individual skills profiles. Employees can choose from a wide range of opportunities for upskilling and reskilling, including dynamic teams that bring together diverse talent from different parts of the organization for collaborative project-based work.

Employers benefit from this use of technology because they gain visibility into how employees are contributing to the organization’s goals. They can also identify gaps on project teams that may require bringing in a contract worker to complete the project. Meanwhile, employees also benefit from enhanced opportunities to develop and grow in their careers.

Born of economic necessity, quiet hiring has the potential to make 2023 the year of expanded opportunity — benefiting employers and employees alike.

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

The National Retail Federation’s annual expo kicks off on Monday in New York with more than 1,000 exhibitors, 150 sessions and a focus on a handful of “disruptor” issues. Climate change and sustainability will take center stage at NRF 2023.

SAP’s Take

“Climate change, circular economy and sustainability have all come to the forefront over the past few years and global supply chains sit right in the middle of these challenges: as a major contributor to the problems and as a great area of focus where we can take action to address the problems,” said Richard Howells, a supply chain expert at SAP.

While many companies have created mission statements and goals around sustainability — for example, becoming carbon neutral over the next decade — many still lack the ability to capture, monitor and measure their emissions and waste. Supply chains have a huge part to play in addressing that.

An estimated 76%Ěý of global trade passes through supply chains with much of it destined for the retail sector. End-to-end supply chain transparency is critical to help retail businesses meet regulatory, governmental and company-mandated goals. This transparency needs to encompass not only their own facilities but also those of suppliers, contract manufacturers, logistics service providers and other partners across the business network.

“Sustainability initiatives must extend from the design to the decommission of a product, from raw materials sourcing to last-mile logistics, and even to product usage, returns and recycling processes,” Howells said. “At every stage in the life cycle of specific products, there are social and environmental impacts.”

From the start, product design must be made with end of life in mind, including how they will be recycled, reused, repurposed and returned to the earth.

“Planning processes must take into account not only optimizing inventory, asset utilization and cost reduction, but also emission reduction and ethical material sourcing that eliminates slave labor and ensures fair trade regulations,” Howells said. “Manufacturing and logistics processes must focus on eliminating waste and emissions and ensure the safety of the workforce.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

Supply chains for consumer goods are finally showing signs of stabilization following a rollercoaster 18 months. This trend could be reinforced by China’s decision to moderate its zero-COVID policy that led to repeated shutdowns during the pandemic.

SAP’s Take

“With the holiday season in full flow, it is great to see some positive news come out of the supply chain,” said Richard Howells, a supply chain expert at SAP. Howells also noted that Black Friday and Cyber Monday shopping hit records.

According to the latest figures from Adobe Analytics, consumers spent $116.5 billion in e-commerce sales over the long Black Friday and Cyber Monday weekend – a 1.7% increase from last year. That increase came despite a for consumers to do even more of their holiday shopping ahead of Halloween.

Along with other good news for U.S. consumers (and manufacturers), the threat of a rail strike receded after the Senate voted to impose a tentative labor deal – helping to save the holidays from supply chain mayhem.

In addition, recent numbers from the marine transport industry showed that there were zero container ships waiting offshore of the ports of Long Beach and Los Angeles prior to Thanksgiving: “The first time this has happened since October of 2020,” Howells said.

Congestion in the East and Gulf Coast ports has also gradually eased over recent months. New York, New Jersey and Houston in particular have significantly reduced ship backlogs.

The easing of China’s zero-COVID policy following an unprecedented wave of protests should also help stabilize supply chains with fewer factory shutdowns and disruptions.

Meanwhile, a recent release from the Bureau of Economic Analysis shows that inflation-adjusted consumer spending jumped 0.5% in October compared with September, the largest such increase since January. That’s welcome news for retailers that held a slew of promotions that month and reflects consumers’ eagerness to start holiday shopping far earlier than usual.

But it’s not all good news. Preliminary data from Adobe Analytics also suggests much weaker post-Thanksgiving spending than in previous years. Even if 2022 shakes out to be a banner year for holiday shopping, there is still the question of whether consumers will be able to afford their new purchases.

The surge in early holiday shopping could yet turn to boon the reverse logistics industry if consumers end up returning purchases in late December and early January that they realize they cannot afford.

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

Last week introduced , an artificial intelligence (AI) model that uses natural language query in the form of conversation to carry out tasks at a level of sophistication that would seem to require the talents of a skilled knowledge worker. AI technology like ChatGPT is showing up in data analysis, research and report writing.

Some knowledge workers may be concerned about being replaced by AI-powered innovations, as Nobel laureate economist Paul Krugman recently wrote in the . For other knowledge workers, however, AI and machine learning tools may be just what they’ve been looking for to keep pace in the age of increased productivity.

SAP’s Take

“My prediction is that next year is going to be the year of data-to-decisions,” said Pras Chatterjee, senior director of Product Marketing, Planning and Analysis at SAP, who presented his business and technology predictions for 2023 on , a program of VoiceAmerica Talk Radio Network.

“Over the last 10 years, organizations have really been focused on growth, year over year,” Chatterjee explained. “That phase of growth might be over for a little while, but that doesn’t mean there’s less of an opportunity for profitability. I think it’s really a time for finance to take advantage of technology to drive better profitability.”

AI and the Future of Finance

One trend that Chatterjee has been paying attention to is the long lead time in realizing the promise of emerging technologies like AI and machine learning. This weekend that promise became much more tangible to him as he played around with ChatGPT, OpenAI’s new innovation tool. He and his daughter experimented with the technology by asking ChatGPT questions and gauging the intelligence of the AI-generated responses.

As a Chartered Professional Accountant (CPA) with experience advising Fortune 500 organizations in bringing new technology solutions to finance teams, Chatterjee began to see the immediate value of AI innovations. “I thought to myself, if I’m asking questions and getting answers – and my daughter is asking questions and getting her homework done – what does that mean for finance departments and people looking to do analytics in organizations?”

The advancement in natural language query demonstrated by tools like ChatGPT opens new possibilities for better insights into organizational data, which can have profound effects on decision-making.

“It gives you insights-to-action, so you can take action immediately,” Chatterjee observed. “The stage is set effectively that you have access to all your data. If you start adopting modern analytics solutions on top of your data, you can ask questions in the context of the way your business performs; namely, what are my opportunities? What are my challenges? Where am I struggling? Where can I do better effectively? I think this gives you a handle on having much greater profitability, but also an advantage over your competitors and ultimately delivering better best-in-class shareholder values.”

So, can AI drive shareholder value in a downbeat year?

Chatterjee predicts that while it may not be a good year in terms of economic growth, finance departments will lead best-in-class organizations across the globe to adopt technology which will have significant benefits. “They’ll be able to ask the right questions, adopting AI and machine learning, because it is here now,” he said.

Chatterjee believes the technology has finally arrived. “The time for AI and machine learning isn’t three years from now. It’s at our fingertips, as this weekend showed with one million users trying [ChatGPT] in the first couple of days.”

That’s exceptional growth for any disruptive technology, noted Chatterjee, who suggested that understaffed finance departments awash in data could reap value from the help of AI-powered digital assistants. “I think AI and machine learning is going to drive a ton of profitability and growth in finance organizations – and ultimately lead to more shareholder value for all of us.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

Over the past few months, many industries, including tech, have been rocked by layoffs, resulting in tens of thousands of jobs lost and affecting a generation that has grown complacent about employment. This complacency has been called “quiet quitting,” a new term for an old concept: doing enough just to get by. While several heavy hitters, including Amazon and Microsoft, announced plans to reduce their workforces, Salesforce said it would cut under-performers.

SAP’s Take

This could herald the end of quiet quitting.

“I wonder if this whole phenomenon of quiet quitting will just simply disappear,” Chief Marketing & Solutions Officer Aaron Green said. “And if people will just buckle down and say: ‘I need an income to support myself, support my family, support my life,’ and phoning it in is just simply not good enough.”

This likely will play out over the next 12 months, he said: “The tech sector specifically is really the space to watch at the moment, because doing enough to get by is probably not going to be enough. We’re seeing that in the way in which tech companies are tightening their belts and really looking at how they improve both top line and bottom line.”

As tech companies focus on their bottom lines, some of the perks that the industry saw as a given, such as free lunches, could be axed. That might shock some of its workforce.

“With the kind of cutting or the culling of some of those perks and perhaps bringing back a more serious commercial-driven outcome, I think it is going to be a problem for a number of people,” Green said. “Generally, for older generations it’s probably less of an issue. But if we think about the millennials and Gen Z, for whom this has just been the only style of work that they’ve ever known, I think that that is going to be a really big period of adjustment.”

And the shock won’t be limited to disappearing perks: “It’s also areas like the cottage industry of digital nomads that’s cropped up, where you’re working for a large company, but you can work from anywhere.”

The lack of close relationships that come with in-person contact also could make those who work exclusively remotely more vulnerable, Green said.

“Would returning to the office give someone a competitive edge in terms of job retention? Potentially, but I would also hope that employers are looking at the full picture of the individual.”

So, once known for doing just the minimum, can a person change his or her reputation as a quiet quitter?

“Absolutely you can,” Green said. “Will you have to lean in a bit more and harder than you have before to change that perception? Probably. So would jumping and going to another organization. I would always err on the side of doing your best possible work and be judged on that work product, not on the stories surrounding you.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

This holiday travel season is expected to be among the and in years. Travel industry experts are sharing their tips for a better travel experience.

SAP’s Take

The trend of “making up for lost travel time,” a knock-on effect of the pandemic, continues into the holiday season. Despite inflation and high ticket prices, people are as determined as ever to travel this holiday season — and into 2023.

“Just about every TripIt user (99%) is planning a trip for the year ahead,” said Jen Moyse, vice president of product, from 51ˇçÁ÷Concur, a travel app that helps people organize and manage their travel plans. “Nearly one in three are planning a Christmas and New Year’s trip and one in four said they’ll travel for Thanksgiving. That’s more than what we heard last year. When we asked the same questionĚý, only 27% of respondents said they’d travel for the winter holidays and just 19% for Thanksgiving.”

In fact, stored in the TripIt app are up from 2021 for domestic flights (45%), international flights (117%), car rentals (35%), lodging (46%) and vacation rentals (26%).

Be Prepared

Summer travel was exceptionally turbulent, with flight delays and cancellations disrupting travel for 57% of TripIt users, according to a . While the travel industry has learned from the experience, 93% of the people who plan to travel over the holidays say they will adjust their behaviors to accommodate potential cancellations and delays.

“Some will arrive at the airport earlier than they have in the past (52%), while others will be more selective with the travel providers they use (45%) and nearly as many (44%) will plan ahead for a delay and come bearing snacks and reading material,” Moyse said. “Almost half of travelers are planning not to check a bag, which is a good way to ease the stress of the unknown and keep a few factors of their trip in their control.”

Be Early

This may be the most expensive holiday travel season in recent years, according to . TripIt survey findings reveal that approximately half of respondents say they are spending more money on travel due to inflation (52%), rising airfare (49%) and gas prices (29%).

Moyse said that the best way to prepare is to expect and budget for higher prices. She advised booking travel early to avoid sell-outs. She shared her tips: “Check your saved-up points and miles, set alerts for travel deals, use a tool like Fare Tracker in TripIt Pro to secure refunds or investigate programs your credit card provides. Consider looking at flights that might be less desirable for others, like red-eyes or flights on the holidays themselves.”

If you plan to travel in 2023, she advised, “It’s safe to assume travel prices will remain high for the foreseeable future, so if you want to make travel a priority, budget accordingly and evaluate the number or types of trips you’re planning to take.”

Be FlexibleĚý

Plan for the unexpected and you won’t be disappointed, so goes the saying that seems to perfectly describe holiday travel. Indeed, there is a higher probability of travel disruptions around Thanksgiving and the winter holidays in part due to labor shortages and inclement weather. “Build in buffer days for important events, and regularly monitor your flight should the time change or any other adjustments be made to the schedule,” Moyse said.

“To avoid holiday mishaps, travelers who have flexibility should avoid the busiest travel days,” she said. “, the busiest travel days will be Wednesday, November 23, followed by Tuesday, November 22. Plan for crowds and long lines, especially at Hartsfield-Jackson Atlanta International Airport, Boston Logan International Airport, Denver International Airport, and Dallas Fort Worth International Airport.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

Utility-scale solar power generation in the U.S. is surging. This year, almost half the 46.1 gigawatts (GW) of generating capacity added to the grid will be solar, according to the U.S. Energy Information Administration, and solar has contributed more than 30% of all new capacity in five of the last six years.

SAP’s Take

“Domestically as well as globally, there is a strong mandate to move to a net-zero greenhouse gas economy,” said Stefan Wolf, vice president and a solar expert in SAP’s .

“The power generation industry today is one of the key producers of greenhouse gas and — because we are talking mostly about industrial size units — it is easier to change than transportation, for example, which has a tremendous number of small units, the cars we are all driving,” Wolf explained. “Solar is one of the proven renewable energy sources and it has location-based advantages over wind and hydro power.”

Photovoltaic (PV) power generation has the benefit of using hardly any moving parts other than the tracker, which keeps the solar panels positioned at an optimal angle to the sun. In addition, Wolf said that solar panels today are much more efficient than 10 years ago, enabling them to be very cost effective, even in less sunny regions. Wolf pointed out that utility-scale solar and residential or commercial rooftop solar are not an “either/or”; in fact, they can complement each other and complement other forms of power generation well too.

One downside to utility-scale solar is the need for a rather sizable area for the panels. This space is often only available far away from densely populated areas and commercial users, which means that like other forms of power generation, the electricity must be transported to where it is needed.

The biggest problem for any utility-scale energy generation is the need for large infrastructure investments to build the necessary transmission capacity. Power plants are typically owned by private investors and require planning permits and other approvals, which can take years to secure, while transmission lines are usually owned by a regulated, controlled utility. Authorizing those investments and getting agreement for the recovery of these investments through the energy rates is a much more complicated processes, unless there are government mandates and support.

Putting solar panels on rooftops and other urban and suburban surfaces is therefore still a good approach because producing power where it is needed avoids the cost of transporting it, while also supporting local resilience and independence. Having solar panels on the roofs of homes, businesses, schools and parking lots allows those owners to participate commercially in the energy network and reduce their overall energy costs.

But solar isn’t the only alternative energy source worth pursuing, according to Wolf: “PV-based energy generation will not solve our energy problems single-handedly. Wind and hydro are equally relevant. And there are other non carbon-based energy sources we have not started to tap into.”

For example, “If we look further into the future there is tidal energy. Compared toĚýsolarĚýand wind, the tides can be forecast precisely so it could be a very dependable source of energy.” Wolf noted however, that a tremendous amount of research is still needed to understand the impact that tidal energy farms have on marine life, as well as their impact on other commercial uses of oceans.

Then there are nuclear options like fusion and small-scale fission. But those have their own challenges to be worked out.

Wolf said ultimately, “When it comes to empowerment of the consumer and bringing energy generation to the place of consumption, solarĚýis hard to beat.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

With the the fourth quarter rally ahead and the holidays nearing, workplace stress levels are climbing as employees return from fall business conferences, strive to meet year-end deadlines, balance family commitments, cope with economic uncertainty and endure an unending health crisis. For global knowledge workers, distributed teams across time zones can mean long hours of emails and video conferences, further compounding stress.

Research and people stories are gaining attention, like Rachel Feintzeig’s , which suggests more rest may be the key to better health and improved productivity in the future of work.

SAP’s Take

Dr. Natalie Lotzmann, chief medical officer and global head of Health, Safety and Well-Being at SAP, believes that creating a healthy, caring culture in which people can thrive and live a fulfilling life in spite of a highly competitive environment ensures that our people run at their best. She counsels employees and people managers and promotes the value of healthy habits like preserving restorative rest.

What rest and recovery look like can vary from individual to individual. According to Lotzmann, recovery can be active, like playing sports, or passive, like sitting in the park. What is more important, she said, is that the person has a regular rhythm that involves periods of task-related concentration, offset by experiences that require a shift in focus to something that has a calming effect, like a walk outdoors, time with a pet or a yoga session.

“Everything that is in a healthy living balance has an underlying rhythm,” Lotzmann said. “It’s not important exactly what it is that you do. The most important thing is that there is a healthy rhythm.”

Micro-breaks are very short breaks that employees can take throughout the work day. As an example of a micro-break, Lotzmann said, “The easiest thing is just to stop, take a deep breath, and look out the window at something in nature. Consciously watch the trees bending in the wind or the birds flying by. Continue breathing and let your mind float. Reflect on what really matters to you in life. Be grateful for what you have. For most people, this is the perfect way to get distance, calm down and reset your brain.”

Research suggests that taking micro-breaks of 10 minutes can improve engagement and motivation. The longer the break, the greater the increase in performance. may include stretching, nutritional intake like coffee — in moderation! — and a snack, or a social activity not centered on work-related topics. Less beneficial are cognitive activities like reading the news, surfing the web, online shopping or banking, which can leave people more depleted, especially under demanding workloads.

Benefits of Rest for Productivity

At SAP, the health management team champions rest as the key to supporting healthy distance. “Rest enables you to have healthy distance, to keep things into perspective and to reflect and recharge. You need healthy distance to make the best decisions possible,” Lotzmann said. “The more you are drawn into a stressful situation without that healthy distance to reflect, the higher the possibility that you will act toward a win-lose or even lose-lose outcome. In a state of healthy distance, you are in a position to realize what really matters, what it takes to resolve the situation toward a win-win outcome or how to turn the challenge into an opportunity.”

An unspectacular example of where healthy distance is useful — and that is likely to be familiar to knowledge workers — is the email chain conversation with many people on copy that takes a sharply negative turn. Lotzmann said that without healthy distance, an automated reflexive reaction of cause and effect leading to escalation is more likely to happen. However, after a moment of restorative rest to gain healthy distance,Ěý people are more likely to respond thoughtfully and achieve better outcomes for all. The distance allows us to realize the big picture, to step into the shoes of a participant or to think about the right person to talk to before taking reflected action.

A healthy and balanced mindset allows targeted action toward the best possible outcome for all.

Micro-Breaks, Supported by Technology

To support and business agility, an organization has a responsibility to empower employees and enable them to take care of themselves. Workplace culture plays an important role in encouraging people to create balance in their lives. However, people will not take time for rest if they believe they will be punished, consciously or unconsciously.

A new crop of workplace technologies is helping employees, many of whom work remotely, to integrate micro-breaks into their day in a way that encourages building healthy habits. 51ˇçÁ÷recently launched a global pilot project to introduce micro-breaks supported by technology that integrates into its online collaboration platform. For those preferring mindfulness, guided meditations by SAP’s own mindfulness trainers are available both as regular sessions as well as via a well-known app on demand.

“My advice is to try it out and decide if it is helpful for you,” suggested Lotzmann, who understands that technology-based prompts may not appeal to some employees. She also has another food for thought, “As we are human beings — and social beings — the most powerful reminders for breaks are other people.” She said that if you can include family, friends or colleagues into your taking-a-break-habits like going for a walk together, participating in a virtual yoga class together or simply reminding each other to take a break and have a chat — most people can build healthy habits more easily in togetherness.

“For many people, this is a great key to do it right,” she added. “The more we talk about taking meaningful breaks and share how we take them, the more likely it is that it really becomes a personal healthy habit in an overall healthy corporate culture.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

All eyes Thursday will be on the release October’s U.S. consumer price index (CPI) figure, a benchmark reflecting the rate of inflation. Some food prices, such as orange juice, have already reached record levels and are expected to go even higher as the impact of Hurricane Ida on Florida’s citrus industry is reflected in prices.

But inflation has impacted prices across the board — from juice to jeans — prompting consumer products companies to find new ways to please the consumer while growing profits.

SAP’s Take

For more than two years, consumer products companies have been grappling with supply chain disruptions, labor shortages, sustainability rules, war-related food ingredient shortages and now the newest factor: inflation-induced consumer buying patterns.

“These various forces are causing massive amounts of complexity in the business,” said Edward Kenney, 51ˇçÁ÷senior vice president of Consumer Products, Industry Business Units. “Their costs are increasing at a rate they can’t pass along.”

In some cases, producers are shrinking the size of their products while holding prices. In others, they are looking to change their formulas, Kenney said.

As consumer products companies are limited in their ability to pass along full cost increases, inflation is fueling their chief anxiety: how to grow profitability.

“It used to be very consistent and very easily predicted,” Kenney said. “They attracted new customers in new geographic areas. That kind of expansion has really hit the end of the road. Now, you have to get more of a share of a wallet of a given customer who has gotten infinitely more selective and has infinitely more choices than they’ve ever had.”

Digitization is helping some producers deal with changes in all these factors and their impacts on each other, “because this macroeconomic problem impacts supply and demand and everything in between,” Kenney explained. “Those end-to-end processes that consumer companies rely on — things like formulation, production planning, scheduling, distribution and promotion — are elongated processes and are very hard to pivot and change. Complexity is significantly greater than it’s ever been before.”

As the complexity grows, consumer product producers are looking to automate more processes, especially when they need to pivot quickly to change a formula, a supplier or any other step in a process.

“If you don’t have some level of automation and intelligence to help guide the decision-making, you can end up not only making the wrong decisions,” Kenney said, “you can end up causing disruption through your value chain.”

In the past, companies used optimization decisioning tools to balance one or two variables, such as available capacity and operating margin to maximize revenue, Kenney explained. Today, simple optimizations won’t work; the inter-reliance on the growing list of changing variables that producers face is prompting some to use artificial intelligence (AI) to help guide them.

“You have to have the ability to balance off multiple variables and come up with the best trade off decision in the moment,” Kenney said. “And because so many variables are happening across many aspects of the business, no one person can do that. Artificial intelligence is a way that a lot of companies express this multivariable optimization.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

The U.S. Federal Reserve will likely raise rates for the sixth consecutive time today, Wednesday, to fight high , which is still running at its fastest pace in nearly 40 years.

SAP’s Take

“The Fed is continuing to increase interest rates to slow down the economy by making debt costlier,” explained AJ Shrestha, an economic policy expert in 51ˇçÁ÷Corporate Development. He said that this will result in consumers and businesses slowing purchases with debt as well as reduced economic activity overall.

What will another rate hike mean? For consumers, Shrestha said that increased interest rates mean purchasing a home or car will become more expensive. Also, refinancing a mortgage or student loan will become more costly. Credit card interest rates could also increase, so debt on outstanding balances may rise too. On the other hand, rising interest rates could mean better returns on savings accounts.

For home buyers, the rate hike will send financing costs higher. Thirty-year fixed-rate mortgages are already at their highest levels since April of 2002. Current home shoppers have lost considerable purchasing power as rates almost doubled since the start of the year. By some estimates, the increase in mortgage rates since the start of 2022 has the same impact on affordability as a 35% increase in home prices. That means if you had been approved for a $300,000 mortgage at the beginning of the year, you could now only afford a home priced at $200,000 or less.

While most businesses benefit from the Fed’s action to cool the economy to bring inflation down, which helps them manage costs, Shrestha says: “The higher rates translate to less access to capital to grow or expand businesses as financial institutions get increasingly tighter when making business loans in a volatile economic environment.”

The Fed is hoping that its actions will slow down the economy from the top down, but raising rates is an inherently indirect way to stabilize prices — so it is unclear how long it will take to see the impact on the economy.

There have been some positive signs, said Shrestha. “The labor market re-balancing is off to a good start, wage growth slowed down slightly and higher rates sapped the momentum in soaring house prices. These key initial signs could be a signal that we are on the path to reducing inflation and decreasing the odds of a recession.”

Is this likely to be the last rate hike? Probably not, according to Shrestha: “The Fed’s fast pace of rate increases has not slowed inflation down from its highest level since the early 1980s and so there will be more rate increases in the upcoming months and longer if inflation continues to persist at high levels.”

The Fed has increased rates five times since March 2022, and it is expected to increase them two more times before the end of the year: 75 basis points (bp) in November and another 50bp in December.

Fed officials have also indicated that they are willing to continue raising rates in early 2023 in order to meet a median interest rate forecast of 4.6% for 2023. Shrestha said that this implies an additional 25bp rate increase in February and 25bp in March.

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

The Mississippi river is a vital transport route for U.S. agricultural commodities, carrying 92% of U.S. agricultural exports and 78% of the global exports of feed grains and soybeans. But water levels in some parts of the river are now so low that commercial traffic has been halted and the U.S. Army Corps of Engineers has been called in to begin emergency dredging.

With no sign of an end to the drought in the Midwest, water levels in the Mississippi are now near 30-year lows because of a lack of rain in the Ohio River Valley and the Upper Mississippi. As a result, U.S crop exports at Louisiana Gulf Coast terminals were at their lowest level in nine years for the first week of October, according to U.S. Department of Agriculture (USDA), and shipping prices have soared.

SAP’s Take

Historically, shipping along the Mississippi river and its tributaries has been less expensive than other forms of transportation, but this hasn’t been true in recent weeks. As Richard Howells, vice president of solution management for digital supply chain at 51ˇçÁ÷notes: “We plan in the perfect world and we execute in the real world.”

With parts of the river unpassable for big barges, he says grain shippers in particular have been forced to look at alternative modes of transport to move the grain to the port. “You may be able to use trains to take the load part way and trucks for the last mile,” he says.

That, he suggests, is easier if the shipper has clear and up-to-date information. Providing that kind of data visibility, control and risk resiliency is the purpose ofĚý. “With connected data — including freight, fleet and logistics — you can re-plan with an updated schedule based on available routes and vehicles.”

“When there’s a disruption, companies have to move quickly to identify which trucking companies and railways offer the right services and are available on short notice,” Howells says. In particular shippers need to establish whether they have contracts with these logistics service providers already, or contacts that could broker introductions to new vendors.

“Ideally, you want to foster relationships with a trusted network of business partners so you have more choices and a faster response when the unexpected happens,” he says. “If your grain is sitting in a stranded barge waiting for the dredger to deepen the water, which customers are expecting that order?”

Once contingency plans are in place, the next step is to figure out whether the grain will arrive on time for each handover between trains, trucks and the outbound ships sitting in the ports. “Updated information and visibility at every leg of the journey helps you keep customers informed, resetting their expectations so they can adapt their operations as well,” says Howells.

Contact:
Joellen Perry, Head ofĚýGlobal Public Relations, SAP
+1 (626) 265-0370,Ěýjoellen.perry@sap.com, PT

Starting January 1, 2023, employers in California with more than 15 employees will be required by law to include pay ranges in job ads and report wages for current employees based on gender, race and role. The aims to detect and mitigate discriminatory pay patterns.

SAP’s Take

Pay transparency benefits workers because it provides a clear understanding of the value of skills in the labor market. Additionally, it enables job seekers to manage their expectations in an informed way during the hiring process.

Employers also benefit from a culture of improved transparency, said organizational psychologist Dr. Lauren Park, human resources (HR) research scientist on the 51ˇçÁ÷SuccessFactors Growth and Insights team. Park’s team has published research on transformations in and best practices for compensation .

“It’s beneficial for organizations if pay processes are transparent and employees are aware of the value of their skills,” she said. “That has good implications for employee retention and employee engagement. It’s one of those indicators of a culture that is honest and supportive of its employees.”

Thinking More Broadly About Compensation

As pay transparency laws like the one in California become more commonplace, employers also have an opportunity to think broadly about compensation and consider practices that align with employee expectations for job flexibility, remote work and skills development. During the Great Resignation, workers were adamant in their demands for an improved experience in the workplace. Park said these pressures are carrying over into discussions of compensation.

“What we’re seeing in today’s labor market, with drastic changes in employees’ expectations, is that the idea of compensation is bigger than it has been in the past,” she said, highlighting an often overlooked benefit to employers and employees. “In a world of pay transparency, where pay is more fixed and less able to be negotiated, compensation can look different and can be a bit more creative with additional perks like growth opportunities and flexibility. We see that as an overall consideration when employees are thinking about their satisfaction with their pay and experience with the organization.”

These compensation practices may seem like pragmatic solutions today, however, they are part of a larger trend that may soon become standard practice. “What is new, and what we might be seeing more of in the future, is a formalization of these non-monetary rewards in compensation structures. Managers in organizations with increased pay transparency may not have as much flexibility in salary negotiation discussions. Organizations can formalize opportunities for development and other benefits to reward exceptional performance while still adhering to pay ranges,” she said. “I think we’ll see that happening more in the future as an additional tool for overall rewards, but organizations need to take caution that the bias they are hoping to avoid with pay transparency doesn’t persist in the provision of these new rewards as well.”

Addressing Perceptions of Pay Inequity

In practice, what passes as pay transparency at many organizations may look more like broad pay bands instead of precise salary ranges that link to clearly defined job roles. In other words, employees may still feel like it is difficult to understand how their salary is calculated. Park believes that this lack of communication can smolder into a flashpoint for employee dissatisfaction, resulting in what organizational psychologists call perceived “distributive injustice,” or an employee’s perception that the way their company distributes resources and rewards is not fair.

The term is based on the organizational psychology concepts of “distributive justice,” which is justice and fairness around who receives resources, and “procedural justice,” which is justice and fairness around the application of policies.

“In the face of perceived distributive injustice, there’s a lot that can be done in terms of promoting procedural justice — communicating the procedures and processes that arrived at that [salary] number,” said Park. “If organizations really take time to justify and communicate their procedures for pay structures and different levels of compensation, of course there might be negativity, but [what is important for the employee is] that knowing the process that went into developing that number, and knowing that the same process is applied to everyone equally.”

Knowing the Value of Your Skills

Employers that prefer not to openly address compensation matters need not worry about what their employees think their skills are worth; they’ll find out elsewhere.

“In a world where pay transparency looks more like broad pay ranges rather than concrete numbers, employees still have areas to negotiate and still need to know the value of their skills in the market,” Park said. “Sites like will be a real source of information for that and they will continue to be valuable for understanding an organization’s culture. I see that as being a continued benefit of these sites.”

Contact:
Ilaina Jonas, Senior Director ofĚýGlobal Public Relations, SAP
+1 (646) 923-2834,Ěýilaina.jonas@sap.com

U.S. consumer , excluding energy and food, rose to a 40-year high in September, a sign that strong price pressures are persisting across the economy.

The U.S. Labor Department on Thursday said that the core consumer-price index, which excludes volatile energy and food prices, rose 6.6% in September from a year earlier, the biggest increase since August 1982.

The inflation report is likely to prompt the Federal Reserve at its November meeting to raise interest rates by another 0.75 percentage point and increases the likelihood that it will continue raising interest rates at the same pace this year and could raise rates even higher next year.

SAP’s Take

The steady march of interest rate increases has prompted many small vendors to turn to alternative funding that can keep their cash flowing while limiting inflation risk, said Alistair Baxter, head of receivables finance for Taulia, which provides financing to small companies that deliver into larger companies.

“Policymakers are looking for greater levels of monetary tightening, so that’s going to create real challenges for businesses,” Baxter said. “If you’re a treasurer today, you’re facing the highest cost of borrowing. Interest cost or debt service coverage cost is more or less at a generational high.”

Climbing borrowing costs squeeze vendors that typically ship their goods but don’t receive cash payments for days or even months. Meanwhile, vendors have their own costs to pay, such as payroll, supplies, debt service, while inflation eats away at the cash they are due. In addition, the risk of a recession is making the ability to quickly translate receivables — money that is due from customers — into revenue, even more critical.

To support working capital — funds used to keep operations going — businesses could increase their revolving credit, which is similar to a credit card. “That creates other problems,’” Baxter said. “You don’t want to increase your debt burden when you’re heading into a recession.”

Instead, many vendors are turning to those that provide working capital by buying vendors’ receivables at a slight discount. Taulia expects receivable buying to increase in the fourth quarter, when companies want to report leverage ratios that reflect healthy cash balances at year end.

Although buyers purchase the receivable at a discount, vendors avoid waiting to be paid with money that is losing value every day. For example, if inflation is hovering around 8.5% to nine percent and it takes 90 days before a vendor receives the cash from its customers, then the receivable is worth 2.13%-2.25% less.

“If you sell your receivables for anything less than 2.13%, over that period, you are essentially mitigating the impact of inflation on your profit margins in real terms,” Baxter said.

Additionally, selling receivables allows vendors to offload the risk of having a customer default on payment or go out of business altogether. “As you go into recession, that’s when insolvency levels begin to go up,” Baxter said. “So, ultimately working capital has a massive role to play here.”

Contact:
Ilaina Jonas, Senior Director ofĚýGlobal Public Relations, SAP
+1 (646) 923-2834,Ěýilaina.jonas@sap.com

Last week the U.S. Dollar Index, which measures the U.S. currency against a basket of six peers including the euro and pound, rose to 114.75. It has slipped back a little since then, but is still at its strongest since early 2002 after gaining 20% this year.

The strong dollar coupled with global inflation, rising interest rates, and supply chain issues related to COVID-19 lockdowns in China are among the headwinds facing some companies and making investors nervous.

SAP’s Take

“There are several factors driving the dollar to gain strength against other currencies,” said AJ Shrestha, an economics expert on SAP’s Corporate Development team.

“The U.S. Federal Reserve has raised interest rates aggressively in a bid to bring down soaring inflation,” he noted. “The rising interest rates make the dollar more attractive to investors by guaranteeing a better return, so investors globally have recently been buying billions of dollars of U.S. bonds and the extra demand has pushed up the dollar’s value while dropping the value of other currencies sold to buy dollars.”

The dollar also has a reputation of providing a safe haven in times of economic distress. Higher energy and food prices, especially in the eurozone, have fueled recession worries and prompted investors to take refuge in the relative safety of the U.S. dollar, which is less exposed to some of the larger macro headwinds.

This flight to safety is driving the dollar’s value higher at the same time that several other currencies — including the British pound, the euro and Chinese renminbi — have come under pressure. The pound fell sharply after the new government rolled out a package of tax cuts, stoking investor fears about a burgeoning deficit, and the euro decline reflects concerns about energy supplies and inflation while the renminbi has fallen because of concerns about China’s slowing domestic economy.

“The Chinese economy has been depressed by a precarious real estate sector and disruptions from the country’s continuing zero-COVID policies,” said Shrestha. “In order to stimulate the economy, the Chinese central bank cut key interest rates, which is a very different path from what the U.S. is taking in response to economic issues at home.”

That divergence in policies should result in the dollar-renminbi exchange rate moving higher as the renminbi continues to weaken. A weaker renminbi helps make China’s exports more competitive in overseas markets, particularly the U.S., increasing demand. The lower prices for China’s manufactured goods should help reduce persistently high inflation in the U.S., benefiting American consumers.

Who are the other winners and losers from a strong dollar?

“Typically, a weak currency is seen as good news for export-heavy economies and bad for economies that rely on imports. So as the dollar strengthens, this is causing problems for developing nations, which depend heavily on imports of crude and other commodities that are priced in dollars and have become expensive in local currencies terms,” said Shrestha.

A strong dollar pushes import prices up, creating inflation in those regions and causing central banks to pursue an even more aggressive monetary policy stance in order to reduce demand, which in turn raises local borrowing costs.

For emerging economies with a large amount of dollar-denominated debt, a strong dollar is especially troubling. A strong dollar could make the cost of servicing this debt unsustainable in some of those countries, resulting in defaults — a risk highlighted this week in a report from the United Nations Conference on Trade and Development (UNCTAD). Furthermore, with rising rates in the U.S. and the dollar climbing, money will start to flow out of those countries, resulting in less investment.

Large U.S. corporations that operate in multiple countries could also be hurt because they become less competitive in overseas markets and their foreign sales lose value when converted back into dollars. U.S. workers in industries that are export-heavy, like agriculture or manufacturing, could also be impacted negatively.

But the European software giant is an exception to that rule.

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

Business travel has returned in 2022, as more people hit the road after two years of work-from-home arrangements due to the pandemic. Travel industry experts also report in the media that there is an who are blending their business travel with personal vacation or leisure — a practice that is being called a “workation” or “bleisure.” While employees have been quick to adopt the blurring of boundaries between work and private time, many companies have yet to formalize corporate travel policies to accommodate employee bleisure trips.

“Know before you go” can save employees headaches when it comes time to file expenses.

SAP’s Take

If you are getting used to colleagues dialing in to conference calls from exotic and fun locations – think Cancun, Orlando, Las Vegas, Honolulu – then you are a witness to the rising trend of bleisure travel. Around this fall and many say they will take their work with them for bleisure – either by adding extra days onto a business trip to enjoy the destination or remotely working during the day and vacationing at night.

´Ąâ€Żâ€Żof 1,700 U.S.-based users of , a popular travel planning app from 51ˇçÁ÷Concur, found that 23% have plans for a bleisure trip in the year ahead. According to 51ˇçÁ÷Concur, the average length of a trip is 14% longer in 2022 compared to 2019, which suggests that travelers are now combining business and leisure travel or combining multiple business trips.

“While the concept of bleisure travel is nothing new, what is new is its prevalence,” said Jen Moyse, vice president of Product for TripIt from 51ˇçÁ÷Concur and author of the travel advice column, She said the pandemic forced employees to blend their business and personal lives. “As the boundaries between work and office blurred, I think this opened many people’s eyes to the possibility of similar blending in other aspects of their lives, including travel.”

Work-life balance has become more fluid. “While it used to be two big chunks of time, it now seems to be about multiple smaller chunks that alternate, and that makes things like bleisure travel seem more possible,” Moyse said.

Managing Expectations for a Carefree Trip

According to a of 1,800 U.S.-based TripIt users, top states for bleisure travel include Florida, Alaska, Hawaii, Nevada, Washington,and Texas. Nearly half (41%) of American travelers are planning bucket-list trips in the year ahead, according to another from TripIt. Of those, 57% of travelers have an international destination in mind and 30% have their eye on Europe. Moyse’s tip: “With the euro and U.S. dollar at parity, it’s a great time for U.S.-based travelers to head to Europe!”

In a 51ˇçÁ÷Concur , travelers said they worked from a cafĂŠ or coffee shop (70%), a lobby (64%), a waiting room (57%), a restroom (39%) and poolside (31%) during business trips.

However, even the best bleisure itineraries can quickly unravel as misunderstandings mount if travel companions and office mates are not fully informed. Moyse offers some advice: “Setting expectations up front with your employer, colleagues and those you’re traveling with is key. Be transparent about what you expect your working hours to be, or when you have important calls scheduled. Similarly, let your team know if you’ll be taking a call from a non-traditional location, or that you won’t be available at certain hours while you’re sightseeing with your travel partners.”

Making Sense of Travel Guidelines for Reimbursement

The same  found that 54% of U.S. business travelers say bleisure is a perk offered by companies, and 46% said it is a standard benefit.

Moyse recommended that you check your company travel policies as the first step to bleisure travel. “Not every company has a policy or permits this practice,” she said.

In a article, 51ˇçÁ÷Concur President Charlie Sultan recently discussed the duty of care and risk considerations that come with extending business trips. Employers and employees also need to be mindful of their working locations, as many states and countries have specific laws and regulations that can trigger tax burdens for companies and individuals if too many days are spent working in a certain geography. 51ˇçÁ÷Concur solutions with technology from leading brands like EY and Deloitte to help customers and their employees navigate interstate and international rules before tax implications are triggered.

Moyse said, “Get familiar with guidelines around how to book your tickets, approved suppliers, your per diem, etc. From there, be transparent with your manager about your plans and get clear on what is an approved corporate expense and what is not.”

To avoid headaches when filing travel expenses, business travelers will find that TripIt can be a useful tool to help them keep track of every part of their trip — from flight to hotel and rental car, restaurant reservations to museum tours, excursions and more — which can then serve as a guide to all trip costs and reimbursable expenses.

Moyse highlighted the additional benefits of TripIt as an integrated solution: “If you have TripIt through your employer’s use of 51ˇçÁ÷Concur solutions, then you could separate your business and personal activities into separate ‘trips,’ so you can share the business part with Concur Travel to start an expense report and keep the personal stuff separate.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

Earlier this week, three leaks from two Nord Stream AG undersea pipes, originally built to transport Russian gas to Germany, massively polluted the Baltic Sea. A fourth was discovered Thursday. The pipeline network has been the focus of an energy battle between Russia and its European clients over the war in Ukraine. The pipelines were not actively delivering gas but could take months to repair. NATO on Thursday called the leaks an act of sabotage.

SAP’s Take

Europe faces a severe shortage of energy that will be needed this winter to heat homes and run businesses. But as an alternative provider of energy to Europe, the U.S. gas and oil industry has seen drillable sites and license reduced. Still, there is an opportunity to wring out as much energy as possible from existing sites.

“The oil and gas sector is ramping up both in exploration where they’re allowed and in production and refinery activity,” said Richard Primm III, vice president of sales for SAP’s North American South market unit. “I see them spending significant amounts of capital over the next several quarters to increase U.S. production capacity.”

Much of the energy sector’s budget will be targeted at getting the most out of existing operations.

“What producers are thinking about right now is: ‘From a drilling perspective, how do we get the most out of that production as possible?’” Primm said. “How do we apply science and technology to our refining methodology to get the highest yield as possible, and then how do we monitor the vehicles that transport that gas? How do we apply that capital that we would otherwise spend an exploration?”

The answer is technology, which also is being applied to U.S. fracking operations — to lower the cost of laterally finding pools of natural gas. By using sensors, producers have reduced the number of vertical wells needed. “We’ve gotten really good at being able to extend those wells horizontally, not just vertically into the ground,” Primm said.

Much of fracking occurs on private land already permitted and without the need for licenses.

“So, if there’s a well that’s fracking right now, they are getting better and better at horizontally moving from oilfield to oilfield underground by using seismic technology and quite a few other methods, so that they don’t have to increase the number of wells that they have,” Primm said.

All told, capital is being deployed to wring out the oil and gas from existing wells and transporting it with the least loss as possible.

“We’re applying technology to increase efficiency as much as possible,” Primm said. “So, in the absence of availability to explore more for alternative sources underground, we’re applying capital that we would otherwise spend on exploration.”

Since taking office in January 2021, President Biden, in a series of orders, reduced drilling on federal land. Some license freezes were reversed under the U.S. Inflation Reduction Act, which called for new oil and gas sales off the coast of Alaska and in the Gulf of Mexico. But those new operations won’t exist in time to boost production over the next few months and U.S. contribution is not expected to make a great difference to allay Europe’s suffering this winter.

“We can’t replace it,” Primm said. “We can’t produce enough.”

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

Privately held Patagonia Inc. recently said it would change its ownership to channel nearly all its profits into a trust, Patagonia Purpose Trust, to fund non-profits and causes dedicated to helping the planet. Founder Yvon Chouinard and his family will own all the voting rights and retain control of the company best known for its high-quality, high-priced outdoor apparel.

They also will control the Holdfast Collective, which will determine where most of Patagonia’s profits go — about $100 million a year. The collective, a non-profit company led by the Chouinard family, will fund ways to help fight climate change, either through donations to charities or to political and environmental causes.

SAP’s Take

While Patagonia will primarily focus on external initiatives, Nate Boudreau, a retail executive at SAP, said he wondered what Patagonia will do within its own operations. “They’re giving all this money — it’s a great idea and it’s really cool to see — but how is the company actually operating?” Boudreau said.

Without giving away a dime, he says Patagonia could make changes using its own data and employing software that could help the company’s own operations, and those of their vendors within its supply chain, to be more sustainable and planet friendly.

“That could be as granular as what material they’re using, how is it made, where is it made and what the impact of that material is on the environment,” he said. “I wonder if their decision-making process is going to change in terms of looking at the sustainability initiatives of the companies that they’re buying from, if that’s going be number one before its money-making number one. I see a lot of people jumping on the Patagonia bandwagon now.”

Patagonia could also use its data to predict its own environmental impact and discover ways to reduce negative effects. The company can also use to help ensure that its bold new strategy succeeds.

“Around $100 million will be donated,” Boudreau said. “Where is it going? How can they track what it’s doing? What are the benefits, and are really get the most bang for their buck in that money? It’s a unique situation because it’s a lot of money that’s going to be yearly.Ěý It’s not going to be a one-time payment. It’s going to be something that can be tracked over the course of years.”

Patagonia’s new plan does have its critics. Detractors are quick to point out that its fleeces are made of petroleum-based material. But the company is one of four sportswear brands that have joined together to help recycling technology get to the clothing market more quickly.

“You get a push back whenever you do something good,” Boudreau said. “I think you’re always going to have even more push back when you’re not doing it right or correctly.”

But according to a Deloitte study, Patagonia’s strategy is on the right track. The study found that a majority of consumers would pay more for products from socially responsible companies. Brands that have demonstrated a commitment to sustainability are seeing average sales growth outperform brands without demonstrated commitment fourfold. It also found that 90% of consumers would switch brands to support a good cause or boycott a brand due to irresponsible business practices.

“I think that’s really huge,” Boudreau said.

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com

U.S. president Joe Biden approved a major disaster declaration for hurricane-ravaged Puerto Rico amid renewed warnings from scientists that the warming planet is making storms wetter and more intense. “The worst storms will get worse,” Michael Wehner, a senior scientist at the Lawrence Berkeley National Laboratory, told NBC news.

Hurricane Fiona was one of three powerful storms last weekend, along with Typhoon Nanmando, which hit Japan, and the remnants of Typhoon Merbok, which wreaked havoc in Alaska. Climate change is fueling extreme weather events across the planet, including record-breaking heatwaves, droughts and floods in the U.S. and elsewhere.

SAP’s Take

From California to Florida, people are directly experiencing the impact of global warming and are demanding action. In addition to reducing CO2 emissions and accelerating decarbonization, they are asking what can be done to minimize the impact of water shortages in some areas and flash flooding in others.

Too much water or not enough: climate change, aquifer depletion and population growth are increasing water scarcity worldwide. In the U.S., almost half of the watersheds may soon lack sufficient water supplies to meet monthly demand — one factor that is prompting the Biden administration to declare that global water security is now a matter of national security.

In most countries, including the U.S., water utilities are the stewards of local water resources — whether the sources are reservoirs, rivers or springs and underground aquifers. About 39 billion gallons of water a day are withdrawn from surface water or groundwater sources for public supply, representing about 12% of total freshwater withdrawals.

In the U.S., this drinking water is delivered through 2.2 million miles of underground pipes owned and operated by community water utilities, big and small. Unfortunately, much of the system is aging and underfunded.

“We believe that the water utilities can have a major impact on what is happening right now,” says Daniela Sellmann, global vice president and head of at 51ˇçÁ÷and an expert on water management.

Although Sellmann acknowledges that the water utilities will never achieve everything alone and need the support of the government, she believes there are actions they can take to manage water supplies, reduce losses through leakage, and cut energy consumption. “One of the main pieces that we see for the water utilities is basically to improve water catchment and then educate society about how to use that water. This is really low level, but it’s something that they can do,” she says.

According to the Unite States Geological Survey (USGS), the lower 48 states receive enough precipitation during an average year to cover the states to a depth of about 30 inches. Unfortunately, only a small proportion of that rainfall — and an even smaller portion of the cloud bursts that lead to flash flooding — finds its way into public water supplies.

Even when rainfall is successfully captured and processed, Sellmann notes that water utilities often suffer huge water losses because of leaks in their aged water distribution networks. In the U.S., the most conservative estimates put the percentage of treated water lost because of leakages at around 17%.

The American Society of Civil Engineers estimates that 6 billion gallons of treated water is lost each day in the U.S., enough to fill over 9,000 swimming pools. The Environmental Protection Agency estimates that distribution system leaks represent a cost $2.6 billion a year. Much of this wasted, treated water is lost through the 240,000 water main breaks that take place annually across the country.

Finding those leaks is one area where technology – including connected pressure and flow sensors, smart meters and software such as real-time analytics and predictive maintenance apps – can reduce leakage.

Tracing and repairing these leaks is likely the most cost-effective way to improve water security and combat the effects of increasingly frequent prolonged droughts like those in the American West this year. Although leak repair and pressure management are two well-known ways to reduce distributional losses, and have proved highly effective in some geographies outside the U.S., their potential as part of a water-saving strategy has been largely underutilized.

Experts suggest this may be because water losses in distribution systems in the U.S. are not systematically tracked or regulated. Only seven states currently require standardized water loss audits, and no state regulates the level of water losses. However, the regulatory environment governing water losses is rapidly evolving and several states are now considering tighter regulations.

Reducing the loss of treated water from the distribution system would also help utilities reduce their energy consumption and carbon footprints. “Losing the water from the network leads to less pressure, which means using more energy for the pumps that are pumping the water, and it also it has a really negative effect on the water quality within the pipes,” Sellmann says.

Leaky infrastructure also means utilities have to treat and process more water, which, in the case of some energy-intensive processes like desalination, pushes up costs and energy usage. So, as Sellman points out, helping utilities use smart technologies to become more efficient becomes a virtuous circle where everyone wins.

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com