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Procurement 2016: The Supply Chain Goes Digital

Emily Rakowski

The world today is a different place. There are officially more mobile devices than people. And with increasing frequency, we use these devices to manage our lives. To shop. To pay for things. To find restaurants and hail cabs. To network with our friends and family. Many of these same technologies have made their way into the enterprise. And they are transforming the way we work. Business networks, for instance, are changing the way we discover, connect, and collaborate with our trading partners. They are giving us access to insights and intelligence that allow us to make better, more informed decisions. They are, in essence, transforming procurement as we know it.

So what does the future hold? Here are five trends to watch:

1. Supply chains will go digital

Technology has driven a new wave of productivity by digitizing key financial and business processes and enabling collaboration across the organization. This trend will continue as best-in-class organizations leverage business networks to create a digital community of partners executing coordinated processes in a more organized and informed way than in the past.

2. Collaboration will increase – and fuel innovation

Many companies have taken steps to improve the efficiency and effectiveness of their supply chain operations by automating key processes such as procurement, orders, invoicing, and payment. And with good reason. Research shows that companies who have embraced digital strategies are seeing real value, boosting revenue more than nine percent, market valuation more than 12%, and profitability by over 26%.

Led by procurement, many of these companies will take things to the next level and enable new processes that drive more collaborative, intelligent, and transparent ways of operating. Processes like dynamic discounting that allow them to secure discounts that can be reinvested in research and development and funding to expand their business. Contingent workforce management through which they can identify and manage highly specialized resources needed to develop that next-generation product. Or joint solution development where they get innovations that enhance their products, and their partners get something they can market to others in the industry.

3. Business will run simpler

Personal networks from Facebook to Twitter have made it simple for consumers to shop, share, and consume in new and more informed ways. Business networks provide an equally easy and scalable way for companies to discover, connect, and collaborate with the trading partners and resources they need to operate in today’s dynamic world. Procurement will tap into these networks to create a simple, consumer-like experience where, with just a few clicks, they can shop for goods and services, place and manage orders and pay for them electronically, and view and manage spend across all major categories through a single, connected platform. With network-based spot buying they can also improve the purchasing process for low-value, non-sourced items and eliminate maverick buying.

4. Lines will blur

Fueled by digital technologies, procurement will take the lead in integrating business processes and collaborating across functions in entirely new ways that drive value. Chief procurement officers (CPOs) will, for instance, engage in helping to manage the financial supply chain, turning payables into a profit center because they have real-time visibility into whether an invoice is okay to pay and whether it has been matched against purchase orders and contracts. Or extending days payable outstanding to improve the overall balance sheet while at the same time offering early payment discounts to suppliers to mitigate both financial and supply risk. According to Future of Procurement, a recent survey conducted by Oxford Economics, 54% of executives say that procurement managing accounts payable is significantly changing the way the function operates.

5. Procurement will get smarter

Like their social counterparts, business networks house incredible amounts of insights and data. Procurement will unleash the power of this information to optimize their supply chain decisions and accelerate innovation and growth. They may, for instance, access performance ratings on potential trading partners along with recommendations from the community to determine who to do business with. Or detect risk across the multi-tier supply chain based on world events and geo-political risk factors. They might combine in-the-moment demand data with historic trends to predict stock outages before they happen and direct replenishment. Or gain real-time insights into invoice approval status to more efficiently manage cash.

In today’s global and connected economy, digital supply chains are the on ramp to innovation and success. And if you want to be among the winners, you need to get on the highway and go fast. Start today by re-imagining your supply chain. Develop digital strategies that allow you to proactively evolve ahead of the competition. Employ comprehensive solutions that support the entire source-to-settle process and create value for all parties involved in it.

Don’t just think about the future, see it and shape it to your advantage.

Emily Rakowski is Global Vice President for Ariba, an SAP Company.

For more on the future direction of sourcing and procurement, see The Future of Procurement, a series of reports by Oxford Economics.

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Emily Rakowski

About Emily Rakowski

Emily Rakowski is the Global Vice President, Audience Marketing and Demand Management, SAP Ariba. She is an entrepreneurial and passionate marketing and demand management executive with 20+ years leadership experience in the software and consulting industries.

Three Factors Driving Business Agility

Anja Reschke

Why is business agility important in today’s digital era? Without it, you may be outwitted by swift new competitors that move into your industry. You might also risk becoming irrelevant, according to the SAP eBook, The Digital Economy: Reinventing the Business World.

Every sector is at risk of digital disruption, and you need to take action and adjust quickly in order to remain successful in today’s digital economy.

A group of consulting, technology, and business leaders from across the consumer goods spectrum addressed this issue at a recent forum. Their findings are outlined in the whitepaper, Rethinking the Value Chain: New Realities in Collaborative Business by Capgemini Consulting and The Consumer Goods Forum.

Three business agility influencers

The group determined that three key factors are significantly altering the business landscape and persuading companies to change the way they traditionally do business in order to become more agile:

  1. Consumers are changing. Consumer demands are increasing, and their omni-channel path-to-purchase is no longer linear. Their customer experience could involve a mobile app, web research, social media, an in-store visit, and an online purchase – in any order. They are also more influenced by online social networks than by conventional advertising methods, and they expect quick outcomes from responsive companies.
  1. Business is changing. Innovative business partnerships are becoming more important and technology is accelerating competition. There is an increasing threat from agile high-tech companies and start-ups that don’t follow established go-to-market patterns. Digital companies with completely new business models are gaining a competitive advantage as they boldly cross formerly well-established market boundaries.
  1. The world is changing. Global economics and demographics are shifting. Emerging markets are growing rapidly, with a different set of needs that agile companies are more capable of responding to quickly.

The biggest obstacle to business agility

The most challenging hurdle for business agility comes down to one thing: complexity.

Large organizations are so complex – with multiple layers, business units, legacy systems, and departmental silos – that agility seems almost impossible. But the ongoing pressures of the digital economy are forcing even the most complex global companies to become more agile just to stay competitive. What steps are you taking to make your company more agile?

For an in-depth look at how the digital era is affecting business, download the SAP eBook, The Digital Economy: Reinventing the Business World.

To learn more about the multiple factors driving digital transformation, download the SAP eBook, Digital Disruption: How Digital Technology is Transforming Our World.

Learn how digital technology is transforming the healthcare industry in the SAP eBook, Connected Care: The Digital Pulse of Global Healthcare.

Discover Five Things That Will Increase Your Business Agility.

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Anja Reschke

About Anja Reschke

Anja Reschke is the Senior Director of Strategic Ecosystem Marketing at SAP. She is responsible for the development of joint strategic marketing plans, programs, and activities, with global strategic services and technology partners.

How To Catch Up In The Digital Transformation Race

Paul Clark

It’s been said that every business is now a technology business, and if the competition is already forcing digital transformation in your industry, then it’s already too late for you to catch up.

I don’t buy that.

I don’t think it’s too late for any company to change course and succeed in today’s digital economy. New technology and innovative business models are cropping up everyday and changing the business landscape in multiple sectors, so there’s always something you can do about it. Indeed, a recent McKinsey article helps formulate some ways that incumbents can anticipate and deal with digital disruption.

The journey to business innovation

According to the SAP eBook, The Digital Economy: Reinventing the Business World, there are five main areas that organizations can focus on as they move toward digital transformation:

  1. Improve your customer experience. Innovate your products and services with a relentless customer-centric focus. Use streamlined messaging and a consistent approach through multiple customer touch points. You might also want to consider mobile customer engagement.
  1. Digitize your core business. Automate your processes with faster, simpler systems, and seamless integration between multiple areas of your business and value chain.
  1. Enhance your digital capabilities and create value from data. Focus on boosting your digital capabilities through advanced analytics, agile platforms, and continuous delivery. Consider a business model based on data, with digitally enhanced IoT products, and product-related services based on sensor data.
  1. Connect your workforce. Focus on training, attracting, and retaining employees and contractors with the high-tech skill set needed to support an innovative business model.
  1. Build your business network. Strengthen relationships with existing partners, and expand your digital ecosystem by working with innovative, and perhaps atypical but relevant organizations that could enhance your positioning.

Innovating in the digital era is not just about adopting new technologies. It is also about embracing a culture of innovation, encouraging collaboration, and tapping into digital ecosystems to achieve results well beyond the scope of an individual organization.

I don’t think it’s too late for any business to catch up. But you might want to be quick about it.

For an in-depth look at how the digital era is affecting business, download the SAP eBook, The Digital Economy: Reinventing The Business World.

Discover the multiple factors driving digital transformation in the SAP eBook, Digital Disruption: How Digital Technology is Transforming Our World.

Have you already gone through digital transformation in your business? Find out how to reinvent an entire industry.

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Paul Clark

About Paul Clark

Paul Clark is the Senior Director of Technology Partner Marketing at SAP. He is responsible for developing and executing partner marketing strategies, activities, and programs in joint go-to-market plans with global technology partners. The goal is to increase opportunities, pipeline, and revenue through demand generation via SAP's global and local partner ecosystems.

How Much Will Digital Cannibalization Eat into Your Business?

Fawn Fitter

Former Cisco CEO John Chambers predicts that 40% of companies will crumble when they fail to complete a successful digital transformation.

These legacy companies may be trying to keep up with insurgent companies that are introducing disruptive technologies, but they’re being held back by the ease of doing business the way they always have – or by how vehemently their customers object to change.

Most organizations today know that they have to embrace innovation. The question is whether they can put a digital business model in place without damaging their existing business so badly that they don’t survive the transition. We gathered a panel of experts to discuss the fine line between disruption and destruction.

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qa_qIn 2011, when Netflix hiked prices and tried to split its streaming and DVD-bymail services, it lost 3.25% of its customer base and 75% of its market capitalization.²︐³ What can we learn from that?

Scott Anthony: That debacle shows that sometimes you can get ahead of your customers. The key is to manage things at the pace of the market, not at your internal speed. You need to know what your customers are looking for and what they’re willing to tolerate. Sometimes companies forget what their customers want and care about, and they try to push things on them before they’re ready.

R. “Ray” Wang: You need to be able to split your traditional business and your growth business so that you can focus on big shifts instead of moving the needle 2%. Netflix was responding to its customers – by deciding not to define its brand too narrowly.

qa_qDoes disruption always involve cannibalizing your own business?

Wang: You can’t design new experiences in existing systems. But you have to make sure you manage the revenue stream on the way down in the old business model while managing the growth of the new one.

Merijn Helle: Traditional brick-and-mortar stores are putting a lot of capital into digital initiatives that aren’t paying enough back yet in the form of online sales, and they’re cannibalizing their profits so they can deliver a single authentic experience. Customers don’t see channels, they see brands; and they want to interact with brands seamlessly in real time, regardless of channel or format.

Lars Bastian: In manufacturing, new technologies aren’t about disrupting your business model as much as they are about expanding it. Think about predictive maintenance, the ability to warn customers when the product they’ve purchased will need service. You’re not going to lose customers by introducing new processes. You have to add these digitized services to remain competitive.

qa_qIs cannibalizing your own business better or worse than losing market share to a more innovative competitor?

Michael Liebhold: You have to create that digital business and mandate it to grow. If you cannibalize the existing business, that’s just the price you have to pay.

Wang: Companies that cannibalize their own businesses are the ones that survive. If you don’t do it, someone else will. What we’re really talking about is “Why do you exist? Why does anyone want to buy from you?”

Anthony: I’m not sure that’s the right question. The fundamental question is what you’re using disruption to do. How do you use it to strengthen what you’re doing today, and what new things does it enable? I think you can get so consumed with all the changes that reconfigure what you’re doing today that you do only that. And if you do only that, your business becomes smaller, less significant, and less interesting.

qa_qSo how should companies think about smart disruption?

Anthony: Leaders have to reconfigure today and imagine tomorrow at the same time. It’s not either/or. Every disruptive threat has an equal, if not greater, opportunity. When disruption strikes, it’s a mistake only to feel the threat to your legacy business. It’s an opportunity to expand into a different marke.

SAP_Disruption_QA_images2400x1600_4Liebhold: It starts at the top. You can’t ask a CEO for an eight-figure budget to upgrade a cloud analytics system if the C-suite doesn’t understand the power of integrating data from across all the legacy systems. So the first task is to educate the senior team so it can approve the budgets.

Scott Underwood: Some of the most interesting questions are internal organizational questions, keeping people from feeling that their livelihoods are in danger or introducing ways to keep them engaged.

Leon Segal: Absolutely. If you want to enter a new market or introduce a new product, there’s a whole chain of stakeholders – including your own employees and the distribution chain. Their experiences are also new. Once you start looking for things that affect their experience, you can’t help doing it. You walk around the office and say, “That doesn’t look right, they don’t look happy. Maybe we should change that around.”

Fawn Fitter is a freelance writer specializing in business and technology. 

To learn more about how to disrupt your business without destroying it, read the in-depth report Digital Disruption: When to Cook the Golden Goose.

Download the PDF (1.2MB)

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Why Companies Don’t Need Knowledge Workers Anymore

Michael Rander

The days of the knowledge worker are coming to an end. As businesses are gearing up to handle a mind-blowing amount of information, the sheer amount of data, the speed at which we need to process it, and the way we need to act on it to stay competitive is vastly surpassing the ability of traditional knowledge workers. For years, they have gathered information, analyzed it, disseminated it, and enabled organizational decision making, but the future of work is rapidly evolving as new technology emerges. And the job roles that cannot fully embrace and adapt to these changes are quickly becoming obsolete.

When Peter Drucker  established the concept of the knowledge worker, his foresight that information-driven employees would be the key to the future development of successful and innovative companies was spot on. In fact, it still holds true today when you consider that relevant, actionable information will remain the essential competitive parameter for businesses of the future.

What has changed since Drucker first formulated this concept is the growth of data, which exceeds a volume that any given group of employees can possibly analyze on their own. At the same, global businesses need to consistently react in real time. So while the underlying construct of the knowledge worker has been exceptionally important and valuable, companies now demand a new type of employee that can replace the knowledge worker and enable business decisions in the moment.

Enter the digital worker

The digital worker assumes a role enabled and driven by technology. With anytime, anywhere access to actionable, live data in a hyperconnected economy, the benefit of running a Live Businesses can be realized, where internal and external factors and influences are acted on exactly when needed for maximum competitive advantage.

how digital transformation changes the nature of work

Digital workers can bring a new level of operational speed, flexibility, and insight, which, in turn, frees up time to take on new responsibilities in the organization and to become a critical resource for decision making, learning, productivity, and management. From an executive perspective, this also provides an opportunity to delegate strategic decision making throughout the organization; reduce organizational bottlenecks, and complexity; and increase time spent on innovation.

Whether you are a knowledge worker and run an organization that employs a few, now is the time to consider their impact on overall goals and transition them into digital workers. If not, your competition surely will.

To read more on the major trends affecting the future of work and the impact of the digital worker, see my white paper on “Live Business: The Rise of the Digital Workforce.”

 

 

 

 

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Michael Rander

About Michael Rander

Michael Rander is the Global Program Director for Future Of Work at SAP. He is an experienced project manager, strategic and competitive market researcher, operations manager as well as an avid photographer, athlete, traveler and entrepreneur.