Why You Need To Rethink The Way Your Business Operates

Simon Dale

The pace of change in business today is staggering. As expectations for quality user experiences rise ever higher, this need for speed is driving enterprises to embark on digital transformation.

Rising expectations

You could call it life imitating art, but customers’ online behavior is now setting sky-high expectations for real-world encounters. Customers demand a single, consistent experience across every touch point.

Everyone has access to multiple channels, which puts pressure on companies to provide an integrated experience. You just can’t deliver a slick experience on a mobile device in isolation. You can’t expect your customers to be happy with one great experience that doesn’t extend beyond the confines of their mobile screens.

But it’s not just about meeting customer expectations. Inside the enterprise, employees are leading the charge. They want to collaborate with their coworkers in the same way as they can with friends. At work, you expect the same powerful technology that you use at home.

Yet on the customer experience side, many of the executives I speak with in manufacturing, retail, services, life sciences, and other sectors are still struggling to create the perfect cross-channel experiences for their customers. Many organizations persist with clunky apps even though they’re a serious drag on productivity.

We are all technology companies

These days, all successful companies are technology companies that just happen to produce other things as well. So it doesn’t matter whether you’re selling beauty products, manufacturing industrial cement, or educating young minds, the market and people have changed.

Adopting digital technologies is crucial if you want to meet modern expectations. You need to take advantage of digital tools and technology to provide customers with what they want in a targeted, effective, and seamless way.

Getting ahead in the digital journey

While large traditional companies—with decades of history and legacy—are very different from nimble digital entrants, clearly only those organizations that take advantage of an always-on, digitally connected and Big Data-driven world can hope to succeed.

Cloud and mobile computing combined with endless streams of data have created the potential to transform nearly everything.

For established organizations there’s an urgent need to rewire your end-to-end business processes for the digital world. You need to modernize core systems to support new kinds of digital interactions.

Accumulating and analyzing more valid data

Take the case of a long-established cement producer based in Thailand. While Siam City Cement is not an obvious early candidate for digital transformation, its needs were compelling. Digital transformation is now well underway in its business as the company strives to respond to changing consumer behavior.

For Siam City, the only way to keep up with customer demand was to understand customer data better. Using a next-generation ERP business suite as its digital core, it now has critical information available in real time, helping the company make decisions quickly and ensure it is offering customers the best products and services possible. The organization has also cut month-end closing in half.

In pursuit of excellence

Over in Australia, Melbourne’s La Trobe University went from having a fragmented finance system with over 15 years of customizations to an ERP-based finance solution in under 20 weeks.

By simplifying its entire IT landscape and architecture, the university’s financial process is now much faster. Access to real-time data is leading to swifter decision making. By comparison, under the old finance system, 72 customized reports were produced each month. Now, there are just five. This has eliminated an entire day of work from the university’s finance administration team, freeing them up to focus on more useful projects.

But more than this, with reliable financial data, the university can now make informed decisions on which programs to increase or which facilities to enhance.

Pioneering a new beauty category

And for the Korean beauty products startup Memebox, within six months of going live with an ERP-based finance solution, the company saw a dramatic uptick in sales productivity.

These efficiencies stem from improved inventory accuracy. With real-time tracking, Memebox has reduced product delivery lead times, so customers are receiving the right products more quickly while revenue for Memebox continues to grow.

Customer experience is the heart of digital transformation

These days, attracting, winning, and retaining customers requires personalized cross-channel interactions and individualization of products and services. Organizations that embrace digital technologies and modernize their end-to-end processes will place themselves in the strongest position to succeed.

Read more SAP S/4HANA success stories and follow me at @SimonDWork to stay on top of the latest developments.

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Simon Dale

About Simon Dale

Simon Dale has the responsibility at SAP Asia Pacific and Japan to establish and scale the business for SAP S/4HANA, the next-generation business suite from SAP. His portfolio encompasses both the traditional on-premise solution go-to-market strategy, as well as the latest cloud solutions. Prior to this role, Simon launched and ran SAP's managed service for SAP solutions, SAP HANA Enterprise Cloud, in Asia. A veteran of 25 years in the IT industry, Simon sits on the advisory boards of both the Singapore Management University of Information Systems as well as the Nanyang Polytechnic School of IT. Simon is an occasional angel investor in startups and committed to active mentoring and coaching, especially to early talent and women in IT.

How Lean Is Your (Financial) Supply Chain?

Drew Hofler

Billions of dollars and millions of people-hours are dedicated each year to improving supply chains. From process improvements in manufacturing and just-in-time supply, to technology infrastructure for managing goods in transit and assessing supply and supplier risk, companies are investing like never before in their supply chains. And for good reason! A healthy physical supply chain is the beating heart of every company that produces goods to sell.

But if the physical supply chain is the beating heart of a healthy company, the financial supply chain is its lifeblood.  For every movement of goods in the physical supply chain, there is a corresponding transactional cash flow (often referred to as the procure-to-pay or source-to-settle process) that impacts the working capital and financial health of all participants. And many leading companies are now approaching the financial supply chain with the same rigor as they are applying to the physical.

In fact, in a new report, “The CFO’s Guide to Streamlining the Financial Supply Chain,” published by CFO, an Argyle company, one executive stated that “the CFO and supply chain leadership are both shifting from a backward-looking view to a forward-looking view” of the financial supply chain. This is in order to gain the visibility and capability needed to transform payables from a balance-sheet liability into a strategic asset. They are doing so by addressing the inherent challenges of the P2P process, enabling them to leverage their payables to reduce supply chain liquidity risk, free up working capital and deliver value through collaboration with their suppliers

Addressing current challenges

Too often, the financial supply chain is made up of a disparate collection of systems and processes, which makes it difficult to have complete visibility into payable performance and opportunities to improve cash flow. The first step, therefore, in improving a financial supply chain is often implementing systems and processes built upon a common platform and business network to create efficiencies and enable end-to-end visibility into the entire source to settle process.  With such a platform in place, the right information can now be made available to the right parties at the right time to enable them to make right decisions and so drive the right business results.

Reducing liquidity risks and driving value

The right results in a financial supply chain often include reducing liquidity risk in the supply chain while at the same time delivering significant free cash flow and earnings on cash to the paying organization. More and more companies are pushing out their payment terms in order to improve their working capital and free up cash. Unfortunately, their suppliers often find themselves cash constrained and unable to access the cash flow they need due to those longer payment terms. The result is an increased level of liquidity risk in the supply chain, which ultimately can affect even the physical chain.

To combat this, many companies are turning to network-based tools like supply chain finance to give their suppliers access to third party funded early payment on approved invoices, while holding on their own cash as long as possible.  The result is an increase their own free cash flow while at the same time reducing liquidity risk in their supply chain.   Others are using their own cash to fund supplier cash flow in exchange for discounts that yield far more than similar cash investment vehicles in today’s low interest rate environment.

Improving the financial supply chain turns payables from liabilities into strategic assets

In a prime example cited in “The CFO’s Guide to Streamlining the Financial Supply Chain,” a Fortune 100 pharmaceutical company was seeking to optimize its working capital without disrupting supply chain cash flow. A combination of payment term extensions and dynamic discount programs were used to achieve that objective. The result was over $300 million in free cash flow and a contribution of more than $10 million to the income statement. The company moved $5 billion in spend from net-45-days to net-60-days payment terms across 38,000 suppliers in 40 countries. And early-payment discounts increased by 12% over the previous year, delivering more than $6.5 million in savings from the discounts.

According to business school textbooks, payables are by definition a balance sheet liability. However, by focusing on improving financial supply chain processes, forward-thinking companies, like the one cited above, can transform their payables into strategic assets that deliver significant value to their bottom lines.

To learn more about this, please join us for a live panel discussion on Tuesday, Oct. 24. Finance executives from a cross-section of industries will discuss “How Finance Leaders Are Looking to the Financial Supply Chain to Optimize Working Capital and Liquidity.” Don’t miss this opportunity to hear firsthand from top-performing financial professionals and ask them your questions. Register now!

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

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Drew Hofler

About Drew Hofler

Drew Hofler is a Senior Director of Solutions Marketing for SAP Ariba. Mr. Hofler is recognized as an expert in the area of collaborative finance and dynamic discounting. He has been interviewed and quoted widely in finance and supply chain industry publications around the topics of e-invoicing, dynamic discounting, supply chain financing, and working capital management-related issues, and has published a number of articles on these subjects. Mr. Hofler is also a regular contributor to various blogs around the issues of the financial supply chain. Mr. Hofler brings almost 20 years of banking and financial services industry experience to SAP Ariba.

Regulatory Superinflation Is Here To Stay—What Can Be Done?

Thomas Frenehard

All businesses, regardless of their size, industry, or geographical location, have one thing in common—the increasing number of regulatory requirements they abide by. Why such an increase in regulatory pressure?

Why such an increase in regulatory pressure?

There are multiple reasons for this regulatory superinflation. The official and most commendable reason, of course, is protection of the end customer: Protection of the customer’s health for EH&S regulations, protection of its proceeds for financial regulations, protection of its private and personal information for privacy regulations, and so on.

Nevertheless, it seems that creating a regulation is also a very simple response from government to public pressure. There is a clear correlation between public scandals or distrust campaigns and new regulatory bodies being created to investigate, regulate, and organize the life of economic actors.

From their own confession, this is also perceived by many political leaders as an easy option—investment is rather minimal (creation of a bill and organization of a regulatory body) for a usually positive return. Indeed, whenever a new regulation is published and applied, fines are most often applied. And most importantly, the public’s reaction is frequently quite positive, since it shows leaders are finding solutions and, if companies don’t comply, they’re the ones that will be blamed.

I won’t get into a debate in this post on whether this type of deflection tactic is successful or not—although I’ll just say that someone at the end must pay for the application of all the regulatory requirements by the businesses. (This is why product and service fees regularly increase—to take this into account.) But today, I’d rather focus on trying to propose a few options for companies to reduce this burden on their organizations.

Map, rationalize, and automate

Interestingly, many new regulations have requirements that are similar to previous ones, or to legislation in other countries in which the organization might operate, as well. Unfortunately, in the sheer pressure of ensuring complete compliance, the faster option always seems to be to create a set of controls and roll them out to the business.

But not only does this have a direct cost, including documentation of the control, assessment of its effectiveness, review by second or third lines of defense, and more. It also has an indirect cost: compliance fatigue. If the first line of defense is asked the same (or very similar) question many times, then there is a high chance that they’ll either stop responding or simply copy previous responses without reviewing the context.

Before documenting new controls, I really think that it’s worth the investment to review the existing controls—centrally but also locally—and see if some can be reused or enhanced to cater to the new requirements.

Also, it’s always valuable to spend some time assessing which ones can be automated. This way, the pressure is removed from the first line and put on an automated system that can handle it.

Turn it into a competitive advantage

Whenever a company is fined for noncompliance, its name is mentioned in the newspaper. As a result, there doesn’t really seem to be a winning strategy for companies. But what if they turned this into marketing positioning? The fact that a company is compliant with regulation A or B is typically only mentioned in the annual report—that customers rarely read. Regulated companies take it for granted that customers don’t care much about compliance, but I’ve seen many examples demonstrating the exact opposite.

Customers today are very much aware of regulations and do take this into account when giving their business to a company. I personally believe that companies can turn the sheer number of regulations they have to comply with into a positive aspect. Financial results are not the only criteria showing that a company is sustainable. The fact that it complies with so many regulations in itself shows how organized and sound it is.

Dura Lex, sed Lex

Whether we like it or not, regulatory inflation is the new normal. New regulatory bodies are regularly set up and to be credible, they must audit organizations thoroughly.

To ensure a win-win situation, I have one last thought: What if both regulatory bodies and organizations worked together on the explanation of the regulations and what is done?

The public is eager to ask for protection, but is also able to understand (and sometimes maybe even challenge via the electoral process) decisions to enforce new laws that durably impact the economy.

Do you have any other suggestions on how compliance efforts can be turned into a positive factor?

I look forward to reading your thoughts and comments either on this blog or on Twitter@TFrenehard

Learn more

For more on this topic, read “How CFOs Can Make Compliance a Competitive Weapon,” and follow and read the GRC Tuesday series.

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

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Diving Deep Into Digital Experiences

Kai Goerlich

 

Google Cardboard VR goggles cost US$8
By 2019, immersive solutions
will be adopted in 20% of enterprise businesses
By 2025, the market for immersive hardware and software technology could be $182 billion
In 2017, Lowe’s launched
Holoroom How To VR DIY clinics

Link to Sources


From Dipping a Toe to Fully Immersed

The first wave of virtual reality (VR) and augmented reality (AR) is here,

using smartphones, glasses, and goggles to place us in the middle of 360-degree digital environments or overlay digital artifacts on the physical world. Prototypes, pilot projects, and first movers have already emerged:

  • Guiding warehouse pickers, cargo loaders, and truck drivers with AR
  • Overlaying constantly updated blueprints, measurements, and other construction data on building sites in real time with AR
  • Building 3D machine prototypes in VR for virtual testing and maintenance planning
  • Exhibiting new appliances and fixtures in a VR mockup of the customer’s home
  • Teaching medicine with AR tools that overlay diagnostics and instructions on patients’ bodies

A Vast Sea of Possibilities

Immersive technologies leapt forward in spring 2017 with the introduction of three new products:

  • Nvidia’s Project Holodeck, which generates shared photorealistic VR environments
  • A cloud-based platform for industrial AR from Lenovo New Vision AR and Wikitude
  • A workspace and headset from Meta that lets users use their hands to interact with AR artifacts

The Truly Digital Workplace

New immersive experiences won’t simply be new tools for existing tasks. They promise to create entirely new ways of working.

VR avatars that look and sound like their owners will soon be able to meet in realistic virtual meeting spaces without requiring users to leave their desks or even their homes. With enough computing power and a smart-enough AI, we could soon let VR avatars act as our proxies while we’re doing other things—and (theoretically) do it well enough that no one can tell the difference.

We’ll need a way to signal when an avatar is being human driven in real time, when it’s on autopilot, and when it’s owned by a bot.


What Is Immersion?

A completely immersive experience that’s indistinguishable from real life is impossible given the current constraints on power, throughput, and battery life.

To make current digital experiences more convincing, we’ll need interactive sensors in objects and materials, more powerful infrastructure to create realistic images, and smarter interfaces to interpret and interact with data.

When everything around us is intelligent and interactive, every environment could have an AR overlay or VR presence, with use cases ranging from gaming to firefighting.

We could see a backlash touting the superiority of the unmediated physical world—but multisensory immersive experiences that we can navigate in 360-degree space will change what we consider “real.”


Download the executive brief Diving Deep Into Digital Experiences.


Read the full article Swimming in the Immersive Digital Experience.

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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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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.