Technologies That Will Propel India In 2018

Reema Jose

Convenience, affordability, and inclusivity will become the mainstay of innovations that take center stage in India in 2018, according to experts.

2017 saw the Indian economy make significant headway in technology deployment. Cloud-based transactions, artificial intelligence (AI), the Internet of Things (IoT), Big Data analytics, augmented and virtual reality (AR and VR), and blockchain became buzzwords across the country, thanks to the digital push by the Indian government, a flourishing startup ecosystem, and automation in the commercial space. India’s thrust in building a robust broadband infrastructure, coupled with its high mobile penetration, will boost technology adoption further. Sector-wise, game changers vary, and 2018 promises further disruptions.

Which technologies are likely to take the spotlight in 2018?

We reached out to 10 prominent leaders from across key sectors to assess contemporary technologies and predict the likely digital disruptions that await India in the coming year. Below is Digitalist Magazine’s projection for emerging technologies in 2018 and the key determinants of their adoption, based on these conversations.

Public sector

“Aadhaar, IndiaStack, and GST all coming together will make a big difference to the country, provided we play our cards right.” -Pramod Varma, chief architect of Aadhaar, architect of IndiaStack, and a Digitalist 2017 award winner

The Government of India’s efforts, such as Aadhaar, Jan Dhan Yojana or “banking for all,” demonetization, Digital India, and the rollout of the goods and services tax (GST) regime, fueled technology adoption in the nation in 2017. The country made a start toward a Unified Payments Interface (UPI) for payments and digital lockers. 2018 is likely to see a broader adoption and impact of these initiatives. Two areas that will receive focus in the public space are education and healthcare.

Pramod Varma, chief architect of Aadhaar, the largest project of its kind to build a verifiable identity system in the country, architect of IndiaStack, and a Digitalist 2017 award winner, says, “The impact of Aadhaar, IndiaStack, and GST all coming together will make a big difference to the country, provided we play our cards right. Some of the technologies that were in the early or experimental phases in 2016 and 2017 will become mainstream in 2018.” Varma is bullish on the use of blockchain and a significant upgrade in cybersecurity in 2018 by India Inc. and the government alike.

Big Data and analytics are other key areas where the government has begun efforts. One instance is its reliance on geospatial analytics, which draws insights from satellite data using ML and remote sensing technology. Other scenarios where Big Data analytics can be applied are monitoring urbanization, authenticating income tax assessments, and even tracking internal migrations within the country. The technology is expected to evolve further and find deployments in governance at the grassroots level, such as in village and district-level administrations.

“Opportunity is in digitalizing physical assets and leveraging blockchain to ensure that transactions against those assets are done in a very secure manner.” -Ramanathan Ramanan, mission director, Atal Innovation Mission

The Digital India drive will open more opportunities for blockchain. Ramanathan Ramanan, mission director of Atal Innovation Mission, a Government of India initiative to promote innovation and entrepreneurship, prophesies, “Blockchain will be a big opportunity in India. The opportunity is in digitalizing physical assets and leveraging blockchain to ensure that transactions against those assets are done in a very secure manner. Whatever you can think of regarding assets can be digitalized today. For example, take land records and Aadhaar: How do you securely digitalize them?”

Is there a prescription for a winner technology in the public space?

“The key criteria for technologies is that they should belong to what I would call ASSURED inclusive innovation – where A stands for affordable, S for scalable, S for sustainable, U for user-friendly, E for excellence and D for distinctive or disruptive.” -Dr. Raghunath A. Mashelkar, research scientist and corporate consultant

Inclusive innovation is the need of the hour. Says Dr. Raghunath A. Mashelkar, a research scientist and corporate consultant who was formerly the director general of the Council of Scientific & Industrial Research (CSIR), “The key criteria for technologies is that they should belong to what I would call ASSURED inclusive innovation – where A stands for affordable, S for scalable, S for sustainable, U for user friendly, E for excellence, and D for distinctive or disruptive.”

Banking

“We are building the largest innovation center in the world. Of the eight pilots we prioritized, at least two will get into beta production this year.” -Sudin Baraokar, head of innovation, State Bank of India

2017 saw digitalization take the banking sector closer to the consumer with disruptive technologies such as Big Data, blockchain, AI, and the IoT leveraging cloud computing to change the face of business. In 2018, the industry will further reimagine processes by harnessing these technologies in the digital payments arena.

Blockchain, which thrives on collaboration and transparency, will emerge as the most disruptive technology for financial transactions in 2018. It is likely to find deployments across areas such as peer-to-peer lending and crowdsourcing. It can also help manage and enhance the economic inclusion index with minimal investments.

The successful start of the BankChain project in India, a Mumbai-headquartered collaborative banking initiative involving Indian and international banks, is a clear sign that blockchain technology is here to stay. BankChain aims at building banking solutions for a network of 22 banks in India and overseas and is widely acknowledged as a landmark project in the space. “We are building the largest innovation center in the world. Of the eight pilots we prioritized, at least two will get into beta production this year. Some of the areas we want to work on may not require a regulatory view,” says Sudin Baraokar, head of innovation at India’s largest public sector bank, State Bank of India.

Biometrics that allow recognition by iris, voice, and face, and enable wallet-free shopping with authenticated payments will be increasingly deployed with cloud and mobile technologies to widen the net of financial inclusion. Several startups are working with banks as well as independently to unlock the opportunity that this presents. E-commerce and healthcare providers will do well to piggyback on these efforts.

The hugely successful launch of the HDFC Bank’s chatbot EVA earlier this year (featured in the Digitalist Sept–Oct 2017 issue) is just the beginning for chatbots in India. Applications of AI and ML are reckoned to find more complex applications in chatbots to meet a broader spectrum of customized customer needs, including payments in 2018.

Healthcare

“Sharpening analytics will help us calculate the efficacy of certain chemotherapy regimens and the chances of exact matching of a drug with the patient.” -J. P. Dwivedi, CIO, Rajiv Gandhi Cancer Institute and Research Center

Technology in healthcare in India translates to deployments at both the back end and front end. Automation at the hospital and service-provider level is evident in hospital data centers, enterprise resource planning (ERP) implementations, disaster recovery centers, and backup facilities, as well as device-monitoring dashboards that ensure the smooth functioning of healthcare infrastructure and seamless tracking of patients.

In the area of patient services, electronic health records systems and improved queue management have enabled smoother service access. There have been exciting experiments with blockchain to enhance accessibility, convenience, and patient-centric medical care. Blockchain technology is being employed to allow hospitals to collaborate and make hassle-free health information exchange a reality. For instance, patient medical records will be accessible on a standard health information grid, enabling the patient to be mobile and access the records at any hospital or city.

J. P. Dwivedi, chief information officer at the Rajiv Gandhi Cancer Institute & Research Centre, one of Asia’s premier cancer care centers, confidently says, “Sharpening analytics will help us calculate the efficacy of certain chemotherapy regimens and the chances of exact matching of a drug with the patient.”

Wearable devices have been growing in adoption, with awareness levels increasing on fitness and health. The IoT will play a role in the evolution of wearable tools that will be more user friendly. In medicine, IoT and AI will also benefit remote delivery of health services and preventive care. Telemedicine, teleradiology, and teleconsultation, which are currently in primitive forms, will become more sophisticated in 2018.

Research in medicine will witness exciting advances, one instance being the arrival of Nano sensors capable of circulating inside the human body. The “Internet of Nano Things” is another area to look forward to, where connected nano things are able to store and transmit information from inside the human body, for research purposes.

Manufacturing

“Connected shop floor or smart manufacturing will become a reality in at least some automobile companies.” -Vijay Sethi, CIO and head of CSR, Hero MotoCorp Limited, and a Digitalist 2017 award winner

Indian manufacturers are already using applications in AR and VR, AI, and robotics to provide better customer experiences and for process optimization. Chatbots used in the front end; industrial IoT and the digital twin concept used in driving operational efficiencies; and predictive analytics used in preventive maintenance and supply-chain innovation are a few examples of the massive digital disruption in the manufacturing sector.

2018 will see further maturing of these technologies as cloud-based technologies permeate into more areas. Blockchain could also find applications in manufacturing, such as vendors collaborating to serve customers better. The Tata Group and the Mahindra Group, among others, are actively exploring opportunities in blockchain.

Experiments in India spotlight on affordability and customization for the Indian environment to provide bottom-of-the-pyramid solutions and efficiencies in the supply chain all around. The Tata Group has an exciting innovation in this space. The salt-to-software solutions conglomerate has developed a technology to create a fuel cell with a low-platinum catalyst to power vehicles in the future.

Automobile industry insiders are looking toward AI to disrupt the sector further. Automobile manufacturing has been a mainstay in India, with the primary manufacturing companies taking pride in pioneering technology and process innovations in this industry. The digital twin project of Hero MotoCorp was a global first in the two-wheeler manufacturing segment. The availability of cost-effective IoT sensors is expected to further fuel the adoption of the digital twin concept with applications in smart asset management, as well as improving operational efficiencies for projects. Further explorations are underway at the Indian auto majors for driverless cars and bikes, e-cars, and even biofuel cars. However, some of these experiments may not translate to actual products on the road in 2018. Trials in electro mobility will lay the foundation for deployments in the next three to four years.

“Connected, smart vehicles and accessories will be in India next year, which means there will be data collected on the automobile, processed in real time, and feedback offered to users. In automobile manufacturing, a connected shop floor or smart manufacturing will become a reality in at least some companies,” says Vijay Sethi, CIO and head of corporate social responsibility at Hero MotoCorp Limited, the world’s largest two-wheeler motorcycle manufacturer based in India.

“AI and IoT will dictate trends in the paints industry in 2018.” -Manish Choksi, president, International, IT, HR and Chemicals at Asian Paints Limited and a Digitalist 2017 award winner

In manufacturing retail, AR and VR will become more disruptive, and more retailers will embrace these technologies to enhance customer adoption and experience. AI and the IoT will dictate trends in the paints industry, according to Manish Choksi, president, International, IT, HR, and Chemicals at Asian Paints Limited, a leading Indian paints manufacturer.

“In 2018, chatbots will become more user-friendly and will have the ability to respond to questions that are not necessarily framed for a machine.” -Dr. Gopichand Katragadda, Group CTO, Tata Sons Limited

In another case of technology serving the grassroots, unmanned aerial vehicles (drones) are increasingly employed in areas such as agriculture for spraying pesticides as well as in industry inspection. Voice recognition, image recognition, and natural language processing have all come of age to service needs at the bottom of the pyramid.

“AI will evolve into chatbots, which are smarter. In 2018, chatbots will become more user friendly and will have the ability to respond to questions that are not necessarily framed for a machine,” says Dr. Gopichand Katragadda, group CTO of Tata Sons Limited, the principal holding company and promoter of the Tata companies. Katragadda, tasked with driving technology innovations across 120 companies of the Tata Group, is leveraging design thinking apart from betting on AI and deep learning to drive business models and impact enterprise technology.

Smart city

“90% of the technologies powering GIFT City have been sourced from Indian companies, a lot of them startups.” -Ajay Pandey, managing director and group CEO, Gujarat International Finance Tec-City Company Limited and a Digitalist 2017 award winner

This year, the government announced a list of 30 additional cities for development as smart cities, taking the count to 90, under its Smart City Mission. The government-backed project is implementing multiple technologies to bring the towns up to global standards in terms of improved quality of living and sustainable management. Smart cities call for an ecosystem of applications and technology to enable “smart” features such as intelligent lighting, smart water, power management, smart traffic management parking mechanisms, and many more.

Digital solutions based on AI, the IoT, blockchain, and robotics, as well as a combination of these technologies, are slated to fuel smart city projects. For instance, devices with intelligence and the power to communicate will help smart waste management, smart parking, and traffic management, and track the distribution and consumption of water and power supply.

AI and deep learning can power features like face recognition and be used to help study the consumer behavior within the cities. Companies like Bangalore-based eMudhra are also exploring ways to use blockchain in urban planning and governance, with potential implications for smart cities.

An innovative smart city in the works, Gujarat International Finance Tec-City Company Limited (GIFT City) will pioneer features such as an automated waste collection system (AWCS) and segregation plant and a single IoT-based Command Control and Communication Centre (C4) to monitor and manage city infrastructure. The district cooling system is the first implementation for commercial use in India. Features under trial include geofencing, which uses GPS to define geographical boundaries.

According to Ajay Pandey, managing director and group CEO of GIFT City, and a Digitalist 2017 award winner, 90% of the technologies powering the project have been sourced from Indian companies, many of them startups.

Logistics

“There is activity across apps using data, automation, and AI. Voice-assisted apps will see an upgrade in 2018.” -Kapil Bharati, co-founder and CTO of Delhivery

The logistics industry has been on a technology adoption spree, combining the strengths of cloud computing, the IoT, and robotics to manage warehouse operations and track shipments and deliveries in real time. Automated storage and retrieval systems (ASRSs), radio frequency identification (RFID), GPS, cloud, and mobile are heavily in use to streamline operations. In 2017, the GST rollout led to an unprecedented increase in digitalization and faster transportation of goods for sectors across the board, and understandably in the logistics sector.

Expectations are rife for greater adoption of essential ML for higher automation and to assist in simplifying delivery mechanisms in 2018. Growth in the sector has also led to an upward spiral in applications using Big Data, automation, and AI. “There is a lot of activity across applications using data, automation, and AI. Voice-assisted applications will see an upgrade in 2018,” says Kapil Bharati, co-founder and CTO of Delhivery. For instance, you may not have to look at the screen to make decisions; instead you may be able to use your Bluetooth handset and give commands. This is an area where much work has been done by companies such as Google and Amazon.

Big Data and cognitive computing will be vital in laying the foundation for futuristic logistics systems. Interestingly, employers are increasingly looking at robots to protect against labor shortages during high demand. That robots improve the speed, accuracy, and productivity per square foot of warehouse space when e-commerce giants are reeling under rising rental prices is clearly in their favor.

The rise of e-commerce and demand from Tier 2 cities will lead to further collaborations between logistics players, and such models will be increasingly enabled by technology. Use of sensor technology that measures traffic flow, area-specific volume, and movement of people will grow in 2018.

Predictions: The top three technologies in India in 2018

  • Blockchain technology has several experts betting on it for collaboration and trust-based ecosystems across industries and government systems.
  • Artificial intelligence will find newer applications across sectors and in combination with digital twin technology among others.
  • Further evolution of AR and VR is expected to ensure increased use of mixed reality for more immersive experiences.

How is digital disruption impacting the Asian economy? See Rise Of The Digital Conglomerate In Asia.


Reema Jose

About Reema Jose

Reema Jose has over 15 years of experience writing on business and technology.

Monetizing And Optimizing Content Distribution With Machine Learning And Blockchain

Catherine Lynch

A generation ago, media conglomerates tightly controlled content production and distribution, deciding when, where, and how content was consumed. That’s all changed. Gone are the days of linear television channels and a single-television household. Today’s consumers decide when and where to consume content across multiple platforms.

With the average attention span of an adult hovering at eight seconds, down from 15 seconds in 2000, the media industry is fighting for increasingly smaller slivers of consumer attention. Media companies need a solution for monetizing content and delivering the right content to the right consumer at the right moment. Advanced analytics, machine learning, and blockchain are three disruptive technologies that can solve the twin problems of volume overload and content monetization.

How advanced analytics and machine learning solve the “paradox of choice”

For media companies, consumers drive demand. It’s all about what they want, when they want it, and which device they want it on.

“We went from a very analog-driven, subscriber numbers rated world to a world where it’s about engagement, and about data, and about consuming the content when you want,” says Richard Whittington, senior vice president, Media Industry Cloud Solutions, in the S.M.A.C. Talk Technology Podcast.

Of course, if consumers can’t find they content they want, they can’t consume it. In a world with nearly infinite choices, consumers are increasingly paralyzed by the “paradox of choice.” This theory states that there is a tipping point for choice, a point where more choices cease to provide an advantage and instead become a hindrance. It’s akin to the feeling of mindlessly scrolling Netflix looking for something to watch, but not finding anything. One-third of consumers say that they frequently cannot find anything to watch, according to a Cord Cutting Survey conducted for Rovi.

Media companies are experimenting with new machine learning algorithms to better understand consumer behavior, preference, and social cues. With machine learning is it easier to utilize metadata through intuitive, creative applications, rather than simply recommending a movie based on genre or actor preference. For example, machine learning enables language processing for a deeper understanding of content based on mood, emotion or intensity. Coupled with social signals, such as a conversation on Facebook around a new movie, machine-learning powered content recommendations could boost viewer engagement, satisfaction, and loyalty. Relevancy and timing are paramount: media companies that can provide consumers with a perfectly curated shortlist may outperform the companies offering an endless list of options that miss the mark.

New monetization pathways with blockchain and machine learning

Since consumers moved away from physical products like CDs or DVDs, media companies have struggled to monetize their content. According to Whittington, blockchain offers a new path forward, addressing problems associated with rights management, payment, and distribution.

“Blockchain gives media companies the ability to track content and create events when content is consumed,” says Whittington in the S.M.A.C. Talk Technology Podcast. “For example, if I send you a football match to view, this will trigger an event that indicates that you consumed the match. Money is then paid to whoever owns the rights to that match, rather than having to go through the traditional controlled, linear model. Blockchain has the ability to turn the whole business model upside down.”

In addition to using blockchain to monetize content distribution and consumption, Whittington says machine learning may also play an important role in content monetization.

“We’ve always heard about product placement in shows,” says Whittington in the S.M.A.C. Talk Technology Podcast. “But [product placement] has never been able to be measured to such an extent with heat mapping and knowing exactly what people looked at, and did they notice it, and how long did they look at it for, and what is the value of those impressions compared to other media avenues that they might have put those dollars into. I love the example, for instance, of how can you use machine learning to say, hey, on this episode of ‘Modern Family’ we had this many times that we showed XYZ’s product and we’re going to charge you for this. If you don’t see any value in this company A, company B might. We can actually create competition there.”

Next steps: Gaining the first-mover advantage

The media industry has undergone a transformation from a distribution model to a direct-to-consumer model and continues to evolve at a rapid pace. By 2020, Gartner predicts that artificial intelligence (AI) bots, rather than humans, will manage 85 percent of customer interactions. There will be over 82 million US millennial digital video customers. As media companies grapple with the challenge of getting the right content to the right consumer at the right time, companies that proactively invest in advanced analytics, machine learning and blockchain will gain a critical first-mover advantage. These companies will be best positioned to turn data into insights, monetizing the delivery of the right piece of content at the right moment to the right consumer.

To learn more about how digital transformation is disrupting content distribution and monetization in the media industry, listen to the S.M.A.C. Talk Technology Podcast with Richard Whittington.

Hear the full podcast episode here. For more insight on digital leaders, check out the SAP Center for Business Insight report, conducted in collaboration with Oxford Economics, “SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart.”


Catherine Lynch

About Catherine Lynch

Catherine Lynch is a Senior Director of Industry Cloud Marketing at SAP. She is a content marketing specialist with a particular focus on the professional services and media industries globally. Catherine has a wide international experience of working with enterprise application vendors in global roles, creating thought leadership and is a social media practitioner.

What Is The Future Of The Industrial Machinery Industry?

David Parrish

The industrial machinery and components (IM&C) industry is often on par with, or ahead of, other industries when it comes to using advanced technologies. For instance, this industry adopted the Internet of Things (IoT) long before many others had even heard of it. Currently, IM&C is adopting cloud solutions, as-a-service business models, and blockchain.

Current technology use cases in IM&C

Hosts of the S.M.A.C. Talk podcast talked to Ulf Guttmann, of SAP’s Industrial Machinery and Components Industry Business Unit, who explained how IM&C companies are by using new technologies that help them run their businesses better.

For example, consider smart products, which have embedded software and sensors that allow companies to send and receive product data. This data is being used with predictive analytics and machine learning. Guttmann said that modern technological capabilities have allowed companies to connect more machines and components. This helps them get more and higher-quality data to understand and improve their business processes.

Technology also allows IM&C companies to predict equipment maintenance needs so they can prevent problems that could lead to breakdowns. IM&C companies have also been experimenting with the equipment-as-a-service model, which works in a way that’s similar to software-as-a-service. Guttmann offered the example of Kaeser Compressors, which sells compressed air output as a service, with the compressors included in each service plan.

IM&C companies are also using cloud solutions, which Guttmann said enables them “to respond to the needs of the users, of their customers, of their suppliers, much faster than what was possible before.” They can have more flexibility and adapt to different needs by adding more applications to the cloud platform. This allows them to quickly change their solutions and applications to expand their businesses. They can also provide better customer service and compete better. If a customer expresses a need, the company is able to quickly change applications through the cloud platform. The customer can then easily access the changes.

A cloud platform also facilitates IoT within the industrial setting, which is known as the Industrial Internet of Things (IIoT). Linda Rosencrance explained in a TechTarget article that the industry is currently facing a challenge with using IIoT to move forward. The problem is that many “things” are not designed to properly connect with each other. She explained that “interoperability standards and common architectures are needed to connect these smart devices and machines.” Creating a standard system is proving difficult, but industry groups have started to work toward this effort. Rosencrance noted that standards should help create better data transfers between industrial machinery and devices.

Moving forward with blockchain

Something the industry has not yet adopted is blockchain, which is currently used in industries like banking. Guttmann says this technology could help IM&C companies track and trace products and components in a safe and secure way throughout their entire lifecycle while also helping them share this data within their network.

Blockchain will allow IM&C companies offer greater transparency of transactions within the cloud platform, explained Georg Kube in Digitalist Magazine. Also, he noted that IM&C companies will need to use new strategies and technologies to continue to stay relevant and competitive in the field. For example, he suggested a digitally enabled supply chain. He also recommended using a systems-engineering method for mechanical and other systems.

In an article in The Future of Customer Engagement and Commerce, Dietmar Bohn laid out some trends it expects to see in the industry by 2022. One prediction is that companies will make more aftermarket service revenue. This connects to the equipment-as-a-service model currently used. Another anticipated trend is to use machine learning in the planning and scheduling processes. Also, companies may transition to cross-industry networks to improve operations and using virtual reality within business operations.

Companies in the IM&C industry tend to use advanced technologies to continue improving their businesses and to meet customer demands. The industry is already using an equipment-as-a-service model and smart products. It is also using IoT, machine learning, and cloud solutions. Blockchain is expected to be the next technology to transform the industry. Nonetheless, IM&C companies will need to continue following new technologies to stay competitive.

Hear Ulf Guttmann’s full discussion of technology in the IM&C industry by listening to the S.M.A.C. Talk podcast.

Hear the full podcast episode here. Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value by reading Accelerating Digital Transformation in Industrial Machinery and Components. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?


David Parrish

About David Parrish

David Parrish is the senior global director of Industrial Machinery & Components Solutions Marketing for SAP. Before joining SAP, he held various product and industry marketing positions with J.D. Edwards, PeopleSoft, and QAD going back to 1999.

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.