All You Need To Know About HR Management: An Exclusive Interview With Jairo Fernandez

Savita V. Jayaram

Jairo Fernandez, Senior Vice President of HR - Asia Pacific and Japan at SAPThrough an exclusive conversation with Jairo Fernandez, senior vice president of HR in Asia Pacific and Japan at SAP, HR in Asia unravels different facets of human resources (HR). We discuss the challenges of creating an innovation-friendly workplace and learning culture; setting new standards, processes, and systems; integrating IT and HR to simplify people management;  grooming talent into future leaders; promoting women leadership in Asia, and a lot more.

How does your team combat attrition effectively as the global war for talent reaches its peak?

First of all, we look at our corporate culture. We know what makes our employees tick, and we know what will maintain their interest in being a part of our team: a strong company culture and a collaborative work environment. To retain and recruit new talent, we create and maintain a working environment where employees can have fun while enjoying the nature of their work and seeing that their contributions are meaningful. Furthermore, our organisation depends on innovation for growth and high performance. This depends on employee initiative, risk taking, and trust – all qualities that are nurtured by the organisation’s culture.

Tell us more about your workplace culture.

We have a diverse and inclusive culture that is critical to making SAP both a great place to work and a successful company. At SAP, we believe in constant workforce cultivation. By subscribing to the learning culture philosophy, everyone is a teacher and everyone is a learner. We have a well-articulated culture that is built around our five key behaviours that form the foundation of our business conduct and success.

Which Asia-Pacific market offers women the most opportunities? Do you think women are well-represented in leadership roles?

Across Asia Pacific and Japan, we aim to nurture a diverse and inclusive environment. We believe that that diversity is essential for enabling a culture of innovation, productivity, and creativity. In turn, SAP has committed itself to increasing its global number of women in management to 25% in 2017 (up from 18% in 2010). To ensure that SAP continues to further this aspect of diversity as part of our innovation strategy, SAP promotes women in leadership through professional development and mentoring programs, active retention of women in leadership roles, executive sponsorship, and ensuring that the shortlist for leadership positions is diverse.

One example of a professional development initiative is LEAP – the Leadership Excellence Acceleration Program. LEAP is a year-long targeted development journey focused on women who have the potential and desire to succeed in people management positions or reach new heights of excellence in people leadership. So far, we have around 90 women who are a part of this group. In Singapore, our efforts have been met with great success: 42% of our employees and 26% of our leaders are women.

What recent initiatives are encouraging better employee engagement?

In Singapore, we have just started the FitSAP initiative. This initiative encourages SAP employees to wear a wearable fitness device that can be synced to the FitSAP application – an app supported by wearable devices from FitBit, Jawbone, Withings, and MiFit. Data from individual devices is presented on a dashboard that tracks cumulative steps of all employees, average steps per day, distance covered, and participation rate. In addition, individual employees can also see how many steps they have taken this quarter and their rankings. Employees who clock an average of 8,000 steps per day for a quarter will earn 100 points in their flexible spending account.

With this initiative, we have managed to encourage healthy living and, of course, nurture friendly competition among employees who are trying to rank highest for steps taken per quarter!

How is your organization influencing diversity in the workplace?

Diversity is about leveraging the unique experiences and perspectives of all employees to better understand and serve our customers, drive innovation, and create a work environment where all employees are fully and passionately engaged to achieve our corporate objectives. We actively promote an environment that values differences in culture, race, ethnicity, age, gender, sexual orientation, gender identity or expression, and physical ability.

One example of how SAP influences diversity at the workplace is through our Autism at Work initiative. This initiative employs people with autism because we believe their strengths allow them to perform better at certain jobs. The ultimate goal of the program is to have 1% of the company’s total workforce represent people on the autism spectrum by 2020.

How is your company bridging the gender gap in pay parity and structure in APJ?

SAP is an equal opportunity employer in every respect. We rigorously track gender pay parity every year. Managers receive a report on pay-parity analysis before and after the salary review cycle, empowering them to make more-informed decisions.

At SAP, pay and rewards are based solely on merit. Our philosophy is to reward and recognize the right talent at the right time and secure a lasting connection between reward and performance. We put in an enormous amount of effort to make the reward mechanism transparent and ensure employees are aware of the criteria. Furthermore, variable pay is closely linked to individual performance and company’s performance which helps drive a high-performance culture and behavior among employees.

Take us through the HR interview selection and candidate screening process.

Our hiring policy is simple: We want the best talent who demonstrates long-term potential – not just a candidate who has the right set of skills and competencies, but also someone who brings the right attitude, values, and aspirations.

We have stringent interview selection and candidate screening processes for different levels within the organization. Beyond the role competencies, skills, technical evaluation, and people-manager interviews, we place emphasis on recruiting talents whose values and aspirations align with those of SAP. We believe cultural fit is a crucial ingredient for success in an employee’s career over the long run. Candidates who demonstrate the right potential are carefully handpicked by hiring managers and assessed for cultural fit.

How do you see emerging HR tech trends boosting the recruiting sphere and facilitating better payroll management?

We are helping businesses simplify the way they work to achieve business outcomes they never thought possible. With the use of technology for recruiting and payroll management, businesses have an opportunity to simplify their processes and increase their productivity. As for payroll, businesses can use solutions to streamline and centralize their payroll processes. Companies can realize the benefits and convenience of cloud delivery and the control of implementing and managing payroll in-house.

What people management practices in your region are motivating and empowering employees to be future leaders? 

To ensure a steady pipeline of senior leadership, we have established a robust talent and succession management process, where we identify potential successors to key positions early in their career and provide support, coaching, and opportunities to take on additional responsibility beyond their typical scope of work.We are also keen on developing its future leaders by providing a range of structured development programs to allow potential leaders to experience leadership positions.

For example, our Leadership Framework analyses the lifecycle of a leader at SAP. Developed in Asia Pacific Japan in 2014, the program increases the quality and standards of leadership practices. It serves as a useful resource for leaders across all levels to seek information on the topics around onboarding, leadership development, goal setting, talent acquisition, succession, promotion, and performance management.

With HR moving to the cloud, how do you envision the future in 2020 and beyond?

The exploding scale of computing, mobile, cloud, business networks, and connected technologies is rapidly changing the way we live and work. In just a few years, the Internet of Things is expected to have tens of billions of devices connected to one another as well as to cloud-based services. This change will provide opportunity and cause complexity.

HR teams that successfully navigate the complexity caused by the deluge of data will be the ones rewarded with a stronger bench of talent and a better-managed workforce. The key is to run simpler systems as they navigate through the changing dynamics of today’s workforce and embrace the future of work.

Tell us more about your employee leave policies and benefits offered in case of maternity/paternal leave?

Our employees go through several life milestones in their careers. So we want to make sure that the workplace is as family-oriented as possible. New mothers are entitled to 16 weeks of paid maternity leave and fathers are eligible for a week’s paid paternity leave. Beyond these fundamental pro-family policies, we also have a range of family-oriented initiatives. We host a Kids@Work day, where children are invited to the workplace during their school holidays to enjoy movie screenings, the arts, and sports competitions. This year, we also organised the SAP Beach Fiesta for our Singapore team that enabled the family and friends of SAP employees to join us for a fun-filled day at Sentosa Beach.

According to a recent news report, Japan’s talent mismatch ranks the most severe in Asia Pacific. What challenges are you encountering when hiring and retaining talent in Japan?

Japan is a tough talent market to crack, but hiring and talent retention is a key focus area across the world. Our mission is to identify and acquire the right talent who will help drive our company towards greater heights. To combat issues such as talent mismatch, we strongly believe in identifying the untapped potential of future managers and proactively groom them for future responsibilities. By grooming leaders in-house, we not only accelerate the development of our amazing talent and empower them to realize their full potentials, but we also ensure that these leaders are aligned with the company’s strategy.

We have also invested in our graduate hiring across many areas of our business in Japan to grow talent from within the company. This is proving to be a successful strategy for creating the internal bench strength needed to continue growing our business in Japan.

As one of the top 5 Great Places to Work in Singapore, what are your organization’s key strengths, challenges, and people management strategies that have helped your workforce upgrade their skills, making it to the top 5 spot?

A career at SAP is based on an interest in life-long learning, and we strive to provide a culture that nurtures it. It is our employees who fuel our innovation and ensure a sustainable future for the company, its customers, and society. This is precisely why we invest in and actively encourage talent development through challenging work assignments, collaboration with peers, and attending formalized programs geared at upgrading employees’ skill sets.

One example is the SAP Sales Academy program, which includes innovative classroom training at our world-class learning center in California; several months of on-the-job training and mentoring; and skills development in presentation delivery, teamwork, and knowledge of our offerings.

What is the future of HR in Asia Pacific and Japan?

Without a doubt, HR will move from being data-driven to being fact-driven. But at the core of it all, HR is essentially a people function. It is essential to balance business requirements with the need to engage your employees at the same time. Not only does HR need to be a trusted advisor and partner to the business function, but it should also serve as a promoter of talent across the company.

This article originally appeared on HR in Asia and was republished with the author’s permission.

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Savita V. Jayaram

About Savita V. Jayaram

Savita V. Jayaram has been working as a journalist and writer for many international publications of repute. You can connect with her at savita@hrinasia.com. Feel free to share your feedback.

Analytics And Big Data: Driving Agility In The Chemical Industry

Michael Laprocido

How important are concepts like Big Data and analytics to the modern enterprise environment? In a word: Very. One study estimates there are currently six million developers all over the world currently working on Big Data and advanced analytics projects. To put that into perspective, that’s about the size of the populations of Houston and Los Angeles combined.

Spending on Big Data tech is expected to reach $57 billion by the end of the year. The business intelligence and analytics market worldwide will be worth about $18.3 billion by the same time. But the true strengths of concepts like Big Data and analytics comes by way of their symbiotic relationship. As the quality of data improves, so does the value of the insight generated by sophisticated analytics solutions.

This is particularly true in the chemical industry, where many companies are currently using Big Data and analytics to support a bold new level of strategic agility that has not been available until now.

Dynamic visibility empowers dynamic resource allocation

Resource planning and allocation have always been critical processes in the chemical industry. Until the somewhat recent past, changes both upstream and downstream from the chemical manufacturer evolved more slowly and predictably. Analysis of markets and competitive position in target segments performed either as a one-off annual or even biennial exercise were adequate to enable a chemical company to have the requisite amount of agility to compete successfully.

Today, complexity and fundamental change are increasing exponentially due to the impacts of globalization, the rapidly shifting center of gravity for demand towards the rising middle class in Asia, the unprecedented influence of US unconventional oil production on raw material costs and global competition, the ongoing compression of product lifecycles experienced by their customers, and the speedy adoption of technology to evolve business models. Thus, analysis must be continually rendered as events and change unfold to be effective in responding. In fact, agility is becoming increasingly important as a source of competitive advantage as the pace of change accelerates making the attainment of an agile culture a board-level imperative.

Unfortunately, being agile is particularly difficult for chemical companies given the breadth and scope of their target markets. Specifically, the challenge lies in the ubiquitous application of their products (in that they are sometimes applied in many industries and in millions of uses) and that the industry is usually at least one step (sometimes several) removed from the ultimate consumer. Thus, chemical companies must be agile on many fronts to be successful. This requires a thorough understanding of the dynamics associated with the value chains for each major product/application/market combination they serve – no small feat given the complexity associated with a single value chain in today’s reality! If attained, this level of insight will not only ensure that chemical companies are providing the appropriate level of resources to support these target segments but that they are focused on the right ones to begin with.

This segues into the true value of Big Data and analytics in this context. Capacity, capital, and skilled people are hardly abundant. It is senior management’s responsibility to ensure that these critical resources are applied to the firm’s best prospects in the light of their strategic objectives. Leveraging Big Data and analytics will allow senior management to guarantee that these finite resources can accomplish both current and future goals at the same time. Not only can organizations put themselves in the best position to maximize shareholder return through action today, but they can also build a bridge to profitable and sustainable growth in the long term.

To become agile, you need to glean insight from data generated both internally and externally. Leveraging internally generated data can help companies see how well they are making use of their available resources today. Layering in external data allows you to get a better understanding of how a chemical business needs to allocate their resources in the future so that it can then better position itself in the direction that leadership wants.

Case in point: Big Data and analytics are invaluable when examining something like growth versus share. Tracking changes in growth and share dynamically based on analytical data gives leadership an almost real-time view into how things are changing, how well the business is positioned to address that change, and the strategic implications of it. Important metrics like profitability, cost to serve, and competitive position are added into the mix, generating an additional level of context to this data to help quickly discern potential opportunities and threats that may be emerging. Use of predictive analytics can lead to strategies to capture or mitigate these under any given timeframe by identifying trends and patterns in things like short to mid-term inflections in demand that might have otherwise gone unnoticed.

Over the longer term, having a dynamic capability to analyze markets in real time will also let you examine things like potential structural market changes. The ability to consider how your competitive advantage will change given the potential for things like competitor capacity addition, supply disruption, and more gives you a much more dynamic ability to understand your business in the context of your target markets. Applying these scenarios in your planning will provide the ability to perpetually allocate scarce resources to provide the greatest return under any condition at a moment’s notice.

It may not be possible to see into the future, but the insights and projections generated by analytics and Big Data may very well be the next big thing. This is certainly true in the chemicals industry, where organizations are struggling to stay malleable and agile amidst ever-changing market conditions.

Using the path to build the future

In the end, it’s important to understand that the true pathway to strategic agility for chemical companies begins with possessing a capability to make sense of the flood of data that is both inside and outside its walls. Insights derived from real-time Big Data and analytics is the key to realizing a dynamic ability to understand your business as it exists in the current context of the market, and can make it easier to take advantage of strategic opportunities as they arise. By gaining a superior level of visibility into both the state of an organization as it exists today and a forward-looking view of their future markets, leaders have the best and most accurate information to work from when making decisions that affect things tomorrow, a year from now, and beyond. You can reallocate scarce resources to provide the best return for any set of conditions, which is what strategic agility is really all about.

Hidden inside your organization’s data is the key to remaining nimble moving forward. Analytical tools let chemical companies go beyond that data, extracting the valuable insight and narrative hidden underneath. That narrative then lets organizational leaders write the future of the company on their own terms.

Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value: read  Accelerating Digital Transformation in Chemicals. Explore how to bring Industry 4.0 insights into your business today: read Industry 4.0: What’s Next?

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Michael Laprocido

About Michael Laprocido

Mike Laprocido serves as a Strategic Industry Advisor for SAP. He is responsible for developing thought leadership and driving SAP solution adoption in the chemical and oil and gas industries. With over three decades in various executive roles at BP Oil, BP Chemicals, Kuraray America, Panda Energy and IBM prior to joining SAP, Mike has gained a broad and deep industry knowledge base that he leverages to help his clients to innovate and transform their business through the application of digital technology.

City Of Cambridge Proves ‘Smart City’ Doesn’t Always Mean Glitz And Glamour

Katie Fischer

Whether it’s taking part in Waterloo Region’s Smart City Challenge or being joined by the likes of Buenos Aires, Dubai, and Los Angeles to serve as a United Nations data hub, the City of Cambridge in Ontario has never been shy about its aspirations to become a smart city.

But behind the glitz and glamour often associated with smart city projects and global data initiatives lies a humbler story; one of a city using digital technology to improve access to financial information that serves better-informed decision-making.

The benefits of bringing an enterprise resource planning (ERP) system into the digital age must not go underestimated. Governments especially need to remain proactive and understand that a tidier ship means better service for citizens and a more productive city.

The City of Cambridge recently completed its transition to a next-generation ERP system referred to in-house as cityONE. Our previous solution had become outdated and demanded a level of manual work that seemed at odds with what is possible in a time of automation and app wizardry. We recognized that we were being severely limited in what we could do, and we were at serious risk of being left behind.

The new system came with an overall business process redesign built around giving public servants better access to information so they can make better decisions and cutting out manual work that was weighing them down.

A user experience application allows workers who aren’t hands-on with data and technology to more easily manage budgets, automate tasks such as expense reimbursements, and access financial information by providing them with user-friendly tools and a consumer-grade dashboard.  Staff from all levels of the organization appreciate the app-like user interface, graphical display of financial information, and drill-down to attachments at their fingertips.

Not only is information more visual and easier to access, it’s also available in real-time, so workers can be quick on their feet when making decisions and reacting to the wishes of citizens more efficiently.

The move to cityONE is part of the City of Cambridge’s wider range of digital transformation work, redefining the way we do business in the digital age. By collecting data and using tools to analyze trends, we’re able to make more informed decisions, listen to the feedback of the community, and deliver more effectively on what they want now and in the future. It may not be glamorous, but it’s certainly smart.

Join the City of Cambridge alongside leaders and technologists from cities around the world at the SAP Smart Cities Forum in Toronto on April 23.

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Katie Fischer

About Katie Fischer

Katie Fischer is the Manager of Finance for the City of Cambridge in Ontario, Canada.

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.