The Business Case For Diversity

Anka Wittenberg

I recently sat down with Iris Bohnet, professor of Public Policy and behavioral economist at the Harvard Kennedy School of Government. We met about a year ago following the publication of her groundbreaking book, “What Works? Gender Equality by Design,” in which she unpacks how behavioral design can help organizations reduce unconscious bias. Iris Bohnet’s research helps companies like SAP create an inclusive environment. As part of our SAP Future Factor series, we shared insights on how organizations can create and promote a diverse and inclusive culture, what role technology plays, and why it matters.

The issue of diversity and inclusion goes beyond gender. It is about harmonizing the strengths and thinking from a diverse set of employees comprising different cultures, age groups, socio-economic, professional, and educational backgrounds as well as different physical and mental capabilities. For example, employees across five generations are currently working together at SAP. Building an inclusive corporate culture is hard work. It requires dedication from every level of the organization. But the payback can be huge.

Based on the latest research and our experience at SAP, diversity and inclusion are more than a “nice to have.” There is a clear business case for a work environment that is inclusive and that offers a level playing field. It drives innovation, customer satisfaction, and employee engagement—and these factors have a direct impact on the bottom line! At SAP, we can track that diversity and inclusion improves employee engagement: By increasing employee engagement by just one percent, we’ve observed an increase of 48 million euros in operational profits per year. That is a strong business case for diversity.

Creating a business beyond bias requires a constant look in the mirror. Humans are drawn to people who think and look like themselves, and unconscious bias can be a limiting factor in hiring, retaining, and promoting the right talent. Iris Bohnet and I talk about approaches that can help organizations recognize and remove unconscious bias. We touch on the role that technology plays in removing bias during hiring and performance management.

There is no “magic button” that we can push to make organizations diverse and inclusive overnight. It is a gradual change, like pieces of a puzzle slowly coming together. Yet we have many tools at our disposal today to move in the right direction, such as machine learning and artificial intelligence. I am excited to see how they can be a catalyst for positive change and help us showcase a truly diverse environment.

In our dialogue, Iris Bohnet and I dive into the following questions:

  1. Why should organizations care about diversity?
  2. What are the challenges of building a diverse workplace?
  3. How can organizations evaluate talent without bias?
  4. How can organizations use technology to promote diversity?
  5. How is diversity changing the workplace norms?
  6. How can organizations move from a mindset of inclusion to behaviors of inclusion?

We hope our exchange provides some inspiration to take an active role in building and promoting a more diverse, inclusive workplace. Tell us what you think, and share your own experiences. You can watch our discussion here. To watch a non-interactive version of the video, please click here.

For more on digitization, work, and HR, visit Episode 1 and Episode 2 of the SAP Future Factor Web Salon, in which HR executives and thought leaders from science/academia discuss the digitization of work.

The series are best watched on non-Internet Explorer browsers such as Chrome.

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Anka Wittenberg

About Anka Wittenberg

Anka Wittenberg is the Chief Diversity & Inclusion Officer at SAP. She is responsible for the development and implementation of SAP’s Diversity and Inclusion strategy globally, ensuring sustainable business success.

How Can Life Sciences Leverage Augmented Reality?

Michelle Schooff

When it comes to augmented reality and life sciences, many people think of the 144 billion steps taken by Pokemon Go players, leading to better health. But augmented reality is starting to play a much larger role in life sciences than you might be aware. From expanding children’s experience of science in the classroom to using technology to improve patient outcomes, augmented reality is already playing a key role in life sciences. Here’s a quick overview of some of the areas it’s impacting.

Augmented reality in the science classroom

Whether your life science classroom focuses on biology, health, or chemistry, augmented reality can help bring those topics to life. A wide range of options helps students better understand scientific principles and existing structures. Three-dimensional models of the human body enable students to explore anatomy without an anatomy lab.

Technology has many applications beyond anatomy. Are you trying to explain more complex portions of organic chemistry to pharmaceutical students? Virtual reality allows them to explore complex compounds in ways never imagined. Augmented reality apps allow students to combine compounds to see what potential issues may arise. It also allows them to observe microbiology interactions on a scale that would otherwise require complex microscope work.

Training the next generation of healers

Virtual reality has been used in surgical suites for the past decade. Combined with video conferencing capabilities, surgeons in remote areas can consult with experts across the country or around the world. A brain tumor patient in a remote area, for example, can have it removed close to home. As the surgery progresses, experts are available should any issues arise. MRI markers help determine the best path and approach to remove the tumor.

With 360-degree video, medical students and surgeons who want to expand their skills can use augmented reality to observe surgery, learning the process from a patient and expert surgeon who may be down the hall or across the globe. This type of training is also being used to help improve emergency response. A student can follow the actions of an emergency room doctor treating a patient. They can choose their actions and observe the potential benefits or drawbacks. When seconds count, this type of training can literally make the difference between life and death. Such training techniques are also being developed for emergency responders at the scene of an incident or accident.

Improving patient outcomes

Many of us have experienced a blood draw with multiple failed attempts. For patients who are nervous about needles, a new approach combining infrared and augmented reality helps improve success rates. The blood stands out on infrared, which is overlaid with the image of the patient’s skin. This makes it much easier to hit the vein the first time.

AR can also help reduce patient pain and anxiety levels without additional medication. Simple surgical procedures often require general anesthesia to reduce blood pressure levels related to anxiety. Some hospitals are experimenting with using virtual reality to “transport” patients to other locations, distracting them from the procedure taking place and reducing the need for anesthesia and pain medications. At the same time, surgeons can experiment with which approach will work best for a particularly complex surgery before they even touch a scalpel. Virtual reality combined with CT or MRI scans creates a virtual surgical environment, allowing surgeons to try the surgery several times to find the best possible solution for the patient.

Giving patients a new perspective on their health

It’s one thing to show a patient dry, dull statistics on their recent cardio tests. With patient medication adherence falling by half within a year of being prescribed, better tools are needed to convey the severity of a patient’s condition. One way to achieve this is by providing images of the effects certain actions can have on an individual.

Some augmented reality programs in development help patients see the physical results of specific medical decisions and procedures. Originally developed for doctors to see the results of calcium-based kidney medications on the heart, this technology has potential in many other areas. For example, it could enable smokers to see an image of current and future lung damage.

With the many areas augmented reality can be used in life sciences, it’s easy to see the advantages of this technology. Where can augmented reality take your company or organization?

Learn how to bring new technologies and services together to power digital transformation by downloading The IoT Imperative for Consumer Industries. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?

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Michelle Schooff

About Michelle Schooff

Michelle Schooff is a global marketing director in the retail and wholesale distribution industries for SAP. She is responsible for the marketing strategy, messaging and positioning for SAP solutions in the global marketplace. With over 20 years experience in technology and marketing, Michelle builds strategic marketing plans that drive growth, innovation and revenue.

Data: The Underestimated Asset Of Our Time

Ingrid-Helen Arnold

Data-driven business models are the foundation for progress worldwide – and data has become the heartbeat of any business. We can now embed and extract data and intelligence out of every business transaction and physical object, from machines and cars to wearables, and we can harness the power of this connected data to create new value in the form of unprecedented revenue opportunities, efficiency improvements, and better customer experiences.

Sounds great, right? But if data is the answer for businesses to drive competitiveness and improve their bottom line, then the question boils down to this: What is the path I need to take to fully leverage the power in data?

Often, companies already have the key ingredients for using data to their advantage, though they may not be aware of the “how.” Certainly, a set of cutting-edge technologies such as machine learning, Big Data, and analytics methods are key elements on the path to discovering the intelligence within the data – but that is not all.

To build the data business inside your business, there are five imperatives to follow:

  1. Start with the business outcome, then frame a winning data strategy: The data economy is in full swing, so how will you use the data to improve your business? First, identify and prioritize the range of growth opportunities and how data can play a part. Are you looking to create new revenue streams or improve your current top line, enhance your core business processes or create and deliver new digitally driven experiences for your customer? What might be the most disruptive business scenario you can develop and execute this year? Choose the approach that best fits your company for your desired business outcomes. Data monetization models vary based on your data strategy and goals – whether you are looking to develop new business, enter an adjacent business, or enhance your core business, understanding the various models of indirect and direct data monetization strategies – and how they can work in concert together – can lead to greater efficiencies and success.
  1. Transform your culture, people, and processes: This is a tough one that takes time, but it is crucial for enabling your company to operate at the disruptive speed of an entrepreneur. Rapidly adopting new data-driven models requires the right culture, mindset, and nimble processes, including a culture that encourages entrepreneurialism and accountability, fostering diverse teams and agile organizations. Data-driven innovation tackles difficult and complex problems; thus, projects deal with a lot of inherent and inescapable uncertainty. Don’t be afraid to fail. Just fail fast, learn from it, and move on. Work from the business problem or opportunity backward to the solution. This will ensure that everything you do has business impact.
  1. Win as an ecosystem: The data economy fundamentally changes the way companies do business and deliver products. Defining your ecosystem and partnerships can be key as these relationships lead to powerful innovation hubs with the potential to disrupt entire markets. Think strategically about your ecosystem and where you can find the most benefit and with whom you can build the most trust.
  1. Ensure core technology: For companies to fully tap into the monetary value of data to capture a significant segment of this larger, growing market, you must first ensure the quality of your data. This is where technology starts to become a key differentiator. Working with trusted technology partners to extend your data monetization platform is paramount in the data economy. Look for these partners so that you can successfully design, architect and implement your data monetization strategy.
  1. Execute fast. The ocean of Big Data itself is not that exciting, but being able to navigate the waters to discover the hidden treasures is. And to do this, you need execution focus and speed. Start small and nimble to deliver tangible business outcomes quickly.

Remember that the value in data decays over time. Keeping your data assets current with real-time updates is as important as maintaining other company assets to successfully compete in a digital economy.

For more on the power of data analytics, see From Business Intelligence To Prescriptive Analytics: What’s Next?

Helen@arnold #SAPDataNetwork

This article originally appeared on LinkedIn Pulse.

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Ingrid-Helen Arnold

About Ingrid-Helen Arnold

Ingrid-Helen Arnold is the president of SAP Data Network, the new business unit delivering end-to-end data monetization for SAP and its customers.

The Blockchain Solution

By Gil Perez, Tom Raftery, Hans Thalbauer, Dan Wellers, and Fawn Fitter

In 2013, several UK supermarket chains discovered that products they were selling as beef were actually made at least partly—and in some cases, entirely—from horsemeat. The resulting uproar led to a series of product recalls, prompted stricter food testing, and spurred the European food industry to take a closer look at how unlabeled or mislabeled ingredients were finding their way into the food chain.

By 2020, a scandal like this will be eminently preventable.

The separation between bovine and equine will become immutable with Internet of Things (IoT) sensors, which will track the provenance and identity of every animal from stall to store, adding the data to a blockchain that anyone can check but no one can alter.

Food processing companies will be able to use that blockchain to confirm and label the contents of their products accordingly—down to the specific farms and animals represented in every individual package. That level of detail may be too much information for shoppers, but they will at least be able to trust that their meatballs come from the appropriate species.

The Spine of Digitalization

Keeping food safer and more traceable is just the beginning, however. Improvements in the supply chain, which have been incremental for decades despite billions of dollars of technology investments, are about to go exponential. Emerging technologies are converging to transform the supply chain from tactical to strategic, from an easily replicable commodity to a new source of competitive differentiation.

You may already be thinking about how to take advantage of blockchain technology, which makes data and transactions immutable, transparent, and verifiable (see “What Is Blockchain and How Does It Work?”). That will be a powerful tool to boost supply chain speed and efficiency—always a worthy goal, but hardly a disruptive one.

However, if you think of blockchain as the spine of digitalization and technologies such as AI, the IoT, 3D printing, autonomous vehicles, and drones as the limbs, you have a powerful supply chain body that can leapfrog ahead of its competition.

What Is Blockchain and How Does It Work?

Here’s why blockchain technology is critical to transforming the supply chain.

Blockchain is essentially a sequential, distributed ledger of transactions that is constantly updated on a global network of computers. The ownership and history of a transaction is embedded in the blockchain at the transaction’s earliest stages and verified at every subsequent stage.

A blockchain network uses vast amounts of computing power to encrypt the ledger as it’s being written. This makes it possible for every computer in the network to verify the transactions safely and transparently. The more organizations that participate in the ledger, the more complex and secure the encryption becomes, making it increasingly tamperproof.

Why does blockchain matter for the supply chain?

  • It enables the safe exchange of value without a central verifying partner, which makes transactions faster and less expensive.
  • It dramatically simplifies recordkeeping by establishing a single, authoritative view of the truth across all parties.
  • It builds a secure, immutable history and chain of custody as different parties handle the items being shipped, and it updates the relevant documentation.
  • By doing these things, blockchain allows companies to create smart contracts based on programmable business logic, which can execute themselves autonomously and thereby save time and money by reducing friction and intermediaries.

Hints of the Future

In the mid-1990s, when the World Wide Web was in its infancy, we had no idea that the internet would become so large and pervasive, nor that we’d find a way to carry it all in our pockets on small slabs of glass.

But we could tell that it had vast potential.

Today, with the combination of emerging technologies that promise to turbocharge digital transformation, we’re just beginning to see how we might turn the supply chain into a source of competitive advantage (see “What’s the Magic Combination?”).

What’s the Magic Combination?

Those who focus on blockchain in isolation will miss out on a much bigger supply chain opportunity.

Many experts believe emerging technologies will work with blockchain to digitalize the supply chain and create new business models:

  • Blockchain will provide the foundation of automated trust for all parties in the supply chain.
  • The IoT will link objects—from tiny devices to large machines—and generate data about status, locations, and transactions that will be recorded on the blockchain.
  • 3D printing will extend the supply chain to the customer’s doorstep with hyperlocal manufacturing of parts and products with IoT sensors built into the items and/or their packaging. Every manufactured object will be smart, connected, and able to communicate so that it can be tracked and traced as needed.
  • Big Data management tools will process all the information streaming in around the clock from IoT sensors.
  • AI and machine learning will analyze this enormous amount of data to reveal patterns and enable true predictability in every area of the supply chain.

Combining these technologies with powerful analytics tools to predict trends will make lack of visibility into the supply chain a thing of the past. Organizations will be able to examine a single machine across its entire lifecycle and identify areas where they can improve performance and increase return on investment. They’ll be able to follow and monitor every component of a product, from design through delivery and service. They’ll be able to trigger and track automated actions between and among partners and customers to provide customized transactions in real time based on real data.

After decades of talk about markets of one, companies will finally have the power to create them—at scale and profitably.

Amazon, for example, is becoming as much a logistics company as a retailer. Its ordering and delivery systems are so streamlined that its customers can launch and complete a same-day transaction with a push of a single IP-enabled button or a word to its ever-attentive AI device, Alexa. And this level of experimentation and innovation is bubbling up across industries.

Consider manufacturing, where the IoT is transforming automation inside already highly automated factories. Machine-to-machine communication is enabling robots to set up, provision, and unload equipment quickly and accurately with minimal human intervention. Meanwhile, sensors across the factory floor are already capable of gathering such information as how often each machine needs maintenance or how much raw material to order given current production trends.

Once they harvest enough data, businesses will be able to feed it through machine learning algorithms to identify trends that forecast future outcomes. At that point, the supply chain will start to become both automated and predictive. We’ll begin to see business models that include proactively scheduling maintenance, replacing parts just before they’re likely to break, and automatically ordering materials and initiating customer shipments.

Italian train operator Trenitalia, for example, has put IoT sensors on its locomotives and passenger cars and is using analytics and in-memory computing to gauge the health of its trains in real time, according to an article in Computer Weekly. “It is now possible to affordably collect huge amounts of data from hundreds of sensors in a single train, analyse that data in real time and detect problems before they actually happen,” Trenitalia’s CIO Danilo Gismondi told Computer Weekly.

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials.

The project, which is scheduled to be completed in 2018, will change Trenitalia’s business model, allowing it to schedule more trips and make each one more profitable. The railway company will be able to better plan parts inventories and determine which lines are consistently performing poorly and need upgrades. The new system will save €100 million a year, according to ARC Advisory Group.

New business models continue to evolve as 3D printers become more sophisticated and affordable, making it possible to move the end of the supply chain closer to the customer. Companies can design parts and products in materials ranging from carbon fiber to chocolate and then print those items in their warehouse, at a conveniently located third-party vendor, or even on the client’s premises.

In addition to minimizing their shipping expenses and reducing fulfillment time, companies will be able to offer more personalized or customized items affordably in small quantities. For example, clothing retailer Ministry of Supply recently installed a 3D printer at its Boston store that enables it to make an article of clothing to a customer’s specifications in under 90 minutes, according to an article in Forbes.

This kind of highly distributed manufacturing has potential across many industries. It could even create a market for secure manufacturing for highly regulated sectors, allowing a manufacturer to transmit encrypted templates to printers in tightly protected locations, for example.

Meanwhile, organizations are investigating ways of using blockchain technology to authenticate, track and trace, automate, and otherwise manage transactions and interactions, both internally and within their vendor and customer networks. The ability to collect data, record it on the blockchain for immediate verification, and make that trustworthy data available for any application delivers indisputable value in any business context. The supply chain will be no exception.

Blockchain Is the Change Driver

The supply chain is configured as we know it today because it’s impossible to create a contract that accounts for every possible contingency. Consider cross-border financial transfers, which are so complex and must meet so many regulations that they require a tremendous number of intermediaries to plug the gaps: lawyers, accountants, customer service reps, warehouse operators, bankers, and more. By reducing that complexity, blockchain technology makes intermediaries less necessary—a transformation that is revolutionary even when measured only in cost savings.

“If you’re selling 100 items a minute, 24 hours a day, reducing the cost of the supply chain by just $1 per item saves you more than $52.5 million a year,” notes Dirk Lonser, SAP go-to-market leader at DXC Technology, an IT services company. “By replacing manual processes and multiple peer-to-peer connections through fax or e-mail with a single medium where everyone can exchange verified information instantaneously, blockchain will boost profit margins exponentially without raising prices or even increasing individual productivity.”

But the potential for blockchain extends far beyond cost cutting and streamlining, says Irfan Khan, CEO of supply chain management consulting and systems integration firm Bristlecone, a Mahindra Group company. It will give companies ways to differentiate.

“Blockchain will let enterprises more accurately trace faulty parts or products from end users back to factories for recalls,” Khan says. “It will streamline supplier onboarding, contracting, and management by creating an integrated platform that the company’s entire network can access in real time. It will give vendors secure, transparent visibility into inventory 24×7. And at a time when counterfeiting is a real concern in multiple industries, it will make it easy for both retailers and customers to check product authenticity.”

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials. Although the key parts of the process remain the same as in today’s analog supply chain, performing them electronically with blockchain technology shortens each stage from hours or days to seconds while eliminating reams of wasteful paperwork. With goods moving that quickly, companies have ample room for designing new business models around manufacturing, service, and delivery.

Challenges on the Path to Adoption

For all this to work, however, the data on the blockchain must be correct from the beginning. The pills, produce, or parts on the delivery truck need to be the same as the items listed on the manifest at the loading dock. Every use case assumes that the data is accurate—and that will only happen when everything that’s manufactured is smart, connected, and able to self-verify automatically with the help of machine learning tuned to detect errors and potential fraud.

Companies are already seeing the possibilities of applying this bundle of emerging technologies to the supply chain. IDC projects that by 2021, at least 25% of Forbes Global 2000 (G2000) companies will use blockchain services as a foundation for digital trust at scale; 30% of top global manufacturers and retailers will do so by 2020. IDC also predicts that by 2020, up to 10% of pilot and production blockchain-distributed ledgers will incorporate data from IoT sensors.

Despite IDC’s optimism, though, the biggest barrier to adoption is the early stage level of enterprise use cases, particularly around blockchain. Currently, the sole significant enterprise blockchain production system is the virtual currency Bitcoin, which has unfortunately been tainted by its associations with speculation, dubious financial transactions, and the so-called dark web.

The technology is still in a sufficiently early stage that there’s significant uncertainty about its ability to handle the massive amounts of data a global enterprise supply chain generates daily. Never mind that it’s completely unregulated, with no global standard. There’s also a critical global shortage of experts who can explain emerging technologies like blockchain, the IoT, and machine learning to nontechnology industries and educate organizations in how the technologies can improve their supply chain processes. Finally, there is concern about how blockchain’s complex algorithms gobble computing power—and electricity (see “Blockchain Blackouts”).

Blockchain Blackouts

Blockchain is a power glutton. Can technology mediate the issue?

A major concern today is the enormous carbon footprint of the networks creating and solving the algorithmic problems that keep blockchains secure. Although virtual currency enthusiasts claim the problem is overstated, Michael Reed, head of blockchain technology for Intel, has been widely quoted as saying that the energy demands of blockchains are a significant drain on the world’s electricity resources.

Indeed, Wired magazine has estimated that by July 2019, the Bitcoin network alone will require more energy than the entire United States currently uses and that by February 2020 it will use as much electricity as the entire world does today.

Still, computing power is becoming more energy efficient by the day and sticking with paperwork will become too slow, so experts—Intel’s Reed among them—consider this a solvable problem.

“We don’t know yet what the market will adopt. In a decade, it might be status quo or best practice, or it could be the next Betamax, a great technology for which there was no demand,” Lonser says. “Even highly regulated industries that need greater transparency in the entire supply chain are moving fairly slowly.”

Blockchain will require acceptance by a critical mass of companies, governments, and other organizations before it displaces paper documentation. It’s a chicken-and-egg issue: multiple companies need to adopt these technologies at the same time so they can build a blockchain to exchange information, yet getting multiple companies to do anything simultaneously is a challenge. Some early initiatives are already underway, though:

  • A London-based startup called Everledger is using blockchain and IoT technology to track the provenance, ownership, and lifecycles of valuable assets. The company began by tracking diamonds from mine to jewelry using roughly 200 different characteristics, with a goal of stopping both the demand for and the supply of “conflict diamonds”—diamonds mined in war zones and sold to finance insurgencies. It has since expanded to cover wine, artwork, and other high-value items to prevent fraud and verify authenticity.
  • In September 2017, SAP announced the creation of its SAP Leonardo Blockchain Co-Innovation program, a group of 27 enterprise customers interested in co-innovating around blockchain and creating business buy-in. The diverse group of participants includes management and technology services companies Capgemini and Deloitte, cosmetics company Natura Cosméticos S.A., and Moog Inc., a manufacturer of precision motion control systems.
  • Two of Europe’s largest shipping ports—Rotterdam and Antwerp—are working on blockchain projects to streamline interaction with port customers. The Antwerp terminal authority says eliminating paperwork could cut the costs of container transport by as much as 50%.
  • The Chinese online shopping behemoth Alibaba is experimenting with blockchain to verify the authenticity of food products and catch counterfeits before they endanger people’s health and lives.
  • Technology and transportation executives have teamed up to create the Blockchain in Transport Alliance (BiTA), a forum for developing blockchain standards and education for the freight industry.

It’s likely that the first blockchain-based enterprise supply chain use case will emerge in the next year among companies that see it as an opportunity to bolster their legal compliance and improve business processes. Once that happens, expect others to follow.

Customers Will Expect Change

It’s only a matter of time before the supply chain becomes a competitive driver. The question for today’s enterprises is how to prepare for the shift. Customers are going to expect constant, granular visibility into their transactions and faster, more customized service every step of the way. Organizations will need to be ready to meet those expectations.

If organizations have manual business processes that could never be automated before, now is the time to see if it’s possible. Organizations that have made initial investments in emerging technologies are looking at how their pilot projects are paying off and where they might extend to the supply chain. They are starting to think creatively about how to combine technologies to offer a product, service, or business model not possible before.

A manufacturer will load a self-driving truck with a 3D printer capable of creating a customer’s ordered item en route to delivering it. A vendor will capture the market for a socially responsible product by allowing its customers to track the product’s production and verify that none of its subcontractors use slave labor. And a supermarket chain will win over customers by persuading them that their choice of supermarket is also a choice between being certain of what’s in their food and simply hoping that what’s on the label matches what’s inside.

At that point, a smart supply chain won’t just be a competitive edge. It will become a competitive necessity. D!


About the Authors

Gil Perez is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Tom Raftery is Global Vice President, Futurist, and Internet of Things Evangelist, at SAP.

Hans Thalbauer is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

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

Fawn Fitter is a freelance writer specializing in business and technology.

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