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What’s In Your Business Network?

Chris Rauen

What’s In Your Business Network?Business networks have come a long way since the first EDI messages were sent via telex before being converted into computer data.

Today, electronic documents are exchanged securely over the Internet, and many networks have built-in business rules that bring intelligence to the network. This is the advantage of the next generation business network, and driver of the networked economy.

Consider the transformational impact of these networks on invoice processing. With an EDI network, you could exchange electronic invoices, but there was no way to validate that the data on the invoice was complete and accurate. The invoice got to accounts payable quicker, but often would not get through AP quicker.

Today, the best e-invoice networks employ business rules that automatically check for errors and exceptions before an invoice posts to your ERP or financial system. This presents a huge advantage for organizations burdened with manually resolving these problem invoices.

Invoice error and match failure rates vary. I recall one research report showing that 15% of invoices on average contain some kind of error or exception. Then, there are the anecdotes, such as a recent conversation with a large Fortune 500 company. During that discussion, I was told that the order-invoice match fail rate was close to 60%.

Regardless of where you fall in this area, one thing is clear. The costs to resolve invoice errors and exceptions aren’t cheap, ranging from $20 to $200 or more per invoice. That’s where the invoice validation via business rules can make a huge difference.

What’s more, the network that expands its scope to include the exchange of electronic purchase orders and related documents (order confirmations and advance ship notices) simplify invoice validation and create a more compelling business case. As invoice management is part of a larger procure-to-pay process, the ability to handle these related documents in the same network adds to the business process improvements and cost savings while improving compliance.

So as you look to tap the empowering capabilities of today’s business networks, know that all networks are not created equal. Carefully assessing the network validation rules is an important step in the evaluation process.

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About Chris Rauen

Chris Rauen is a solution marketer for Ariba, an SAP company. He regularly contributes to topics including e-invoicing and dynamic discounting as well as the value of collaborating in a digital economy.

Why 3D Printed Food Just Transformed Your Supply Chain

Hans Thalbauer

Numerous sectors are experimenting with 3D printing, which has the potential to disrupt many markets. One that’s already making progress is the food industry.

The U.S. Army hopes to use 3D printers to customize food for each soldier. NASA is exploring 3D printing of food in space. The technology could eventually even end hunger around the world.

What does that have to do with your supply chain? Quite a bit — because 3D printing does more than just revolutionize the production process. It also requires a complete realignment of the supply chain.

And the way 3D printing transforms the supply chain holds lessons for how organizations must reinvent themselves in the new era of the extended supply chain.

Supply chain spaghetti junction

The extended supply chain replaces the old linear chain with not just a network, but a network of networks. The need for this network of networks is being driven by four key factors: individualized products, the sharing economy, resource scarcity, and customer-centricity.

To understand these forces, imagine you operate a large restaurant chain, and you’re struggling to differentiate yourself against tough competition. You’ve decided you can stand out by delivering customized entrees. In fact, you’re going to leverage 3D printing to offer personalized pasta.

With 3D printing technology, you can make one-off pasta dishes on the fly. You can give customers a choice of ingredients (gluten-free!), flavors (salted caramel!), and shapes (Leaning Towers of Pisa!). You can offer the personalized pasta in your restaurants, in supermarkets, and on your ecommerce website.

You may think this initiative simply requires you to transform production. But that’s just the beginning. You also need to re-architect research and development, demand signals, asset management, logistics, partner management, and more.

First, you need to develop the matrix of ingredients, flavors, and shapes you’ll offer. As part of that effort, you’ll have to consider health and safety regulations.

Then, you need to shift some of your manufacturing directly into your kitchens. That will also affect packaging requirements. Logistics will change as well, because instead of full truckloads, you’ll be delivering more frequently, with more variety, and in smaller quantities.

Next, you need to perfect demand signals to anticipate which pasta variations in which quantities will come through which channels. You need to manage supply signals source more kinds of raw materials in closer to real time.

Last, the source of your signals will change. Some will continue to come from point of sale. But others, such as supplies replenishment and asset maintenance, can come direct from your 3D printers.

Four key ingredients of the extended supply chain

As with our pasta scenario, the drivers of the extended supply chain require transformation across business models and business processes. First, growing demand for individualized products calls for the same shifts in R&D, asset management, logistics, and more that 3D printed pasta requires.

Second, as with the personalized entrees, the sharing economy integrates a network of partners, from suppliers to equipment makers to outsourced manufacturing, all electronically and transparently interconnected, in real time and all the time.

Third, resource scarcity involves pressures not just on raw materials but also on full-time and contingent labor, with the necessary skills and flexibility to support new business models and processes.

And finally, for personalized pasta sellers and for your own business, it all comes down to customer-centricity. To compete in today’s business environment and to meet current and future customer expectations, all your operations must increasingly revolve around rapidly comprehending and responding to customer demand.

Want to learn more? Check out my recent video on digitalizing the extended supply chain.

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Hans Thalbauer

About Hans Thalbauer

Hans Thalbauer is the Senior Vice President, Extended Supply Chain, at SAP. He is responsible for the strategic direction and the Go-To-Market of solutions for Supply Chain, Logistics, Engineering/R&D, Manufacturing, Asset Management and Sustainability at SAP.

How to Create a Culture of Continuous Learning

Polly Traylor

The digital age has transformed every aspect of corporate processes, and corporate learning is no exception. We have mobile apps, social media, and online courses to help us achieve just-in-time learning when we identify a gap in knowledge at work or in our personal lives. Companies everywhere face the challenge of training and reskilling their workforces to keep pace with technological change, business disruption, and global competition.

Yet the traditional approach to learning, accomplished through classroom training, has been transitioning quickly to more cost-effective and real-time learning methods. This transition is crucial in enabling employees to learn new technologies at the rapid pace that vendors deliver them by, along with associated skills, such as data analysis.

Additionally, Millennials, the largest workforce demographic today, are demanding new methods for learning that center on social collaboration, video, and mobile apps. Corporate learning departments are determining how and where to blend face-to-face learning with digital learning methods.

Our experts discuss the trends and challenges ahead.

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qa_qHow is the digital world affecting corporate learning today?

Elliott Masie: We’ve seen a huge spike in the use of tracked online learning. Depending on the industry, as much as 70% of learning is now driven by compliance or regulatory experiences and as much as 90% of that is delivered digitally, either to a mobile phone or a desktop or through a live Webinar. If it’s skill building, such as how to delegate in a positive way as a leader, you’ll want a blended model where some content is delivered face-to-face. When you don’t have digital learning, the irony is you have a limited supply of learning and the supply goes to the people who need it the least – those who are really enthusiastic and proactive. Once you add a digital component to learning, the supply becomes limitless, available to talent across the organization.

Karie Willyerd: My daughter wanted to apply to the Centers for Disease Control for an internship, which required statistics knowledge. So she went to Khan Academy, took a few modules, and passed the test. It’s the idea that you can instantly get the training you need. I think the softer skills, such as leadership skills, will still require a classroom. But companies are getting increasingly virtual. There will be a very limited percentage of training that is done live in the future.

Bernd Welz: The general shelf life of knowledge is shortening with the increasing pace of digital transformation, so companies need a strategy to push knowledge and make sure that knowledge is always fresh. That’s where the digital learning platforms come into play. A manager will be able to say, ”Here’s a piece of knowledge that you really need.” With the learning management platform the manager can then very effectively dispatch the course to the employee and check later to see whether the learning was completed. Learning is much more real time and proactive.

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Digital learning often consists of short snippets of content, with a video or social element, rather than longer courses that take place over a day or two. Is there a danger to fly-by-night learning?

Jim Carroll: There’s always a phrase I use with Millennials, whether it’s about video games, how they ingest knowledge, or how they play sports: it’s not bad, it’s just different. The older generations tend to retain their values and understanding of what education is, but this generation has grown up in an entirely different world. Millennials think differently about what the world is and where they can get knowledge.

Willyerd: We need to connect with other people in our learning. In one of the studies we did for my book The 2020 Workplace, people said they don’t really like e-learning. We have to come up with ways to make e-learning more sociable.

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How can companies create an effective learning culture as they transform their learning organizations to digital and just-in-time learning?

SAP_Learning-Isbell_QA_images2400x1600_2Masie: Southwest Airlines has recognized that learning is continuous. Its goal is to launch its learning program and then include follow-ups and touchbacks for the learners rather than just teach in traditional classes.

Emirates, too, has figured out that digital is where the bulk of learning takes place. It has a culture of continuous learning whereby managers regularly talk to the people about what they’re learning or bump them to new or better learning activities or resources.

Carroll: Organizations are realizing that they need to deliver knowledge where it wasn’t required before, and the time they have to do it in is compressed. Organizations used to plan a year out for the changes that were going to occur in their industry. But business is speeding up to such a degree that all of a sudden we have to get ready now, because the change is going to have a big impact on us in the next three months.

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Are corporations doing enough to invest in learning transformation?

SAP_Learning-Isbell_QA_images2400x1600_3Willyerd: Eventually, people are going to realize ”Wow, we’ve got a real reskilling thing to do here!” When you look at how much the United States puts into training as a percentage of overall revenue, I think we are in 25th place or something ridiculous like that. But how did Korea go from where it was to being such a powerhouse? The government subsidized half of all training budgets for companies. I don’t think we’re going to go that far, but I can see it being a tax deduction or a tax incentive.

I know of a large hotel chain that implemented an online social collaboration space and began to use it for innovation ideas. It got people together from different brands who could share what they were doing. Before the collaboration space, the hotel chain didn’t have a way to do this effectively; now it can foster cross-brand innovation. Corporate leaders need to understand that learning does have a bottom-line benefit when there’s the right kind of investment in it.

Welz: In many industries, companies need to transform themselves, and knowledge is the key ingredient of a successful transformation. You need to know what the state of the art is, and you can only do that if you have a systematic approach to learning. You can’t just leave it to up to the employees hoping that they will read the right books or find the right training course on their own. The transformation is much less stressful if you can assure employees that they will get the knowledge they need to be successful.

Polly Traylor is a freelance writer who reports frequently about business and technology.

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About Polly Traylor

Polly S. Traylor writes about business, technology and healthcare from Denver, Colorado.

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Transform Or Die: What Will You Do In The Digital Economy?

Scott Feldman and Puneet Suppal

By now, most executives are keenly aware that the digital economy can be either an opportunity or a threat. The question is not whether they should engage their business in it. Rather, it’s how to unleash the power of digital technology while maintaining a healthy business, leveraging existing IT investments, and innovating without disrupting themselves.

Yet most of those executives are shying away Businesspeople in a Meeting --- Image by © Monalyn Gracia/Corbisfrom such a challenge. According to a recent study by MIT Sloan and Capgemini, only 15% of CEOs are executing a digital strategy, even though 90% agree that the digital economy will impact their industry. As these businesses ignore this reality, early adopters of digital transformation are achieving 9% higher revenue creation, 26% greater impact on profitability, and 12% more market valuation.

Why aren’t more leaders willing to transform their business and seize the opportunity of our hyperconnected world? The answer is as simple as human nature. Innately, humans are uncomfortable with the notion of change. We even find comfort in stability and predictability. Unfortunately, the digital economy is none of these – it’s fast and always evolving.

Digital transformation is no longer an option – it’s the imperative

At this moment, we are witnessing an explosion of connections, data, and innovations. And even though this hyperconnectivity has changed the game, customers are radically changing the rules – demanding simple, seamless, and personalized experiences at every touch point.

Billions of people are using social and digital communities to provide services, share insights, and engage in commerce. All the while, new channels for engaging with customers are created, and new ways for making better use of resources are emerging. It is these communities that allow companies to not only give customers what they want, but also align efforts across the business network to maximize value potential.

To seize the opportunities ahead, businesses must go beyond sensors, Big Data, analytics, and social media. More important, they need to reinvent themselves in a manner that is compatible with an increasingly digital world and its inhabitants (a.k.a. your consumers).

Here are a few companies that understand the importance of digital transformation – and are reaping the rewards:

  1. Under Armour:  No longer is this widely popular athletic brand just selling shoes and apparel. They are connecting 38 million people on a digital platform. By focusing on this services side of the business, Under Armour is poised to become a lifestyle advisor and health consultant, using his product side as the enabler.
  1. Port of Hamburg: Europe’s second-largest port is keeping carrier trucks and ships productive around the clock. By fusing facility, weather, and traffic conditions with vehicle availability and shipment schedules, the Port increased container handling capacity by 178% without expanding its physical space.
  1. Haier Asia: This top-ranking multinational consumer electronics and home appliances company decided to disrupt itself before someone else did. The company used a two-prong approach to digital transformation to create a service-based model to seize the potential of changing consumer behaviors and accelerate product development. 
  1. Uber: This startup darling is more than just a taxi service. It is transforming how urban logistics operates through a technology trifecta: Big Data, cloud, and mobile.
  1. American Society of Clinical Oncologists (ASCO): Even nonprofits can benefit from digital transformation. ASCO is transforming care for cancer patients worldwide by consolidating patient information with its CancerLinQ. By unlocking knowledge and value from the 97% of cancer patients who are not involved in clinical trials, healthcare providers can drive better, more data-driven decision making and outcomes.

It’s time to take action 

During the SAP Executive Technology Summit at SAP TechEd on October 19–20, an elite group of CIOs, CTOs, and corporate executives will gather to discuss the challenges of digital transformation and how they can solve them. With the freedom of open, candid, and interactive discussions led by SAP Board Members and senior technology leadership, delegates will exchange ideas on how to get on the right path while leveraging their existing technology infrastructure.

Stay tuned for exclusive insights from this invitation-only event in our next blog!
Scott Feldman is Global Head of the SAP HANA Customer Community at SAP. Connect with him on Twitter @sfeldman0.

Puneet Suppal drives Solution Strategy and Adoption (Customer Innovation & IoT) at SAP Labs. Connect with him on Twitter @puneetsuppal.

 

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What Is Digital Transformation?

Andreas Schmitz

Achieving quantum leaps through disruption and using data in new contexts, in ways designed for more than just Generation Y — indeed, the digital transformation affects us all. It’s time for a detailed look at its key aspects.

Data finding its way into new settings

Archiving all of a company’s internal information until the end of time is generally a good idea, as it gives the boss the security that nothing will be lost. Meanwhile, enabling him or her to create bar graphs and pie charts based on sales trends – preferably in real time, of course – is even better.

But the best scenario of all is when the boss can incorporate data from external sources. All of a sudden, information on factors as seemingly mundane as the weather start helping to improve interpretations of fluctuations in sales and to make precise modifications to the company’s offerings. When the gusts of autumn begin to blow, for example, energy providers scale back solar production and crank up their windmills. Here, external data provides a foundation for processes and decisions that were previously unattainable.

Quantum leaps possible through disruption

While these advancements involve changes in existing workflows, there are also much more radical approaches that eschew conventional structures entirely.

“The aggressive use of data is transforming business models, facilitating new products and services, creating new processes, generating greater utility, and ushering in a new culture of management,” states Professor Walter Brenner of the University of St. Gallen in Switzerland, regarding the effects of digitalization.

Harnessing these benefits requires the application of innovative information and communication technology, especially the kind termed “disruptive.” A complete departure from existing structures may not necessarily be the actual goal, but it can occur as a consequence of this process.

Having had to contend with “only” one new technology at a time in the past, be it PCs, SAP software, SQL databases, or the Internet itself, companies are now facing an array of concurrent topics, such as the Internet of Things, social media, third-generation e-business, and tablets and smartphones. Professor Brenner thus believes that every good — and perhaps disruptive — idea can result in a “quantum leap in terms of data.”

Products and services shaped by customers

It has already been nearly seven years since the release of an app that enables customers to order and pay for taxis. Initially introduced in Berlin, Germany, mytaxi makes it possible to avoid waiting on hold for the next phone representative and pay by credit card while giving drivers greater independence from taxi dispatch centers. In addition, analyses of user data can lead to the creation of new services, such as for people who consistently order taxis at around the same time of day.

“Successful models focus on providing utility to the customer,” Professor Brenner explains. “In the beginning, at least, everything else is secondary.”

In this regard, the private taxi agency Uber is a fair bit more radical. It bypasses the entire taxi industry and hires private individuals interested in making themselves and their vehicles available for rides on the Uber platform. Similarly, Airbnb runs a platform travelers can use to book private accommodations instead of hotel rooms.

Long-established companies are also undergoing profound changes. The German publishing house Axel Springer SE, for instance, has acquired a number of startups, launched an online dating platform, and released an app with which users can collect points at retail. Chairman and CEO Matthias Döpfner also has an interest in getting the company’s newspapers and other periodicals back into the black based on payment models, of course, but these endeavors are somewhat at odds with the traditional notion of publishing houses being involved solely in publishing.

The impact of digitalization transcends Generation Y

Digitalization is effecting changes in nearly every industry. Retailers will likely have no choice but to integrate their sales channels into an omnichannel approach. Seeking to make their data services as attractive as possible, BMW, Mercedes, and Audi have joined forces to purchase the digital map service HERE. Mechanical engineering companies are outfitting their equipment with sensors to reduce downtime and achieve further product improvements.

“The specific potential and risks at hand determine how and by what means each individual company approaches the subject of digitalization,” Professor Brenner reveals. The resulting services will ultimately benefit every customer – not just those belonging to Generation Y, who present a certain basic affinity for digital methods.

“Think of cars that notify the service center when their brakes or drive belts need to be replaced, offer parking assistance, or even handle parking for you,” Brenner offers. “This can be a big help to elderly people in particular.”

Chief digital officers: team members, not miracle workers

Making the transition to the digital future is something that involves not only a CEO or a head of marketing or IT, but the entire company. Though these individuals do play an important role as proponents of digital models, it also takes more than just a chief digital officer alone.

For Professor Brenner, appointing a single person to the board of a DAX company to oversee digitalization is basically absurd. “Unless you’re talking about Da Vinci or Leibnitz born again, nobody could handle such a task,” he states.

In Brenner’s view, this is a topic for each and every department, and responsibilities should be assigned much like on a soccer field: “You’ve got a coach and the players – and the fans, as well, who are more or less what it’s all about.”

Here, the CIO neither competes with the CDO nor assumes an elevated position in the process of digital transformation. Implementing new databases like SAP HANA or Hadoop, leveraging sensor data in both technical and commercially viable ways, these are the tasks CIOs will face going forward.

“There are some fantastic jobs out there,” Brenner affirms.

Want more insight on managing digital transformation? See Three Keys To Winning In A World Of Disruption.

Image via Shutterstock

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Andreas Schmitz

About Andreas Schmitz

Andreas Schmitz is a Freelance Journalist for SAP, covering a wide range of topics from big data to Internet of Things, HR, business innovation and mobile.