From Idea To Reality: Get On The Innovation Fast-Track With Digital Design

Oliver Huschke

Part 3 of the “Kick-Starting Innovation” series

The whole notion of innovation has dramatically shifted from being a new product, idea, or method to upending even the most stable industries. In just a few short years, nearly every business has encountered digitally driven transformation, where exponential change creates mind-boggling advancements in a very short space of time.

As the innovation race continues to gain speed, companies are increasing their investment in digital technology. Everything from advanced analytics, automation, and the cloud to machine learning, blockchain, mixed reality, and cognitive computing is on the table. Yet very few companies understand that these technologies are just enablers of a much larger digital strategy.

Digital innovation: A matter of thought-provoking clarity before taking action

Innovation and failure are two sides of the same coin. Very rarely does a new product, service, or process go from concept to adopted practice without some disappointments along the way. But for organizations that chronically fail, I often see innovation failure stemming from two common misperceptions:

  1. Equating digital transformation with technology-enabled services, digitized channels, and automated processes. Under this premise, businesses usually realize the capture of new data, higher workforce and process efficiency, and more engaged employees and customers. While these benefits are, without a doubt, helpful in improving business operations, they do not permanently embed new ways of working that lead to groundbreaking business models that solve customer concerns and fulfill their demands.
  1. Placing too much focus on investing and doing, and not enough on processes and expertise. The threat of digital disruption is inspiring companies to take action, but no one really knows where to start. It’s always easy to come up with new ideas. Making them happen is the hard part – unless there’s a design-oriented process that can help tackle problem solving and create sustainable innovation.

Digital design zone: Turning innovative ideas into disruptive innovation

As a fundamental element of digital innovation, design principles empower people to collaborate and give technology the space it needs to achieve the intended outcome. But this is not something that comes naturally. It must be nurtured with a process-centric approach (also known as a digital design zone) from initial ideation to working proof of concept.

To kick off a digital design zone, businesses should go through an exploration workshop to identify a customer-specific portfolio of digital opportunities. A mixture of internal business experts and a third-party coach allows the company to create the detailed scope of a distinct business scenario and design challenge. From start to finish, the entire design process is coordinated, including the organizing of further service activities and facilitation of future workshops.

After the scoping and exploration stage, work done through the digital design zone follows three primary phases: discovery, design and prototyping, and delivery.

Phases of development of a working prototype in a digital design zone

Phases of development of a working prototype in a digital design zone

Phase 1: Discovery

The first phase of the digital design zone includes a discovery workshop with two days of onsite research conducted by a designated innovation coach and design expert. Together, these experts interview and observe business users to gain deep insight into current business practices. This information is then synthesized to create a road map for the digital journey, a set of user persona descriptions, the desired to-be process, and the prototype use case. 

Phase 2: Design and prototype

Next, the combined team of internal and external experts work together to form a proof of concept. A design expert converts the outcome of the discovery workshop into a clickable, high-fidelity prototype. The innovation designer frequently interacts with designated business users to validate the usefulness and performance of the prototype.

Phase 3: Delivery

Last, but certainly not least, the prototype is presented. The business is welcome to use this deliverable to demonstrate within the organization the value of an investment in digital technology. It can even undergo rigorous testing and further development and optimization after gaining executive buy-in. The design process comes to an end after overall service delivery is reviewed and future activities are initiated.

Create a one-stop shop to materialize your next big idea

Disruptive innovation is not a trick of magic inspired by technology adoption. It doesn’t automatically happen or occur quickly. Rather, it’s a long-term, sustainable process of five core capabilities:

  1. Knowledge creation
  2. Formation of a compelling, widely used solution
  3. Delivery of impacts that matter
  4. Sourcing of inspiration through a common goal
  5. Response to a variety of internal and external perceptions

With the help a one-stop shop for design-centric innovation, companies can turn a mere spark of an idea into an innovation that shakes up the competitive landscape and strengthens market leadership.

Find out how your business can benefit from unlimited access to a showroom, a set of empowering sessions, and an innovation platform. Read the white paper “Achieve Digital Transformation and Create a System of Ongoing Innovation.” 

And don’t forget to check every Monday for new installments to our blog series “Kick-Starting Innovation.” Next week, we’ll explore the impact of human empowerment on innovation.

Oliver Huschke

About Oliver Huschke

Oliver Huschke is the global head of Solution Marketing for Digital Business Services at SAP. He has worked for SAP since 1997, starting with development where he built up and led the central test organization. Oliver was head of application management and managed marketing activities at SAP Hosting. Further stations include strategic development and Active Global Support with responsibility for global product management of the SAP Premium Engagement Program. Share your thoughts with Oliver on LinkedIn or Twitter.

How Facebook And Data Privacy Are Pushing Boundaries Of Trust

Paul Taylor

Mark Zuckerberg’s appearance before Congressional investigators probing the Facebook user-data scandal has highlighted the trust chasm that has opened between consumers and some of the biggest brands in the Internet era.

As a result, we have reached an inflection point in the debate over consumer data privacy and regulation in the U.S. that could have far-reaching consequences not only for consumer brands, but also the technology companies that provide the tools brand leaders use to manage the customer experience.

The implications of this trust deficit were reflected in the comments of Rep. Michael Doyle, a Democrat from Pennsylvania, who told Facebook’s CEO during one exchange: “To my mind, the only way we will close the trust gap is through legislation that creates and empowers a sufficiently (powerful) oversight agency with rule-making authority to protect the digital privacy and ensure that companies protect our users’ data.”

Ramming home his point, Rep. Doyle added; “Why should we trust you to follow through on these promises when you have demonstrated that you’re willing to flaunt your internal policies and government oversight when the need suits you?” Zuckerberg had no real answer.

At the root of the problem are what might be called the “terms of trust.” Consumers want a personalized, customized experience online, but not at any cost. Consumers will share information about themselves in return for something, e.g., better products and better services. But they will only do that if they can control and understand what’s happening with their data. This is what is technically thought of as “consent.”

“We are moving to a world where data is probably the most valuable asset, but trust is the ultimate currency in this new data economy,” says Patrick Salyer, chief executive of SAP’s recently acquired Gigya unit. “Trust is everything. The next leading brands will be the most trusted brands,

He argues that over the past decade, brands have delivered on personalization, but that at some point a line was crossed. “They began tracking people without their permission and creepy things were happening,” he says. “Their data was being sold without their knowledge. Ultimately, all of this has eroded consumer trust.”

In fact, a recent survey suggested that two-thirds of consumers don’t trust brands anymore. “Consumers still want personalization,” he says, “I don’t think that’s something they want to move away from, but transparency and control around their data is becoming critical.“

Download the free e-book Personalization: How to Avoid Crossing the Line from Cool to Creepy.

This article originally appeared on Forbes SAPVoice.

Aligning IT With Corporate Strategy In The Age Of Digital Transformation

Andre Smith

There was a time that IT services played little more than a supporting role in the overall success of an enterprise. That’s no longer the case for today’s digitally transformed businesses. At this point, it’s fair to say that IT has become central to almost every company in every industry. With that shift, though, there has also been some drift away from the core purpose of IT within many organizations.

What has happened is that the integration of technology into the modern economy has often created a sense that IT is an end unto itself, rather than a means of achieving business goals. That has led to a measurable disconnect in how technology staff and management see their work in relation to their company’s overall strategy. According to research firm Axelos, even though some 70% of information technology service management (ITSM) professionals report having a clear understanding of their company’s strategy, only 41% believe that the work they do is aligned with that strategy.

That lack of coordination can prove costly to any business if allowed to continue unchecked. The job of correcting it lands in the middle of the C-suite – right on the CIO’s desk. Here’s what they need to do.

Strive to inform

The first goal of any CIO when seeking to create better alignment between corporate strategy and IT initiatives should be to take on the role of chief technology educator for the executive level. After all, decision-makers can’t evaluate what they can’t understand. In order to make sure that IT is delivering value and continuing the furtherance of strategic goals, the CIO must work to help executives understand the technology that’s in use (and what’s coming next), as well as what the limitations of that technology are. This top-down educational approach will allow the CIO to shift from the traditional reactive position (responding to organizational priorities as they arise) to a proactive stance where they can help decision-makers formulate strategies based on a clear understanding of what is possible.

Empower the organization

Beyond the C-suite, CIOs must realign their organizations back towards the support role that was once central to the IT mission. That doesn’t mean abandoning their new role as a driver of innovation within the business – far from it – but rather reflects the realization that technology works best when the entire organization is empowered to use it. Today’s workforce tends to be more technically adept to begin with, so the IT support role can still coexist with other initiatives. Sarah Lahav, CEO of ITSM leader SysAid Technologies, makes this point:

“Empowering end users is the main purpose of SysAid’s help desk platform. We’ve put quite a bit of effort into the self-service functions of our software because we know that modern users are better informed and more willing to seek solutions rather than simply deferring to IT support staff.”

Choose the right metrics

CIOs must realize that aligning IT with business goals and creating the underlying organizational structure and strategy to support those goals is meaningless if the results aren’t appropriately measured. While most CIOs know that metrics to gauge process effectiveness are crucial, they may not be measuring the right things. The reason has to do with yet another holdover from the days when IT was a more self-contained and narrowly focused endeavor.

Back then, costs were king. That meant that efficiency metrics were all that mattered. The typical goal was to prioritize lower budgets, often at the expense of agility and quick turnaround times. Those may no longer be the priorities of the modern digital enterprise. To get it right, CIOs need to bring together key stakeholders from all relevant business units to gain a consensus on the outcomes they expect IT to provide. These outcomes are what must be measured, and agreeing on specific measurable KPIs (rather than focusing on cost) is the new paradigm for the modern IT organization.

An ongoing evolution

It’s critical to remember that maintaining close alignment between IT and business goals will always be a work in progress. Making educational efforts at the top, empowering employees at all levels, and measuring the desired outcomes will only serve to point the organization in the right direction, not keep it there. As modern digital transformation accelerates through the 21st century, the addition of new technologies and priorities will continue to shift the role of IT in the enterprise in ways that cannot be forecast. To stay focused, CIOs must continue to adapt their long-term visions to what’s now, what’s new, and what’s next.

To learn more about the role of IT in digital transformation, check out Striking The Right Balance: Digital Transformation Versus IT-Led Transformation.

Andre Smith

About Andre Smith

Andre Smith is an Internet, marketing, and e-commerce specialist with several years of experience in the industry. He has watched as the world of online business has grown and adapted to new technologies, and he has made it his mission to help keep businesses informed and up to date.

Hack the CIO

By Thomas Saueressig, Timo Elliott, Sam Yen, and Bennett Voyles

For nerds, the weeks right before finals are a Cinderella moment. Suddenly they’re stars. Pocket protectors are fashionable; people find their jokes a whole lot funnier; Dungeons & Dragons sounds cool.

Many CIOs are enjoying this kind of moment now, as companies everywhere face the business equivalent of a final exam for a vital class they have managed to mostly avoid so far: digital transformation.

But as always, there is a limit to nerdy magic. No matter how helpful CIOs try to be, their classmates still won’t pass if they don’t learn the material. With IT increasingly central to every business—from the customer experience to the offering to the business model itself—we all need to start thinking like CIOs.

Pass the digital transformation exam, and you probably have a bright future ahead. A recent SAP-Oxford Economics study of 3,100 organizations in a variety of industries across 17 countries found that the companies that have taken the lead in digital transformation earn higher profits and revenues and have more competitive differentiation than their peers. They also expect 23% more revenue growth from their digital initiatives over the next two years—an estimate 2.5 to 4 times larger than the average company’s.

But the market is grading on a steep curve: this same SAP-Oxford study found that only 3% have completed some degree of digital transformation across their organization. Other surveys also suggest that most companies won’t be graduating anytime soon: in one recent survey of 450 heads of digital transformation for enterprises in the United States, United Kingdom, France, and Germany by technology company Couchbase, 90% agreed that most digital projects fail to meet expectations and deliver only incremental improvements. Worse: over half (54%) believe that organizations that don’t succeed with their transformation project will fail or be absorbed by a savvier competitor within four years.

Companies that are making the grade understand that unlike earlier technical advances, digital transformation doesn’t just support the business, it’s the future of the business. That’s why 60% of digital leading companies have entrusted the leadership of their transformation to their CIO, and that’s why experts say businesspeople must do more than have a vague understanding of the technology. They must also master a way of thinking and looking at business challenges that is unfamiliar to most people outside the IT department.

In other words, if you don’t think like a CIO yet, now is a very good time to learn.

However, given that you probably don’t have a spare 15 years to learn what your CIO knows, we asked the experts what makes CIO thinking distinctive. Here are the top eight mind hacks.

1. Think in Systems

A lot of businesspeople are used to seeing their organization as a series of loosely joined silos. But in the world of digital business, everything is part of a larger system.

CIOs have known for a long time that smart processes win. Whether they were installing enterprise resource planning systems or working with the business to imagine the customer’s journey, they always had to think in holistic ways that crossed traditional departmental, functional, and operational boundaries.

Unlike other business leaders, CIOs spend their careers looking across systems. Why did our supply chain go down? How can we support this new business initiative beyond a single department or function? Now supported by end-to-end process methodologies such as design thinking, good CIOs have developed a way of looking at the company that can lead to radical simplifications that can reduce cost and improve performance at the same time.

They are also used to thinking beyond temporal boundaries. “This idea that the power of technology doubles every two years means that as you’re planning ahead you can’t think in terms of a linear process, you have to think in terms of huge jumps,” says Jay Ferro, CIO of TransPerfect, a New York–based global translation firm.

No wonder the SAP-Oxford transformation study found that one of the values transformational leaders shared was a tendency to look beyond silos and view the digital transformation as a company-wide initiative.

This will come in handy because in digital transformation, not only do business processes evolve but the company’s entire value proposition changes, says Jeanne Ross, principal research scientist at the Center for Information Systems Research at the Massachusetts Institute of Technology (MIT). “It either already has or it’s going to, because digital technologies make things possible that weren’t possible before,” she explains.

2. Work in Diverse Teams

When it comes to large projects, CIOs have always needed input from a diverse collection of businesspeople to be successful. The best have developed ways to convince and cajole reluctant participants to come to the table. They seek out technology enthusiasts in the business and those who are respected by their peers to help build passion and commitment among the halfhearted.

Digital transformation amps up the urgency for building diverse teams even further. “A small, focused group simply won’t have the same breadth of perspective as a team that includes a salesperson and a service person and a development person, as well as an IT person,” says Ross.

At Lenovo, the global technology giant, many of these cross-functional teams become so used to working together that it’s hard to tell where each member originally belonged: “You can’t tell who is business or IT; you can’t tell who is product, IT, or design,” says the company’s CIO, Arthur Hu.

One interesting corollary of this trend toward broader teamwork is that talent is a priority among digital leaders: they spend more on training their employees and partners than ordinary companies, as well as on hiring the people they need, according to the SAP-Oxford Economics survey. They’re also already being rewarded for their faith in their teams: 71% of leaders say that their successful digital transformation has made it easier for them to attract and retain talent, and 64% say that their employees are now more engaged than they were before the transformation.

3. Become a Consultant

Good CIOs have long needed to be internal consultants to the business. Ever since technology moved out of the glasshouse and onto employees’ desks, CIOs have not only needed a deep understanding of the goals of a given project but also to make sure that the project didn’t stray from those goals, even after the businesspeople who had ordered the project went back to their day jobs. “Businesspeople didn’t really need to get into the details of what IT was really doing,” recalls Ferro. “They just had a set of demands and said, ‘Hey, IT, go do that.’”

Now software has become so integral to the business that nobody can afford to walk away. Businesspeople must join the ranks of the IT consultants.

But that was then. Now software has become so integral to the business that nobody can afford to walk away. Businesspeople must join the ranks of the IT consultants. “If you’re building a house, you don’t just disappear for six months and come back and go, ‘Oh, it looks pretty good,’” says Ferro. “You’re on that work site constantly and all of a sudden you’re looking at something, going, ‘Well, that looked really good on the blueprint, not sure it makes sense in reality. Let’s move that over six feet.’ Or, ‘I don’t know if I like that anymore.’ It’s really not much different in application development or for IT or technical projects, where on paper it looked really good and three weeks in, in that second sprint, you’re going, ‘Oh, now that I look at it, that’s really stupid.’”

4. Learn Horizontal Leadership

CIOs have always needed the ability to educate and influence other leaders that they don’t directly control. For major IT projects to be successful, they need other leaders to contribute budget, time, and resources from multiple areas of the business.

It’s a kind of horizontal leadership that will become critical for businesspeople to acquire in digital transformation. “The leadership role becomes one much more of coaching others across the organization—encouraging people to be creative, making sure everybody knows how to use data well,” Ross says.

In this team-based environment, having all the answers becomes less important. “It used to be that the best business executives and leaders had the best answers. Today that is no longer the case,” observes Gary Cokins, a technology consultant who focuses on analytics-based performance management. “Increasingly, it’s the executives and leaders who ask the best questions. There is too much volatility and uncertainty for them to rely on their intuition or past experiences.”

Many experts expect this trend to continue as the confluence of automation and data keeps chipping away at the organizational pyramid. “Hierarchical, command-and-control leadership will become obsolete,” says Edward Hess, professor of business administration and Batten executive-in-residence at the Darden School of Business at the University of Virginia. “Flatter, distributive leadership via teams will become the dominant structure.”

5. Understand Process Design

When business processes were simpler, IT could analyze the process and improve it without input from the business. But today many processes are triggered on the fly by the customer, making a seamless customer experience more difficult to build without the benefit of a larger, multifunctional team. In a highly digitalized organization like Amazon, which releases thousands of new software programs each year, IT can no longer do it all.

While businesspeople aren’t expected to start coding, their involvement in process design is crucial. One of the techniques that many organizations have adopted to help IT and businesspeople visualize business processes together is design thinking (for more on design thinking techniques, see “A Cult of Creation“).

Customers aren’t the only ones who benefit from better processes. Among the 100 companies the SAP-Oxford Economics researchers have identified as digital leaders, two-thirds say that they are making their employees’ lives easier by eliminating process roadblocks that interfere with their ability to do their jobs. Ninety percent of leaders surveyed expect to see value from these projects in the next two years alone.

6. Learn to Keep Learning

The ability to learn and keep learning has been a part of IT from the start. Since the first mainframes in the 1950s, technologists have understood that they need to keep reinventing themselves and their skills to adapt to the changes around them.

Now that’s starting to become part of other job descriptions too. Many companies are investing in teaching their employees new digital skills. One South American auto products company, for example, has created a custom-education institute that trained 20,000 employees and partner-employees in 2016. In addition to training current staff, many leading digital companies are also hiring new employees and creating new roles, such as a chief robotics officer, to support their digital transformation efforts.

Nicolas van Zeebroeck, professor of information systems and digital business innovation at the Solvay Brussels School of Economics and Management at the Free University of Brussels, says that he expects the ability to learn quickly will remain crucial. “If I had to think of one critical skill,” he explains, “I would have to say it’s the ability to learn and keep learning—the ability to challenge the status quo and question what you take for granted.”

7. Fail Smarter

Traditionally, CIOs tended to be good at thinking through tests that would allow the company to experiment with new technology without risking the entire network.

This is another unfamiliar skill that smart managers are trying to pick up. “There’s a lot of trial and error in the best companies right now,” notes MIT’s Ross. But there’s a catch, she adds. “Most companies aren’t designed for trial and error—they’re trying to avoid an error,” she says.

To learn how to do it better, take your lead from IT, where many people have already learned to work in small, innovative teams that use agile development principles, advises Ross.

For example, business managers must learn how to think in terms of a minimum viable product: build a simple version of what you have in mind, test it, and if it works start building. You don’t build the whole thing at once anymore.… It’s really important to build things incrementally,” Ross says.

Flexibility and the ability to capitalize on accidental discoveries during experimentation are more important than having a concrete project plan, says Ross. At Spotify, the music service, and CarMax, the used-car retailer, change is driven not from the center but from small teams that have developed something new. “The thing you have to get comfortable with is not having the formalized plan that we would have traditionally relied on, because as soon as you insist on that, you limit your ability to keep learning,” Ross warns.

8. Understand the True Cost—and Speed—of Data

Gut instincts have never had much to do with being a CIO; now they should have less to do with being an ordinary manager as well, as data becomes more important.

As part of that calculation, businesspeople must have the ability to analyze the value of the data that they seek. “You’ll need to apply a pinch of knowledge salt to your data,” advises Solvay’s van Zeebroeck. “What really matters is the ability not just to tap into data but to see what is behind the data. Is it a fair representation? Is it impartial?”

Increasingly, businesspeople will need to do their analysis in real time, just as CIOs have always had to manage live systems and processes. Moving toward real-time reports and away from paper-based decisions increases accuracy and effectiveness—and leaves less time for long meetings and PowerPoint presentations (let us all rejoice).

Not Every CIO Is Ready

Of course, not all CIOs are ready for these changes. Just as high school has a lot of false positives—genius nerds who turn out to be merely nearsighted—so there are many CIOs who aren’t good role models for transformation.

Success as a CIO these days requires more than delivering near-perfect uptime, says Lenovo’s Hu. You need to be able to understand the business as well. Some CIOs simply don’t have all the business skills that are needed to succeed in the transformation. Others lack the internal clout: a 2016 KPMG study found that only 34% of CIOs report directly to the CEO.

This lack of a strategic perspective is holding back digital transformation at many organizations. They approach digital transformation as a cool, one-off project: we’re going to put this new mobile app in place and we’re done. But that’s not a systematic approach; it’s an island of innovation that doesn’t join up with the other islands of innovation. In the longer term, this kind of development creates more problems than it fixes.

Such organizations are not building in the capacity for change; they’re trying to get away with just doing it once rather than thinking about how they’re going to use digitalization as a means to constantly experiment and become a better company over the long term.

As a result, in some companies, the most interesting tech developments are happening despite IT, not because of it. “There’s an alarming digital divide within many companies. Marketers are developing nimble software to give customers an engaging, personalized experience, while IT departments remain focused on the legacy infrastructure. The front and back ends aren’t working together, resulting in appealing web sites and apps that don’t quite deliver,” writes George Colony, founder, chairman, and CEO of Forrester Research, in the MIT Sloan Management Review.

Thanks to cloud computing and easier development tools, many departments are developing on their own, without IT’s support. These days, anybody with a credit card can do it.

Traditionally, IT departments looked askance at these kinds of do-it-yourself shadow IT programs, but that’s changing. Ferro, for one, says that it’s better to look at those teams not as rogue groups but as people who are trying to help. “It’s less about ‘Hey, something’s escaped,’ and more about ‘No, we just actually grew our capacity and grew our ability to innovate,’” he explains.

“I don’t like the term ‘shadow IT,’” agrees Lenovo’s Hu. “I think it’s an artifact of a very traditional CIO team. If you think of it as shadow IT, you’re out of step with reality,” he says.

The reality today is that a company needs both a strong IT department and strong digital capacities outside its IT department. If the relationship is good, the CIO and IT become valuable allies in helping businesspeople add digital capabilities without disrupting or duplicating existing IT infrastructure.

If a company already has strong digital capacities, it should be able to move forward quickly, according to Ross. But many companies are still playing catch-up and aren’t even ready to begin transforming, as the SAP-Oxford Economics survey shows.

For enterprises where business and IT are unable to get their collective act together, Ross predicts that the next few years will be rough. “I think these companies ought to panic,” she says. D!

About the Authors

Thomas Saueressig is Chief Information Officer at SAP.

Timo Elliott is an Innovation Evangelist at SAP.

Sam Yen is Chief Design Officer at SAP and Managing Director of SAP Labs.

Bennett Voyles is a Berlin-based business writer.

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.


Survey: Four Ways Machine Learning Will Disrupt Your Business

Dan Wellers and Dirk Jendroska

We are entering the era of the machine learning enterprise, in which this subset of artificial intelligence (AI) capabilities will revolutionize operating models, shake up staffing methods, upend business models, and potentially alter the nature of competition itself. The adoption of machine learning capabilities will be limited only by an organization’s ability to change – but not every company will be willing or able to make such a radical shift.

Very soon, the difference between the haves and the have-nots of machine learning will become clear. “The disruption over the next three to five years will be massive,” says Cliff Justice, principal in KPMG’s Innovation and Enterprise Solutions team. Companies hanging onto their legacy processes will struggle to compete with machine learning enterprises able to compete with a fraction of the resources and entirely new value propositions.

For those seeking to be on the right side of the disruption, a new survey, conducted by SAP and the Economist Intelligence Unit (EIU), offers a closer look at organizations we’ve identified as the Fast Learners of machine learning: those that are already seeing benefits from their implementations.

Machine learning is unlike traditional programmed software. Machine learning software actually gets better – autonomously and continuously – at executing tasks and business processes. This creates opportunities for deeper insight, non-linear growth, and levels of innovation previously unseen.

Given that, it’s not surprising that machine learning has evolved from hype to have-to-have for the enterprise in seemingly record time. According to the SAP/EIU survey, more than two-thirds of respondents (68%) are already experimenting with it. What’s more, many of these organizations are seeing significantly improved performance across the breadth of their operations as a result, and some are aiming to remake their businesses on the back of these singular, new capabilities.

So, what makes machine learning so disruptive? Based on our analysis of the survey data and our own research, we see four primary reasons:

1. It’s probabilistic, not programmed

Machine learning uses sophisticated algorithms to enable computers to “learn” from large amounts of data and take action based on data analysis rather than being explicitly programmed to do something. Put simply, the machine can learn from experience; coded software does not. “It operates more like a human does in terms of how it formulates its conclusions,” says Justice.

That means that machine learning will provide more than just a one-time improvement in process and productivity; those improvements will continue over time, remaking business processes and potentially creating new business models along the way.

2. It creates exponential efficiency

When companies integrate machine learning into business processes, they not only increase efficiency, they are able to scale up without a corresponding increase in overhead. If you get 5,000 loan applications one month and 20,000 the next month, it’s not a problem, says Sudir Jha, head of product management and strategy for Infosys; the machines can handle it.

3. It frees up capital – financial and human

Because machine learning can be used to automate any repetitive task, it enables companies to redeploy resources to areas that make the organization more competitive, says Justice. It also frees up the employees within an organization to perform higher-value, more rewarding work. That leads to reduced turnover and higher employee satisfaction. And studies show that happier employees lead to higher customer satisfaction and better business results.

4. It creates new opportunities

AI and machine learning can offer richer insight, deeper knowledge, and predictions that would not be possible otherwise. Machine learning can enable not only new processes, but entirely new business models or value propositions for customers – “opportunities that would not be possible with just human intelligence,” says Justice. “AI impacts the business model in a much more disruptive way than cloud or any other disruption we’ve seen in our lifetimes.”

Machine learning systems alone, however, will not transform the enterprise. The singular opportunities enabled by these capabilities will only occur for companies that dedicate themselves to making machine learning part of a larger digital transformation strategy. The results of the SAP/EIU survey explain the makeup of the evolving machine learning enterprise. We’ve identified key traits important to the success of these machine-learning leaders that can serve as a template for others as well as an overview of the outcomes they’re already seeing from their efforts.

Learn more and download the full study here.  


Dan Wellers

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.

Dirk Jendroska

About Dirk Jendroska

Dr. Dirk Jendroska is Head of Strategy and Operations Machine Learning at SAP. He supports the vision of SAP Leonardo Machine Learning to enable the intelligent enterprise by making enterprise applications intelligent. He leads a team working on machine learning strategy, marketing and communications.