In Support Of Digital Transformation: Transforming Data Management Architecture And Solutions

Dan Vesset

Increased digitalization of processes, things, and human interactions; availability of higher-performance technology platforms; and cloud, data, and analytics services: These developments have ushered in opportunities to digitally transform the enterprise. Business and IT executives are increasingly looking to technology not only to improve cost control through efficiency and productivity gains, but also to drive revenue, accelerate innovation, and improve the ability to fulfill their missions.

Data as an asset

As information is at the core of the new digital ecosystem, enterprises must begin to treat data the way they would treat any other asset. They must invest in technology and people to distill insight into value and establish organizational competencies and capabilities focused on leveraging data. This trend is not about Big Data. The “bigness” of data is a topic that does not necessitate repeating. To harness all the data, enterprises will need to develop a digital transformation (DX) platform.

But isn’t this a refrain that has been heard for years — leverage your data, compete on analytics, and become data-driven? Not exactly! As DX takes hold, organizations are facing more complex ecosystems and business environments within an expansion of data characteristics, behaviors, domains, social contexts, and environments. Data complexity also grows along with volume, dimensions, timeliness, multi-channels, motion, heterogeneity, structures, distribution, or availability.

Urgency to act

A comprehensive intelligence vision is needed to start the journey of addressing this data complexity. And there is an urgency to act on this need and start (or continue) the digital journey.

According to McKinsey:

In less than a decade, new digital entrants have already seized a significant share of revenue across regions and industries — 17% on average. While digital entrants hold “only” 17% of total global revenue, they own 47% of digital revenue.

How you build your intelligent core, including its data management capabilities, will determine your ability to transform and compete (or fulfill your mission) effectively. As the foundation of the DX platform, the intelligent core is not “simply” a technology modernization exercise. Evidence already exists of key value to be generated:

  • Drastic improvement in developer productivity and ability to rapidly deploy new intelligent applications — that combine code, algorithms, and data — at the request of business users
  • Elimination of the distinction between transaction processing and analytic applications in the context of real-time operational workloads
  • Enhanced data trust and integrity leading to more pervasive use of enterprise-wide analytic assets
  • Exponential expansion in the number and types of decisions that can be automated
  • Support for new co-innovation efforts to drive business model transformation
  • Generation of new financial returns either directly or indirectly from data, a.k.a. data as a service

Critical self-assessment

The time to act is now. However, the journey to DX winds along different paths depending on the starting point; general advice to digitally transform is not actionable. Selecting the right path requires a critical self-assessment of your enterprise’s current data and information capabilities and a vision for evolving transformation. IDC’s research identifies three categories of enterprises:

  • The enterprises in the first category are seeking to transform their existing (often legacy) data management architecture and solutions. They are hampered by siloed data management technology that lacks the scalability and performance to process the volume, variety, and velocity of data created within the enterprise or by the ecosystem of external data sources.
  • The enterprises in the second category are looking to expand on the recently deployed new generation of data management technology and ensure integration with internal legacy systems as they proceed on their way toward more comprehensive transformation of their data management capabilities. These organizations have experienced project-level data management success that has led to tangible business benefits, including initiatives of data monetization.
  • The organizations in the third category have already made a substantial investment in a new generation of data management. These enterprises have experienced success in integrated legacy and new technology and, furthermore, have achieved business value from such investments in discrete areas of the enterprise. If your enterprise is in this category, it is now time to expand on early successes by enabling an ever-growing number of internal and external stakeholders with innovation accelerators, such as artificial intelligence (AI), that are made possible by the new data management solution.

Source: IDC

Regardless of where your enterprise stands, there is also a need to reframe the data management strategy. For years, IT leaders’ efforts have focused on improving the efficiency of managing the three V’s of Big Data: volume, velocity, variety. A new approach is needed where attention must turn to the three A’s — awareness, augmentation, automation — the essential elements of a comprehensive enterprise intelligence vision. A critical step in the journey to achieving this vision is to reorient the existing information management and analytics architecture toward specialized (and optimized) capabilities that leverage a broad range of data management, governance, integration, integrity, and analytics and data services.

Intelligent data orchestration

These capabilities will manifest themselves in a new architecture that intelligently orchestrates data across a network of core and edge entities (machines, things, humans, apps, bots, data stores) connected via data pipelines, where the intelligence will be derived from machine learning–based constant monitoring, diagnostics, prediction, and prescription. These capabilities will form the basis for comprehensive awareness about the state and events affecting your enterprise from within and outside They will enable augmentation of human decision-makers with machine-generated recommendations and will allow for deployment of adaptable, self-learning decision automation solutions.

Whether you’re just stepping on the starting line or approaching another turn on the journey of digital transformation, consider the impact that the foundation of an evolved data management architecture and platform will have on the chances of your enterprise to succeed.

To learn more, join me on Thursday, March 22 at 12 pm ET for a Webinar on IDC’s Maturity Models. Register here.


Dan Vesset

About Dan Vesset

Dan Vesset is GVPGroup Vice President, of Analytics and Information Management at IDC. Vesset’s research and consulting is currently focused on business analytics, business intelligence, and data warehousing software markets. He is also the co-lead of IDC's Big Data research. Vesset has authored numerous research publications, is a frequent speaker at business analytics conferences and seminars worldwide, contributes to IDC’s Business Analytics and Big Data blog, and tweets at @danvesset.

The Rise Of The Dual-Role CIO Redefines Digital Commitment

Cristiano Barbieri

First of three blogs about SulAmérica and part of the “Digital CIO” series

Managing one line of business comes with many responsibilities and commitments. But CIOs who are leading their enterprises through massive changes enabled by technology may soon find themselves running two. That’s what I’ve been doing for the past two years at SulAmérica, and I’d like to share my experience with you.

Since 2010, I have been immersed in building SulAmérica’s digital capabilities to keep up with the fast pace of the insurance market here in Brazil. But over time, I began to realize that my IT domain was bleeding into other areas of the businesses, especially when it came to customer relationships. My executive team agreed, and in 2016, asked me to assume the additional strategic responsibilities for customer relationships across our contact center channels.

To manage these dual roles well, I run on a full schedule and heavy load of action items. But at the same time, I feel like a kid in Disneyland every day. This challenge is always evolving, mesmerizing, and fun.

And why not? SulAmérica is in the middle of the most significant transformation in its 123-year existence, which is enabling us to deliver the digital experiences that customers expect today without compromise.

Redefining a traditional business with next-generation values

Designating a single leader for both IT and customer relationships created an opportunity to experiment and find the right mix of technology, processes, and measurement for offering an engaging customer experience. And for us, this was the start of our transformation journey.

As the fourth-largest insurance company in Brazil, SulAmérica provides a full range of insurance and investment offerings – from life, health, property, casualty, and auto insurance to asset management – to 8 million customers across 25 states. IT is a highly regarded critical area for ensuring efficient execution of our core processes. However, changing customer behavior and their use of digital technology opened up an opportunity that is helping our 30,000 brokers and 5,000 internal employees create closer relationships with every customer.

This defining realization empowered my IT team and customer relationship team to work together to develop and execute a strategic initiative based on three fundamental principles:

1. Go cloud-first in everything we do

Cloud technology serves as the foundation for every digital initiative. As we moved our applications, data, and interactions to the cloud, we replaced 20 disparate legacy systems with a companywide, connected platform. Now, teams across the business are accessing and contributing to this network of knowledge and working together as a single unit.

2. Operate with a 360-degree view of every customer

After setting up our cloud platform, we created a master data management repository and customer relationship management platform that allows our employees and brokers to tap into a 360-degree view of every customer with one click. With this insight, they can offer our customers the right products, get their concerns resolved quickly, and assure them that their claims are processed fairly without unnecessary frustration.

No matter which channel they choose to engage us, our millions of customers know that the person at the other end of the interaction knows what they need. More importantly, every experience is just as productive and simple as the last.

3. Experiment for our digital future with an innovation garage

One of the keys to running as a successful digital business is fostering a culture of continuous innovation. While running in the cloud enables this capability, we needed a dedicated space to experiment and test innovative developments with tangible and measurable results – and without spending significant money, time, and resources on it.

Creating this space, which we call our innovation garage, allows technology experts to identify new opportunities for customers, as well as further differentiate our businesses in a highly competitive marketplace. However, this team resides by themselves, not within IT nor any other business area. Each member understands how to use digital thinking, apply prototyping, and look beyond business requirements to sense and respond to the real opportunity ahead.

Heading into a digital horizon of excellence and dynamism

Some people may say that embracing and enabling each of these three capabilities means that we are well underway in our digital transformation. However, I believe that we have only just begun. From the adoption of the cloud and a well-rounded view of the customer to the enablement of an innovation space, we have the foundation our business needs to perform and deliver competitively.

In a matter of weeks or even days, we are better equipped to fund and bring to market high-potential innovations – and know when to dismiss weaker ideas and which ones to pursue. But no matter the project, everything we do is aligned with our ultimate mission of customer proximity, transparency, excellence, and dynamism.

For more insight on IT leadership, see Hack The CIO.


Cristiano Barbieri

About Cristiano Barbieri

Cristiano Barbieri is chief information officer and head of customer relationships at SulAmerica Seguros. He has been leading the digital transformation of the company, spearheading important initiatives including "Transforming the Customer Experience," which created a 360-degree view of the customer, and "A New Customer Platform," totally cloud based. "A New Digital Customer Journey" recently launched where more than 2 million calls a year were transformed into digital interactions. He has also created an experimentation lab within the company named "Innovation Garage," another important initiative where culture transformation is the main goal and drives many innovative projects.

“The Digital CIO”: An Experience In The Digital Economy

Thomas Saueressig

Introducing the Digital CIO series

The way business success was measured in the past doesn’t hold up against the demands of an ever-expanding digital environment. The digital reality has changed forever the way we live and do business. And no one better understands the opportunities and the challenges of digital enterprise transformation than the CIOs of today. Staying engaged on this topic is critical to ensure the success of the digital journey.

That is why I am excited to introduce the “The Digital CIO,” a new blog series in the CIO Knowledge section of the Digitalist Magazine by SAP. The premise of this blog series is to be a continuous source of insight and inspiration from CIOs to their peers all over the world. Top executives from global industries will share their experience in incorporating sophisticated new technologies, what they have learned, and what has been successful for them. This series is a reflection based on real stories told by CIOs who have taken necessary steps to improve speed and efficiency, eliminate wasteful practices, and avoid or overcome costly mistakes in their organizations.

Meet our first digital CIO

“The Digital CIO” launches with Cristiano Barbieri, the CIO and director of Customer Relationship and Technology Strategies of SulAmérica in Brazil. His first blog examines the rise of the dual-role CIO, and how merging responsibilities for both IT and customer relationships is helping SulAmérica maintain its leadership position in Brazil’s fast-paced insurance market. In his blog series, Cristiano explains how he and his team recognized the importance of an internal cultural shift to take digital transformation from cliché to reality.

 A CIO-to-CIO community

In my work with executives around the world, I am fortunate to meet leading CIOs with invaluable insights about advancing their organizations towards technological innovations. This is an experience I would like to share, and it inspired the idea of the Digital CIO blog series. The objective is to create a community of CIOs who will discuss what they have learned about work ethics in the digital era and how their organizations were changed by leveraging groundbreaking technologies to address the fast-paced demands of our digital economy.

Each blogger will provide personal guideposts on how to navigate what may seem difficult and uncharted territory. These are executive accounts of shared facts, figures, and findings to help other leaders make their best technology decisions. It will guide them on how to interact successfully with CEOs and CFOs, and how to make a compelling business case for technological innovation to their leadership.

I hope you are as excited about this series as I am, and I wish you all the best for your organization’s digital journey. I welcome your input on this new series and on what area of technology you’d like to learn more about. Please feel free to comment below.

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. Learn how to Hack the CIO.


Thomas Saueressig

About Thomas Saueressig

Thomas Saueressig is chief information officer, global head of IT Services, and a member of the SAP Chief Technology Officer circle. In his role as SAP CIO, he represents the entire IT organization internally and externally. He works to enable SAP’s IT organization to become agile, user-centric, and business-driven, with a cloud-first approach. His teams enable new business models and optimize business processes by leveraging the latest technologies and innovations, to provide a modern workplace. Thomas has vast experience in the global IT organization, starting with building up the Enterprise Mobility organization and leading all cross functions, over to heading the entire IT Project Delivery and Client IT organization globally. His focus is to create a user-centric IT organization, that delivers great user and customer experiences and changes the perception of IT. Prior to this, he supported Executive Board Member Gerhard Oswald as Executive Board Assistant in his daily operations and strategic projects. Thomas started his career in SAP Consulting where he successfully led multiple CRM customer projects. Thomas was honored to be included on Fortune’s 40 Under 40 list in 2016 and was recognized in 2017 as one of Constellation Research’s Business Transformation 150, a list that recognizes the top global executives leading transformation efforts in their organizations. He has a degree in Business Information Technology from the University of Cooperative Education in Mannheim (Germany), and a joint executive MBA from ESSEC (France), and Mannheim Business School (Germany).

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.


The Differences Between Machine Learning And Predictive Analytics

Shaily Kumar

Many people are confused about the specifics of machine learning and predictive analytics. Although they are both centered on efficient data processing, there are many differences.

Machine learning

Machine learning is a method of computational learning underlying most artificial intelligence (AI) applications. In ML, systems or algorithms improve themselves through data experience without relying on explicit programming. ML algorithms are wide-ranging tools capable of carrying out predictions while simultaneously learning from over trillions of observations.

Machine learning is considered a modern-day extension of predictive analytics. Efficient pattern recognition and self-learning are the backbones of ML models, which automatically evolve based on changing patterns in order to enable appropriate actions.

Many companies today depend on machine learning algorithms to better understand their clients and potential revenue opportunities. Hundreds of existing and newly developed machine learning algorithms are applied to derive high-end predictions that guide real-time decisions with less reliance on human intervention.

Business application of machine learning: employee satisfaction

One common, uncomplicated, yet successful business application of machine learning is measuring real-time employee satisfaction.

Machine learning applications can be highly complex, but one that’s both simple and very useful for business is a machine learning algorithm that compares employee satisfaction ratings to salaries. Instead of plotting a predictive satisfaction curve against salary figures for various employees, as predictive analytics would suggest, the algorithm assimilates huge amounts of random training data upon entry, and the prediction results are affected by any added training data to produce real-time accuracy and more helpful predictions.

This machine learning algorithm employs self-learning and automated recalibration in response to pattern changes in the training data, making machine learning more reliable for real-time predictions than other AI concepts. Repeatedly increasing or updating the bulk of training data guarantees better predictions.

Machine learning can also be implemented in image classification and facial recognition with deep learning and neural network techniques.

Predictive analytics

Predictive analytics can be defined as the procedure of condensing huge volumes of data into information that humans can understand and use. Basic descriptive analytic techniques include averages and counts. Descriptive analytics based on obtaining information from past events has evolved into predictive analytics, which attempts to predict the future based on historical data.

This concept applies complex techniques of classical statistics, like regression and decision trees, to provide credible answers to queries such as: ‘’How exactly will my sales be influenced by a 10% increase in advertising expenditure?’’ This leads to simulations and “what-if” analyses for users to learn more.

All predictive analytics applications involve three fundamental components:

  • Data: The effectiveness of every predictive model strongly depends on the quality of the historical data it processes.
  • Statistical modeling: Includes the various statistical techniques ranging from basic to complex functions used for the derivation of meaning, insight, and inference. Regression is the most commonly used statistical technique.
  • Assumptions: The conclusions drawn from collected and analyzed data usually assume the future will follow a pattern related to the past.

Data analysis is crucial for any business en route to success, and predictive analytics can be applied in numerous ways to enhance business productivity. These include things like marketing campaign optimization, risk assessment, market analysis, and fraud detection.

Business application of predictive analytics: marketing campaign optimization

In the past, valuable marketing campaign resources were wasted by businesses using instincts alone to try to capture market niches. Today, many predictive analytic strategies help businesses identify, engage, and secure suitable markets for their services and products, driving greater efficiency into marketing campaigns.

A clear application is using visitors’ search history and usage patterns on e-commerce websites to make product recommendations. Sites like Amazon increase their chance of sales by recommending products based on specific consumer interests. Predictive analytics now plays a vital role in the marketing operations of real estate, insurance, retail, and almost every other sector.

How machine learning and predictive analytics are related

While businesses must understand the differences between machine learning and predictive analytics, it’s just as important to know how they are related. Basically, machine learning is a predictive analytics branch. Despite having similar aims and processes, there are two main differences between them:

  • Machine learning works out predictions and recalibrates models in real-time automatically after design. Meanwhile, predictive analytics works strictly on “cause” data and must be refreshed with “change” data.
  • Unlike machine learning, predictive analytics still relies on human experts to work out and test the associations between cause and outcome.

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Shaily Kumar

About Shaily Kumar

Shailendra has been on a quest to help organisations make money out of data and has generated an incremental value of over one billion dollars through analytics and cognitive processes. With a global experience of more than two decades, Shailendra has worked with a myriad of Corporations, Consulting Services and Software Companies in various industries like Retail, Telecommunications, Financial Services and Travel - to help them realise incremental value hidden in zettabytes of data. He has published multiple articles in international journals about Analytics and Cognitive Solutions; and recently published “Making Money out of Data” which showcases five business stories from various industries on how successful companies make millions of dollars in incremental value using analytics. Prior to joining SAP, Shailendra was Partner / Analytics & Cognitive Leader, Asia at IBM where he drove the cognitive business across Asia. Before joining IBM, he was the Managing Director and Analytics Lead at Accenture delivering value to its clients across Australia and New Zealand. Coming from the industry, Shailendra held key Executive positions driving analytics at Woolworths and Coles in the past. Please feel to connect on: Linkedin: Twitter: