The Power Of A Blockchain-Enabled Supply Chain

Paul Brody

Part 2 in the 3-part series “Blockchain and the Supply Chain.” 

Through blockchains, companies gain a real-time digital ledger of transactions and movements for all participants in their supply chain network. But don’t let the simplicity of the tool overshadow how transformational it is. The benefits to be gained will save you time, money, and effort on several fronts — and have the potential to redefine how you do business.

Procurement: more visibility and more savings

Companies negotiate procurement discounts based on the total number of purchases they drive. Your business may ask other people to do purchasing on your behalf, but the consequence is that it’s hard to keep track of the volume you drive across subsidiaries, business partners, and everyone else in your supply chain network.

Blockchains make that simple. With a constantly refreshed digital ledger that incorporates data from all your relevant partners, your company can see the total volume regardless of who directed the purchase activity—without each user having to share its operational data with the others.

Without a blockchain, companies hire many people to audit their orders to capture these volume-purchase benefits. Large businesses can have dozens of professionals spending days and nights to audit each one to add up all the gains they’re supposed to receive. (For example, EY assisted a large consumer goods company that had 60 people devoted to this task.) But blockchains do this work without the staff and without any added time, eliminating the extra price-verification process.

Data and analytics: better data, better outcomes

The oldest phrase in computing is “garbage in, garbage out”—and nowhere does that apply more strongly and more expensively than in supply chain management. To compensate for uncertainty in how much product or material is in different locations – how much actual demand there has been in a period of time—companies put in extra inventory.

And while that inventory is often cheaper than a lost sale, it’s far from free. In the technology industry, it is often estimated that keeping $1 of inventory costs 20 cents to 40 cents per year, when you account for both the cost of capital and the rapid depreciation of technology products.

With blockchains, through the ability to track and manage resources at the ecosystem level, the payoff should be much greater accuracy and, from there, better forecasts, and the need for less inventory to maintain the same service level.

Digital contracts and payments

The average U.S. Fortune 100 company has more than 60 days of sales outstanding. That’s how long it takes for companies to get paid after completing a task or delivering a product in the real world. What’s odd about this statistic is that nearly all these companies are interacting with each other in contracts that specify payment upon receipt or, at most, within 30 days.

The gap between contracts and reality comes because payments, though themselves digital, are separated from contact performance by an “analog gap.” That is, work is done and invoices are generated, which are emailed to customers, who, in turn, enter them manually and decide when and how to pay them.

Smart contracts to end costly procure-to-pay gaps

The result is a ridiculous and insanely expensive dance as suppliers politely call and nudge customers to pay, while customers aim to cash in on the float by entering and processing invoices at a snail’s pace and occasionally “losing” them. Blockchains can put an end to that by integrating delivery and payment in digital contracts that flow across enterprises and integrate with logistics partners and banks.

Using smart contracts, where the terms are payable upon receipt, a proof of delivery from a logistics carrier will immediately trigger automatic digital invoicing and payments through the banking system, with no analog gap between customer and supplier. The result has the potential to radically reduce working capital requirements and dramatically simplify finance operations, with a direct impact to the bottom line.

Putting a stop to the rogues

Blockchains give these supply chain networks the chance to create one shared truth without one all-powerful, centralized intermediary. Each participant has a copy of the ledger, and all transactions and movements are part of that ledger. If any participant tries to game the system or perpetrate fraud, that company is manipulating only its ledger and is immediately out of sync with the rest of the ecosystem, a powerful deterrent to bad behavior.

Sounds good, right? So what’s the catch? You may be thinking that the blockchain is yet another “solution” in a long line of others you’ve purchased, and that you’re not ready to rip everything up and start again. The good news: you don’t have to. I’ll discuss how you can seize upon the supply chain of the future in the last article in this series.

Read Part 1 of this series: How Blockchain Revolutionizes Supply Chain Management.

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Paul Brody

About Paul Brody

Paul Brody is global innovation blockchain leader at EY. Paul is responsible for driving EY’s initiatives and investments in blockchain, playing a dual role as global innovation blockchain leader as well the Americas strategy leader for the technology sector. He has extensive experience in the areas of IoT, supply chain, and operations and business strategy.

A Finance Employee Working In The Digitalization Era

Vaag Durgaryan

The fourth industrial revolution (digitalization era) is happening right now. Business models, macroeconomic trends, and, most important, new technologies have motivated change in workplaces, organizations, and economies, regardless of their size, strength, or place on the map. Professor Klaus Schwab, founder and executive chairman of the World Economic Forum, noted, “We need leaders who are emotionally intelligent and able to model and champion cooperative working. They’ll coach, rather than command; they’ll be driven by empathy, not ego. The digital revolution needs a different, more human kind of leadership.”

Finance employees are part of this fast-changing world. Accordingly, they should take part in the new reality by having special skills. A skill is the ability to carry out a task with determined results. The skills that we will discuss here will be important for finance employees’ success in the future.

Program management

In a growing business or organization, volumes will grow. Sooner or later, processing of volume transactions will be automated or digitized. That means significant time will free up for finance sales-support personnel. They will naturally reinvest that freed-up capacity into finance support of very large or complex transactions. Such transactions would need involvement of legal, accounting, business, and other experts. Thus, one of the skills needed by finance employees will be to program-manage large or complex transactions. The ability to pull together the right people – those with the right expertise to create and execute a program plan for a large or complex transaction and to lead without formal authority – is one skill that will be much needed in the future.

Embracing cultural differences

Multinational corporations have country offices in the majority of regions and in most of the countries in those regions. Because the world is now globalized, expatriates from many backgrounds work in many regional and country teams. Hence, the finance person of the future needs to be able to comfortably get along with all cultures, have conversations based on trust and openness, and consider different ways of doing business depending on the culture of the people he or she would work with.

Emerging technologies

Blockchain, robotics, artificial intelligence, and machine learning are all examples of new or emerging (reborn) technologies. Those technologies will indeed change the way of working in the future, but how? That is yet to be known. However, the finance employee of the future should be aware of these technologies that might disrupt finance and be able to work comfortably in the new reality.

For more on this topic, read “Automation, Simulation, and Talent Management for Finance” by Tony Klimas of EY and “Six Best Practices For A Future-Ready Finance Talent Strategy” by Nilly Essaides of The Hackett Group.

And read 3 Reasons CFOs & Finance Professionals Should Attend SAPPHIRE NOW to learn about what’s happening at this year’s SAPPHIRE NOW and ASUG Conference – panels, keynotes, discussions, presentations, and endless ways to connect to people and gain new ideas for streamlining processes. Join SAP’s finance team and partners June 5–7, in Orlando, Florida.

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

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Vaag Durgaryan

About Vaag Durgaryan

Vaag Durgaryan is the commercial finance director for SAP in the Middle East and North Africa, which comprises of over 20 countries. Starting in 2017, he oversees a multinational team that provides finance expertise, knowledge, and strategy outlook for finance sales support in the region. Prior to that, Vaag was chief of staff for the CFO for SAP Global Field Finance and co-drove global transformation initiatives with focus on process simplification and people enablement. He holds an Executive MBA degree from ESSEC Business School and Mannheim Business School. Vaag has a passion in digitalization and learning culture.

Why T&E Demands So Much Attention In Financial Services

Andy Hirst

Your margins are under enough pressure already. But with continual digital disruption—from fintechs and other recent entrants who are tightening the screws even further—costs are always in the spotlight.

In this environment, you need to do whatever you can to control and reduce what you spend. And after people and payroll, T&E is likely one of your biggest cost centers.

With large numbers of travelers, including relationship managers, financial advisors, and insurance brokers, all needing to meet with clients daily, it doesn’t take long to see how much getting a handle on T&E really does matter.

Is your data as secure as you’d like it to be?

Given the sensitivity of everything you’re doing—from analysts and finance specialists working on mergers and acquisitions, to thousands of people meeting thousands of clients every day—the security of your data and confidentiality of their travel plans is key.

And in the era of data hacks and cyber attacks, it’s easy to recognize the value of data safety and integrity.

This is costing more than you thought it would.

More of your people spend more time on the road than most other industries. That means T&E takes a larger bite of your budget pie—money you no doubt could be using elsewhere. Eliminating any inefficiencies and driving out excess costs—finding new sources of savings in the process—is critical.

You don’t need anyone to tell you you’re operating in a highly regulated, highly scrutinized industry. You need your T&E systems to increase policy compliance, prevent fraud, and make sure you meet every regulatory requirement, including duty of care. In this people-centered business, knowing your employees are complying with company policy—and knowing where they are in times of danger—is crucial.

You have top talent. Are you giving them top technology?

Paperwork is busywork, and if your people are still wrangling receipts and writing up expense reports, they’re not getting to the work you need them to get done. Giving them super-simple apps—and cutting unnecessary steps from the T&E process—not only makes travel more enjoyable and productive. It helps recruit and retain top talent.

The answer, not surprisingly, is the cloud. But what’s the best way to get T&E up there?

You’re probably working in the cloud already, so you understand the ease and efficiency it brings. Taking T&E to the cloud is no different; it delivers control over spending, transparency into your deepest data, and a better, more fruitful travel experience for every employee.

Move to the cloud with the world’s T&E authority, and you can be certain you’re on top of what matters most.

  • Secure your data with systems that set the industry standards.
  • Reduce cost pressures at every level—from negotiating rates to automating processes.
  • Mitigate fraud, manage risk, and maintain compliance.
  • Digitize T&E with the latest apps and other brilliant tools employees want to use.

Ready for the next step?

Download Oxford Economics Research: Effective Spending Management Boosts Performance and find out why 95% of top-performing leaders consider cloud-based applications critically or very important to the success of the finance team.

Review the report from the Aberdeen Group on Key Success Factors for T&E Management in Financial Services.

And read 3 Reasons CFOs & Finance Professionals Should Attend SAPPHIRE NOW to learn about what’s happening at this year’s SAPPHIRE NOW and ASUG Conference – panels, keynotes, discussions, presentations, and endless ways to connect to people and gain new ideas for streamlining processes. Join SAP’s finance team and partners June 5–7, in Orlando, Florida.

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

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Andy Hirst

About Andy Hirst

Andy Hirst is vice president of Banking Solutions, SAP Banking Industry Business Unit, at SAP. He is responsible for driving the success of the SAP go-to-market strategy in Line of Business Cloud Applications and Analytics in Financial Services. Previously, Andy was responsible for Capital Markets solutions for banking. Andy is an expert in Big Data and analytics use cases in financial services and has been involved in many digital banking initiatives for banks.

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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Cloud Computing: Separating Myth From Reality

Misa Rawlins and Krishnakant Dave

Across industries, many enterprise leaders believe and understand that cloud computing is here to stay. Globally, public cloud services market revenue is projected to reach US$411 billion by 2020, compared with $260 billion in 2017, according to research firm Gartner, Inc. Cloud technology in all its forms—software, platform, or infrastructure as a service—is rapidly becoming essential to the needs of business today. With cloud computing, organizations can simplify IT, save costs, scale rapidly, drive standardization and user adoption, and start getting ahead of tomorrow’s needs when it comes to customer engagement, the supply chain, the workforce, a simplified finance function, and more.

Despite the short- and long-term advantages, some executives remain uncertain about the next steps or have lingering questions about the benefits of moving to the cloud. For many leaders, separating the cloud myths from the facts can prove daunting. Start here, with these insights that can help you bust big myths about the cloud and start moving confidently toward a cloud-enabled transformation of your organization.

Myth No. 1: Moving to the cloud is too costly. “Costly” is a relative term. The cloud can be costly – but costs should be weighed against benefit and return once requirements and migration plans are in place. Rapidly evolving business demands, for example, can dramatically alter cloud-related requirements. Meanwhile, new technologies are dramatically redefining the art of the possible with the cloud. Because migrating to the cloud is not a true “plug-and-play” proposition, and many enterprise leaders underestimate what a migration or implementation involves, some organizations can be surprised by the costs of a cloud transformation. Without a clear understanding of the potential benefits—without a clear business case for moving to the cloud—the focus on costs can overshadow the return on investment. Knowing the value that cloud solutions can bring—not just the costs—can help manage expectations.

Myth No. 2: The benefits of the cloud aren’t substantial enough. As vendors adopt a “cloud-first” stance for many solutions and product updates, organizations that move to the cloud may have a competitive advantage—no matter the size of the enterprise. Cloud solutions continue to offer abundant and increasing functionality. And with the help of an end-to-end solution provider, you can configure cloud solutions to the specific needs of your industry and your business. For larger organizations, rapidly deployable cloud solutions can help support growth or the unique needs of certain business units, such as new acquisitions or foreign subsidiaries, for example. For smaller organizations, the cloud can help you position your organization to tap new opportunities and tame growth challenges.

Myth No. 3: Cloud is too risky. All digital technologies and all business models come with inherent risk. In a hyperconnected world, no system is immune from cyber attacks, insider threats, data leakage, or related risks. No transformation project is a guaranteed success. Market changes, new competition, regulatory issues, and other factors can require you to change your cloud strategy overnight.

Because the risks are real, take advantage of resources and capabilities that can help reduce risk and ensure that your technology investments align tightly with clear business objectives. The maturity of the software goes a long way toward mitigating risk with cloud projects. You can add an extra layer of capabilities such as managed cloud services to provide active, hands-on oversight of cloud applications and infrastructure—helping you to avoid service interruptions and address issues proactively.

Myth No. 4: Cloud computing is still an immature technology. Like other evolving technologies, cloud is advancing every day. Those who wait for the next generation of cloud offerings may find themselves missing out on tangible benefits as competitors leverage cloud technology to sharpen their edge. Across industries, leading organizations are not waiting. Many view cloud technology as evolving but necessary, and they are leveraging it effectively today. Some, for example, are tightly integrating cloud software solutions to streamline supply chain processes, boost information transparency, and improve decision-making across the board—all the while tapping the cloud benefits of cost savings and scalability. Others are confidently turning to infrastructure solutions delivered and running solutions in a private or hybrid cloud. Still others are turning to cloud platform solutions to extend the power of existing applications, build modern analytics platforms, or support new Internet of Things business models. Turning the cloud to your advantage may depend less on the maturity of the technology and more on the power of your imagination.

Myth No. 5: Moving to the cloud will be easy. Cloud technology can help organizations streamline and simplify their IT landscapes and their business processes, reducing needs around capital expenses and infrastructure while helping to save costs. But migrating to the cloud requires more than simply plugging in technology. It requires an ability to address a host of considerations—data migration, the business-specific capabilities of solutions, change management, governance, systems integration, security, and more.

A cloud transformation is more than a plug-and-play project or a traditional system implementation. It requires progressive thinking and an ability to align technology with your business needs and processes— for today and for the future. Migrating to the cloud is a journey. Moving forward with the cloud will require a vision of your “to be” state—your destination—as well as a strategy for getting you there.

To learn more, and to find out what IDC thinks about the future of the cloud, please read this study that presents a strategic blueprint for enterprises on their digital transformation journey.

For more information on how to simplify innovation with cloud technology, learn more about SAP Cloud Platform.

Ready to reimagine the potential of the cloud? Contact us to get the conversation started.

Contact Krishnakant Dave at kdave@deloitte.com and follow him on Twitter: @kkdave

Contact Misa Rawlins at mrawlins@deloitte.com and follow her on Twitter: @misa_rawlins

www.deloitte.com/SAP

SAP@deloitte.com

@DeloitteSAP

This article originally appeared on Deloitte.com and is republished by permission.

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Misa Rawlins

About Misa Rawlins

As a senior manager and consultant in Deloitte’s SAP practice, Misa Rawlins enjoys helping her clients not only to figure out how to solve their current business problems, but also to envision how a modern cloud platform can transform their organizations moving ahead. Within the practice, she has specifically chosen to take a leadership role around the sales and delivery of SAP S/4HANA Cloud because she considers it the wave of the future. She has made it her mission to deeply understand this technology to better advise clients on what moving to a cloud infrastructure really means.

Krishnakant Dave

About Krishnakant Dave

As a principal in Deloitte’s global SAP practice, KK Dave is a consulting leader for Deloitte’s largest clients; part of the U.S. SAP leadership team where he spearheads Deloitte's cloud offerings; and leader of global go-to-market efforts in the wholesale distribution and manufacturing sector. In these roles, he assists clients in their business transformation journeys using the absolute latest SAP toolset, which presently comprises SAP S/4HANA, SAP Cloud Platform, and SAP S/4HANA Cloud, among other technologies.