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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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 articles 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. 

Six Tips To Avoid Project Team Attrition

Shannon Schupbach

Employee attrition can hamper your team’s ability to meet deadlines and negatively affect overall engagement. Productivity suffers when high employee turnover forces you to bring in new people on a regular basis. Your employees need clear expectations, interesting challenges, and opportunities for deeper engagement with the work they’re doing. Use these tips to keep your employees engaged and your team intact as you make your way through the workload.

1. Define roles and responsibilities

Team members have strengths and weaknesses that you can leverage to optimize productivity. Having everyone simply take tasks as they become available is not the best way to maximize skills.

By defining roles and responsibilities, you can best utilize your team in a way that boosts their effectiveness and helps them stay engaged. After all, if you never have workers doing what they’re actually hired to do, they end up dissatisfied, and retention takes a hit.

Team members will know exactly what they should be doing, the role that they serve in the group, and how their duties relate to their core skill set. They can have confidence in the work they’re doing rather than second-guessing their tasks or getting too far outside their comfort zones.

2. Develop a training program

Employees want the opportunity to grow their skills and move forward in their chosen career paths. If they’re doing the same things on a project, they have no opportunity to learn.

Develop training programs that provide the resources needed to advance your team members. You’re investing in their future and showing that you care about offering opportunities for professional development.

This strategy also works well if you have to bring in costly external partners for in-demand skills. You can develop this talent from within to cover your skills gaps so you remain competitive without paying massive recruitment costs. Keep your eyes open for recruitment trends over the next 5 to 10 years so you know where you should focus most of your efforts.

3. Rotate subject-matter expertise

You don’t want to keep the same subject-matter experts on the same teams when their knowledge is useful elsewhere. Assign them to the projects that make the most sense for their talents, and keep them engaged by challenging them with new environments. The subject-matter experts can find new ways to apply their skills, and the rest of the team can pick up new information from them.

You can also gauge the interest in cross-training among your team members. Some employees may find themselves intrigued by what the subject-matter expert does. They can pursue professional development training and certification courses to learn more about what that type of work entails. The knowledge pool in your organization becomes broad and is less likely to take a major hit if someone gets sick or leaves the company.

4. Automate processes

Many employees find that a significant portion of their working hours are dedicated to repetitive manual processes such as putting together time sheets, tracking expenses, and creating revenue reports. This work is little more than data entry, in most cases, which is not what they expect to do with their talents.

By automating these processes, you decrease the hands-on time that’s required to keep up with documentation and administrative requirements. The goal is to enter data once and have it automatically populate where it’s needed.

For example, consultants can log their time against work items so all the information is added to their timesheets. The project financials get updated instantly to give everyone on the team full visibility in real time. You enjoy improved agility and the ability to quickly adapt to unexpected disruptions.

5. In-context digital assistants

Digital assistants are common in smart homes and on smartphones, but they also have a place in the enterprise. Think about the way you use this technology on your personal devices—assistants process conversation and add context to it. They determine the user’s intent, the right application to perform requested actions, and how to present this information appropriately.

The benefits of incorporating digital assistants into your workflow are twofold: You give employees another time-saving tool to streamline their workload, and the assistant also uses context to analyze data and make suggestions based on the intended usage.

6. Self-service analysis

Having the right information at the right time can make or break a project. When employees need to search multiple layers to access essential data, they will likely miss potentially critical opportunities.

A self-service option reduces the amount of back-and-forth that occurs when a team is trying to get their hands on relevant data. They can put together ad hoc requests, see updates in real time, and determine the best course of action. They wouldn’t have the opportunity to do this if they couldn’t get data in the form that makes the most sense for the project.

Project attrition shouldn’t prevent you from reaching the milestones. While the reasons behind employee team turnover can be complex, you have many options to reduce or reverse the trend.

To find out more about how to recognize what’s causing margin leakage, check out our one-pager on the 4 Steps of Digital Value Creation.

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Shannon Schupbach

About Shannon Schupbach

Shannon Schupbach is a proven leader in helping customers and partners adopt “cloud first” architectures. Shannon is an expert in product strategy and go-to-market, having held many roles (presales, delivery, sales enablement and operations) at companies such as Salesforce, WebLogic, and others. Before joining SAP, he ran implementation services for a startup company and has firsthand experience with the challenges of professional services automation. Shannon is blessed to be part of SAP and its efforts to help customers adopt digital transformation via an intelligent ERP. Connect with Shannon directly via LinkedIn: https://www.linkedin.com/in/shannon-schupbach-57785/

Drones: Is That Buzzing In Your Ear An Opportunity Or Just A Pest?

David Cruickshank

Part 3 of the Co-Innovation Series.

Day-to-day adoption of drones for commercial purposes is increasing, and it’s leading to not-at-rest sensors going to work, sensing and sense-making the full spectrum of space between terra firma and outer space. The day may soon arrive where identified flying objects continuously pass you on your street, in the halls of your building, or on campus, dutifully and autonomously carrying out all sorts of assigned tasks. Or not. Sort of like when the first Blade Runner movie failed to reflect any notion of a mobile-enabled world in the year 2019. Instead they went for neon-light-handled umbrellas. A total miss? Sure. Yet prediction of future technology is never easy. There’s always the sequel.

While we may not yet be surrounded by swarms of drones buzzing about us in all directions (which of course does worry some), the technology is nonetheless sound enough and gaining real-world traction. The entire drone industry is now focused upon growth in commercial use, as the technology keeps advancing towards formation of artificial intelligence (AI)-enabled and completely autonomous drones. The U.S. Federal Aviation Administration (FAA) says it estimates the commercial drone fleet will grow from 42,000 at the end of 2016 to about 442,000 aircraft by 2021.The aviation safety agency has said there could be as many as 1.6 million commercial drones in use by 2021. A number of valid use cases for select industries like construction, mining, and insurance are emerging today.

In my last post, I spoke to why I believe co-innovation is a reasonable approach to efficiently taking advantage of data extracted from your business operations using not-at-rest sensors. Such an initiative can take real advantage of what a co-innovated solution can be designed to do. Early adoption of any new technology is driven in part by the relentless belief in the return on investment – in this case from collecting important data from drones and automation, which is largely still nascent. That means you will likely be trying a few things before hitting on what works for your business.

Discovery through others

We are quickly advancing our understanding that this is not about just identifying and capturing more data. As we explore use cases in construction, we’ve already discovered the need to empathize with industries that have little interest in receiving more data than it has time or expertise to process. Co-innovation gets you focused on the solution and applying design thinking principles, which helps you recognize what concerns customers most.

While we may talk a lot about forming end-to-end solutions inside Silicon Valley (all in a day’s work), we also recognize that deciding to extract value from drone technology can be a big step for any given industry. Being able to leverage co-innovation, especially in cases involving nascent technologies and services, offers a chance for all participants to share knowledge and learn hands-on together. It can even spawn more discoveries with respect to the solutions possible. It’s usually the case that as we learn more (about anything), we also wind up finding out how much we still don’t know.

Fly solo or collaborate?

With the use of drones – or any not-at-rest sensor, for that matter – there will always be more to learn and discover. Even before the dust fully settles around final FAA regulations governing drones in industry, it is time well spent to examine what key dimensions of using drones in your business matter most and how they integrate with your business operational model. It’s important to gain a sense of the desired future state through understanding a day in the life of an end user trying to apply insights derived from data collected using drones.

Some early drone adopters, like in mining and construction, have elected to manage their own drone operations. They put their own product operations teams in charge of flying drones out of existing facilities, then transfer the drone’s images, captured on microSD cards, to someone else who identifies the images most useful to the requester. This is a serious undertaking, requiring flight control training and becoming familiar with federal aviation and other local regulations, among other complex tasks. It’s not that it can’t be done and done well. But the question to ask, given your business priorities, is whether it makes sense for your company to fly its own drones to get the data and then act upon it – or is it better to seek another way to consume and benefit from this data source?

In my next blog, we’ll look at how some companies are working to answer these questions.

For more on co-innovation opportunities, see The Future Will Be Co-Created.

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David Cruickshank

About David Cruickshank

David Cruickshank is senior director for strategy and operations for the SAP Co-Innovation Lab. He leads the lab's efforts in Silicon Valley to enable ecosystem-driven co-innovation between SAP, its partners, and customers. Additionally, he manages all operational aspects necessary to run a multimillion-dollar data center to provision private cloud infrastructures to deliver productive SAP landscapes consumed by co-innovation projects seeking a faster track to market for commercially successful innovations.

The Future Will Be Co-Created

Dan Wellers and Timo Elliott

 

Just 3% of companies have completed enterprise digital transformation projects.
92% of those companies have significantly improved or transformed customer engagement.
81% of business executives say platforms will reshape industries into interconnected ecosystems.
More than half of large enterprises (80% of the Global 500) will join industry platforms by 2018.

Link to Sources


Redefining Customer Experience

Many business leaders think of the customer journey or experience as the interaction an individual or business has with their firm.

But the business value of the future will exist in the much broader, end-to-end experiences of a customer—the experience of travel, for example, or healthcare management or mobility. Individual companies alone, even with their existing supplier networks, lack the capacity to transform these comprehensive experiences.


A Network Effect

Rather than go it alone, companies will develop deep collaborative relationships across industries—even with their customers—to create powerful ecosystems that multiply the breadth and depth of the products, services, and experiences they can deliver. Digital native companies like Baidu and Uber have embraced ecosystem thinking from their early days. But forward-looking legacy companies are beginning to take the approach.

Solutions could include:

  • Packaging provider Weig has integrated partners into production with customers co-inventing custom materials.
  • China’s Ping An insurance company is aggressively expanding beyond its sector with a digital platform to help customers manage their healthcare experience.
  • British roadside assistance provider RAC is delivering a predictive breakdown service for drivers by acquiring and partnering with high-tech companies.

What Color Is Your Ecosystem?

Abandoning long-held notions of business value creation in favor of an ecosystem approach requires new tactics and strategies. Companies can:

1.  Dispassionately map the end-to-end customer experience, including those pieces outside company control.

2.  Employ future planning tactics, such as scenario planning, to examine how that experience might evolve.

3.  Identify organizations in that experience ecosystem with whom you might co-innovate.

4.  Embrace technologies that foster secure collaboration and joint innovation around delivery of experiences, such as cloud computing, APIs, and micro-services.

5.  Hire, train for, and reward creativity, innovation, and customer-centricity.


Evolve or Be Commoditized

Some companies will remain in their traditional industry boxes, churning out products and services in isolation. But they will be commodity players reaping commensurate returns. Companies that want to remain competitive will seek out their new ecosystem or get left out in the cold.


Download the executive brief The Future Will be Co-Created.


Read the full article The Future Belongs to Industry-Busting Ecosystems.

Turn insight into action, make better decisions, and transform your business.  Learn how.

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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.

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 articles 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. 

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Blockchain: Much Ado About Nothing? How Very Wrong!

Juergen Roehricht

Let me start with a quote from McKinsey, that in my view hits the nail right on the head:

“No matter what the context, there’s a strong possibility that blockchain will affect your business. The very big question is when.”

Now, in the industries that I cover in my role as general manager and innovation lead for travel and transportation/cargo, engineering, construction and operations, professional services, and media, I engage with many different digital leaders on a regular basis. We are having visionary conversations about the impact of digital technologies and digital transformation on business models and business processes and the way companies address them. Many topics are at different stages of the hype cycle, but the one that definitely stands out is blockchain as a new enabling technology in the enterprise space.

Just a few weeks ago, a customer said to me: “My board is all about blockchain, but I don’t get what the excitement is about – isn’t this just about Bitcoin and a cryptocurrency?”

I can totally understand his confusion. I’ve been talking to many blockchain experts who know that it will have a big impact on many industries and the related business communities. But even they are uncertain about the where, how, and when, and about the strategy on how to deal with it. The reason is that we often look at it from a technology point of view. This is a common mistake, as the starting point should be the business problem and the business issue or process that you want to solve or create.

In my many interactions with Torsten Zube, vice president and blockchain lead at the SAP Innovation Center Network (ICN) in Potsdam, Germany, he has made it very clear that it’s mandatory to “start by identifying the real business problem and then … figure out how blockchain can add value.” This is the right approach.

What we really need to do is provide guidance for our customers to enable them to bring this into the context of their business in order to understand and define valuable use cases for blockchain. We need to use design thinking or other creative strategies to identify the relevant fields for a particular company. We must work with our customers and review their processes and business models to determine which key blockchain aspects, such as provenance and trust, are crucial elements in their industry. This way, we can identify use cases in which blockchain will benefit their business and make their company more successful.

My highly regarded colleague Ulrich Scholl, who is responsible for externalizing the latest industry innovations, especially blockchain, in our SAP Industries organization, recently said: “These kinds of use cases are often not evident, as blockchain capabilities sometimes provide minor but crucial elements when used in combination with other enabling technologies such as IoT and machine learning.” In one recent and very interesting customer case from the autonomous province of South Tyrol, Italy, blockchain was one of various cloud platform services required to make this scenario happen.

How to identify “blockchainable” processes and business topics (value drivers)

To understand the true value and impact of blockchain, we need to keep in mind that a verified transaction can involve any kind of digital asset such as cryptocurrency, contracts, and records (for instance, assets can be tangible equipment or digital media). While blockchain can be used for many different scenarios, some don’t need blockchain technology because they could be handled by a simple ledger, managed and owned by the company, or have such a large volume of data that a distributed ledger cannot support it. Blockchain would not the right solution for these scenarios.

Here are some common factors that can help identify potential blockchain use cases:

  • Multiparty collaboration: Are many different parties, and not just one, involved in the process or scenario, but one party dominates everything? For example, a company with many parties in the ecosystem that are all connected to it but not in a network or more decentralized structure.
  • Process optimization: Will blockchain massively improve a process that today is performed manually, involves multiple parties, needs to be digitized, and is very cumbersome to manage or be part of?
  • Transparency and auditability: Is it important to offer each party transparency (e.g., on the origin, delivery, geolocation, and hand-overs) and auditable steps? (e.g., How can I be sure that the wine in my bottle really is from Bordeaux?)
  • Risk and fraud minimization: Does it help (or is there a need) to minimize risk and fraud for each party, or at least for most of them in the chain? (e.g., A company might want to know if its goods have suffered any shocks in transit or whether the predefined route was not followed.)

Connecting blockchain with the Internet of Things

This is where blockchain’s value can be increased and automated. Just think about a blockchain that is not just maintained or simply added by a human, but automatically acquires different signals from sensors, such as geolocation, temperature, shock, usage hours, alerts, etc. One that knows when a payment or any kind of money transfer has been made, a delivery has been received or arrived at its destination, or a digital asset has been downloaded from the Internet. The relevant automated actions or signals are then recorded in the distributed ledger/blockchain.

Of course, given the massive amount of data that is created by those sensors, automated signals, and data streams, it is imperative that only the very few pieces of data coming from a signal that are relevant for a specific business process or transaction be stored in a blockchain. By recording non-relevant data in a blockchain, we would soon hit data size and performance issues.

Ideas to ignite thinking in specific industries

  • The digital, “blockchained” physical asset (asset lifecycle management): No matter whether you build, use, or maintain an asset, such as a machine, a piece of equipment, a turbine, or a whole aircraft, a blockchain transaction (genesis block) can be created when the asset is created. The blockchain will contain all the contracts and information for the asset as a whole and its parts. In this scenario, an entry is made in the blockchain every time an asset is: sold; maintained by the producer or owner’s maintenance team; audited by a third-party auditor; has malfunctioning parts; sends or receives information from sensors; meets specific thresholds; has spare parts built in; requires a change to the purpose or the capability of the assets due to age or usage duration; receives (or doesn’t receive) payments; etc.
  • The delivery chain, bill of lading: In today’s world, shipping freight from A to B involves lots of manual steps. For example, a carrier receives a booking from a shipper or forwarder, confirms it, and, before the document cut-off time, receives the shipping instructions describing the content and how the master bill of lading should be created. The carrier creates the original bill of lading and hands it over to the ordering party (the current owner of the cargo). Today, that original paper-based bill of lading is required for the freight (the container) to be picked up at the destination (the port of discharge). Imagine if we could do this as a blockchain transaction and by forwarding a PDF by email. There would be one transaction at the beginning, when the shipping carrier creates the bill of lading. Then there would be look-ups, e.g., by the import and release processing clerk of the shipper at the port of discharge and the new owner of the cargo at the destination. Then another transaction could document that the container had been handed over.

The future

I personally believe in the massive transformative power of blockchain, even though we are just at the very beginning. This transformation will be achieved by looking at larger networks with many participants that all have a nearly equal part in a process. Today, many blockchain ideas still have a more centralistic approach, in which one company has a more prominent role than the (many) others and often is “managing” this blockchain/distributed ledger-supported process/approach.

But think about the delivery scenario today, where goods are shipped from one door or company to another door or company, across many parties in the delivery chain: from the shipper/producer via the third-party logistics service provider and/or freight forwarder; to the companies doing the actual transport, like vessels, trucks, aircraft, trains, cars, ferries, and so on; to the final destination/receiver. And all of this happens across many countries, many borders, many handovers, customs, etc., and involves a lot of paperwork, across all constituents.

“Blockchaining” this will be truly transformational. But it will need all constituents in the process or network to participate, even if they have different interests, and to agree on basic principles and an approach.

As Torsten Zube put it, I am not a “blockchain extremist” nor a denier that believes this is just a hype, but a realist open to embracing a new technology in order to change our processes for our collective benefit.

Turn insight into action, make better decisions, and transform your business. Learn how.

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Juergen Roehricht

About Juergen Roehricht

Juergen Roehricht is General Manager of Services Industries and Innovation Lead of the Middle and Eastern Europe region for SAP. The industries he covers include travel and transportation; professional services; media; and engineering, construction and operations. Besides managing the business in those segments, Juergen is focused on supporting innovation and digital transformation strategies of SAP customers. With more than 20 years of experience in IT, he stays up to date on the leading edge of innovation, pioneering and bringing new technologies to market and providing thought leadership. He has published several articles and books, including Collaborative Business and The Multi-Channel Company.