Policies And Government Grants For SMEs In Singapore, Malaysia, And Indonesia

Roy Wakim

A common misconception among startups is that they have to do it alone. Imagine your fledgling company navigating the challenges of capital and costs in an increasingly globally competitive market. Daunting, isn’t it?

But small and medium-sized enterprise (SME) owners are not the only ones who believe in the growth potential of their business idea. Governments have also shown their fair share of support through grants and policies.

Within the Association of Southeast Asian Nations (ASEAN) region specifically, SMEs are highly valued and recognised for their role in the growing economy. A 2015 report by the US-ASEAN Business Alliance for Competitive Small and Medium Sized Enterprises states that SMEs account for more than 96% of businesses in the region. As such, policies towards SME development and modernisation play a major role towards realising the region’s full economic potential.

One report that aggregates SME development policies and actions implemented by ASEAN countries is the ASEAN SME Policy Index. It was developed to promote more competitive and innovative practices in the region and address concerns surrounding entrepreneurship, standards compliance, as well as marketing and management. The ASEAN Economic Community (AEC), on the other hand, was formed to transform the region into a single market and production base, integrating the Southeast Asian economies by 2025. One of its areas of focus is helping SMEs trade in the region.

Such government policies provide a competitive playing field and optimistic outlook for SMEs.

In this blog post, we’ll take a closer look at government policies and grants in Singapore, which has arguably the most developed startup ecosystem in the region, and its neighbouring countries Malaysia and Indonesia.

Government policies and schemes for small businesses

Singapore, Malaysia, and Indonesia have set the pace for collaboration between government and small businesses through their active policymaking agencies.

The Standards, Productivity, and Innovation Board of Singapore (SPRING), under the Ministry of Trade and Industry, lives by its mission of “enabling enterprise.” It aids SMEs by providing internationally recognised standards and quality assurance infrastructure while promoting compliance.

In Malaysia, the SME Corp. is the central coordinating agency formulating overall policies and strategies of SMEs and overseeing implementation. It also serves as the Secretariat to the National SME Development Council (NSDC), the highest policymaking body for SMEs in the country.

Indonesia’s Ministry of Cooperatives and SMEs (MoCSME) draws its mandate from the country’s president to craft and coordinate policies to drive productivity, competitiveness, and independence towards a better business environment.

Beyond their bureaucratic functions, they tangibly serve the business sector through grants and funding opportunities.

Government grants: Helping the government help you

A grant is different from other forms of monetary assistance: It’s not a loan; there is no expectation that you will pay the funds back. While being a grant beneficiary sounds like the perfect scenario, there are pros and cons to be aware of.

While a single stellar proposal can earn your company an award in the millions, that doesn’t mean you can coast with cash flow. Grants are usually implemented under a reimbursement scheme, so you must be prepared to shell out some capital until the government releases the grant funds. And, as to be expected, bureaucratic processes take time.

Winning a grant elevates your small business’ reputation. But the prestige comes with paying your dues and building a profile that meets the application’s requirements. Drafting a proposal demands research and planning, as well as comprehending and conforming to the grant-giving agency’s terms. These include rules and regulations that warrant specialised expertise and conditions that the grantee must strictly meet.

Any payoff is ultimately rewarding, which is why applying for grants is not only challenging but also competitive. But the good news is there are diverse prospects for Southeast Asian SMEs in need of funding.

Singapore government grants for small businesses

Singapore has a wide menu of government funding for capability-upgrading initiatives, such as process improvement and product development. It also offers tech startup programs, as Singapore aspires to host its own version of Silicon Valley.

Singaporean SMEs are vital to the growth of GDP in the country – that’s why the government addresses constraints like the lack of financial support and resources through these grants:

  • Capability Development Grant helps SMEs build capabilities across 10 key business areas, from adopting technology to overseas expansion. Recently it has simplified its application process for grant support of SGD30,000 or less.
  • ACE Startups enables SPRING to match SGD7 to every SGD3 raised by an entrepreneur, up to SGD50,000. This grant also matches each SME with a mentor who will support the startup in its first year.

Malaysia government grants for small business

In Malaysia, the impact of SMEs on the overall economy had been modest compared to those in other countries, despite their good performance. In response, the government launched the SME Masterplan in 2012 to further support the development of SMEs. It paved the way for the following initiatives:

  • Through the Soft Loan Schemes for Service Sector, the Malaysian Industrial Development Berhad (MIDF) aids the expansion, upgrade, modernisation, and diversification of existing service providers into higher value-added activities.
  • MIDF’s Soft Loan for SMEs helps existing and startup companies with project, fixed assets, and working capital financing. It also helps them become more efficient and productive through the adoption of information and communications technology in business management and operations.
  • The Young Entrepreneur Fund from SME Bank is available to young entrepreneurs, 18 to 30 years old, who are engaged in business activities catering to their generation.
  • The Business Start-Up Fund (BSF), sponsored by the Malaysian Technology Development Corporation (MTDC), reaches out to tech entrepreneurs and new startup companies.
  • TEKUN Financing provides funds to SME owners who eye expansion.
  • Agro Bank’s Perusahaan Kecil dan Sederhana provides financial backup to local agricultural entrepreneurs.

Indonesia government grants for small business

Indonesia’s economy relies on grassroot SMEs that comprise most of the sector. Because of SMEs’ importance to long-term sustainable economic growth, the government aims to help them improve productivity and narrow the gap between SME and large enterprise growth. Seeing clustering as a strategy to promote SMEs across the Indonesian archipelago, the government has also enlisted the help of nonprofit organisations to roll out grants, including:

Innovating and preparing for the grant proposal

Now that you’re aware of the government support programs for small business within Singapore, Malaysia, and Indonesia, check out these tips to increase your chances at winning one. Foremost is overcoming the tedious preparation of a proposal.

  • Do not fret. Focus. Sharpen your understanding of your business concept enough that you can convey and sell it. Your business plans must be clear and concise to those reviewing them.
  • Stand out. As mentioned, there’s plenty of competition to draw the attention of grant-giving bodies. You can help them notice you by giving accurate information, highlighting team expertise, and enumerating the economic benefits that your business can offer.
  • Last, when it comes to innovation, show, don’t tell. Most small businesses will claim to be above average right off the bat, but here’s one solid way to back it up: Automate your business processes through cloud-based enterprise resource planning (ERP) solutions. Grant-giving agencies specifically look for future-looking and innovative startups, and when they find out you’re open to using cloud-based ERP solutions, they’ll know you’re efficient, quick-thinking, and have great capacity for growth.

Besides, investing in a cloud-based ERP solution increases your productivity, safeguards your data, and helps you manage and streamline the processes that allow your small business to grow with ease. With or without a grant, it’s a win-win situation for all.

Modernise your processes and gain advantage over your competition through SAP Business One. It’s a worthy investment that will help make your business globally competitive.


Roy Wakim

About Roy Wakim

Roy Wakim is Director of SAP Business One (Southeast Asia)at SAP. He is responsible for the growth and expansion of this ERP solution within the region. Roy has 15 years of leadership experience, driving innovative sales strategies and execution across Asia Pacific. He has an MTech degree in Technology Management from the University of Western Sydney.

Your Duty Of Care And The Increase In Traveler Concerns

Tina Gunn

The Global Business Travel Association (GBTA) reports that spending on global business travel is growing and is expected to reach $1.6 trillion by 2020. Despite increasing global uncertainty around unforeseen events, organizations show no signs of slowing down business travel. Therefore, the duty of care and travel risk management programs need to be at the forefront of your organization’s security conversations, as outlined in a report produced by the Business Travel News (BTN) group.

Your organization most likely has some level of a duty-of-care solution in place; however, even organizations with a good track record in providing safety and security measurements still have some gaps in providing the right level of duty of care to their travelers and employees – and gaps that may be perceived by the organization as small could be viewed as negligent.

Risks for travelers and employees are on the rise

With the continual increase in business travel – global crises that are hitting the headlines are grabbing the attention of travel decision makers at organizations. The potential risks your travelers could encounter, domestically and internationally, are numerous – including geopolitical, health-related, and environmentally-related incidents. Even historically low-risk areas are reporting catastrophic events that are adding to the growing concerns for traveling employees.

Not only do organizations need to be prepared to fulfill duty-of-care obligations in high-profile incidents; they need to consider the smaller, more common travel risks that can happen when commuting into the office, including pedestrian accidents, car accidents, and incidents on public transportation.

“The broader notion of traveler well-being and duty of care issues are not only linked to emergencies and medical incidents,” notes GBTA’s Corporate Social Responsibility Toolkit. “The stress of business travel caused by delays, lost baggage, less productivity (yet consistently high workload), or the simple fact of being away from friends and family should not be underestimated.”

Travel risk management programs need to incorporate all your employees’ (not just travelers’) safety and security and be prepared to assist with the range of risks and incidents possible.

An ethical responsibility, not just a legal one

Legal obligations concerning insurance, lawsuits, and costs are what typically drive most organizations to implement duty-of-care initiatives. However, the moral obligation to your travelers and employees needs to be a driving factor as well.

“When companies concentrate on the moral part, their actions tend to answer the legal questions as well,” explains Stephen Barth, University of Houston law professor and founder of the Hospitality Lawyer media and information platform. “The companies that we see take the more proactive approach are the ones that don’t view it as a legal obligation, but view it as an ethical corporate responsibility.”

In the U.S., workers’ compensation reaches only so far, covering those who get injured on the job, and within a certain distance of their workplace. However, with growth and expansion increasingly taking business across borders – where an organization’s duty of care responsibilities begin and end are unclear when sending employees abroad.

In recent years, numerous countries around the world have started implementing legal statutes that side with the employee when there is a gross breach of duty-of-care responsibilities resulting in the death of an employee.

A recent traveler survey demonstrates that safety and security is one of the fastest-growing topics of concern for employees traveling on behalf of their organizations. Proactively incorporating an ethical responsibility in your duty-of-care program assists in addressing the increase in employee anxiety about medical and security disruptions while traveling.

Mitigating business risks while protecting your greatest asset: People

A single duty-of-care incident can result in staggering costs to an organization including medical expenses, sick pay, employment litigation, morale and productivity loss, and employee fall out – as well as damage to the organization’s reputation.

To help mitigate liability risks while fulfilling the moral obligation to your employees’ safety and security, industry experts suggest:

  • Consistent travel risk management policy and procedures encompassing all employees
  • Proactive safety training
  • Clear monitoring and communication channels
  • Multi-channel data management for tracking and response coordination
  • Legal and executive management cooperation
  • Incident response reporting and measurement for ongoing improvement

Organizations cannot afford to be negligent with the safety and security of their travelers and employees in today’s global landscape. It’s imperative to implement a travel risk management program or re-evaluate your existing program to determine that you’ll be able to monitor, locate, and communicate to all employees and fulfill your duty-of-care obligation if a crisis arises.

Download the full BTN report, The Travel Risk Management Imperative. Learn more about how to fulfill your duty of care with SAP Concur solutions.


Tina Gunn

About Tina Gunn

Tina Gunn is the content marketing manager for the Enterprise Americas team at SAP Concur. Tina earned her degree in Journalism from the University of Washington and brings her experience in content strategy and digital marketing to SAP Concur. When she’s not creating thought leadership and sales enablement content, Tina writes fiction and screenplays of the horror and sci-fi genres.

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. 


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

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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Survey: Four Ways Machine Learning Will Disrupt Your Business

Dan Wellers and Dirk Jendroska

We are entering the era of the machine learning enterprise, in which this subset of artificial intelligence (AI) capabilities will revolutionize operating models, shake up staffing methods, upend business models, and potentially alter the nature of competition itself. The adoption of machine learning capabilities will be limited only by an organization’s ability to change – but not every company will be willing or able to make such a radical shift.

Very soon, the difference between the haves and the have-nots of machine learning will become clear. “The disruption over the next three to five years will be massive,” says Cliff Justice, principal in KPMG’s Innovation and Enterprise Solutions team. Companies hanging onto their legacy processes will struggle to compete with machine learning enterprises able to compete with a fraction of the resources and entirely new value propositions.

For those seeking to be on the right side of the disruption, a new survey, conducted by SAP and the Economist Intelligence Unit (EIU), offers a closer look at organizations we’ve identified as the Fast Learners of machine learning: those that are already seeing benefits from their implementations.

Machine learning is unlike traditional programmed software. Machine learning software actually gets better – autonomously and continuously – at executing tasks and business processes. This creates opportunities for deeper insight, non-linear growth, and levels of innovation previously unseen.

Given that, it’s not surprising that machine learning has evolved from hype to have-to-have for the enterprise in seemingly record time. According to the SAP/EIU survey, more than two-thirds of respondents (68%) are already experimenting with it. What’s more, many of these organizations are seeing significantly improved performance across the breadth of their operations as a result, and some are aiming to remake their businesses on the back of these singular, new capabilities.

So, what makes machine learning so disruptive? Based on our analysis of the survey data and our own research, we see four primary reasons:

1. It’s probabilistic, not programmed

Machine learning uses sophisticated algorithms to enable computers to “learn” from large amounts of data and take action based on data analysis rather than being explicitly programmed to do something. Put simply, the machine can learn from experience; coded software does not. “It operates more like a human does in terms of how it formulates its conclusions,” says Justice.

That means that machine learning will provide more than just a one-time improvement in process and productivity; those improvements will continue over time, remaking business processes and potentially creating new business models along the way.

2. It creates exponential efficiency

When companies integrate machine learning into business processes, they not only increase efficiency, they are able to scale up without a corresponding increase in overhead. If you get 5,000 loan applications one month and 20,000 the next month, it’s not a problem, says Sudir Jha, head of product management and strategy for Infosys; the machines can handle it.

3. It frees up capital – financial and human

Because machine learning can be used to automate any repetitive task, it enables companies to redeploy resources to areas that make the organization more competitive, says Justice. It also frees up the employees within an organization to perform higher-value, more rewarding work. That leads to reduced turnover and higher employee satisfaction. And studies show that happier employees lead to higher customer satisfaction and better business results.

4. It creates new opportunities

AI and machine learning can offer richer insight, deeper knowledge, and predictions that would not be possible otherwise. Machine learning can enable not only new processes, but entirely new business models or value propositions for customers – “opportunities that would not be possible with just human intelligence,” says Justice. “AI impacts the business model in a much more disruptive way than cloud or any other disruption we’ve seen in our lifetimes.”

Machine learning systems alone, however, will not transform the enterprise. The singular opportunities enabled by these capabilities will only occur for companies that dedicate themselves to making machine learning part of a larger digital transformation strategy. The results of the SAP/EIU survey explain the makeup of the evolving machine learning enterprise. We’ve identified key traits important to the success of these machine-learning leaders that can serve as a template for others as well as an overview of the outcomes they’re already seeing from their efforts.

Learn more and download the full study here.  

 


Dan Wellers

About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

Dirk Jendroska

About Dirk Jendroska

Dr. Dirk Jendroska is Head of Strategy and Operations Machine Learning at SAP. He supports the vision of SAP Leonardo Machine Learning to enable the intelligent enterprise by making enterprise applications intelligent. He leads a team working on machine learning strategy, marketing and communications.