How CIOs Can Lead Digitalization Of Consumer Products Industry

Don Gordon

If you attended CES 2017 last month or, like me, just watched the highlights, you were doubtless astounded by all the new consumer gadgets and products. There was a countertop machine that brews 5 liters of beer in a couple of hours; cordless, hands-free breast pumps; and an electric skateboard that goes up to 20 mph. (We can only hope that people have the good sense not to combine these activities.)

But for all the talk about consumer-facing digital innovations, for consumer products (CP) companies, many of the opportunities are less about product and more about business model and process. Whether it’s innovating a direct-to-consumer service or using the Internet of Things (IoT) to realize supply chain efficiencies, CIOs are expected to play a leading role in digital initiatives. How individual CIOs respond to the digital challenge will help determine their own success as well as that of their organization.

History is on the CIO’s side – but time is not

The opportunities presented by the new digital frontier are profound, and leading CP companies are beginning to respond accordingly. Those that do not risk being left out of increases in market share and consumer loyalty. In one sense, the move toward a new digital future comes at a perfect time for CIOs. As noted in a recent CIO.com article:

“In the past, the CIO and IT roles were mostly about … controlling costs, business processes [and back-office] support. … IT was never seen as a strategic part of the business. … That time is over.”

As the shift to digital accelerates, CIOs need to consider a bolder, more strategic approach to their work. This will mean asking important questions like these:

  • Are my IT goals and objectives fully aligned with the business strategy?
  • Do I have the right skills? Does my team?
  • Do I understand the emerging technologies and the best practices associated with them?
  • Is our IT function organized in order to maximize innovation?
  • How will we measure ROI?
  • Ensure continuous improvement?

What digital means for IT leaders

To take full advantage of digitalization, CP companies will need to transform business models and processes. CIOs and other IT leaders will need to adopt new roles and responsibilities. Instead of “keeping the lights on” and managing system integrations and implementations, IT leaders are expected to take a new, more strategic role in the C-suite.

Now is the time for IT leaders in CP to become digital transformation leaders, setting clear direction and objectives and articulating the linkage between overall business strategy and IT directives. This means IT leaders will need to shift away from a systems support role and take the lead in developing digital strategy. For some accustomed to a more reactive role, the change will be uncomfortable – but for those who embrace it, the rewards will be extensive.

The journey will not be without difficulty. A survey performed by EIU indicates that CP lags other industries in terms of LoB-IT collaboration on strategy. But if CP companies continue to rely solely on product innovation to drive growth, their more digitally savvy competitors will keep taking share.

A CIO road map in CP

The needs and opportunities may seem daunting, but there are some very specific steps that IT leaders in CP can and should take:

  1. Promote development of a digital vision and strategy. Most companies do not have, or have not considered, a vision for digital. CIOs must educate senior leaders and boards about the importance of digitalization, the impact on markets and the raw opportunity available.
  1. Build digital skills and capacity. CIOs have a unique advantage in digital strategy. They can begin to build the new IT platform for the new digital economy, and develop the skills to engage with the consumer.
  1. Be the architect. Apps and tools may be flashy, but the CIO should begin to hone an integrated, end-to-end process. That means taking a hard look at legacy infrastructure systems and making the bold (and often short-term expensive) choices that will clear the path for innovation.
  1. Adopt agile, flexible sourcing. To be effective, IT teams must be responsive to opportunities and demands. That means having flexible and agile operational models that can build, support, and drive digitalization.
  1. Help change the culture. Digitalization is happening at the speed of now. That means CIOs need to help organizations with internal processes that can operate in an omnichannel, consumer-focused quality-driven change process, not one that’s mired by calendars, committees, and restrictive controls.
  1. Manage risk. With the rapidity of change comes a need for a governance framework that is likely going to need to be different. Risk-averse governance can slow down innovation. CIOs need to lead a governance strategy that protects at the same time it propels.

Consumers are expecting new relationships with products. Products are still important – but today, what sets your company apart is the consumer experience you deliver. To win, you need to engage with consumers like never before. This means capitalizing on moments of opportunity to ensure better outcomes – all in a digital economy where interactions happen in an instant, decisions are made in the here and now, and insight is needed in real time.  This deep transformation in the CP industry requires a fundamental evolution in the role of the CIO and the board’s understanding of what IT now brings to the business.

For more insight on digitalization strategies, see Bringing The Four Degrees Of Digital Transformation To Life.

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About Don Gordon

Don Gordon leads global Consumer Products industry marketing for SAP. Previously he led global Retail industry marketing for IBM. He lives in Philadelphia, considered by many to be the finest city on earth.

Zhena’s Gypsy Tea Brews Sustainable Growth On Cloud ERP

David Trites

Recently I had the pleasure of hosting a podcast with Paula Muesse, COO and CFO of Zhena’s Gypsy Tea, a small, organic, fair-trade tea company based in California, and Ursula Ringham from SAP. We talked about some of the business challenges Zhena’s faces and how the company’s ERP solution helped spur growth and digital transformation.

Small but complex business

~ERP helped Zhena’s sustain growthZhena’s has grown from one person (Zhena Muzyka) selling hand-packed tea from a cart, into a thriving small business that puts quality, sustainability, and fair trade first. And although the company is small its business is complex.

For starters, tea isn’t grown in the United States, so Zhena’s has to maintain and import inventory from multiple warehouses around the world. Some of their tea blends have up to 14 ingredients, and each one has a different lead time. That makes demand-planning difficult. In addition, the FDA and US Customs require designated ingredients be traced and treated a certain way to comply with regulations.

Being organic and fair trade also makes things more complicated. Zhena’s has to pass an annual organic compliance audit for all products and processing facilities. And all products need to be traceable back to the farms where the tea was grown and picked to ensure the workers (mostly women) are paid fair wages.

Sustainable growth

Prior to implementing its new ERP system, Zhena’s was using a mix of tools like QuickBooks, Excel, and paper to manage the business. But to sustain growth and ensure future success, the company had to make some changes. Zhena’s needed an integrated software solution that could handle all facets of the business. It needed a tool that could help with cost control and profitability analysis and facilitate complex reporting and regulatory requirements.

The SAP Business ByDesign solution was the perfect choice. The cloud-based ERP solution reduced both business and IT costs, simplified processes from demand planning to accounting, and enabled mobile access and real-time reporting.

Check out the podcast to hear more about how Zhena’s successfully transformed its business by moving to SAP Business ByDesign.

 This article originally appeared on SAP Business Trends.

Building a successful company is hard work. SAP’s affordable solutions for small and midsize companies are designed to make it easier. Simple to install and use, SAP SME Solutions help you automate and integrate your business processes to give real-time, actionable insights. So you can make decisions on the spot. Find out how Run Simple can work for you. Visit sap.com/sme.

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About David Trites

David Trites is a Director of SAP Global Marketing. He is responsible for producing interesting and compelling customer stories that will humanize the SAP brand, support sales and marketing teams across SAP, and increase the awareness of SAP in key markets.

Haier Asia Builds A Digital Platform To Speed Innovation And Win Consumers’ Loyalty [VIDEO]

Dinesh Sharma

08 Apr 2013 --- Intersection, Germany. --- Image by © Markus Hanke/www.MarkusHanke.de/CorbisFew words scare the corporate world like the term “disruption.” No matter the language, disruption conjures the fear of dilution, alteration, and disturbance. And as the world becomes increasingly hyperconnected, disruption seems to be an ever-present threat.

Nevertheless, the C-suite is remaining vigilant by embracing the digital economy as the new reality. According to a recent study conducted by the Economist Intelligence Unit, 80% of executives view hyperconnectivity positively – indicating that it presents more opportunities than threats. All the while, they are carefully watching the competitive landscape and anticipating the arrival of overnight digital sensations and the inventiveness of long-time adversaries.

However, this is only one side of the transformational change hyperconnectivity is bringing. Disruption is not just happening on the corporate side of the consumer market – consumers are steadily disrupting everything a business touches.

The secret? Go beyond the competition to find disruptive opportunity

Not that long ago, most businesses followed a one-time transaction model. They would manufacture the product and ship it to the retailer, and consumers would purchase it. However, hyperconnectivity has changed the rules – making this experience a distant memory.

Consumers are more connected to information and no longer interested in listening corporate rhetoric. By drastically changing everything in our lives, the Internet is giving more power to the consumer, putting them in a position to guide the conversation and dictate product and service offerings. From this perspective, it is easy to see that hyperconnectivity and its impact on social behavior are the true disruptors.

Haier Asia, a top-ranking multinational consumer electronics and home appliances company, is one of those few companies that quickly recognized how hyperconnectivity is powering consumer-based disruption. “When you look around, no consumer life business is making money. Why is that? Margins are so slim,” cites Yoshiaki Ito, president and CEO of Haier Asia. “Consumers are far, far faster than manufacturers because they are getting new information on a daily basis. In the meantime, traditional companies produce their products – taking 24 months. So the gap is just widening every second.”

Instead of surrendering to these challenges, Haier decided to disrupt itself and the market it serves. With a two-prong approach to digital transformation, the company created a service-based model to seize the potential of new consumer behaviors and accelerate its product development cycles.

“My strategy for Haier Asia is to double up the digital platform. This is a great opportunity to bring us to the next level by becoming a services provider and gaining a steady stream of new revenue,” says Ito.

How did Haier take advantage of hyperconnectivity to gain the attention of stakeholders and consumers? Watch the video below to find out.

This article originally appeared on SAP Business Trends.

Want more insight on managing digital disruption? See Three Keys To Winning In A World Of Disruption.

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About Dinesh Sharma

Dinesh Sharma is the Vice President of Digital Economy at SAP. He is a GM-level technology executive with leadership, technical innovation, effective strategic planning, customer and partner engagement, turnaround management and focused operational execution experience at both large enterprise and startup companies. Share your thoughts with Dinesh on Twitter @sharmad

Human Skills for the Digital Future

Dan Wellers and Kai Goerlich

Technology Evolves.
So Must We.


Technology replacing human effort is as old as the first stone axe, and so is the disruption it creates.
Thanks to deep learning and other advances in AI, machine learning is catching up to the human mind faster than expected.
How do we maintain our value in a world in which AI can perform many high-value tasks?


Uniquely Human Abilities

AI is excellent at automating routine knowledge work and generating new insights from existing data — but humans know what they don’t know.

We’re driven to explore, try new and risky things, and make a difference.
 
 
 
We deduce the existence of information we don’t yet know about.
 
 
 
We imagine radical new business models, products, and opportunities.
 
 
 
We have creativity, imagination, humor, ethics, persistence, and critical thinking.


There’s Nothing Soft About “Soft Skills”

To stay ahead of AI in an increasingly automated world, we need to start cultivating our most human abilities on a societal level. There’s nothing soft about these skills, and we can’t afford to leave them to chance.

We must revamp how and what we teach to nurture the critical skills of passion, curiosity, imagination, creativity, critical thinking, and persistence. In the era of AI, no one will be able to thrive without these abilities, and most people will need help acquiring and improving them.

Anything artificial intelligence does has to fit into a human-centered value system that takes our unique abilities into account. While we help AI get more powerful, we need to get better at being human.


Download the executive brief Human Skills for the Digital Future.


Read the full article The Human Factor in an AI Future.


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About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

Kai Goerlich

About Kai Goerlich

Kai Goerlich is the Chief Futurist at SAP Innovation Center network His specialties include Competitive Intelligence, Market Intelligence, Corporate Foresight, Trends, Futuring and ideation.

Share your thoughts with Kai on Twitter @KaiGoe.heif Futu

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Finance And HR: Friends Or Foes? Shifting To A Collaborative Mindset

Richard McLean

Part 1 in the 3-part “Finance and HR Collaboration” series

In my last blog, I challenged you to think of collaboration as the next killer app, citing a recent study by Oxford Economics sponsored by SAP. The study clearly explains how corporate performance improves when finance actively engages in collaboration with other business functions.

As a case in point, consider finance and HR. Both are being called on to work more collaboratively with each other – and the broader business – to help achieve a shared vision for the company. In most organizations, both have undergone a transformation to extend beyond operational tasks and adopt a more strategic focus, opening the door to more collaboration. As such, both have assumed three very important roles in the company – business partner, change agent, and steward. In this post, I’ll illustrate how collaboration can enable HR and finance to be more effective business partners.

Making the transition to focus on broader business objectives

My colleague Renata Janini Dohmen, senior vice president of HR for SAP Asia Pacific Japan, credits a changing mindset for both finance and HR as key to enabling the transition away from our traditional roles to be more collaborative. She says, “For a long time, people in HR and finance were seen as opponents. HR was focused on employees and how to motivate, encourage, and cheer on the workforce. Finance looked at the numbers and was a lot more cautious and possibly more skeptical in terms of making an investment. Today, both areas have made the transition to take on a more holistic perspective. We are pursuing strategies and approaching decisions based on what delivers the best return on investment for the company’s assets, whether those assets are monetary or non-monetary. This mindset shift plays a key role in how finance and HR execute the strategic imperatives of the company,” she notes.

Viewing joint decisions from a completely different lens

I agree with Renata. This mindset change has certainly impacted the way I make decisions. If I’m just focused on controlling costs and assessing expenditures, I’ll evaluate programs and ideas quite differently than if I’m thinking about the big picture.

For example, there’s an HR manager in our organization who runs Compensation and Benefits. She approaches me regularly with great ideas. But those ideas cost money. In the past, I was probably more inclined to look at those conversations from a tactical perspective. It was easy for me to simply say, “No, we can’t afford it.”

Now I look at her ideas from a more strategic perspective. I think, “What do we want our culture to be in the years ahead? Are the benefits packages she is proposing perhaps the right ones to get us there? Are they family friendly? Are they relevant for people in today’s world? Will they make us an employer of choice?” I quite enjoy the rich conversations we have about the impact of compensation and benefits design on the culture we want to create. Now, I see our relationship as much more collaborative and jointly invested in attracting and retaining the best people who will ultimately deliver on the company strategy. It’s a completely different lens.

Defining how finance and HR align to the company strategy

Renata and I believe that greater collaboration between finance and HR is a critical success factor. How can your organization achieve this shift? “Once the organization has clearly defined what role finance and HR must play and how they fundamentally align to the company strategy, then it’s more natural to structure them in a way to support such transformation,” Renata explains.

Technology plays an important role in our ability to successfully collaborate. Looking back, finance and HR were heavily focused on our own operational areas because everything we did tended to consume more time – just keeping the lights on and taking care of our basic responsibilities. Now, through a more efficient operating model with shared services, standard operating procedures, and automation, we can both be more business-focused and integrated. As a result, we’re able to collaborate in more meaningful ways to have a positive impact on business outcomes.

In our next blog, we’ll look at how finance and HR can work together as agents of change.

For a deeper dive, download the Oxford Economics study sponsored by SAP.

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

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Richard McLean

About Richard McLean

Richard McLean, regional CFO for SAP Asia Pacific Japan, oversees all key finance and administrative functions for field and regional headquarters, supporting more than 16,000 employees. He has more than 20 years of experience in senior finance roles with leading global companies across a range of industries, including financial services, investment banking, automotive, and IT. He joined SAP in 2008.