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Barriers To Effective Risk Management

Norman Marks

risk managementEarlier this year, an interesting article on CFO.com considered the risk management practices at 10 major global banks.

While they found that each of the banks considered risk management (or, ERM in the words of the author) a strategic priority and recognized that “risks of all kinds — not just credit, market, and liquidity risks — can threaten their performance and even their viability”, translating the intent into practice ran into several significant barriers:

  • Operating in default mode. By this, the author refers to the board deferring to the CEO, who in turn defers to the CRO (chief risk officer). While the author seems more concerned that the board is not actively involved, I am more concerned that risk management is left to the CRO rather than being seen as the responsibility of every manager at every level of the organization. The responsibility for managing performance should not be separated from the responsibility for managing risk, and this is exactly what is likely to happen when the CRO is seen as responsible for risk management
  • Ambiguous mandates and limited resources. Budgets are allocated for operational activities, with no time left for holistic risk management. Again, my point is that operational activities must include risk management
  • Risk is siloed in functional and business verticals. The article expresses this well: “Below the level of CRO, risk officers oversee tightly defined areas of an organization’s risk — and lack the authority and credibility to influence the wider organization. In fact, the risk function itself is often a silo, largely devoted to setting and monitoring quantitative risk parameters and leaving holistic risks, such as reputational risk, to others”
  • There is no mechanism for addressing risk holistically. This is a continuation of the prior point: nobody is considering the interrelationship and potential aggregation of risk across the organization

As a result, says the author, risk management “remains fragmented and provides poor visibility of risks”.

I like the point that appointing a CRO is just consolidating the risk silo into one organization, still separated from operating management’s responsibility.

Although I differ from the author’s opinion that risk management should be driven from a board perspective down, I wholeheartedly support the article’s ideal:

Everyone comes to own enterprise risk individually. Over time, the institution creates — and continually refreshes — a culture in which it becomes second nature to strive for the ultimate goal of ERM: an enhanced capacity to increase stakeholder value by more effectively dealing with the risks and opportunities offered by uncertainty”

My opinion is that while the article has detailed some important obstacles, the most important is that those who direct and manage the organization, including the risk officers, have not fully appreciated the true value of risk management. It lies in these two statements:

  • Risk management informs and enables better decisions, not only at the board and executive levels but every day by operating management
  • Risk management helps you take the right risks

I welcome your views.

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About Norman Marks

Norman Marks previously held the role of Vice President, Evangelist for Better Run Business, at SAP, responsible for optimizing business processes for internal audit, risk management, governance, and compliance.

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The Future Of Supplier Collaboration: 9 Things CPOs Want Their Managers To Know Now

Sundar Kamak

As a sourcing or procurement manager, you may think there’s nothing new about supplier collaboration. Your chief procurement officer (CPO) most likely disagrees.
Forward-thinking CPOs acknowledge the benefit of supplier partnerships. They not only value collaboration, but require a revolution in how their buying organization conducts its business and operations. “Procurement must start looking to suppliers for inspiration and new capability, stop prescribing specifications and start tapping into the expertise of suppliers,” writes David Rae in Procurement Leaders. The CEO expects it of your CPO, and your CPO expects it of you. For sourcing managers, this can be a lot of pressure.

Here are nine things your CPO wants you to know about how supplier collaboration is changing – and why it matters to your company’s future and your own future.

1. The need for supplier collaboration in procurement is greater than ever

Over half (65%) of procurement practitioners say procurement at their company is becoming more collaborative with suppliers, according to The Future of Procurement, Making Collaboration Pay Off, by Oxford Economics. Why? Because the pace of business has increased exponentially, and businesses must be able to respond to new market demands with agility and innovation. In this climate, buyers are relying on suppliers more than ever before. And buyers aren’t collaborating with suppliers merely as providers of materials and goods, but as strategic partners that can help create products that are competitive differentiators.

Supplier collaboration itself isn’t new. What’s new is that it’s taken on a much greater urgency and importance.

2. You’re probably not realizing the full collective power of your supplier relationships

Supplier collaboration has always been a function of maintaining a delicate balance between demand and supply. For the most part, the primary focus of the supplier relationship is ensuring the right materials are available at the right time and location. However, sourcing managers with a narrow focus on delivery are missing out on one of the greatest advantages of forging collaborative supplier partnerships: an opportunity to drive synergies that are otherwise perceived as impossible within the confines of the business. The game-changer is when you drive those synergies with thousands, not hundreds of suppliers. Look at the Apple Store as a prime example of collaboration en masse. Without the apps, the iPhone is just another ordinary phone!

3. Collaboration comes in more than one flavor

Suppliers don’t just collaborate with you to provide a critical component or service. They also work with your engineers to help ensure costs are optimized from the buyer’s perspective as well as the supplier’s side. They may even take over the provisioning of an entire end-to-end solution. Or co-design with your R&D team through joint research and development. These forms of collaboration aren’t new, but they are becoming more common and more critical. And they are becoming more impactful, because once you start extending any of these collaboration models to more and more suppliers, your capabilities as a business increase by orders of magnitude. If one good supplier can enable your company to build its brand, expand its reach, and establish its position as a market leader – imagine what’s possible when you work collaboratively with hundreds or thousands of suppliers.

4. Keeping product sustainability top of mind pays off

Facing increasing demand for sustainable products and production, companies are relying on suppliers to answer this new market requirement.

As a sourcing manager, you may need to go outside your comfort zone to think about new, innovative ways to collaborate for achieving sustainability. Recently, I heard from an acquaintance who is a CPO of a leading services company. His organization is currently collaborating with one of the largest suppliers in the world to adhere to regulatory mandates and consumer demand for “lean and green” lightbulbs. Although this approach was interesting to me, what really struck me was his observation on how this co-innovation with the supplier is spawning cost and resource optimization and the delivery of competitive products. As reported by Andrew Winston in The Harvard Business Review, Target and Walmart partnered to launch the Personal Care Sustainability Summit last year. So even competitors are collaborating with each other and with their suppliers in the name of sustainability.

5. Co-marketing is a win-win

Look at your list of suppliers. Does anyone have a brand that is bigger than your company’s? Believe it or not, almost all of us do. So why not seize the opportunity to raise your and your supplier’s brand profile in the marketplace?

Take Intel, for example. The laptop you’re working on right now may very well have an “Intel inside” sticker on it. That’s co-marketing at work. Consistently ranked as one of the world’s top 100 most valuable brands by Millward Brown Optimor, this largest supplier of microprocessors is world-renowned for its technology and innovation. For many companies that buy supplies from Intel, the decision to co-market is a strategic approach to convey that the product is reliable and provides real value for their computing needs.

6. Suppliers get to choose their customers, too

Increased competition for high-performing suppliers is changing the way procurement operates, say 58% of procurement executives in the Oxford Economics study. Buyers have a responsibility to the supplier – and to their CEO – to be a customer of choice. When the economy is going well, you might be able to dictate the supplier’s goods and services – and sometimes even the service delivery model. When times get tough (and they can very quickly), suppliers will typically reevaluate your organization’s needs to see whether they can continue service in a fiscally responsible manner. To secure suppliers’ attention in favorable and challenging economic conditions, your organization should establish collaborative and mutually productive partnerships with them.

7. Suppliers can help simplify operations

Cost optimization will always be one of your performance metrics; however, that is only one small part of the entire puzzle. What will help your organization get noticed is leveraging the supplier relationship to innovate new and better ways of managing the product line and operating the business while balancing risk and cost optimization. Ask yourself: Which functions are no longer needed? Can they be outsourced to a supplier that can perform them better? What can be automated?

8. Suppliers have a better grasp of your sourcing categories than you do

Understand your category like never before so that your organization can realize the full potential of its supplier investments while delivering products that are consistent and of high quality. How? By leveraging the wisdom of your suppliers. To be blunt: they know more than you do. Tap into that knowledge to gain a solid understanding of the product, market category, suppliers’ capabilities, and shifting dynamics in the industry, If a buyer does not understand these areas deeply, no amount of collaboration will empower a supplier to help your company innovate as well as optimize costs and resources.

9. Remember that there’s something in it for you as well

All of us want to do strategic, impactful work. Sourcing managers with aspirations of becoming CPOs should move beyond writing contracts and pushing PO requests by building strategic procurement skill sets. For example, a working knowledge in analytics allows you to choose suppliers that can shape the market and help a product succeed – and can catch the eye of the senior leadership team.

Sundar Kamak is global vice president of solutions marketing at Ariba, an SAP company.

For more on supplier collaboration, read Making Collaboration Pay Off, part of a series on the Future of Procurement, by Oxford Economics.

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Sundar Kamak

About Sundar Kamak

Sundar Kamak is the Vice President of Products & Innovation at SAP Ariba. He is an accomplished Solutions Marketing and Product Management Execuive with 15 + year's broad experience in product strategy, positioning, SaaS, Freemium offering, go-to-market planning and execution.

The CFO Role In 2020

Estelle Lagorce

African American businessman looking out office window --- Image by © Mark Edward Atkinson/Blend Images/CorbisThe role of the CFO is undergoing a serious transformation, and CFOs can expect their role to continue to evolve, according to a recent CFO.com article by Deloitte COO and CFO Frank Friedman.

In the futurist article, Friedman says one of the biggest factors that will contribute to the CFO’s significant change over the next five years is technology.

Digital technology is obviously expected to drive change in high-tech companies, but Friedman says it’s industries outside of the tech sectors that are of particular interest, as they struggle to understand how to grasp and harness the digital capabilities available to them.

Working with high tech in low-tech industries

Five years from now, a finance team may be defined by how well it uses technology and innovative business tools, regardless of what industry it’s in. The article outlines some examples of ways that digital technology will increasingly be used by CFOs in “non-tech” sectors:

  • Predictive analytics: CFOs in manufacturing companies can forecast results and produce revenue predictions based on customer-experience profiles and current demand, instead of comparing to previous years as most companies still do today.
  • Social media and crowdsourcing: You may not think CFOs spend a lot of time on social media or crowdsourcing sites, but these methods can actually expedite finance processes, such as month-end responsibilities of the finance organization.
  • Big Data: CFOs already have a lot of data at their fingertips, but in 2020 they will have even more. CFOs in both tech and non-tech sectors who understand how to use that data to make valuable, informed decisions, can strategically guide their company and industry in a more digitally oriented world.

To do this, Friedman says CFOs can lead the way by addressing some critical areas:

  1. Know the issues: Gather the key questions that leaders expect Big Data analytics to answer.
  1. Make data easily accessible: Collect data that is manageable and easy to access.
  1. Broaden skills: The finance team needs people with the skills to understand and strategically interpret the data available to them.

The tech-savvy CFO

The role of today’s CFO has already expanded to include strategic corporate growth advice as well as managing the bottom line. In 2020, Friedman says expectations placed on the CFO are presumed to be even greater, and CFOs will likely need a much more diverse, multidisciplinary skill set to meet those demands.

The article details several traits and skills that CFOs will need in order to keep up with the pace of digital change in their role.

  1. Digital knowledge: CFOs must be tech-savvy in order to capitalize on technical innovations that will benefit their company and their industry as a whole.
  1. Data-driven execution: CFOs will need the ability to execute company strategy and operations decisions based on data-driven insights.
  1. Regulatory compliance: Regulations continue to be more stringent globally, so CFOs will need to be proficient at working closely with regulators and compliance systems.
  1. Risk management: With the growing global economy comes increased cyber and geopolitical risks worldwide. The CFOs of 2020, especially those in large multinational organizations, will need to have the expertise to monitor and manage risk in areas that may be unforeseen today.

The future CFO’s well-rounded resume

By 2020, the CFO role will require much more than just an accounting background. According to Deloitte’s Frank Friedman, “CFOs may need to bring a much more multidisciplinary skill set to the job as well as broader career experiences, from working overseas to holding positions in sales and marketing, and even running a business unit.”

So if you’re a current or aspiring CFO, you have five years to round out your resume with the necessary skills to be ready for the digitally driven role of the CFO in 2020.

The above information is based on the CFO.com article What Will the CFO Role Look Like In 2020?” by Deloitte COO & CFO, Frank Friedman – Copyright © 2015 CFO.com.

Want to learn more about best practices for transforming your finance organization? View the SAP/Deloitte Webinar, “Reshaping the Finance Function”.

For an in-depth look at digital technology’s role in business transformation, download the SAP eBook, The Digital Economy: Reinventing the Business World.

To learn more about the business and technology factors driving digital disruption, download the SAP eBook, Digital Disruption: How Digital Technology is Transforming Our World.

To read more CFO insights from a tech industry perspective, read the Wall Street Journal article with SAP CFO Luka Mucic: Driving Insight with In-memory Technology.

Discover 7 Questions CFOs Should Ask Themselves About Cyber Security.

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Estelle Lagorce

About Estelle Lagorce

Estelle Lagorce is the Director, Global Partner Marketing, at SAP. She leads the global planning, successful implementation and business impact of integrated marketing programs with top global Strategic Partner across priority regions and countries (demand generation, thought leadership).

Running Future Cities on Blockchain

Dan Wellers , Raimund Gross and Ulrich Scholl

Building on the Blockchain Framework

Some experts say these seemingly far-future speculations about the possibilities of combining technologies using blockchain are actually both inevitable and imminent:


Democratizing design and manufacturing by enabling individuals and small businesses to buy, sell, share, and digitally remix products affordably while protecting intellectual property rights.
Decentralizing warehousing and logistics by combining autonomous vehicles, 3D printers, and smart contracts to optimize delivery of products and materials, and even to create them on site as needed.
Distributing commerce by mixing virtual reality, 3D scanning and printing, self-driving vehicles, and artificial intelligence into immersive, personalized, on-demand shopping experiences that still protect buyers’ personal and proprietary data.

The City of the Future

Imagine that every agency, building, office, residence, and piece of infrastructure has an entry on a blockchain used as a city’s digital ledger. This “digital twin” could transform the delivery of city services.

For example:

  • Property owners could easily monetize assets by renting rooms, selling solar power back to the grid, and more.
  • Utilities could use customer data and AIs to make energy-saving recommendations, and smart contracts to automatically adjust power usage for greater efficiency.
  • Embedded sensors could sense problems (like a water main break) and alert an AI to send a technician with the right parts, tools, and training.
  • Autonomous vehicles could route themselves to open parking spaces or charging stations, and pay for services safely and automatically.
  • Cities could improve traffic monitoring and routing, saving commuters’ time and fuel while increasing productivity.

Every interaction would be transparent and verifiable, providing more data to analyze for future improvements.


Welcome to the Next Industrial Revolution

When exponential technologies intersect and combine, transformation happens on a massive scale. It’s time to start thinking through outcomes in a disciplined, proactive way to prepare for a future we’re only just beginning to imagine.

Download the executive brief Running Future Cities on Blockchain.


Read the full article Pulling Cities Into The Future With Blockchain

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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.

Raimund Gross

About Raimund Gross

Raimund Gross is a solution architect and futurist at SAP Innovation Center Network, where he evaluates emerging technologies and trends to address the challenges of businesses arising from digitization. He is currently evaluating the impact of blockchain for SAP and our enterprise customers.

Ulrich Scholl

About Ulrich Scholl

Ulrich Scholl is Vice President of Industry Cloud and Custom Development at SAP. In this role, Ulrich discovers and implements best practices to help further the understanding and adoption of the SAP portfolio of industry cloud innovations.

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Why HR Is The New Marketing

Michael Brenner

In a world of infinite media choices, the best way to reach new buyers and new talent might be right under your nose. Your own employees represent the greatest opportunity to create meaningful marketing and to develop human resources programs that increase sales, while also finding and retaining top talent. Is HR the new marketing?

In the battle for new talent, HR departments have been forced to expand their role from hiring and firing, overseeing personnel systems and processes, and handling benefit management to include leadership development and training, employer branding, and diversity initiatives.

HR has been forced to adopt strategies that look, well, very much like marketing. These days, HR develops campaigns to grow employer awareness, to build the employer brand as a “great place to work,” and to retain top talent—all traditional marketing objectives.

While many in HR have embraced these traditional marketing skills, the most effective companies are moving beyond HR simply applying marketing techniques to a whole new opportunity. These effective companies are actually activating employees as a new marketing channel to achieve both HR and marketing objectives.

Proceed with caution

One of the biggest obstacles to achieving the potential of employees as a new marketing channel is the perception of marketing as advertising.

Asking (or forcing) your employees to share product content on their social media channels is just as dangerous as asking them to share (or guilting them into sharing) what a great place your company is to work.

Consumers are increasingly ignoring and blocking advertising messages, with some research even suggesting that promotional messages from brands can have the opposite of their intended effect. These misguided efforts can actually cause sales to decline!

While some employees may authentically share their excitement and passion for the products they work on, the projects they are engaged in, and the company they work for (and we should celebrate that), this is not a sustainable strategy for getting new customer or talent.

Content marketing and HR

Content marketing has emerged as one of the hottest trends in marketing. Marketers are learning to think and act like publishers to create entertaining, interesting, or helpful content that consumers actually want to read and share (vs. promotional ads). And this approach allows a brand to reach, engage, convert and retain new customers.

The opportunity to activate employees to achieve marketing and HR objectives starts by creating content they naturally want to share.

As the first VP of content marketing at SAP, I learned to tap into the power of my fellow employees to create a marketing program that delivered massive ROI. The biggest lesson I learned: HR is the new marketing!

With a limited budget for content, I asked our internal experts to write articles on whatever they wanted. We had one editorial rule: no product promotion. Our internal experts could explore their professional or personal passions and interests, even if it meant writing about cat videos. Because somewhere out in the world, I believed there was a potential customer, employee, partner or investor who might also loved cat videos. (No one ever wrote about cat videos. Bummer!)

I even created a slideshare deck to explain the value for these employees/budding content marketers:

  • Grow your personal brand
  • Increase or establish your authority on the topics you are interested in
  • Gain new social media followers
  • Maybe even find that new job or get promoted

We also encouraged this behavior by publicly recognizing our top articles and authors each week in a round-up post. We made rock stars of the best performers as their social connections and influence increased. And this drove more employees to sign up.

Today, that site has hundreds of employee contributors. All are growing their personal brand, while expressing their passions and expertise to the world. And many of the employees who don’t write articles voluntarily share the content with their social connections.

As LinkedIn’s own Jason Miller mentioned in his article, the trick is to define what’s in it for them.

Why does this work?

Because you can create massive momentum when we combine the needs of our customers, our employees, and our company based on THEIR own distinct interests:

  • Companies want more loyal customers and talented employees.
  • Employees want purpose and meaningful work that has real impact on their career and the world.
  • Customers want to form relationships with brands on their terms and based on their self-interest

What you can do to activate HR as the new marketing

1. Create a customer-centric vision

Look around your organization, and you will see people above you, below you, and beside you. The traditional org chart still exists to focus on your position in the hierarchy. But where’s the customer? Where is the customer in your org chart? 

Even if your company mission isn’t customer-centric (“we are the leading provider of widgets”), your marketing vision must be. And there is one simple formula to get there:

Become a sought-after destination for which topicin order to deliver what customer value or impact.

2. Create content employees who want to share

According to LinkedIn, the combined connections of employees on the LinkedIn platform is 10 times larger than any company’s followers. And just 3 percent of company employees sharing branded content generate 30 percent of the views and clicks on that content.

Platforms such as LinkedIn Elevate, social selling programs, and other tools can dramatically increase the reach of your content, grow your company’s social presence, and improve the effectiveness of marketing programs — without spending a single dollar on paid media.

But you have to create content your employees want to share. You might even ask them to help you. The trick is to explain what’s in it for them: creating or sharing content can help them build more connections, establish relationships with other leaders in your industry, and grow their personal brand so they can achieve happiness in their careers.

3. Measure the results

Measure the impact of your employee content sharing for your company. Demonstrate how it has benefited the employees (increased connections, awards, and recognition). Discuss ways to profile your best customers as well.

And partner with your colleagues across HR, marketing, and sales to determine the best ways to continuously optimize what is working for everyone.

If you’re in marketing, it’s time to start thinking about your colleagues in HR as your new best friend. And if you’re in HR, it’s time to think about how marketing can help you acquire and retain the best talent — while making the leadership team happy as well.

For more strategies that create a culture that drives business growth, see Employee Advocacy = Engaged Employees.

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About Michael Brenner

Michael Brenner is a globally-recognized keynote speaker, author of  The Content Formula and the CEO of Marketing Insider GroupHe has worked in leadership positions in sales and marketing for global brands like SAP and Nielsen, as well as for thriving startups. Today, Michael shares his passion on leadership and marketing strategies that deliver customer value and business impact. He is recognized by the Huffington Post as a Top Business Keynote Speaker and   a top  CMO influencer by Forbes.