18 Predictions For 2017 From Finance Thought Leaders In A Digital And Automated World

Judy Cubiss

Digitization continues amok. New business models and processes are being introduced across all industries; new competitors are emerging that can natively take advantage of these new business models and are disrupting entire industries. Continued volatility is driving the demand for real-time, detailed information. Technology innovation continues at breakneck speed. While 2016 saw the application of blockchain to financial processes and the adoption of artificial intelligence to drive more automation and efficiencies in finance. What is that going to mean in 2017? Can finance organizations keep up with the technology opportunities?

Once again, we asked finance thought leaders to share their predictions for finance in a digital world. Their insights for 2017 include increased real-time insight, collaboration, automation, and partnership with the business. Take a look back at the predictions for 2016 and see how they differ from the following predictions for 2017 from finance thought leaders.

1. David Axson, managing director, CFO & Enterprise Value, Accenture Strategy – @DavidAxson, @AccentureTech

2016 was the year digital finance went mainstream. Recent Accenture research shows increasing adoption rates for technologies such as cloud –76%; predictive analytics – 67%; in-memory 65%; and artificial intelligence – 62%. In 2017, CFOs will pivot to ensure that they have the right talent to fully exploit these new schools. Accountants will be less in demand, while data scientists, sociologists, and mathematicians will be joining the ranks of finance professionals.

2. Eliseo Belmonte, managing director, SAP Finance Transformation, Accenture Technology – @EliseoBelmonte, @AccentureTech

Digital technologies elevate finance to a new role in the business, disrupting traditional ways of working, demanding a change in talent and differentiation through insights. By 2022, half of the current finance functions will no longer be relevant, and half of the required capabilities are nonexistent today or are just emerging. 2017 needs to be the year for “raising the new finance talent.”

3. Thack Brown, general manager and global head, SAP’s Line of Business Finance, SAP – @thackbrown, @SAPFinance

On the upside, 2017 will see three major changes becoming mainstream for finance:

  • Financial results will become available to companies on an as-needed basis, not on the basis of month-end close.
  • Dynamic planning processes will replace the antiquated annual budget cycle.
  • Technology will drive significant automation in back-office processes, and the first solid use cases for artificial intelligence will become mainstream.

On the downside, finance organizations are facing the daunting challenges caused by accounting standard changes (IFRS 9, 15, 16); country-by-country reporting; auditor scrutiny of transfer pricing; FCPA; and other regulatory burdens that will come into effect or face heightened enforcement.

4. Gary Cokins, founder, Analytics-Based Performance Management LLC – @GaryCokins

In 2017 the finance function will realize the impact on its profession from machine learning, artificial intelligence (AI), smart process automation (SPA), and cognitive software computing. The accelerating and disruptive “digital revolution” will adversely impact an organization’s competitiveness. Organizations must either “disrupt” or “be disrupted.” Companies often fail to recognize disruptive threats until it is too late. And even if they do, they fail to act boldly and quickly enough. The exponential growth of digital devices connected to the Internet creates both opportunities and challenges for enterprises. This requires a paradigm shift in thinking to embrace “digital transformation” for protection.

5. Mark Dudgeon, global SAP CTO, IBM – @MarkPDudgeon, @IBMSAPAlliance

CFOs are seeing the barriers between industries collapse and feeling increased competition from outside and within their industries. These trends will continue to challenge enterprises globally in 2017. Financial leaders can no longer afford to rely solely on traditional data sources to understand, anticipate, and communicate the state of the business. With significant advancements in technologies such as advanced analytics and cognitive computing, companies can now integrate and analyze information across and outside the enterprise in real time. Technology enablers can also improve agility by optimizing operation processes, which is critical to achieving desired business outcomes, vision, and growth.

6. Nilly Essaides, senior research director & EPM Advisory Practice, The Hackett Group

CFOs are being asked to do (a lot) more with less – for example, digitize finance quickly but without massive disruption. In parallel, CFOs’ scope is growing to include managing risk and its ultimate financial impacts, while taking on more and more – and ever-changing – compliance requirements across the entire business, not just finance. (In many businesses, we actually see IT returning to the CFO’s scope!)  Seems like the traditional Catch-22. I predict, though, that forward-thinking CFOs will see the opportunity in these mediocre economic times to consolidate gains, evolve their businesses into the digital economy, and streamline those consolidated operations by simplifying, analyzing, and automating.

7. Miles Ewing, principal, Deloitte Consulting LLP – @mw_ewing@DeloitteSAP

Finance stands at a crossroads where new technology offers the chance to dramatically improve automation and efficiency, allowing finance to step forward as the analytic engine for companies. If finance fails to make this jump, other functions could increasingly take the lead role in analytics, leaving finance with a limited role as a business adviser.

8. Neil Krefsky, senior marketing director, Finance Line of Business Solutions, SAP @Krefsky

In the wake of digital everything, one of the most interesting outputs in finance is rise of the role “chief finance transformation officer.” The growing use of automation, digital disruption, and increased business partnering is driving the progression of this new executive role. CFOs and finance organizations will increasingly acknowledge the need for this leadership position requiring a transformational skill set that converges equal know-how in finance and IT. These new leaders will drive tremendous efficiencies in finance’s traditional tasks, but also be pioneers of cutting-edge technology that amplifies business foresight across the entire enterprise.

9. Chris Horak, global VP, Solution Marketing, SAP – @choirshark

The digital economy is as different from “classic” business as an Uber-summoned Tesla is from a horse-drawn buggy. 2017 will be the year when finance professionals realize that the digital revolution is not just about making fully existing systems and processes better and faster. While that is necessary in many cases, it is not sufficient to capitalize on the opportunity of digital economy. As the saying goes: “The electric lightbulb was not invented by trying to optimize the candle.” Finance teams that can draw on the power of a single source of truth for real-time reporting, governance, compliance, and predictive insight will be at the forefront of the digital frontier. They will discover that their unique value to the business is not about looking backwards, but charging forwards with innovation and new business models.

10. Rodger Howell, partner, PwC’s Strategy& – @rodger_howell@pwc_LLP

Finance is rethinking the approach to automate reporting. Many companies are skipping best-in-class software and using robotics process automation to automate their existing processes and approach, resulting in increased speed to process information, improved quality, reduced costs, and minimized human errors. It’s on fire! Once they have the processes automated, then they are looking at moving them to best-in-class software to drive additional benefit.

11. Tony Klimas, Principal, Global PI Finance Leader, EY Advisory Services – @tonyklimas, @EY_SAP

“The focus on automation, robotics, and advanced analytics will continue to drive digital disruption in the finance and accounting space. These technologies are accelerating the pace of change and will eventually become a “new normal.” At the same time, even newer technologies like blockchain and artificial intelligence are starting to appear and will have significant influence on the way businesses serve their customers and stakeholders. It’s an exciting time and one in which traditional business operating models that have been with us for the last century are going to look quite different in the near future.”

12. Kevin McCollom, global VP, GRC Go-to-Market, SAP – @SAPTradeGeek

Digitalization of the finance function will speed up the synchronization of streams of financial and non-financial data. Being able to view data across functional divides will drive finance’s ability to run advanced analytics and develop a big-picture view of how changes in the business affect financial results and vice versa. Finance will need to acquire technology architectures designed to integrate multiple platforms and data types into a single repository. At the most advanced level, new integrated planning systems should be able to connect data from factory floor machines all the way to the income statement. By crossing departmental barriers, new cloud planning solutions are enabling advanced analysis. For example, finance can ask how a change in product design will cascade through the cost structure and affect margins. These new tools often come with self-service capabilities, allowing business partners to test the financial impact of multiple scenarios.

13. Richard McLean, regional CFO, Asia-Pacific and Japan, SAP

Open digital technologies will continue to support finance transformation. Transformation is accelerating in terms of companies and people needing investment decisions, as well as the development and implementation of new business models. This will require increased automation and simplification to drive process efficiencies, increased analytics to provide high-speed business insight to drive better business decision-making, and, finally, better collaboration so business connects in a much more seamless way.

14. Martin Naraschewski, VP, LOB Finance Solutions, SAP

The awareness for digital finance transformation is growing in the broader finance community, [and] 2017 will be all about making this transformation real, driven by three major adoption trends. First, finance will move to real-time analytics based on a renewal of back-end system architecture via in-memory platforms. Adoption paths will be individualized and vary from system upgrades to partial landscape harmonization to greenfield re-implementations. Finally, customers will seek rapid cost reductions via aggressive process automation. This will be through a mixture of dedicated automation solutions that leverage novel digital architectures that support robotic process automation tools that provide fast ROI at the expense of increased system complexity. In addition, 2017 will be the year for machine learning and predictive methods to make their way into finance.

15. Phuong Nguyen, SAP S/4HANA finance initiative lead, Capgemini Center of Excellence, Capgemini –@phuongnguyen_1@CapgemniConsul

2017 is the year for CFOs to take advantage of real-time insights and faster close thanks to digital finance with the capability to process information with high speed and huge [volumes] of data. The combination of both factors (high speed and Big Data) will help finance leaders operate, where accountants will be more and more supported by ERP systems that become more intelligent day after day. This change is the start of a new era where the relationship between man and machine is going to be drastically amended.

16. Colin Sampson, SVP and Ambassador for the Asia-Pacific and Japan Region, SAP

CFOs will continue to be more involved in IT decisions as they understand that technology will help them deliver on the business strategy and support innovation. It is critical that finance departments reimagine their processes to drive transformation and realize the benefits of a digital world; they cannot continue to do more of the same. Finally, adoption of cloud technologies will continue to be more ubiquitous.

17. Henner Schliebs, global VP, Audience Marketing, SAP S/4HANA and Finance, SAP – @hschliebs

2017 will be the year that finance professionals eventually understand the massive opportunity that modern technology provides. They will stop optimizing and re-engineering existing processes (a bad process quicker is still a bad process) based on old technology limitations, but rather design optimal processes that leverage the limitless possibilities available now. Accounting is becoming a continuous exercise, reporting is in the moment, forward-looking planning is nimble and supports dynamic resource allocation, fraud and risk management are embedded in all processes, and, finally, automation and robotics will find their way into the finance department more than ever. It will be a new world that uses methodologies of the personal life and brings it into the finance profession.

18. David Williams, VP, Global Product Marketing, Analytics (EPM & GRC), SAP – @daveswilliams

As finance continues to increase its focus on providing forward-looking insight to support the business, more investment will be made to automate what can be automated for greater efficiency while at the same time putting the technology in place to simulate actions and better predict future outcomes. Machine learning and artificial intelligence will be further embedded into the fabric of financial management systems, allowing finance teams to quickly sift through the increasing volume of data that the digital economy is creating, get the insights they need, and ask the questions they want in the moment without having to be a data scientist.

Do you agree? Let me know your predictions @jucubiss.

CFO Research surveyed 1,500+ finance professionals to find out how their careers are changing in the digital economy. Read the research Thriving in the Digital Economy: The Innovative Finance Function to discover nine trends shaping the future of financial management.

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Judy Cubiss

About Judy Cubiss

Judy is director of content marketing for Finance at SAP. She has worked in the software industry for over 20 years in a variety of roles, including consulting, product management, solution management, and content marketing in both Europe and the United States.

Guide To The Machine Learning Galaxy: Meet Tomorrow’s Rising Stars

Jessica Schubert

We’ve just begun to scratch the surface of the impact of machine learning on the enterprise. Organizations are applying machine learning algorithms to business processes to automate manual tasks and identify patterns in transactional data to drive strategic decisions. Many applications are focused on efficiency and automation, but that trend is shifting. More and more businesses are using machine learning to develop disruptive new business models.

What does this mean for your organization? Plenty, according to two experts during a recent Deloitte and ASUG Webinar, Guide to the Machine Learning Galaxy: How Your ERP Knowledge Enables Value-Driven Intelligent Processes. Leading the Webinar from Deloitte Consulting LLP were Darwin Deano, principal and chief officer for SAP Leonardo and Denise McGuigan, senior manager and Deloitte reimagine platform leader for Lights Out Finance. Darwin and Denise explained emerging trends, why enterprise resource planning (ERP) software is a hotbed for machine learning, and the potential impact on the workforce.

Making room for your digital twin

Machine learning unleashes the greatest possibilities for the enterprise by amplifying the best of human capabilities. It’s not about replacing humans; it’s about coexistence. In the future, there will be greater opportunities for people who can work with machines, take the information that’s produced, and do something meaningful with it.

Consider the concept of a digital twin. The digital twin is essentially the replication of a process system. In finance, payables transactions and record-to-report tasks require a copious number of journal entries that take a lot of time to input. Those tasks could all be reduced or even eliminated by a machine learning bot.

As a digital twin takes on transactional processes, individuals who performed those tasks are then able to focus their efforts on activities that make better use of their human skills by driving actionable insights. They would need to work alongside the digital twin and activate the resulting insight and analytics.

Unleashing data-driven ERP power

Before we give too much credit to the enabling power of machine learning, keep in mind that it all starts and ends with data. Machine learning is only as good as the algorithm, the algorithm is only as good as the data, and nobody knows the data about your core business better than the people who understand your ERP. Therefore, your people play key roles in identifying opportunities and driving the value of machine learning in your enterprise.

There are emerging roles across business and IT that will be critical to the success of not only designing and implementing, but operating, sustaining, and continuously improving investments in machine learning. Two of these roles are orchestrators and guardians.

Identifying orchestrators and guardians – the new stars

Before the advent of machine learning, organizations valued individual skills with a lot of emphasis on specialization. With machine learning, that emphasis shifts to the people who can put it all together – the orchestrators. Orchestrators help realize the value of machine learning. For example, a finance manager is a classic orchestrator. Finance managers know how order-to-cash flows into the central finance operation and how each individual department interacts with finance. For any machine learning scenario in finance, this manager would help put it all together.

The guardians monitor the effectiveness of machine learning to validate that your model works and to address any uncertainty about machine-driven actions. They’ll safeguard the audit trail, assess the evolution of data, and determine what adjustments need to be made. A supply chain director is a very good guardian who can filter out extraneous noise and verify the merits of machine learning scenarios. These roles and constructs will be increasingly important going forward.

Learn more to prepare for a disruptive future

By bringing together your people, processes, and technology, you can more effectively put machine learning to work for your organization. To learn more about what it takes to build modern machine-intelligence capabilities with a solid ERP foundation, watch a replay of Guide to the Machine Learning Galaxy: How Your ERP Knowledge Enables Value-Driven Intelligent Processes. You’ll explore use cases, industry-specific challenges, and leading practices, as well as how the combination of SAP Leonardo and SAP S/4HANA provides a synergistic digital innovation capability. For more information, contact @demcguigan, @darwindeano, @DeloitteSAP, or visit www.deloitte.com/sap. For more on this topic, read “Underfit Vs. Overfit: Why Your Machine Learning Model May Be Wrong.”

Follow SAP Finance online: @SAPFinance (Twitter) | LinkedIn | FacebookYouTube

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Jessica Schubert

About Jessica Schubert

Jessica Schubert is the director of Global Partner Marketing, Deloitte Alliance Lead, at SAP. Her specialties include strategic partnerships, business alliances, go-to-market strategy, product marketing, and demand generation.

Innovate Your Business Model With Conversational AI: Part 3

Ivo van Barneveld

Part 3 in the 3-part “Driving Innovation with Conversational AI” series

In the first two blogs in this series, we looked at the impact of injecting conversational AI into the value proposition as digital value drivers. Now, let’s explore how conversational AI can change the way you interact with your customers.

Unlike humans, chatbots operate 24/7, so your customers can engage with you any time they want. What’s more, as chatbots can pull information from many different sources and systems much faster than humans can, their answers and recommendations are more accurate and personalized. Many customers dislike calling a customer service agent: choosing the right option from a menu, waiting for the next available agent, explaining the problem or question, waiting for the agent to come back with an answer – that’s no longer acceptable in 2018! Instead, customers prefer to interact with brands as they do with friends: through conversations, getting a personalized experience, being able to continue on a previous thread. Chatbots offer just that.

Covering both high- and low-touch interactions

So let’s have a look again at the business model canvas, and this time inject conversational AI into customer relationships. The relationship could be very personal and “high-touch,” for example, when dedicated account managers build close relationships with their customers. Or it could be automated and “low-touch,” for example, through self-service tools with no personal interaction whatsoever. The paradox of conversational AI is that it covers both sides of this scale! It offers a personalized, contextual, 24/7 interaction, while being fully automated at the same time.

Chatbots can be used throughout the customer journey:

  • Evaluation: answering general questions about the product or service
  • Purchase: proposing the right product or service, suggesting related products or services (upsell), handling the transaction
  • Delivery: providing information about order status
  • After sales: providing tips and tricks, handling customer incidents

Thousands of brands already use chatbots in one or more of these phases. The Wall Street Journal offers a chatbot to deliver the latest breaking news, live stock market data, and other financial information. Expedia offers a bot for travelers to quickly see hotel options and move forward with a booking. And Tommy Hilfiger has a bot helping fashionistas choose clothes that match their style.

The conversational nature of chatbots make them very suitable for communication channels customers love to use: Facebook Messenger, WhatsApp, WeChat and Slack, and so on. Rather than trying to pull customers to your Web site or mobile application, with a chatbot, you can follow customers where they spend most of their time when engaging with others: messaging applications – and lower the barrier for engaging them with your brand. KLM President & CEO Pieter Elbers couldn’t have said it better when announcing KLM’s business account on WhatsApp: “We want to be where our customers are and, given the 1 billion users, you have to be on WhatsApp. With an account verified by WhatsApp, we offer our customers worldwide a reliable way to receive their flight information and ask questions 24/7.”

Expanding the exposure of your brand

The popularity of messaging applications is huge: combined, they have more than 3 billion users globally. That’s a reach you can’t get anywhere else! Offering your chatbot in these channels will give your brand exposure to new potential customers. In turn, new customers will lead to incremental revenues. An increase in customer satisfaction is another positive effect.

So we see how introducing conversational AI in the customer relationship propagates to the customer channel, customer segment, and revenue components in the business model canvas. But there is another effect: chatbots are often associated with reducing operating costs. Benchmark figures for call center pricing show that the average cost per minute for inbound customer calls ranges between $0.35 and $0.90. The cost of an API call to conversational cloud services such as Language Understand (LUIS) on Microsoft’s Azure platform, or Conversation on IBM Watson, is less than $0.01. Or, as stated in an SAP solution brief, the cost of resolving a ticket is $0.10 per ticket using chatbots versus $2.50 per ticket using a human agent. This means that you can service the same number of customers with fewer personnel.

Freeing up people for developing customer intimacy

And while this is great if your focus is on the bottom line, you could also use the freed-up resources for innovation. For example, you could create a new value proposition by focusing on customer intimacy. While chatbots perform high-volume but low-value tasks like providing order status, resetting passwords and so on, your customer service personnel will have more time to focus on high-value activities. These might include building personal relationships with customers (think private banking), handling complex issues and brand advocacy (writing blogs and how-to’s). These activities will positively change your value proposition, and with that, you can unearth new customer segments in the market!

Don’t wait, start now

There are of course many other examples of how conversational AI can impact your business model, including those focused on internal (employee) use cases:

    • improve employee productivity by achieving faster task completion
    • reduce time spent on administrative tasks
    • eliminate the need for end-user training for enterprise applications
    • access self-service tools
    • support decision-making
    • write meeting minutes
    • book travel
    • order products

These are ideal areas for gaining experience with conversational AI. All major software suppliers for systems of record offer a digital assistant to improve the user experience of your employees. SAP CoPilot is already available for SAP S/4HANA Cloud, and with planned support for natural language interaction for SAP S/4HANA on-premise systems in early 2018.

AI has reached a stage where chatbots can have a meaningful, engaging, and gratifying conversation with end users. The technology is available, the chatbot ecosystem is fairly robust, and users embrace it. So don’t wait, and start creating your first chatbot!

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Ivo van Barneveld

About Ivo van Barneveld

Ivo van Barneveld is a passionate evangelist of innovations in user experience, mobile, and Internet of Things. His work focuses on the intersection of technology and business. He is currently a member of the UX Customer Office team in SAP Global Design, with the remit to drive adoption of SAP’s award-winning user experience, SAP Fiori. Previously, he worked at SAP as a lead consultant, supporting customers with planning and executing digital transformation strategies. Prior to joining SAP in 2012, he held several business development, account manager, and partner manager roles at Nokia and Layar, among others. Ivo holds a Master’s degree in Applied Physics from the Delft University of Technology, and is based in the Netherlands.

Why Strategic Plans Need Multiple Futures

By Dan Wellers, Kai Goerlich, and Stephanie Overby , Kai Goerlich and Stephanie Overby

When members of Lowe’s Innovation Labs first began talking with the home improvement retailer’s senior executives about how disruptive technologies would affect the future, the presentations were well received but nothing stuck.

“We’d give a really great presentation and everyone would say, ‘Great job,’ but nothing would really happen,” says Amanda Manna, head of narratives and partnerships for the lab.

The team realized that it needed to ditch the PowerPoints and try something radical. The team’s leader, Kyle Nel, is a behavioral scientist by training. He knows people are wired to receive new information best through stories. Sharing far-future concepts through narrative, he surmised, could unlock hidden potential to drive meaningful change.

So Nel hired science fiction writers to pen the future in comic book format, with characters and a narrative arc revealed pane by pane.

The first storyline, written several years before Oculus Rift became a household name, told the tale of a couple envisioning their kitchen renovation using virtual reality headsets. The comic might have been fun and fanciful, but its intent was deadly serious. It was a vision of a future in which Lowe’s might solve one of its long-standing struggles: the approximately US$70 billion left on the table when people are unable to start a home improvement project because they can’t envision what it will look like.

When the lab presented leaders with the first comic, “it was like a light bulb went on,” says Manna. “Not only did they immediately understand the value of the concept, they were convinced that if we didn’t build it, someone else would.”

Today, Lowe’s customers in select stores can use the HoloRoom How To virtual reality tool to learn basic DIY skills in an interactive and immersive environment.

Other comics followed and were greeted with similar enthusiasm—and investment, where possible. One tells the story of robots that help customers navigate stores. That comic spawned the LoweBot, which roamed the aisles of several Lowe’s stores during a pilot program in California and is being evaluated to determine next steps.

And the comic about tools that can be 3D-printed in space? Last year, Lowe’s partnered with Made in Space, which specializes in making 3D printers that can operate in zero gravity, to install the first commercial 3D printer in the International Space Station, where it was used to make tools and parts for astronauts.

The comics are the result of sending writers out on an open-ended assignment, armed with trends, market research, and other input, to envision what home improvement planning might look like in the future or what the experience of shopping will be in 10 years. The writers come back with several potential story ideas in a given area and work collaboratively with lab team members to refine it over time.

The process of working with writers and business partners to develop the comics helps the future strategy team at Lowe’s, working under chief development officer Richard D. Maltsbarger, to inhabit that future. They can imagine how it might play out, what obstacles might surface, and what steps the company would need to take to bring that future to life.

Once the final vision hits the page, the lab team can clearly envision how to work backward to enable the innovation. Importantly, the narrative is shared not only within the company but also out in the world. It serves as a kind of “bat signal” to potential technology partners with capabilities that might be required to make it happen, says Manna. “It’s all part of our strategy for staking a claim in the future.”

Planning must become completely oriented toward—and sourced from—the future.

Companies like Lowe’s are realizing that standard ways of planning for the future won’t get them where they need to go. The problem with traditional strategic planning is that the approach, which dates back to the 1950s and has remained largely unchanged since then, is based on the company’s existing mission, resources, core competencies, and competitors.

Yet the future rarely looks like the past. What’s more, digital technology is now driving change at exponential rates. Companies must be able to analyze and assess the potential impacts of the many variables at play, determine the possible futures they want to pursue, and develop the agility to pivot as conditions change along the way.

This is why planning must become completely oriented toward—and sourced from—the future, rather than from the past or the present. “Every winning strategy is based on a compelling insight, but most strategic planning originates in today’s marketplace, which means the resulting plans are constrained to incremental innovation,” says Bob Johansen, distinguished fellow at the Institute for the Future. “Most corporate strategists and CEOs are just inching their way to the future.” (Read more from Bob Johansen in the Thinkers story, “Fear Factor.”)

Inching forward won’t cut it anymore. Half of the S&P 500 organizations will be replaced over the next decade, according to research company Innosight. The reason? They can’t see the portfolio of possible futures, they can’t act on them, or both. Indeed, when SAP conducts future planning workshops with clients, we find that they usually struggle to look beyond current models and assumptions and lack clear ideas about how to work toward radically different futures.

Companies that want to increase their chances of long-term survival are incorporating three steps: envisioning, planning for, and executing on possible futures. And doing so all while the actual future is unfolding in expected and unexpected ways.

Those that pull it off are rewarded. A 2017 benchmarking report from the Strategic Foresight Research Network (SFRN) revealed that vigilant companies (those with the most mature processes for identifying, interpreting, and responding to factors that induce change) achieved 200% greater market capitalization growth and 33% higher profitability than the average, while the least mature companies experienced negative market-cap growth and had 44% lower profitability.

Looking Outside the Margins

“Most organizations lack sufficient capacity to detect, interpret, and act on the critically important but weak and ambiguous signals of fresh threats or new opportunities that emerge on the periphery of their usual business environment,” write George S. Day and Paul J. H. Schoemaker in their book Peripheral Vision.

But that’s exactly where effective future planning begins: examining what is happening outside the margins of day-to-day business as usual in order to peer into the future.

Business leaders who take this approach understand that despite the uncertainties of the future there are drivers of change that can be identified and studied and actions that can be taken to better prepare for—and influence—how events unfold.

That starts with developing foresight, typically a decade out. Ten years, most future planners agree, is the sweet spot. “It is far enough out that it gives you a bit more latitude to come up with a broader way to the future, allowing for disruption and innovation,” says Brian David Johnson, former chief futurist for Intel and current futurist in residence at Arizona State University’s Center for Science and the Imagination. “But you can still see the light from it.”

The process involves gathering information about the factors and forces—technological, business, sociological, and industry or ecosystem trends—that are effecting change to envision a range of potential impacts.

Seeing New Worlds

Intel, for example, looks beyond its own industry boundaries to envision possible future developments in adjacent businesses in the larger ecosystem it operates in. In 2008, the Intel Labs team, led by anthropologist Genevieve Bell, determined that the introduction of flexible glass displays would open up a whole new category of foldable consumer electronic devices.

To take advantage of that advance, Intel would need to be able to make silicon small enough to fit into some imagined device of the future. By the time glass manufacturer Corning unveiled its ultra-slim, flexible glass surface for mobile devices, laptops, televisions, and other displays of the future in 2012, Intel had already created design prototypes and kicked its development into higher gear. “Because we had done the future casting, we were already imagining how people might use flexible glass to create consumer devices,” says Johnson.

Because future planning relies so heavily on the quality of the input it receives, bringing in experts can elevate the practice. They can come from inside an organization, but the most influential insight may come from the outside and span a wide range of disciplines, says Steve Brown, a futurist, consultant, and CEO of BaldFuturist.com who worked for Intel Labs from 2007 to 2016.

Companies may look to sociologists or behaviorists who have insight into the needs and wants of people and how that influences their actions. Some organizations bring in an applied futurist, skilled at scanning many different forces and factors likely to coalesce in important ways (see Do You Need a Futurist?).

Do You Need a Futurist?

Most organizations need an outsider to help envision their future. Futurists are good at looking beyond the big picture to the biggest picture.

Business leaders who want to be better prepared for an uncertain and disruptive future will build future planning as a strategic capability into their organizations and create an organizational culture that embraces the approach. But working with credible futurists, at least in the beginning, can jump-start the process.

“The present can be so noisy and business leaders are so close to it that it’s helpful to provide a fresh outside-in point of view,” says veteran futurist Bob Johansen.

To put it simply, futurists like Johansen are good at connecting dots—lots of them. They look beyond the boundaries of a single company or even an industry, incorporating into their work social science, technical research, cultural movements, economic data, trends, and the input of other experts.

They can also factor in the cultural history of the specific company with whom they’re working, says Brian David Johnson, futurist in residence at Arizona State University’s Center for Science and the Imagination. “These large corporations have processes and procedures in place—typically for good reasons,” Johnson explains. “But all of those reasons have everything to do with the past and nothing to do with the future. Looking at that is important so you can understand the inertia that you need to overcome.”

One thing the best futurists will say they can’t do: predict the future. That’s not the point. “The future punishes certainty,” Johansen says, “but it rewards clarity.” The methods futurists employ are designed to trigger discussions and considerations of possibilities corporate leaders might not otherwise consider.

You don’t even necessarily have to buy into all the foresight that results, says Johansen. Many leaders don’t. “Every forecast is debatable,” Johansen says. “Foresight is a way to provoke insight, even if you don’t believe it. The value is in letting yourself be provoked.”

External expert input serves several purposes. It brings everyone up to a common level of knowledge. It can stimulate and shift the thinking of participants by introducing them to new information or ideas. And it can challenge the status quo by illustrating how people and organizations in different sectors are harnessing emerging trends.

The goal is not to come up with one definitive future but multiple possibilities—positive and negative—along with a list of the likely obstacles or accelerants that could surface on the road ahead. The result: increased clarity—rather than certainty—in the face of the unknown that enables business decision makers to execute and refine business plans and strategy over time.

Plotting the Steps Along the Way

Coming up with potential trends is an important first step in futuring, but even more critical is figuring out what steps need to be taken along the way: eight years from now, four years from now, two years from now, and now. Considerations include technologies to develop, infrastructure to deploy, talent to hire, partnerships to forge, and acquisitions to make. Without this vital step, says Brown, everybody goes back to their day jobs and the new thinking generated by future planning is wasted. To work, the future steps must be tangible, concrete, and actionable.

Organizations must build a roadmap for the desired future state that anticipates both developments and detours, complete with signals that will let them know if they’re headed in the right direction. Brown works with corporate leaders to set indicator flags to look out for on the way to the anticipated future. “If we see these flagged events occurring in the ecosystem, they help to confirm the strength of our hypothesis that a particular imagined future is likely to occur,” he explains.

For example, one of Brown’s clients envisioned two potential futures: one in which gestural interfaces took hold and another in which voice control dominated. The team set a flag to look out for early examples of the interfaces that emerged in areas such as home appliances and automobiles. “Once you saw not just Amazon Echo but also Google Home and other copycat speakers, it would increase your confidence that you were moving more towards a voice-first era rather than a gesture-first era,” Brown says. “It doesn’t mean that gesture won’t happen, but it’s less likely to be the predominant modality for communication.”

How to Keep Experiments from Being Stifled

Once organizations have a vision for the future, making it a reality requires testing ideas in the marketplace and then scaling them across the enterprise. “There’s a huge change piece involved,”
says Frank Diana, futurist and global consultant with Tata Consultancy Services, “and that’s the place where most
businesses will fall down.”

Many large firms have forgotten what it’s like to experiment in several new markets on a small scale to determine what will stick and what won’t, says René Rohrbeck, professor of strategy at the Aarhus School of Business and Social Sciences. Companies must be able to fail quickly, bring the lessons learned back in, adapt, and try again.

Lowe’s increases its chances of success by creating master narratives across a number of different areas at once, such as robotics, mixed-reality tools, on-demand manufacturing, sustainability, and startup acceleration. The lab maps components of each by expected timelines: short, medium, and long term. “From there, we’ll try to build as many of them as quickly as we can,” says Manna. “And we’re always looking for that next suite of things that we should be working on.” Along the way certain innovations, like the HoloRoom How-To, become developed enough to integrate into the larger business as part of the core strategy.

One way Lowe’s accelerates the process of deciding what is ready to scale is by being open about its nascent plans with the world. “In the past, Lowe’s would never talk about projects that weren’t at scale,” says Manna. Now the company is sharing its future plans with the media and, as a result, attracting partners that can jump-start their realization.

Seeing a Lowe’s comic about employee exoskeletons, for example, led Virginia Tech engineering professor Alan Asbeck to the retailer. He helped develop a prototype for a three-month pilot with stock employees at a Christiansburg, Virginia, store.

The high-tech suit makes it easier to move heavy objects. Employees trying out the suits are also fitted with an EEG headset that the lab incorporates into all its pilots to gauge unstated, subconscious reactions. That direct feedback on the user experience helps the company refine its innovations over time.

Make the Future Part of the Culture

Regardless of whether all the elements of its master narratives come to pass, Lowe’s has already accomplished something important: It has embedded future thinking into the culture of the company.

Companies like Lowe’s constantly scan the environment for meaningful economic, technology, and cultural changes that could impact its future assessments and plans. “They can regularly draw on future planning to answer challenges,” says Rohrbeck. “This intensive, ongoing, agile strategizing is only possible because they’ve done their homework up front and they keep it updated.”

It’s impossible to predict what’s going to happen in the future, but companies can help to shape it, says Manna of Lowe’s. “It’s really about painting a picture of a preferred future state that we can try to achieve while being flexible and capable of change as we learn things along the way.” D!


About the Authors

Dan Wellers is Global Lead, Digital Futures, at SAP.

Kai Goerlich is Chief Futurist at SAP’s Innovation Center Network.

Stephanie Overby is a Boston-based business and technology journalist.


Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.

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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.

Kai Goerlich

About Kai Goerlich

Kai Goerlich is the Chief Futurist at SAP Innovation Center network His specialties include Competitive Intelligence, Market Intelligence, Corporate Foresight, Trends, Futuring and ideation. Share your thoughts with Kai on Twitter @KaiGoe.heif Futu

About Stephanie Overby

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Human Is The Next Big Thing

Traci Maddox

One of my favorite movies of 2016 was Hidden Figures. The main character, Katherine Johnson, and her team of colleagues had an interesting job title: Computer. Here’s what Katherine said about her job: “On any given day, I analyze the binomial levels of air displacement, friction, and velocity. And compute over 10 thousand calculations by cosine, square root, and lately analytic geometry. By hand.”

That was the 1960s. It was amazing work, but work that took hours to complete – and something an in-memory computer could do in a fraction of a second today.

Just as in-memory computing transformed calculating by hand (and made jobs like Katherine’s much easier), digital technologies are transforming the way we work today – and making our day-to-day activities more efficient.

What’s the real impact of technology in today’s workplace?

We are surrounded by technology, both at home and at work. Machine learning and robotics are making their way into everyday life and are affecting the way we expect to engage with technology at work. That has a big impact on organizations: If a machine can do a job safely and more efficiently, a company, nonprofit, or government – and its employees – will benefit. Digital technologies are becoming increasingly more feasible, affordable, and desirable. The challenge for organizations now is effectively merging human talent and digital business to harness new capabilities.

How will jobs change?

What does this mean for humans in the workplace? In a previous blog, Kerry Brown showed that as enterprises continue to learn, human/machine collaboration increases. People will direct technology and hand over work that can be done more efficiently by machine. Does that mean people will go away? No – but they will need to leverage different skills than they have today.

Although we don’t know exactly how jobs will change, one thing is for sure: Becoming more digitally proficient will help every employee stay relevant (and prepare them to move forward in their careers). Today’s workforce demographic complicates how people embrace technology – with up to five generations in the workforce, there is a wide variety in digital fluency (i.e., the ability to understand which technology is available and what tools will best achieve desired outcomes).

What is digital fluency and how can organizations embrace it?

Digital fluency is the combination of several capabilities related to technology:

  • Foundation skills: The ability to use technology tools that enhance your productivity and effectiveness
  • Information skills: The ability to research and develop your own perspective on topics using technology
  • Collaboration skills: The ability to share knowledge and collaborate with others using technology
  • Transformation skills: The ability to assess your own skills and take action toward building your digital fluency

No matter how proficient you are today, you can continue to build your digital IQ by building new habits and skills. This is something that both the organization and employee will have to own to be successful.

So, what skills are needed?

In a Technical University of Munich study released in July 2017, 64% of respondents said they do not have the skills necessary for digital transformation.

Today's workplace reality

These skills will be applied not only to the jobs of today, but also to the top jobs of the future, which haven’t been imagined yet! A recent article in Fast Company mentions a few, which include Digital Death Manager, Corporate Disorganizer, and 3D Printing Handyman.

And today’s skills will be used differently in 2025, as reported by another Fast Company article:

  • Tech skills, especially analytical skills, will increase in importance. Demand for software developers, market analysts, and computer analysts will increase significantly between now and 2025.
  • Retail and sales skills, or any job related to soft skills that are hard for computers to learn, will continue to grow. Customer service representatives, marketing specialists, and sales reps must continue to collaborate and understand how to use social media effectively to communicate worldwide.
  • Lifelong learning will be necessary to keep up with the changes in technology and adapt to our fast-moving lives. Teachers and trainers will continue to be hot jobs in the future, but the style of teaching will change to adapt to a “sound bite” world.
  • Contract workers who understand how businesses and projects work will thrive in the “gig economy.” Management analysts and auditors will continue to be in high demand.

What’s next?

How do companies address a shortage of digital skills and build digital fluency? Here are some steps you can take to increase your digital fluency – and that of your organization:

  • Assess where you are today. Either personally or organizationally, knowing what skills you have is the first step toward identifying where you need to go.
  • Identify one of each of the skill sets to focus on. What foundational skills do you or your organization need? How can you promote collaboration? What thought leadership can your team share – and how can they connect with the right information to stay relevant?
  • Start practicing! Choose just one thing – and use that technology every day for a month. Use it within your organization so others can practice too.

And up next for this blog series – a look at the workplace of the future!

The computer made its debut in Hidden Figures. Did it replace jobs? Yes, for some of the computer team. But members of that team did not leave quietly and continue manual calculations elsewhere. They learned how to use that new mainframe computer and became programmers. I believe humans will always be the next big thing.

If we want to retain humanity’s value in an increasingly automated world, we need to start recognizing and nurturing Human Skills for the Digital Future.

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Traci Maddox

About Traci Maddox

Traci Maddox is the Director of the North America Customer Transformation Office at SAP, where she is elevating customer success through innovation and digital transformation. Traci is also part of the Digital Workforce Taskforce, a team of SAP leaders whose mission is to help companies succeed by understanding and addressing workforce implications of digital technology.