HR Digitalization And The Path To Future Success For Growing Businesses

David Ludlow

 

Part 4 of “Never Too Small for Digital HR” series

Mobile devices and apps, wireless networks, and collaborative platforms are just a few of the many technologies that are changing how people approach everyday life. We are constantly engaged in experiences that are highly curated, individualized, responsive, and immediate. But what most people miss is how this moment in human history is creating immense upheaval for HR organizations as they fight to acquire and retain the right talent – and keep them engaged – to compete effectively in a landscape of constant change and disruption.

A lack of digitally enabled HR processes can limit the ability of a company to have the right talent and thereby thwart future growth. This can be an issue for small and midsize companies as indicated in the Forbes Insights briefing report “Competing for Talent in the Digital Age,” sponsored by SAP SuccessFactors, where less than half of surveyed executives cited having an established strategy and undergoing a coordinated transformation.

Would anyone willingly jump back to technology experiences in the workplace reminiscent to those from 10 years ago? Most likely not – people want the same access to digital capabilities they use outside of work. For the HR function, it’s time to start supporting preferred ways of working to help the business run with an engaged, passionate workforce that is willing to do what it takes to help the company succeed.

Redefining the value of HR in a digital world

HR strategies and processes touch every employee, manager, and executive within small and midsize businesses, impacting workforce behaviors and productivity. However, the adoption of digital technology can have a significant influence as well. By marrying processes with technology that mimics favored digital consumer experiences, HR organizations can raise their value to every member of the workforce and ignite a wave of engagement rarely seen in most workplaces.

For example, HR organizations can transition the workplace culture into one that values and encourages continuous learning and career advancement by making development opportunities ubiquitous, simple, accessible, and convenient. Employees can take advantage of individualized learning plans relevant to their current role, future aspirations, and short- and long-term changes in their position. New digital technologies, such as machine learning, can better assess the personalized needs of each individual and intelligently suggest relevant learning courses or mentors. Plus, open collaboration platforms can encourage knowledge sharing across the organization.

Learning and development are just the beginning of the full potential of HR digitalization. Managers can make data-driven decisions based on data that has been transformed into recommended courses of action by using these new digital technologies. And they can do it on the go, anytime and anywhere with their mobile devices. Employees can quickly get the right answers to their questions using natural language instead of guessing where to navigate next on a series of menus. But perhaps most important, work becomes an enjoyable experience as the frustration of making decisions with limited information and using latent, complex IT systems become a thing of the past.

Turning HR digitalization into a foundation for future success

The transformational power of digital technology is unmistakable in the world of work. HR organizations can effectively foster digital skills and productive habits that align with current needs, while flexibly evolving work experiences to align with new market dynamics and changes in business strategy in real time.

With a range of cloud-based HR technologies available, small and midsize businesses can increase control of the digital capabilities they adopt, keep IT costs low, secure information confidently, and authorize access to the right people anytime and anywhere. The HR function not only streamlines user experiences and accelerates processes, but also creates a foundation for an engaged, informed, and prepared workforce that can handle anything the future brings.

Find out how small and midsize businesses are digitalizing HR with cloud-based models to create a competitive edge in the digital economy. Read the Forbes Insights briefing report “Competing for Talent in the Digital Age” sponsored by SAP SuccessFactors. And don’t forget to check every Wednesday for new installments to our blog series “Never Too Small for Digital HR” to explore the possibilities for your business.

This article originally appeared on Growth Matters Network.


David Ludlow

About David Ludlow

David Ludlow is the Group Vice President at SAP Labs. His areas of expertise include product management, enterprise software, portfolio management, ERP, go-to-market strategy, business intelligence and cloud computing.

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.

Analytics And Big Data: Driving Agility In The Chemical Industry

Michael Laprocido

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

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

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

Dynamic visibility empowers dynamic resource allocation

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

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

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

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

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

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

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

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

Using the path to build the future

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

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

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


Michael Laprocido

About Michael Laprocido

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

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.