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Disrupt With Digitization

Sven Denecken

Innovation requires reimagined processes – and the CIO needs to lead this transformation.

Enterprises today must be prepared for the transformation that the digital economy is forcing upon them.

Now, you might think, “Another digital buzzword article.” Well, yes, some dismiss it as a buzzword, but the challenge for many has just started. But let’s not look at only the problems; there are opportunities if seized right – and you can win big.

For example, competing for new business, or even exploring a new revenue stream by creating a new business model, are things you need to look out for constantly – and for sure you can learn from startups, because that is what they do: challenge the status quo. In a fast-moving digital economy, the window to capture these opportunities closes quickly; companies that are unprepared to pounce when occasions arise will likely get stuck on the road to irrelevance. In my job as product manager, my team constantly screens such opportunities, as innovation needs to be weighted fast and implemented via co-innovation even faster if there is a chance of success – and it must also be adapted fast if reality kicks in.

Successful companies need to be willing to change: They must assess whether they are truly in a position to reinvent business processes every day, not just every generation. And here is where the modern CIO comes in. Yes, digital officers arise at every corner of every industry, and they are needed ambassadors or agents of change. But today I think we should be clear: If every company will soon be a “software” company (which I very much believe, as data will rule the world) you need a modern chief information (and innovation) officer to help business and the company board of directors to make this change happen.

Here are 3 key lessons we have learned from the CIOs we constantly speak with during our co-innovation work. (Of course, there are also many lessons we learn from CIOs who are not embracing it – but will they still be CIO next year?)

Lesson #1: Four trends to check if you are on track

As I stated earlier, there are four inescapable trends are creating the pressures that shape today’s digital transformation:

  • The empowered customer: Whether your customers are Generation Z consumers or multi-national conglomerates, they all share one vitally important characteristic: Each demands to be treated as a unique segment of one. You have no choice but to meet that expectation.
  • Competitive and regulatory pressures: Transparency is a necessary part of business today, and that means competitors and regulators alike can dissect any business process. Staying ahead of the former and meeting the standards of the latter requires operational excellence and accountability at every step in the value cycle.
  • Globalization: More businesses today must be prepared to go global in order to remain relevant. Expanding into new markets can no longer be done effectively with costly, infrastructure-heavy international build-outs. Enterprises need a pay-as-you-go strategy with scalable capacity, which can be adjusted rapidly to meet market conditions in any region.
  • Technological progress: The tide of innovations and discoveries is unrelenting. Businesses must be agile enough to quickly adopt new strategies, and be steered by insightful, knowledgeable leadership that can sort winning inventions from dead-end novelties.

Lesson #2: Unprecedented levels of business agility

The need for an unprecedented level of business agility to match the rapid pace of innovation and transformation present in business is not restricted to a particular industry. Rather, we see entire markets, including transportation, logistics, and e-commerce, being reinvented on a seemingly daily basis. For any industry in which the production, shipment, and transaction of a product is still relevant, transformation supported by digitization is fast becoming a necessity.

Pressures to reshape the business using a digital template are likewise common across the industry spectrum. Companies — both in the business-to-business (B2B) and business-to-consumer (B2C) worlds — expect personalized interactions as a “segment of one,” which necessitates individualization of products and services, and freedom of choice. The business has no choice but to meet these demands — on the platform the customer chooses — or risk losing customers to a competitor.

The common solution that addresses these pressures is agility, and the way to achieve that agility is with a flexible, digital core at the heart of every organization that can meet the demands presented by increasing across-the-board disruption.

In my presentations I often state why we need to talk about a digital core: As long as something is produced (even if it is a service), as long as something is delivered or shipped, and as long as something will be paid – there is a need for a core. It is as simple as that. Every CIO surely knows that end-to-end processes often start at the edges or with systems of engagement, but they are of limited value if they do not connect with the core – the heart that makes your company run.

Now building on top of this, with a digital core, organizations can do far more than simply meet these pressures at a minimum level of success. They can pivot in near real time to capitalize on innovations in areas such as cloud, Big Data, and business network connectivity to completely transform the business, whether it’s to keep up with the growing influence of emerging topics such as the Internet of Things (IoT), 3D printing, or augmented reality, or to defend against new competitors launching up all around them.

A digital core is an enabling platform for transformation and innovation, but what are its hallmarks? We find five key characteristics that make up a digital core:

  1. A digital core provides the enterprise with the capability to drive and anticipate business outcomes in real time.
  2.  It integrates the business seamlessly across all value chain processes such as client interaction, administration, production, and research and development.
  3.  The digital core increases efficiency by automating processes and distributing responsibility for customer insights across an intelligent business network.
  4. It increases effectiveness by converting signals in business data into tangible action, essentially bringing Big Data to the size and scale needed to turn insight into action for the everyday user.
  5. The digital core increases enterprise agility by elevating each employee’s view of the organization.

So how can the modern CIO help to disrupt with digitization?

Here is the modern CIO’s plan for success: They prioritize day-to-day operations that were formerly siloed lines of business to have complete visibility into the entire core business of the enterprise. Finance, sales, and manufacturing can then act in concert, basing decisions on the same information in real time. This is where the company wins big, and this is how the modern CIO will drive change for the better and help their company win in the digital economy.

Successful CIOs know that the race to digitization is on. Until recently, many of the clients I spoke with were still questioning the need for digitizing the enterprise. Now, they want to know the most efficient route to get there. And while SAP’s digital core S/4HANA Enterprise Management is certainly a monumental milestone, clients are surprised to discover that arriving at a digital core is not as difficult as it might seem to enable this level of transformation.

A digital core helps any business run faster and simpler, so getting there should not be as complicated as the siloed line-of-business applications and redundancies a business leaves behind.

Want more insight on digitization? See The Digitized Core At The Heart Of Reimagined Business.

Looking forward to your feedback! Follow me for the latest updates: @SDenecken (link to Twitter account).

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Sven Denecken

About Sven Denecken

Sven Denecken is Senior Vice President, Product Management and Co-Innovation of SAP S/4HANA, at SAP. His experience working with customers and partners for decades and networking with the SAP field organization and industry analysts allows him to bring client issues and challenges directly into the solution development process, ensuring that next-generation software solutions address customer requirements to focus on business outcome and help customers gain competitive advantage. Connect with Sven on Twitter @SDenecken or e-mail at sven.denecken@sap.com.

Machine Learning: Man Vs. Machine Or Man + Machine?

Jean Loh

Part 1 of a 2-part series

Is there one term to describe the fantastic machines and infinite computing power built around the cloud, innovative chips, and semiconductors already in use by a growing number of companies?

“Artificial intelligence (AI) technology,” according to SAP’s senior director of advanced analytics, Chandran Saravana, on Coffee Break with Game Changers Radio, presented by SAP on May 3, 2017.

He and SAP’s senior director of Big Data initiatives, David Jonker, joined producer/moderator Bonnie D. Graham (follow on Twitter: @SAPRadio and #SAPRadio) for a lively discussion on “Machine Learning: Man vs. Machine Or Man + Machine?”

Chandran observed, “Businesses are already relying heavily on this level of AI. We’re at the top level right now. But when it comes to machine learning, you have to bridge a big gap to teach the machines how to learn – so machines can become smarter every day.”

New to the term machine learning? It describes a computer science subfield that analyzes algorithms iteratively to find hidden insights, but without being explicitly told where to look. Examples include Google’s self-driving car, Facebook’s personalized news feeds, and Amazon’s pushing relevant purchase recommendations to customers. An upcoming use case comes from financial services, where companies are combining this technology with linguistic-rule creation to detect and prevent fraud.

Machine learning offers a range of applications across every industry and line of business, from HR and marketing to finance, with use cases reflecting who you are and your mindset.

Will these innovations result in a world of man versus machine or man plus machines?

Looking back in time

David added historical perspective. “In the 18th century, machines were seen by many skeptics as taking over the world. At that time, the focus was on man plus machine, not man versus machine, but people were worried nonetheless. Of course, we can see today the dramatic, positive, impact this advancement had on our society, economy, and personal wealth in the Western world. I am a proponent of machine learning in a person-plus-machines future.”

Chandran noted the importance of adding the human quality of empathy when designing end-user experiences of a product, service, or point of interaction. “Machines can do many things, but there are always disproportionate capabilities when it comes to people. We [humans] have the cognitive abilities to think and respond to certain types of emotions. Whether you’re selling a product or service, customers are key,” he continued.

David pointed out that human brains have difficulty correlating a particular observation when assessing massive volumes of data. “This is where the machine can help the human to become smarter. You leverage the machines to understand this data, learn from it, and help humans make a better version of it.”

Call to action: embrace and adapt to machine learning

Given the pace of business, people need a machine to perform deep analysis. David acknowledged, “Machine learning can assist the human, coming back to that whole idea of person plus machine. When we talk about enabling the intelligent enterprise, it’s that combination that’s going to be so fundamental to building the future.”

But we first need a better understanding of how to manage and leverage Big Data. Chandran said, “Teaching these machines how to learn requires a lot of skills sets, such as those of data scientists and machine-learning architects and specialists.” Universities and other educational institutions are developing programs and expertise to bridge this gap.

The future of the workforce?

David observed that much of the current workforce will need to be “retooled” to take on machine learning. “An adjustment needs to happen in the workforce. The challenge is acquiring specialized skills sets and a background in science, technology, engineering, or math (STEM) … it’s a huge opportunity.”

“Machine learning capabilities need to be extended to a variety of users in the enterprise, not just the data scientist role,” advised Chandran. “Those without a STEM background need the right tools to leverage machine learning to gain the insights to build a simple, predictive model.”

David concluded, “Machine learning isn’t about theorizing in an ivory tower. It’s about empirically looking at data, inferring insights, and reflecting on it in a way that humans typically do not. If they can’t figure out how to move things across the business, organizations will not reap the full benefits of machine learning.”

As in the Industrial Revolution, the companies and pioneers who can rethink their business in fundamentally new ways will thrive.

Learn more

Listen to Coffee Break with Game-Changers Radio: “Machine Learning Trends – Part 1: Enabling the Intelligent Enterprise” on demand.

Automation is the top priority for global business organizations that want to drive costs down. Join Randy Garrison of SAP and Weston Jones of Ernst & Young, LLP on July 17 at 1 p.m. EDT to understand what robotic process automation can offer you today and in the future. Register now!

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Jean Loh

About Jean Loh

Jean Loh is the Director, Global Audience Marketing, LOB Finance, at SAP. She is an experienced marketing and communication professional, currently responsible for developing thought leadership content that is unbiased and audience-led while addressing market challenges to illuminate and solve the unmet needs of CFOs and the wider global finance audience.

Transform Your IT Department With IT-As-A-Service

Daniel Newman

The as-a-service model supplies businesses with scalable, consumption-based services to increase speed and agility while driving revenue and reducing costs. As businesses have turned towards software-as-a-service (SaaS), video conferencing-as-a-service (VCaaS), platform-as-a-service (PaaS), and even cloud-as-a-service (CaaS) to lower costs and increase agility, it makes sense that IT-as-a-service (ITaaS) is now available—and recommended.

Switching to an IT as a service model (and mindset) means taking the focus off the functional roles of IT and enabling an IT department that is much more agile, better aligned with business goals, and customer-centric. As an operational model, ITaaS delivers to an enterprise only the hardware, software, and staff needed at any given time. ITaaS can be internal or external or a combination of the two. It can be cloud-based or on-site—or a combination of the two. ITaaS should be as flexible in delivery as it is in ability.

Judith Hurwitz says of the benefits of ITaaS, “By transitioning to an IT-as-a-service model, IT organizations are transforming themselves from traditional IT groups to brokers of a variety of public and private cloud services, third-party managed service providers, and traditional data center services.”

If that statement alone does not convince you, here are four more reasons why ITaaS should be on every CIO’s radar:

ITaaS can be more effective and cost-efficient

As with so much change that has been driven by anything “as a service” and cloud computing, ITaaS enables streamlining operations and speeding up development. It also lowers cost because the up-front investment is minimal compared to having all hardware, software, and staff in-house. Businesses only use what they need, and the cost of doing so can be projected out. The services can scale if and when needed. Software upgrades and hardware are kept up-to-date. And the business can tap into an IT expertise without paying the high cost of having that expertise on the payroll.

Legacy business functions are still used

When using ITaaS, organizations can still use those legacy business functions that are at the core of their business. There is no need to completely walk away from the “old” way of doing IT, or from those legacy systems or functions. Sure, they might be slow and seemingly not able to keep pace with a fast-moving market. Supplemented with ITaaS, however, CIOs are no longer faced with decisions about optimizing outdated equipment as an either/or scenario: Either update the old, or invest in the new.

ITaaS can stabilize the environment

A third reason to have ITaaS on your radar screen is because it can stabilize your IT environment while also allowing for flexibility in the cloud. As mentioned above, the pricing is stabilized and predictable, and businesses pay only for what they need at any given time. In addition, ITaaS can improve security and lower risk, as well as ensure the hardware and software are up-to-date. You’re able to respond quickly to market changes and demands without putting any of your own infrastructure at risk—or rendering it unusable. Although the word “stabilize” might seem like an odd choice in this context, ITaaS can stabilize what otherwise might be a volatile and chaotic environment if your IT department tried to keep up with all the ever-changing demands placed on it using only internal resources.

ITaaS enables customized cloud computing and IT

With ITaaS, hybrid cloud and IT can be customized to meet your business needs, and offer an alternative to cloud computing vendors. As John Wellen puts it, “The goal is to transform and optimize enterprise-specific IT operations using self-managed service provider models that leverage cloud technologies more economically than licensed commercial cloud providers.” With ITaaS, organizations can use a mixed IT strategy to benefit from the best of both worlds: components hosted internally and components externally.

Organizations today want IT to add business value, and I mean in a monetary way as well. ITaaS makes this possible. However, it’s not an overnight change. It takes time to transition into working with an ITaaS model, because it is as much a cultural shift as it is a change in the way IT is viewed and the expectations the business units have of the IT department. Businesses can ease the transition and lower the risk with a gradual approach, implementing ITaaS only in higher-priority areas first—although that approach inherently has its own risks, as Peter Bendor-Samuel explains in an article for CIO.com.

This post was brought to you by IBM Global Technology Services. For more content like this, visit IT Biz Advisor.

Photo Credit: pinkhypo Flickr via Compfight cc

 

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Daniel Newman

About Daniel Newman

Daniel Newman serves as the Co-Founder and CEO of EC3, a quickly growing hosted IT and Communication service provider. Prior to this role Daniel has held several prominent leadership roles including serving as CEO of United Visual. Parent company to United Visual Systems, United Visual Productions, and United GlobalComm; a family of companies focused on Visual Communications and Audio Visual Technologies. Daniel is also widely published and active in the Social Media Community. He is the Author of Amazon Best Selling Business Book "The Millennial CEO." Daniel also Co-Founded the Global online Community 12 Most and was recognized by the Huffington Post as one of the 100 Business and Leadership Accounts to Follow on Twitter. Newman is an Adjunct Professor of Management at North Central College. He attained his undergraduate degree in Marketing at Northern Illinois University and an Executive MBA from North Central College in Naperville, IL. Newman currently resides in Aurora, Illinois with his wife (Lisa) and his two daughters (Hailey 9, Avery 5). A Chicago native all of his life, Newman is an avid golfer, a fitness fan, and a classically trained pianist

Taking Learning Back to School

Dan Wellers

 

Denmark spends most GDP on labor market programs at 3.3%.
The U.S. spends only 0.1% of it’s GDP on adult education and workforce retraining.
The number of post-secondary vocational and training institutions in China more than doubled from 2000 to 2014.
47% of U.S. jobs are at risk for automation.

Our overarching approach to education is top down, inflexible, and front loaded in life, and does not encourage collaboration.

Smartphone apps that gamify learning or deliver lessons in small bits of free time can be effective tools for teaching. However, they don’t address the more pressing issue that the future is digital and those whose skills are outmoded will be left behind.

Many companies have a history of effective partnerships with local schools to expand their talent pool, but these efforts are not designed to change overall systems of learning.


The Question We Must Answer

What will we do when digitization, automation, and artificial intelligence eject vast numbers of people from their current jobs, and they lack the skills needed to find new ones?

Solutions could include:

  • National and multinational adult education programs
  • Greater investment in technical and vocational schools
  • Increased emphasis on apprenticeships
  • Tax incentives for initiatives proven to close skills gaps

We need a broad, systemic approach that breaks businesses, schools, governments, and other organizations that target adult learners out of their silos so they can work together. Chief learning officers (CLOs) can spearhead this approach by working together to create goals, benchmarks, and strategy.

Advancing the field of learning will help every business compete in an increasingly global economy with a tight market for skills. More than this, it will mitigate the workplace risks and challenges inherent in the digital economy, thus positively influencing the future of business itself.


Download the executive brief Taking Learning Back to School.


Read the full article The Future of Learning – Keeping up With The Digital Economy

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Dan Wellers

About Dan Wellers

Dan Wellers is the Global Lead of Digital Futures at SAP, which explores how organizations can anticipate the future impact of exponential technologies. Dan has extensive experience in technology marketing and business strategy, plus management, consulting, and sales.

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Why Millennials Quit: Understanding A New Workforce

Shelly Kramer

Millennials are like mobile devices: they’re everywhere. You can’t visit a coffee shop without encountering both in large numbers. But after all, who doesn’t like a little caffeine with their connectivity? The point is that you should be paying attention to millennials now more than ever because they have surpassed Boomers and Gen-Xers as the largest generation.

Unfortunately for the workforce, they’re also the generation most likely to quit. Let’s examine a new report that sheds some light on exactly why that is—and what you can do to keep millennial employees working for you longer.

New workforce, new values

Deloitte found that two out of three millennials are expected to leave their current jobs by 2020. The survey also found that a staggering one in four would probably move on in the next year alone.

If you’re a business owner, consider putting four of your millennial employees in a room. Take a look around—one of them will be gone next year. Besides their skills and contributions, you’ve also lost time and resources spent by onboarding and training those employees—a very costly process. According to a new report from XYZ University, turnover costs U.S. companies a whopping $30.5 billion annually.

Let’s take a step back and look at this new workforce with new priorities and values.

Everything about millennials is different, from how to market to them as consumers to how you treat them as employees. The catalyst for this shift is the difference in what they value most. Millennials grew up with technology at their fingertips and are the most highly educated generation to date. Many have delayed marriage and/or parenthood in favor of pursuing their careers, which aren’t always about having a great paycheck (although that helps). Instead, it may be more that the core values of your business (like sustainability, for example) or its mission are the reasons that millennials stick around at the same job or look for opportunities elsewhere. Consider this: How invested are they in their work? Are they bored? What does their work/life balance look like? Do they have advancement opportunities?

Ping-pong tables and bringing your dog to work might be trendy, but they aren’t the solution to retaining a millennial workforce. So why exactly are they quitting? Let’s take a look at the data.

Millennials’ common reasons for quitting

In order to gain more insight into the problem of millennial turnover, XYZ University surveyed more than 500 respondents between the ages of 21 and 34 years old. There was a good mix of men and women, college grads versus high school grads, and entry-level employees versus managers. We’re all dying to know: Why did they quit? Here are the most popular reasons, some in their own words:

  • Millennials are risk-takers. XYZ University attributes this affection for risk taking with the fact that millennials essentially came of age during the recession. Surveyed millennials reported this experience made them wary of spending decades working at one company only to be potentially laid off.
  • They are focused on education. More than one-third of millennials hold college degrees. Those seeking advanced degrees can find themselves struggling to finish school while holding down a job, necessitating odd hours or more than one part-time gig. As a whole, this generation is entering the job market later, with higher degrees and higher debt.
  • They don’t want just any job—they want one that fits. In an age where both startups and seasoned companies are enjoying success, there is no shortage of job opportunities. As such, they’re often looking for one that suits their identity and their goals, not just the one that comes up first in an online search. Interestingly, job fit is often prioritized over job pay for millennials. Don’t forget, if they have to start their own company, they will—the average age for millennial entrepreneurs is 27.
  • They want skills that make them competitive. Many millennials enjoy the challenge that accompanies competition, so wearing many hats at a position is actually a good thing. One millennial journalist who used to work at Forbes reported that millennials want to learn by “being in the trenches, and doing it alongside the people who do it best.”
  • They want to do something that matters. Millennials have grown up with change, both good and bad, so they’re unafraid of making changes in their own lives to pursue careers that align with their desire to make a difference.
  • They prefer flexibility. Technology today means it’s possible to work from essentially anywhere that has an Internet connection, so many millennials expect at least some level of flexibility when it comes to their employer. Working remotely all of the time isn’t feasible for every situation, of course, but millennials expect companies to be flexible enough to allow them to occasionally dictate their own schedules. If they have no say in their workday, that’s a red flag.
  • They’ve got skills—and they want to use them. In the words of a 24-year-old designer, millennials “don’t need to print copies all day.” Many have paid (or are in the midst of paying) for their own education, and they’re ready and willing to put it to work. Most would prefer you leave the smaller tasks to the interns.
  • They got a better offer. Thirty-five percent of respondents to XYZ’s survey said they quit a previous job because they received a better opportunity. That makes sense, especially as recruiting is made simpler by technology. (Hello, LinkedIn.)
  • They seek mentors. Millennials are used to being supervised, as many were raised by what have been dubbed as “helicopter parents.” Receiving support from those in charge is the norm, not the anomaly, for this generation, and they expect that in the workplace, too.

Note that it’s not just XYZ University making this final point about the importance of mentoring. Consider Figures 1 and 2 from Deloitte, proving that millennials with worthwhile mentors report high satisfaction rates in other areas, such as personal development. As you can see, this can trickle down into employee satisfaction and ultimately result in higher retention numbers.

Millennials and Mentors
Figure 1. Source: Deloitte


Figure 2. Source: Deloitte

Failure to . . .

No, not communicate—I would say “engage.” On second thought, communication plays a role in that, too. (Who would have thought “Cool Hand Luke” would be applicable to this conversation?)

Data from a recent Gallup poll reiterates that millennials are “job-hoppers,” also pointing out that most of them—71 percent, to be exact—are either not engaged in or are actively disengaged from the workplace. That’s a striking number, but businesses aren’t without hope. That same Gallup poll found that millennials who reported they are engaged at work were 26 percent less likely than their disengaged counterparts to consider switching jobs, even with a raise of up to 20 percent. That’s huge. Furthermore, if the market improves in the next year, those engaged millennial employees are 64 percent less likely to job-hop than those who report feeling actively disengaged.

What’s next?

I’ve covered a lot in this discussion, but here’s what I hope you will take away: Millennials comprise a majority of the workforce, but they’re changing how you should look at hiring, recruiting, and retention as a whole. What matters to millennials matters to your other generations of employees, too. Mentoring, compensation, flexibility, and engagement have always been important, but thanks to the vocal millennial generation, we’re just now learning exactly how much.

What has been your experience with millennials and turnover? Are you a millennial who has recently left a job or are currently looking for a new position? If so, what are you missing from your current employer, and what are you looking for in a prospective one? Alternatively, if you’re reading this from a company perspective, how do you think your organization stacks up in the hearts and minds of your millennial employees? Do you have plans to do anything differently? I’d love to hear your thoughts.

For more insight on millennials and the workforce, see Multigenerational Workforce? Collaboration Tech Is The Key To Success.

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