A “Cambrian Explosion” Of Opportunity

James Marland

At SAPPHIRE NOW last week, Bill McDermott invited Michael Dell on stage to talk about digital transformation. Michael offered an interesting metaphor, noting that there is a “Cambrian Explosion of opportunity” in front of companies as a result of the new digital technologies (roll to timestamp 14:30 in Bill’s keynote).

So what was the Cambrian Explosion, and why did Michael use this metaphor?

The Cambrian explosion

For the first 2 billion years of life on Earth, the only creatures were single-celled organisms floating around in the primordial soup, not doing very much at all. Then, 500 million years ago, an event occurred that still has biologists scratching their heads (Wikipedia offers five possible explanations). Single-celled organisms became multi-cellular, leading to more complex creatures, and eventually, to all of us. This singularity is called the Cambrian Explosion. Michael was referring to the same approaching singularity, but with organizations rather than organisms.

Since the start of the Industrial Revolution, companies have been essentially operating as single cells. It’s time to look beyond the cell wall and develop multi-cellular organisations. This Cambrian Explosion in the business world is possible thanks to new digital technologies that are coming to market. Let’s look at the criteria for multi-cellular life and see how it applies to today’s companies.

Specialization of cells

An organism is made up of many types of cell: blood, skin, bone, etc., each with its own speciality. No cell can be efficient at all of the tasks required for a complex organism, such as the ability to move, feed, or reproduce. An extended organisation, similarly, has value chains made up of many different groups: design, engineering, marketing, and distribution, for example. These used to be single departments in one company, but they are increasingly becoming separate companies. Companies that once had in-house catering, real estate, or IT support are increasingly turning to specialist companies that provide these services. Only digital technologies such as IoT, blockchain, and business networks can support these types of re-engineered business models.

Adaptability and evolution

Multicellular life is far more varied then single cells, because cells can be repaired or regrown. In today’s digital world, our value chains are also more flexible: Got a problem with a subcontractor in Manila? Switch to a similar company in Vietnam. Need a geologist in Chile? Don’t hire; use a subcontractor on a three-month contract. Digital technologies also give great scope for evolution of business and the re-thinking of business models. In the biological world, organisms that cannot evolve do not survive. In his remarks, Bill referred to the constant churn in Fortune 500 as companies struggle to evolve.

The rise of intelligence

Once life became multi-cellular, intelligence and conscience followed. The most successful species were the ones that could use that intelligence to shape their environment, with the prime example, of course, being our own species: homo sapiens. Bill also discussed the rise of machine intelligence, pointing out that companies need to embrace the ability to get insights from their data in real time.

DNA: The digital core

Every cell in an organism contains the same DNA code, which provides consistency and information. In an extended digital enterprise, there is a need for consistent data, policies, rules, and interfaces. S4/HANA is the Digital Core for the enterprise—without it, nothing works properly.

It’s early days in the evolution to the digital enterprise. But the Cambrian Explosion has started, and if you can’t adapt, you’re plankton.

For more insight on innovation, technology, and the future of business, see Digital Transformation Recharged.


James Marland

About James Marland

James is responsible for defining and rolling out strategies for the Network with particular focus on Europe. He joined Ariba at the launch of the Ariba Network in 1998 after previously being a Solution Consultant at SAP America. In addition he has held the position of Director of Algorithms at Vendavo, an SAP Partner in the area of Pricing. He has a Bachelor of Science degree in Mathematics from Southampton University. Follow James's twitter feed at @JamesMarland

Discovering Life Science's Bright Future

Michelle Schooff

What changes are digitization driving in life sciences?

In a recent episode of S.M.A.C. Talk Technology Podcast, hosts Brian Fanzo and Daniel Newman discussed some of the changes taking place in life sciences with Joe Miles, SAP’s life sciences business unit lead. Miles focuses on setting strategy for pharmaceutical, biotechnology and medical device business solutions. By providing more effective, innovative solutions, he’s helping the life science industry through digital transformation.

The direction of life sciences transformation

The industry has a history of rushing ahead at some points and lagging at others. As Joe said in the podcast, “Necessity, being the mother of invention, sometimes has allowed it and required it to move more quickly.” Much of the drive for digital transformation in the industry has been pushed forward by the desire to increase top-line revenue.

As a strongly regulated industry, life sciences has long needed to consider the implications of regulatory measures. Digitization is boosting visibility to compliance, process, supply chains, and patient care.

Improving research outcomes through Big Data

The Internet of Things has also driven change in life sciences. Sensors and devices add connectivity to clinical trials, for example, which vastly increases the amount of instantly available data available to researchers and physicians. Miles notes, “You’re talking probably about a terabyte a day per patient of data.” This allows researchers to gain a more comprehensive picture of patient data.

Once the clinical trials are completed, the same devices and sensors can continue to improve patient outcomes in the real world. Instead of simply monitoring A1C levels in a diabetes patient, for example, doctors can check whether the patient is exercising, staying active, eating right, or losing weight. Continual monitoring provides doctors with feedback on patient compliance and improves health outcomes.

Applications of blockchain in pharmaceuticals

Blockchain is becoming the new darling of the life sciences industry. The auditing technology is still rough for pharmaceutical use, but the digital ledger has great potential. It can authenticate assets and financial transactions as well as provide supply chain verification. In clinical trials, blockchain technology can be used to track the financial investments in drugs and to track which patients receive placebos. In trial settings, Joe notes, healthcare workers can verify that medicines are going to the right patients, helping prevent mistakes that can set back clinical trials. Blockchain acts as an irrefutable, unchangeable record of the study.

In shipments, blockchain can deliver a chain of custody to prevent counterfeit medications from reaching pharmacies, enabling workers to simply authenticate serial numbers or vials with the manufacturer. Blockchain also has applications in drug safety, making it easier to trace particular batches of medications with higher drug interaction rates. Drugs with recalls can be tracked more quickly, and impacted patients could be notified immediately to minimize potential health problems.

Blockchain technology can help bring transparency and visibility to these value and supply chains. This leads to better outcomes, improved health, and higher quality of life for patients.

Who’s driving life sciences innovation?

Innovation in life sciences is driven by a number of different sources. The healthcare industry, as well as financial service firms, are creating better, smarter, faster solutions that fall within the regulations. Patients are becoming more accountable for their health, and pressure from different directions will help drive the industry to create better outcomes.

Joe says, “U.S. [healthcare spending] was somewhere in the neighborhood of 16-18% of GDP, depending on some of the stats you see.” This is an unsustainable amount of spending. In response, digital transformation is driving outcome-driven reimbursement, which is rapidly changing current approaches to healthcare.

Today’s regulations often create barriers between patients and manufacturers. Sensors and devices allow greater transparency and visibility into patient health but in a private, non-invasive way. It’s a much more cost-effective way to gain transparency and data that allows continued refinement of treatments, therapies, and medication. Researchers and patients alike are putting pressure on doctors and healthcare systems to integrate innovation for better outcomes and long-term quality of life.

The changes in life sciences are driving a better quality of life for people around the globe. The technology continues to develop through the use of blockchain, the role of different aspects of the industry and improvements in research. The application of sensors, Big Data, analytics, supercomputing, and artificial intelligence will help us find answers to today’s health questions.

Much like the elimination of smallpox, polio, and other diseases, the changes brought by digitization will help create a better world. Learn more about it in this S.M.A.C. Talk Technology Podcast today.

Hear the full podcast episode here. Learn how to bring new technologies and services together to power digital transformation: download The IoT Imperative for Consumer Industries. Explore how to bring Industry 4.0 insights into your business today: read Industry 4.0: What’s Next?


Michelle Schooff

About Michelle Schooff

Michelle Schooff is a global marketing director in the retail and wholesale distribution industries for SAP. She is responsible for the marketing strategy, messaging and positioning for SAP solutions in the global marketplace. With over 20 years experience in technology and marketing, Michelle builds strategic marketing plans that drive growth, innovation and revenue.

Purpose Matters When Building Your Long-Game Digital Strategy

Paul Kurchina

Digital transformation. It’s at the top of every boardroom agenda, prompting much debate over data management, analytics-driven decision-making, personalized user experiences, and automation. Yet, for most executives, the primary purpose and end goal of such initiatives remain, at best, fuzzy.

Rapid, proactive response to changing data, competitive conditions, and customer behaviors is undoubtedly a necessity for surviving in this increasingly hyperconnected and hypercompetitive world. However, according to Jeff Stier, co-founder of the Global EY Sinek Performance Practice for EY, businesses must do more to produce purposeful outcomes that drive life-sustaining change to everyone on our planet.

“Digitalization promises to help organizations do things well over and over again without human intervention. At the same time, we must reflect on what humans can do better. What important role will employees, partners, suppliers, and customers play in this new digital world?” said Stier during the Americas’ SAP Users’ Group (ASUG) Webcast “The Art & Science of Accelerating a Digital Transformation … with Purpose.

Why is Stier’s question relevant to your business? Simply put, your answers can mean the difference between building a revenue generator for a couple years and offering a clean, equitable, and prosperous future that outlasts us all.

Purpose sets the foundation for infinite and impactful change

Traditional change strategies have enabled businesses to acquire the skills and create the processes needed to successfully execute a digital initiative, such as implementing a new ERP system. But what companies often miss is the one thing that can turn that project into a real digital transformation: people who understand the purpose of the change and are motivated to take action and achieve desirable results.

“Short- and long-term value from any business change is accelerated by integrating purpose and motivation with traditional strategies for digital transformation,” Stier advised. “Similar to the double-helix structure of DNA, digital transformation strategies and purpose and motivation strategies must zip tightly with each other – with digital strategies running through the middle to guide innovation, inspiration, and strategic engagement toward desirable business outcomes.”

Maintaining a perfect union of motivation and purpose with digital transformation enables your company to gain a return of sustainable growth across the spectrum of the business network:

  • Inside-out: Trust in the employee relationship increases because the digital initiative delivered what business leadership promised. The workplace culture gradually embraces the change, leading to high-performing teams, better employee engagement, and continuous innovation.
  • Outside-in: Customers begin to trust your brand more now that the digital experience matches their wants, needs, and expectations. Over time, their loyalty and retention grow, while customers decide to advocate your products and services. Plus, your ties with the customer community strengthen and your sales revenue and margins significantly improve.

By combining motivation and purpose with digital transformation and digital strategies, your business can tap into the best of our human nature to move forward.

“Science tells us that we all want to be inspired, trusted, valued, and fulfilled in everything we do,” said Stier. “Leaders, organizations, and businesses that operate with an infinite mindset are always looking to optimize their motivation and purpose strategies as they understand how human beings react to the way they treat them, communicate to them, and interact with them. And ultimately, the business becomes a brand that is beloved by employees and customers alike.”

Reframe your digital transformation into an inspiring social movement of change that impacts generations to come. Get the best practices and insights you need to get started by listening to the Americas’ SAP Users’ Group (ASUG) Webcast replay “The Art & Science of Accelerating a Digital Transformation … with Purpose,” featuring Jeff Stier, co-founder of Global EY Sinek Performance Practice, EY.


Paul Kurchina

About Paul Kurchina

Paul Kurchina is a community builder and evangelist with the Americas’ SAP Users Group (ASUG), responsible for developing a change management program for ASUG members.

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.

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Survey: Four Ways Machine Learning Will Disrupt Your Business

Dan Wellers and Dirk Jendroska

We are entering the era of the machine learning enterprise, in which this subset of artificial intelligence (AI) capabilities will revolutionize operating models, shake up staffing methods, upend business models, and potentially alter the nature of competition itself. The adoption of machine learning capabilities will be limited only by an organization’s ability to change – but not every company will be willing or able to make such a radical shift.

Very soon, the difference between the haves and the have-nots of machine learning will become clear. “The disruption over the next three to five years will be massive,” says Cliff Justice, principal in KPMG’s Innovation and Enterprise Solutions team. Companies hanging onto their legacy processes will struggle to compete with machine learning enterprises able to compete with a fraction of the resources and entirely new value propositions.

For those seeking to be on the right side of the disruption, a new survey, conducted by SAP and the Economist Intelligence Unit (EIU), offers a closer look at organizations we’ve identified as the Fast Learners of machine learning: those that are already seeing benefits from their implementations.

Machine learning is unlike traditional programmed software. Machine learning software actually gets better – autonomously and continuously – at executing tasks and business processes. This creates opportunities for deeper insight, non-linear growth, and levels of innovation previously unseen.

Given that, it’s not surprising that machine learning has evolved from hype to have-to-have for the enterprise in seemingly record time. According to the SAP/EIU survey, more than two-thirds of respondents (68%) are already experimenting with it. What’s more, many of these organizations are seeing significantly improved performance across the breadth of their operations as a result, and some are aiming to remake their businesses on the back of these singular, new capabilities.

So, what makes machine learning so disruptive? Based on our analysis of the survey data and our own research, we see four primary reasons:

1. It’s probabilistic, not programmed

Machine learning uses sophisticated algorithms to enable computers to “learn” from large amounts of data and take action based on data analysis rather than being explicitly programmed to do something. Put simply, the machine can learn from experience; coded software does not. “It operates more like a human does in terms of how it formulates its conclusions,” says Justice.

That means that machine learning will provide more than just a one-time improvement in process and productivity; those improvements will continue over time, remaking business processes and potentially creating new business models along the way.

2. It creates exponential efficiency

When companies integrate machine learning into business processes, they not only increase efficiency, they are able to scale up without a corresponding increase in overhead. If you get 5,000 loan applications one month and 20,000 the next month, it’s not a problem, says Sudir Jha, head of product management and strategy for Infosys; the machines can handle it.

3. It frees up capital – financial and human

Because machine learning can be used to automate any repetitive task, it enables companies to redeploy resources to areas that make the organization more competitive, says Justice. It also frees up the employees within an organization to perform higher-value, more rewarding work. That leads to reduced turnover and higher employee satisfaction. And studies show that happier employees lead to higher customer satisfaction and better business results.

4. It creates new opportunities

AI and machine learning can offer richer insight, deeper knowledge, and predictions that would not be possible otherwise. Machine learning can enable not only new processes, but entirely new business models or value propositions for customers – “opportunities that would not be possible with just human intelligence,” says Justice. “AI impacts the business model in a much more disruptive way than cloud or any other disruption we’ve seen in our lifetimes.”

Machine learning systems alone, however, will not transform the enterprise. The singular opportunities enabled by these capabilities will only occur for companies that dedicate themselves to making machine learning part of a larger digital transformation strategy. The results of the SAP/EIU survey explain the makeup of the evolving machine learning enterprise. We’ve identified key traits important to the success of these machine-learning leaders that can serve as a template for others as well as an overview of the outcomes they’re already seeing from their efforts.

Learn more and download the full study here.  

 


Dan Wellers

About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

Dirk Jendroska

About Dirk Jendroska

Dr. Dirk Jendroska is Head of Strategy and Operations Machine Learning at SAP. He supports the vision of SAP Leonardo Machine Learning to enable the intelligent enterprise by making enterprise applications intelligent. He leads a team working on machine learning strategy, marketing and communications.