Digital Leadership: A Six-Step Framework For Transformation

Timo Elliott

Part 2 in the 3-part Digital Leadership Series

Leaders in digital transformation are in the minority today, according to a recent SAP Digital Transformation Executive Study conducted with Oxford Economics. As my last blog asked, are CIOs up to the challenge? What will it take to catch up? What’s required of you to successfully drive digital transformation?

IDC has developed a useful framework to guide the digital ambitions of CIOs and CDOs, complete with role-specific scorecards – one for CIOs and one for CDOs. These scorecards identify the following dimensions as critical to successful digital transformation:

  1. Vision. Leaders must cultivate an innovation-oriented culture focused on generating multitier digital revenue streams and identify new use cases linked to emerging technologies with clear risk-management approaches in place.
  1. Simplification and Integration. To prevent islands of innovation – which do not yield the significant business benefits of comprehensive approaches – it’s critical that companies put in place an enterprise digital platform architecture that aggressively modernizes their enterprise applications, infrastructure, and systems to support a digital organization. (SAP’s research confirms IDC’s prioritization of this dimension; for example, our findings indicate that leaders have established a strong base upon which to make the most of next-generation technologies and are currently far ahead of the laggards on Big Data and analytics (94% vs. 60%), IoT (76% vs. 52%), machine learning (50% vs. 7%), and robotics (15% vs. 8%).)
  1. Ecosystem-centricity. Leaders must build an external customer focus for the entire IT organization and develop consumer engagement expertise to support discussions with the CIO, CDO, and lines of business. This is critical to success, because the business models of the future are all about the end-to-end customer experience, which almost always crosses traditional customer boundaries. (SAP’s study validates the importance of this area of focus. After investing in greater interconnectivity across their business, nearly half – 46% – of the top 100 leaders reported that they are already seeing significant impact in terms of working more digitally with their partner ecosystems.)
  1. Data-driven business. Digital transformation requires that organizations look at data in an entirely different way so they can identify ways to monetize it and reinvent business models to create new revenue streams (referred to as “infonomics”). This requires leaders who will invest in and implement “new” data platforms of the future – platforms that can bring together data effectively as it’s needed, from wherever it’s stored, inside or outside the organization. It also requires a new understanding of the customer experience and how to use data about customers to deliver a personalized experience.
  1. Profitable digital capabilities. Leaders must put in place a digital platform architecture that aggressively modernizes enterprise applications (for example, by putting them on standard platforms) and core infrastructure to support digital organization. (IDC believes that this KPI is unique to the CDO, while the CIO and the IT department should deliver the right digital platform architecture to support these profitable digital capabilities.)
  1. Talent management. Leaders find ways to attract new types of top digital talent (for example, developers, data scientists, UX experts, and design thinking consultants) that will effectively turn digital use cases into a profitable digital capability, quickly and efficiently. SAP’s research confirms this – for example, leaders are much more likely to create new roles (such as “chief robotics officer”) to keep up with their digital transformation efforts (52% for leaders versus 32% for all others).

What are you waiting for?

Think you can wait to begin your organization’s digital transformation? Think again. Competitors who lead in digital transformation will realize consistently higher value – ranging from a factor of 2.5x to 4x more than laggards, according to SAP’s study. These results are staggering across the board and affect every part of the enterprise – from customers and partners to brand value, employee engagement, and revenue growth.

I encourage you to get more detail on the SAP Digital Transformation Executive Study, as well as to read IDC’s papers on CIO and one for CDO scorecards regarding digital transformation. In my next blog, we’ll explore a question on the minds of many CIOs today: can CIOs become the CDO for their organization?

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Timo Elliott

About Timo Elliott

Timo Elliott is an Innovation Evangelist for SAP and a passionate advocate of innovation, digital business, analytics, and artificial intelligence. He was the eighth employee of BusinessObjects and for the last 25 years he has worked closely with SAP customers around the world on new technology directions and their impact on real-world organizations. His articles have appeared in publications such as Harvard Business Review, Forbes, ZDNet, The Guardian, and Digitalist Magazine. He has worked in the UK, Hong Kong, New Zealand, and Silicon Valley, and currently lives in Paris, France. He has a degree in Econometrics and a patent in mobile analytics. 

Why CIOs Need To Be Postmodern

Christine Ashton

Part 1 in the “Postmodern CIO” series

Businesses are more reliant on technology than ever before, but that doesn’t mean that CIOs are supposed to focus solely on maintaining their enterprise applications and IT infrastructure. Regardless of the size of the company they work for, the days when a CIO’s primary role was just keeping the lights on are long gone. Or at least they are for the generation of CIOs with a vision for using technology to enable their businesses to reconfigure themselves for the rapidly evolving digital marketplace.

More and more CIOs are leaving the gritty technical details to their IT managers and becoming innovation leaders, occupying a seat at the table with the rest of the C-suite. In doing so, they’re assuming greater responsibility, moving from operating a system of record and running reports to overseeing a post-modern technology and services environment that underpins the truly digital business.

From cloud and mobile technologies to APIs and software as a service (SaaS), undergoing a digital transformation means providing your employees with the tools and solutions they need in order to do their jobs quickly and correctly. This new breed of CIO needs to enable the instant, limitless scalability and immediate access to innovation that come with being a genuinely digitally enhanced organization. Here’s are just a few ways postmodern CIOs stand out from their predecessors:

The role of the postmodern CIO

1. From operating IT to innovating business operations

IT professionals have never been in such a strong position to help their colleagues in the wider business achieve their goals. The IT department can now proactively move to create simplified processes, tools, and capabilities that the business team could only have dreamed of, delivering value for internal users, suppliers, and customers.

2. From owning software to leveraging ecosystems

IT environments no longer need to contain disconnected pieces of software, but dozens or hundreds of interlocking parts that together form a coherent business technology ecosystem. Developing the capability to help the business take advantage of this constantly evolving environment is crucial. Helping the business learn how it can reconfigure itself in near real time to develop new capability and to take advantage of innovations is how the postmodern CIO can create added value. Making a shift from an architectural view of the technology ecosystem to a business design perspective will be a key milestone for the success of any postmodern CIO.

3. From managing teams to growing talents

Mentoring and team-building are already crucial skills for any CIO, but the task becomes even more crucial as the competition for tech talent grows fiercer. A talented, inclusive, and confident IT workforce is the catalyst for business innovation, and postmodern CIOs need to put their focus on building a well-oiled talent pipeline to hire and retain the best people.

4. From keeping the lights green to delivering differentiation

CIOs need to be so much more than glorified tech support and should consider how they can hold suppliers more accountable to deliver services and stated outcomes. In today’s competitive business landscape, technology can be a source of differentiation between you and your rivals. Those CIOs who really get their hands dirty and strive to understand how they can use technology to benefit their company are best-positioned to lead and react to rapidly changing business objectives and market conditions.

5. From receiving CFO tasks to becoming the COO and advising the CEO

In this new CIO era, IT professionals expect – and are expected – to provide a vision for how the business can leverage technology to deliver results and meet targets. But sometimes they are the only ones who can see the benefits of that vision. By focusing on short-term return on investment, finance can sometimes have a restraining effect on innovative projects that are oriented to the medium or long term. Instead, CIOs might want to consider taking a “phased approach,” working with the business on some clearly defined projects, implemented in a way that, if successful, could be instantly scalable. Such an approach can help cut the perceived risk and help guide CFOs on how their IT investments will reap future dividends. Equally, the pace of technological change means being able to show the instant impact of technology adoption, and it can be a key way for IT to contribute in real time.

Final thoughts

CIOs and other IT leaders need to decide whether they’re going to lead technological change proactively or continue to be a cost-led, shadow procurement department and let change lead them. It’s a choice between dynamism and stasis.

Today’s postmodern CIOs need a strong vision for their company’s future that allows them to make the shift from building static architectures that require a lot of maintenance to keep them relevant, to promoters of innovation in all areas to stay ahead of the curve (and competitors).

Traditional change management won’t work for the digital transformation era. Learn about The New DNA of Change.

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Christine Ashton

About Christine Ashton

Christine is global chief digital officer, Digital Office ERP Cloud at SAP. Her focus is to work with CxOs to reimagine strategy and business practices. She works with senior executives to plan their “AI-first” digital transformation road map enabled by intelligent ERP and public cloud. Notably, Christine is recognized in Computer Weekly’s 2017’s Most Influential Women In IT – Top 100 list.

Revolutionizing (Not Disrupting) The Status Quo Of Roadway Logistics

Alexander Lutze

Most companies operate under the assumption that innovation and disruption are one and the same. For more than two decades, businesses have been engaged in an increasingly fast, never-ending, and contentious pursuit of the next breakthrough product or service that will displace existing markets, industries, and technologies.

But what if this narrow view is underestimating the true power of innovation? Sometimes, when the definition of innovation is expanded, organizations can concentrate on solving long-existing problems through innovative thinking to revolutionize – not disrupt – standard practices.

The value of revolutionizing the status quo, not disrupting it

At BPW Innovation Lab, we commit ourselves to create innovative solutions for some of the biggest challenges in the logistics industry – from automatic driving to logistic networks and sensors on loading equipment. We help our parent company, BPW Group, create new business models that deliver new technologies to senders and receivers of goods and services, as well as their transportation providers.

In recent years, we noticed that production companies are well-informed about the activities in their production facilities. However, once goods or products left this safe environment, this information is no longer shared across the supply chain – a reality that is commonly referred as the “information black hole.”

By looking at the problem through a different lens, we devised a way to eliminate a status quo of limited visibility to give supply chain managers the information they need to run more efficiently. Now, senders and receivers of goods and products can leverage a digital network based on the Internet of Things, so they can track and trace the position and condition of the freight, traffic events, and weather changes. All of this information is transmitted back to the provider’s system, uncovering insight our customers need to readjust routes and ensure on-time, safe delivery. And this knowledge enables them to find better ways to service their own customers when they are requesting that their manufactured product be shipped to a retailers or consumer. 

Solving age-old problems requires a new way of thinking

“We can’t solve problems by using the same kind of thinking we used when we created them.”

– Albert Einstein

For better or for worse, human instinct colors personal bias intentionally and unintentionally. These erected walls restrain imaginative thinking and blind us from seeing the situation or opportunity that’s right in front of our eyes. When working with 20 people in the same room representing the boardroom and every line of business, reaching a consensus on a sound idea that can significantly impact the bottom line is nearly impossible.

To question – and improve – the status quo, we knew that we had to step out of our comfort zone and study the shipping process in new and different ways. Design thinking empowered the team, project stakeholders, and executive sponsors to look at the problem from a variety of perspectives. We invited our customers to participate in the process so we can hear firsthand accounts from their general managers, head of logistics, head of the supply chain, dispatchers, and individuals who are affected by logistics and supply chain performance.

This out-of-the-box thinking enabled us to solve a missing link in today’s transport practices by applying technology that our customers are beginning to adopt. More importantly, our customers are becoming more aware of the risks of not tracking their shipments when they leave the production facility, while seizing an opportunity to provide a new service to their customers.

Design thinking ignites innovation that matters most

Although all disruptions are innovations, not all innovations are disruptions – just like all squares are rectangles, but not all rectangles are squares. However, breakthrough innovation can be a powerful, transformational force. It can shift existing paradigms and spur unprecedented growth, and create networks that help people work together to address more significant opportunities. But these possibilities cannot be accomplished without acting creatively and assessing all aspects of a situation without bias.

With design thinking, people from a variety of organizations, or only one, can collaborate and create a constant flow of high-quality ideas. And once a concept is defensible from the perspective of the business, user, and anyone else who may be impacted as well, the approach sets the foundation for fast prototyping and delivery of the innovation.

For more on how innovation can transform business, see The Holy Grail Of Innovation In Today’s Digital Era.

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Alexander Lutze

About Alexander Lutze

From the very beginning, Alexander Lutze was a member of the BPW Innovation Lab, a future garage to explore solutions and opportunities within the digitization of transport & logistics processes. Alex first worked in the area of the global supply chain management and later held the position of manager, Strategy & Business Development at BPW Asia in Singapore. Alex holds a bachelor‘s degree in engineering and a master’s degree in technical management.

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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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.

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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How Manufacturers Can Kick-Start The Internet Of Things In 2018

Tanja Rueckert

Part 1 of the “Manufacturing Value from IoT” series

IoT is one of the most dynamic and exciting markets I am involved with at SAP. The possibilities are endless, and that is perhaps where the challenges start. I’ll be sharing a series of blogs based on research into knowledge and use of IoT in manufacturing.

Most manufacturing leaders think that the IoT is the next big thing, alongside analytics, machine learning, and artificial intelligence. They see these technologies dramatically impacting their businesses and business in general over the next five years. Researchers see big things ahead as well; they forecast that IoT products and investments will total hundreds of billions – or even trillions – of dollars in coming decades.

They’re all wrong.

The IoT is THE Big Thing right now – if you know where to look.

Nearly a third (31%) of production processes and equipment and non-production processes and equipment (30%) already incorporate smart device/embedded intelligence. Similar percentages of manufacturers have a company strategy implemented or in place to apply IoT technologies to their processes (34%) or to embed IoT technologies into products (32%).

opportunities to leverage IoTSource:Catch Up with IoT Leaders,” SAP, 2017.

The best process opportunities to leverage the IoT include document management (e.g. real-time updates of process information); shipping and warehousing (e.g. tracking incoming and outgoing goods); and assembly and packaging (e.g. production monitoring). More could be done, but figuring out where and how to implement the IoT is an obstacle for many leaders. Some 44 percent of companies have trouble identifying IoT opportunities and benefits for either internal processes or IoT-enabled products.

Why so much difficulty in figuring out where to use the IoT in processes?

  • No two industries use the IoT in the same way. An energy company might leverage asset-management data to reduce costs; an e-commerce manufacturer might focus on metrics for customer fulfillment; a fabricator’s use of IoT technologies may be driven by a need to meet exacting product variances.
  • Even in the same industry, individual firms will apply and profit from the IoT in unique ways. In some plants and processes, management is intent on getting the most out of fully depreciated equipment. Unfortunately, older equipment usually lacks state-of-the-art controls and sensors. The IoT may be in place somewhere within those facilities, but it’s unlikely to touch legacy processes until new machinery arrive. 

Where could your company leverage the IoT today? Think strategically, operationally, and financially to prioritize opportunities:

  • Can senior leadership and plant management use real-time process data to improve daily decision-making and operations planning? Do they have the skills and tools (e.g., business analytics) to leverage IoT data?
  • Which troublesome processes in the plant or front office erode profits? With real-time data pushed out by the IoT, which could be improved?
  • Of the processes that could be improved, which include equipment that can – in the near-term – accommodate embedded intelligence, and then communicate with plant and enterprise networks?

Answer those questions, and you’ve got an instant list of how and where to profit from the IoT – today.

Stay tuned for more information on how IoT is developing and to learn what it takes to be a manufacturing IoT innovator. In the meantime, download the report “Catch Up with IoT Leaders.”

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Tanja Rueckert

About Tanja Rueckert

Tanja Rueckert is President of the Internet of Things and Digital Supply Chain Business Unit at SAP.