Transforming Learning Starts Today

Alwin Gruenwald

Digital technology is disrupting nearly every industry – from automotive and retail to agriculture, clinical research, transportation, entertainment, and hospitality – and the people who work in them. Car mechanics need to understand digital dashboards. Call center operators should be social media experts well-versed in communicating through Twitter, Facebook, Instagram, and Pinterest. Finance directors are searching for ways to get their arms around Big Data. And salespeople are trying to strike a balance between knowing when to pick up the phone and when to use online tools to nurture prospects. “Knowledge is becoming obsolete faster than ever before, while new knowledge emerges,” says Jim Carroll, a speaker, consultant, and author on business transformation.

Senior executives can no longer make every decision – the world is moving too fast. They must rely on the brightest and most-motivated employees on their teams to help predict future needs in the market and to deliver solutions quickly. Unfortunately, those rising stars might not have the skills to get there – at least, not yet. According to Oxford Economics’ “Workforce 2020” study, nearly 40% of North American employees believe that their current job skills will not be adequate in three years, while the majority agree that the need for technology-related skills, especially in analytics and programming, will grow.

However, traditional corporate learning methods, such as classroom training or long-duration e-learning courses, aren’t keeping pace with learning needs and preferences. Managers can send their employees to the Web and let them figure it out on their own, but this free-for-all model may not be effective for most people.

A better approach is to create and facilitate a learning environment that is more accessible, consumable, and real-time for today’s mobile workforce. Here’s how learning is evolving to meet these new pressures:

Micro-learning

Breaking up learning content into bite-size portions of five- or 10-minute chapters can minimize disruptions in productivity and reduce learner fatigue. Micro-learning is perfect for employees of all levels, whether they are learning to write a business plan or getting instruction on installing a new line of air conditioning units for a customer.

Learning as entertainment

To keep learning experiences fresh, fun, and competitive, Canadian telecommunications company TELUS is using gamification. Leaders can spend eight weeks coaching a virtual Olympic speed-skating team and competing against colleagues to earn gold medals. To win, learners must demonstrate leadership behaviors that TELUS values. The company’s training programs are also starting to incorporate virtual reality for a more immersive and emotional experience, which is a great way to approach simulations and role play.

Social learning

Learning platforms that allow employees to exchange ideas and ask questions in a community setting deliver an opportunity for real-time sharing that is common in live classroom environments. “Learning is an emotional experience, and most people don’t want to be alone when they learn,” says Bernd Welz, senior vice president of scale, enablement, and transformation at SAP. In turn, community-based learning may enrich the content in unforeseen ways, sparking novel discussions or interpretations of the material.

User-generated content

The Internet has made it possible for creative minds to share their writing, music, film, and art with mass audiences immediately – and it is doing the same for  education. “What learners value the most today is the raw, user-created content over the highly polished corporate-created content,” says Elliott Masie, founder of The MASIE Center, a think tank focused on learning in the workforce.

Nanodegrees

Employees looking to retrain for a promotion or lateral move don’t have the time to go back to school, unless they are seeking a nanodegree. These short and intensive online programs are designed to train individuals for a specific job such as a Web designer or graphic illustrator. Industry partnerships between course providers and companies, such as Google and AT&T, help ensure that degrees are business-ready.

Transforming learning strategies and tools requires the involvement of managers who can help foster a culture of accountability and excitement around learning and map individual learning activities with specific business and career goals. Chief learning officers need to work closely with business leaders to understand skill gaps and curate content for the company. In the near future, we will all learn while applying that new skill to our work – maybe even through the guidance of a wearable.

Learn more about how digital technology is disrupting the way we learn in future. Read the study “Study: Employees Lack Skills for Digital Transformation.” For more relevant insights, check out the SAP Service & Support thought-leadership inquiry “A New Model for Corporate Learning.

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About Alwin Gruenwald

As a senior director within the SAP Global Services and Support Marketing team, Alwin focuses on SAP Education, digital learning, and learning in the cloud. He is a seasoned marketing professional with comprehensive international business-to-business and business-to-consumer marketing experience. Before joining SAP in 2011, Alwin held various marketing management roles at companies such as NEC and Dolby Laboratories. Alwin has a Master of Arts degree in Political Sciences from the Ludwig-Maximilians-University, Munich, Germany. He lives in the greater Munich area with his wife and two children.

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.

Transportation Industry: 'Ripe For Change'

Paul Pessutti

A recent S.M.A.C. Talk Technology Podcast looks at the urgencies facing the commercial transportation industry. Hosted by Brian Fanzo and Daniel Newman, the 12-minute audio interviews expert Paul Pessutti, global vice president and general manager of Travel, Transportation and Hospitality Industries at SAP. Pessutti, who spent 25 years with cargo logistics, discusses why the transportation industry is “ripe for change.”

Ocean shipping, rail, and trucking industry must embrace a generational shift

As Pessutti points out, the cargo industry faces disruption from today’s millennial-leaning transportation innovators. Think in terms of what modernized companies are bringing to the table. They offer tech-based transportation coupled with expanding services. For example, unlike many traditional trucking outfits, customers can click on electronic devices and enjoy real-time benefits.

“Companies that are able to not only provide the actual logistic services but value-added services on top of that to create an amazing customer experience,” Pessutti says . “That is what I think is what’s keeping a lot of shipping executives up at night, is not only how do they reduce their costs and maintain those expensive assets, but how do they innovate and provide a better experience to the customer.”

Many long-haul and regional transportation organizations have the competitive technology at their disposal. However, they tend to be hamstrung by an older workforce who are unsteady about embracing multi-level technology.

“I mean, that’s a big problem that we have in the industry, is that we have, in many cases, an aging workforce within these companies,” Pessutti says. “Whether it’s trucking, ocean shipping, the rail business, and they’re used to doing things a certain way. The whole concept of change management and doing things with technology can be a little bit scary for that group.”

Along with a workforce nearing retirement, the trucking industry also has a youth shortfall. Although artificial intelligence-functioning vehicles are on the drawing board, the trucking industry faces massive driver shortages in the United States.

Bob Costello, chief economist for the American Trucking Associations, concluded that the trucking industry could see its driver shortage grow to upwards of 174,000 by 2026 due to growth and attrition.

“This means that even as the shortage numbers fluctuate, it remains a serious concern for our industry, for the supply chain and for the economy at large,” Costello stated in an industry report.

SAP transportation expert Pessutti agrees with the chief economist’s conclusions.

“In addition, they’re having the challenge of attracting younger millennial talent that has the technology skills and know-how to be able to come in and help them innovate and make a change within their organization,” he says. “They’re having a hard time attracting the new talent because they’re not seen as innovators when it comes to technology. So, it’s something that we’re keeping our eye on and advising them to look at and find ways to take advantage of some of these new technologies.”

Bridging the gap between an aging workforce accustomed to traditional methods and engaging in millennial-styled outreach may be the pathway to resolving the growing workforce shortage. Costello concurs and has pointed to ideas such as lifestyle management and other industry modifications to attract a younger workforce.

Beyond making a shift that meets the ideas of tech-savvy drivers, the sector is tasked with maximizing its administrative and customer service technologies.

Blockchain innovation appears promising

When thinking about transportation in a comprehensive sense, it includes the movement of materials, manufacturing, air and sea travel, port arrivals, and warehousing. Trucking simply makes up one of the last legs of an intricate process. At each stage, stakeholders rely on traditional communication, cumbersome documents and sometimes just blind trust. The condition and timeliness of a product’s arrival are too often best guesses. Pessutti believes blockchain offers solutions.

“When you think about an indent shipment from the time an order gets placed to when it gets delivered to a customer, there’s probably 35 to 40 documents that you have to exchange in that process,” Pessutti says. “If we can get to a place where you’re able to look at those documents and actually get visibility and transparency into what’s happening as well as then trust that information, we’re going to do really well with blockchain in this industry.”

And, the SAP expert is far from alone in his assessment that blockchain can help revolutionize the transportation industry. Jillian Farrington argues in her article, “3 Ways Blockchain Technology Can Improve the Logistics Industry,” that it provides these key benefits: transparency, security, and cost-effectiveness. She makes these points.

  • Transparency: “Every time a product is handled, the transaction can be documented. The technology can enable everyone in the process of shipping to experience better visibility and connectivity.”
  • Security: “With blockchain, a copy of the essential shipping data can be stored on a decentralized network on individual nodes, so even if the network is hacked, the data remains safe.”
  • Increased efficiency and reduced costs: “The efficiencies created by this technology will get orders filled and delivered faster. It can record the transfer of raw materials and goods as they move through the supply chain as well as track purchase orders, shipment notifications, and receipts.”

Although blockchain can be a primary mover in terms of leveraging transportation industry data, the SAP expert recognizes the value of bringing a full complement of technological innovations to bear.

“I think what we’re able to do, and what we’ve proven out so far in this industry, is giving a lot of comfort to these shipping companies by connecting and integrating the digital core of what they’re running their business,” Pessutti says. “Whether it’s transportation management or an ERP environment, and then connecting them to these different capabilities around analytics and blockchain, (and) IOT.”

Transportation industry insiders appear to agree that the future of the sector faces a significant technological shift.

Take 12 minutes to get intellectually stimulated about the future of the transportation industry by listening to this S.M.A.C. Talk Technology Podcast featuring SAP expert Paul Pessutti.

Hear the full podcast episode here. Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value by reading Accelerating Digital Transformation in Transportation.

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Paul Pessutti

About Paul Pessutti

Paul Pessutti is Senior Vice President and General Manager of the Travel, Transportation, and Hospitality Industry Unit at SAP. Applying over 20 years of experience in this area, Paul is responsible for establishing and maintaining key customer relationships, ensuring customer success, enhancing the solution portfolio, growing the partner ecosystem, and acting as the brand ambassador worldwide. The industry consists of nine industry segments including airlines, airports, passenger transport, hospitality, travel service providers, freight forwarding and third parties, rail cargo, liner shipping, and trucking.

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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CEO Priorities And Challenges In The Digital World

Dr. Chakib Bouhdary

Digital transformation is here, and it is moving fast. Companies are starting to realize the enormous power of digital technologies like artificial intelligence (AI), Internet of things (IoT) and blockchain. These technologies will drive massive opportunities—and threats—for every company, and they will impact all aspects of business, including the business model. In fact, business velocity has never been this fast, yet it will never be this slow again.

To move quickly, companies need to be clear on what they want to achieve through digital transformation and understand the possible roadblocks. Based on my meetings with customer executives across regions and industries, I have learned that CEOs often have the same three priorities and face the same three challenges:

1. Customer experience – No longer defined by omnichannel and personalized marketing.

Not surprisingly, 92 percent of digital leaders focus on customer experience. However, this is no longer just about omnichannel and personalized marketing – it is about the total customer experience. Businesses are realizing that they need to reimagine their value proposition and orchestrate changes across the value chain – from the first point of interaction to manufacturing, to shipment, to service – and be able to deliver the total customer experience. In some cases, it will even be necessary to change the core product or service itself.

2. Step change in productivity – Transform productivity and cost structure through digital technologies.

Businesses have been using technology to achieve growth for decades, but by combining emerging technologies, they can now achieve a significant productivity boost and reduce costs. For this to happen, companies must first identify the scenarios that will drive significant change in productivity, prioritize them based on value, and then determine the right technologies and solutions. Both Mckinsey and Boston Consulting Group expect a 15 to 30 percent improvement in productivity through digital advancements – blowing the doors off business-as-usual and its incremental productivity growth of 1 to 2 percent.

3. Employee engagement – Fostering a culture of innovation should be at the core of any business.

Companies are looking to create an environment that encourages creativity and innovation. Leaders are attracting the needed talent and building the right skill sets. Additionally, they aim for ways to attract a diverse workforce, improve collaborations, and empower employees – because engaged employees are crucial in order to achieve the best results. This Gallup study reveals that approximately 85 percent of employees worldwide are performing below their potential due to engagement issues.

As CEOs work towards achieving these three desired outcomes, they face some critical challenges that they must address. I define the top three challenges as follows: run vs. innovate, corporate cholesterol, and digital transformation roadmap.

1. Run vs. innovate – To be successful you must prioritize the future.

The foremost challenge that CEOs are facing is how they can keep running current profitable businesses while investing in future innovations. Quite often these two conflict as most executives mistakenly prioritize the first and spend much less time on the latter. This must change. CEOs and their management teams need to spend more time thinking about what digital is for them, discuss new ideas, and reimagine the future. According to Gartner, approximately 50 percent of boards are pushing their CEOs to make progress on digital. Although this is a promising sign, digital must become a priority on every CEOs agenda.

2. Corporate cholesterol – Do not let company culture get in the way of change.

The older the company is, the more stuck it likely is with policies, procedures, layers of management, and risk averseness. When a company’s own processes get in the way of change, that is what I call “corporate cholesterol.” CEOs need to change the culture, encourage cross-team collaborations, and bring in more diverse thinking to reduce the cholesterol levels. In fact, both Mckinsey and Capgemini conclude that culture is the number-one obstacle to digital effectiveness.

3. Digital transformation roadmap – Digital transformation is a journey without a destination.

Many CEOs struggle with their digital roadmap. Questions like: Where do I start? Can a CDO or another executive run this innovation for me? What is my three- to five-year roadmap? often come up during the conversations. Most companies think that there is a set roadmap, or a silver bullet, for digital transformation, but that is not the case. Digital transformation is a journey without a destination, and each company must start small, acquire the necessary skills and knowledge, and continue to innovate.

It is time to face the digital reality and make it a priority. According to KPMG, 70 percent to 80 percent of CEOs believe that the next three years are more critical for their company than the last fifty. And there is good reason to worry, as 75 percent of S&P 500 companies from 2012 will be replaced by 2027 at the current disruption rate.

Download this short executive document. 

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Dr. Chakib Bouhdary

About Dr. Chakib Bouhdary

Dr. Chakib Bouhdary is the Digital Transformation Officer at SAP. Chakib spearheads thought leadership for the SAP digital strategy and advises on the SAP business model, having led its transformation in 2010. He also engages with strategic customers and prospects on digital strategy and chairs Executive Digital Exchange (EDX), which is a global community of digital innovation leaders. Follow Chakib on LinkedIn and Twitter