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Using Technology Power To Fuel The UN Global Goals

Daniel Schmid

In a special address on the first day of the recent World Economic Forum Annual Meeting in Davos, Canadian Prime Minister Justin Trudeau noted, “New technology is always dazzling, but we don’t want technology simply because it is dazzling. We want it, create it, and support it because it improves people’s lives.”

As someone who witnesses the power of technology firsthand, I could not agree more!

I followed Davos closely, and saw political, business, and other leaders of society come together to shape global, regional, and industry agendas with the ambition to improve the state of the world. As part of this effort, they discussed controversially whether the new technologies driving the “Fourth Industrial Revolution” will be a force for good – or evil.

My personal take is that we have it in our hands to make sure that the opportunities that technology offers us outweigh the risks. Government, public, and private sector organizations have the power to create positive economic, social, and environmental value through technology, solutions, and skills. And they are already using this power to help achieve the ambitious United Nations’ Sustainable Development Goals (also called Global Goals), which aim to end poverty, hunger, inequalities, and climate change by 2030.

We’ve already started changing the world

I see organizations everywhere taking on the UN Global Goals through innovation that was not thought of even a few years ago.

For instance, the National Center for Tumor Diseases (NCT) and the American Society of Clinical Oncology (ASCO) are using advanced technology solutions to fight and even eradicate cancer. To counteract financial inequality for women, Compartamos Banco opened its doors in 1990 to provide financing to female small-business owners with low incomes. Today, over 90% of the bank’s 2.8 million clients in Mexico, Guatemala, and Peru are women.

Ethiopia, once iconic for images of drought and starvation, is on its way to being able to produce enough electricity to fuel its own growth. It may even rise to become Africa’s – and one of the world’s – greatest power providers. The country currently generates around 2,300 MW, but it aims to add more than 12,000 MW more by 2020 to reach 37,000 MW of generation capacity by 2037, making it a prime exporter of electricity.

SAP is doing its part too — and so can you!

Since the early development of the UN Global Goals, SAP has aligned with its vision and purpose and played a key role.

To start, we are a founding member of the Global Partnership for Sustainable Development Data  and IMPACT 2030. Through these efforts, SAP is helping to demonstrate how technology and skills can play a role in achieving the 17 goals. In addition, we recently launched a new web book, SAP & UN Global Goals, to inspire customers, partners, employees, and the public to join in and also contribute.

The facts and stories for each goal in this book provide sometimes surprising insights of what IT can do. Knowing that such impact is within our reach, I believe we need to do more. I would like to see each of us ask ourselves what we can do to serve a higher purpose bigger than ourselves.

Wherein do you think lies our biggest lever? Of the 17 Global Goals, where can you make the biggest difference to help the world run better and improve people’s lives?

For more on how technology can improve lives, see Digital Transformation: Reimagining The World, Industry By Industry.

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Daniel Schmid

About Daniel Schmid

Daniel Schmid was appointed Chief Sustainability Officer at SAP in 2014. Since 2008 he has been engaged in transforming SAP into a role model of a sustainable organization, establishing mid and long term sustainability targets. Linking non-financial and financial performance are key achievements of Daniel and his team. Since last year, his focus was extended towards the wider impact of SAP’s business activities.

Time For Banks To Fight Back

Laurence Leyden

Metamora, Illinois, USA --- USA, Illinois, Metamora, Close-up of man photographing checque --- Image by © Vstock LLC/Tetra Images/CorbisThe financial services industry has suffered consecutive blows in recent years. The global banking crisis, new regulations, empowered customers calling the shots, not to mention a new breed of digital disruptors out to steal market share, have wreaked havoc on business as usual.  Profits have been slashed, reputations have been damaged, and management has been blindsided.

The only way forward is change – a change of business model, a change of mindset, and a change of ecosystem.  It’s a major upheaval, and not to be taken lightly. Banks in particular have operated largely the same way for the past 300 years. Management is facing a once in a generation reassessment of 21st century banking.

Changes in customer behaviour, including 24×7 omnichannel service expectations, lack of loyalty by current customers willing to exchange privacy for easier access to information, generational expectations of future customers – “screenagers” and tech savvy Millennials – and technology advances in cloud, mobile, real-time data, and predictive analytics make yesterday’s business model redundant.

Banking isn’t actually about banking anymore. It’s about enabling people’s lifestyles. That means you have to completely re-think how you engage with customers. The lessons are everywhere in parallel industries. Nokia, for example, thought it was about the phone, not the customer experience. Digitisation has both emboldened and empowered customers. Ignoring this fact is pointless. You need to cater to what consumers want. That means your back-end systems need to be integrated, consistent, contextualised and easy to deploy across any channel.

There’s also a whole new ecosystem required to support this new business model. Banks are facing disaggregation as they no longer own the end-to-end value chain, as well as disintermediation as new market entrants attack specific parts of the business (think Apple Pay). Smart banks are forging relationships with different and unexpected partners, such as mobile and retail organisations, even providing products from outside of the group where they are the best fit for a customer’s needs.  As I’ve said in one of my previous blogs, there’s a new mantra for modern banking: “Must play well with others.”

Old-fashioned banking is gone, and with it so have old style processes, business models and attitudes. Nobody wants to be the last dinosaur.  It’s time for the industry to dust itself off, and step up. Embracing change is easier – and far more profitable – than risking irrelevance in the widening digital divide.

I’ve briefly summarised only some of the key drivers of digital transformation, but you can find much more insight – including views from thought leaders in banks, insurance companies, fintech providers, challenger banks and aggregators – by downloading the eBook from the recent SAP Financial Services Forum: The digital evolution – As technology transforms financial services who will triumph.

It’s essential reading if you’re going to successfully fight back.

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Laurence Leyden

About Laurence Leyden

Laurence is general manager of Financial Services, EMEA, at SAP and is primarily involved in helping banks in their transformation agenda. Prior to SAP he worked for numerous banks in Europe and Asia including Barclays, Lloyds Banking Group and HSBC. He regularly presents on industry trends and SAP’s banking strategy.

Why Banks Should Be Bullish On Integrating Finance And Risk Data

Mike Russo

Welcome to the regulatory world of banking, where finance and risk must join forces to banking executiveensure compliance and control. Today it’s no longer sufficient to manage your bank’s performance using finance-only metrics such as net income. What you need is a risk-adjusted view of performance that identifies how much revenue you earn relative to the amount of risk you take on. That requires metrics that combine finance and risk components, such as risk-adjusted return on capital, shareholder value added, or economic value added.

While the smart money is on a unified approach to finance and risk, most banking institutions have isolated each function in a discrete technology “silo” complete with its own data set, models, applications, and reporting components. What’s more, banks continually reuse and replicate their finance and risk-related data – resulting in the creation of additional data stores filled with redundant data that grows exponentially over time. Integrating all this data on a single platform that supports both finance and risk scenarios can provide the data integrity and insight needed to meet regulations. Such an initiative may involve some heavy lifting, but the advantages extend far beyond compliance.

Cashing in on bottom-line benefits

Consider the potential cost savings of taking a more holistic approach to data management. In our work with large global banks, we estimate that data management – including validation, reconciliation, and copying data from one data mart to another – accounts for 50% to 70% of total IT costs. Now factor in the benefits of reining in redundancy. One bank we’re currently working with is storing the same finance and risk-related data 20 times. This represents a huge opportunity to save costs by eliminating data redundancy and all the associated processes that unfold once you start replicating data across multiple sources.

With the convergence of finance and risk, we’re seeing more banks reviewing their data architecture, thinking about new models, and considering how to handle data in a smarter way. Thanks to modern methodologies, building a unified platform that aligns finance and risk no longer requires a rip-and-replace process that can disrupt operations. As with any enterprise initiative, it’s best to take a phased approach.

Best practices in creating a unified data platform

Start by identifying a chief data officer (CDO) who has strategic responsibility for the unified platform, including data governance, quality, architecture, and analytics. The CDO oversees the initiative, represents all constituencies, and ensures that the new data architecture serves the interests of all stakeholders.

Next, define a unified set of terms that satisfies both your finance and risk constituencies while addressing regulatory requirements. This creates a common language across the enterprise so all stakeholders clearly understand what the data means. Make sure all stakeholders have an opportunity to weigh in and explain their perspective of the data early on because certain terms can mean different things to finance and risk folks.

In designing your platform, take advantage of new technologies that make previous IT models predicated on compute-intensive risk modeling a thing of the past. For example, in-memory computing now enables you to integrate all information and analytic processes in memory, so you can perform calculations on-the-fly and deliver results in real time. Advanced event stream processing lets you run analytics against transaction data as it’s posting, so you can analyze and act on events as they happen.

Such technologies bring integration, speed, flexibility, and access to finance and risk data. They eliminate the need to move data to data marts and reconcile data to meet user requirements. Now a single finance and risk data warehouse can be flexible and comprehensive enough to serve many masters.

Join our webinar with Risk.net on 7 October, 2015 to learn best practices and benefits of deploying an integrated finance and risk platform.

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Mike Russo

About Mike Russo

Mike Russo, Senior Industry Principal – Financial Services Mike has 30 years experience in the Financial Services/ Financial Software industries. His experience includes stints as Senior Auditor for the Irving Trust Co., NY; Manager of the International Department at Barclays Bank of New York; and 14 years as CFO for Nordea Bank’s, New York City branch –a full service retail/commercial bank. Mike also served on Nordea’s Credit, IT, and Risk Committees. Mike’s financial software experience includes roles as a Senior Banking Consultant with Sanchez Computer Associates and Manager of Global Business Solutions (focused on sale of financial/risk management solutions) with Thomson Financial. Prior to joining SAP, Mike was a regulator with the Federal Reserve Bank in Charlotte, where he was responsible for the supervision of large commercial banking organizations in the Southeast with a focus on market/credit/operational risk management. Joined SAP 8years ago.

How Much Will Digital Cannibalization Eat into Your Business?

Fawn Fitter

Former Cisco CEO John Chambers predicts that 40% of companies will crumble when they fail to complete a successful digital transformation.

These legacy companies may be trying to keep up with insurgent companies that are introducing disruptive technologies, but they’re being held back by the ease of doing business the way they always have – or by how vehemently their customers object to change.

Most organizations today know that they have to embrace innovation. The question is whether they can put a digital business model in place without damaging their existing business so badly that they don’t survive the transition. We gathered a panel of experts to discuss the fine line between disruption and destruction.

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qa_qIn 2011, when Netflix hiked prices and tried to split its streaming and DVD-bymail services, it lost 3.25% of its customer base and 75% of its market capitalization.²︐³ What can we learn from that?

Scott Anthony: That debacle shows that sometimes you can get ahead of your customers. The key is to manage things at the pace of the market, not at your internal speed. You need to know what your customers are looking for and what they’re willing to tolerate. Sometimes companies forget what their customers want and care about, and they try to push things on them before they’re ready.

R. “Ray” Wang: You need to be able to split your traditional business and your growth business so that you can focus on big shifts instead of moving the needle 2%. Netflix was responding to its customers – by deciding not to define its brand too narrowly.

qa_qDoes disruption always involve cannibalizing your own business?

Wang: You can’t design new experiences in existing systems. But you have to make sure you manage the revenue stream on the way down in the old business model while managing the growth of the new one.

Merijn Helle: Traditional brick-and-mortar stores are putting a lot of capital into digital initiatives that aren’t paying enough back yet in the form of online sales, and they’re cannibalizing their profits so they can deliver a single authentic experience. Customers don’t see channels, they see brands; and they want to interact with brands seamlessly in real time, regardless of channel or format.

Lars Bastian: In manufacturing, new technologies aren’t about disrupting your business model as much as they are about expanding it. Think about predictive maintenance, the ability to warn customers when the product they’ve purchased will need service. You’re not going to lose customers by introducing new processes. You have to add these digitized services to remain competitive.

qa_qIs cannibalizing your own business better or worse than losing market share to a more innovative competitor?

Michael Liebhold: You have to create that digital business and mandate it to grow. If you cannibalize the existing business, that’s just the price you have to pay.

Wang: Companies that cannibalize their own businesses are the ones that survive. If you don’t do it, someone else will. What we’re really talking about is “Why do you exist? Why does anyone want to buy from you?”

Anthony: I’m not sure that’s the right question. The fundamental question is what you’re using disruption to do. How do you use it to strengthen what you’re doing today, and what new things does it enable? I think you can get so consumed with all the changes that reconfigure what you’re doing today that you do only that. And if you do only that, your business becomes smaller, less significant, and less interesting.

qa_qSo how should companies think about smart disruption?

Anthony: Leaders have to reconfigure today and imagine tomorrow at the same time. It’s not either/or. Every disruptive threat has an equal, if not greater, opportunity. When disruption strikes, it’s a mistake only to feel the threat to your legacy business. It’s an opportunity to expand into a different marke.

SAP_Disruption_QA_images2400x1600_4Liebhold: It starts at the top. You can’t ask a CEO for an eight-figure budget to upgrade a cloud analytics system if the C-suite doesn’t understand the power of integrating data from across all the legacy systems. So the first task is to educate the senior team so it can approve the budgets.

Scott Underwood: Some of the most interesting questions are internal organizational questions, keeping people from feeling that their livelihoods are in danger or introducing ways to keep them engaged.

Leon Segal: Absolutely. If you want to enter a new market or introduce a new product, there’s a whole chain of stakeholders – including your own employees and the distribution chain. Their experiences are also new. Once you start looking for things that affect their experience, you can’t help doing it. You walk around the office and say, “That doesn’t look right, they don’t look happy. Maybe we should change that around.”

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

To learn more about how to disrupt your business without destroying it, read the in-depth report Digital Disruption: When to Cook the Golden Goose.

Download the PDF (1.2MB)

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How Disruption Will Cause The Insurance Industry To Change

Joe Pacor

Digital transformation is changing our world, and the insurance industry cannot sit idly and avoid these changes. It’s expected that the digital customer experience will drastically drive insurance profitability in the years to come. Over 50% of insured clients won’t recommend an insurer that doesn’t have digital interaction options. An overwhelming 61% of customers prefer to track their claim status digitally instead of contacting the insurance company or agency through more traditional means. It’s estimated that 79% of insurance executives recognize the need for innovation, but are having problems with daily operations. Over 60% see both opportunities and threats in the digital transformation process. At the same time, 74% of insurance executives feel they don’t have the necessary skills to drive the needed changes.

How does your company adapt to such a changing landscape? One common way approach is updating existing business models. Many companies have already been successful in driving digital transformation through a wide range of channels. Online-only insurance solutions and faster approval times are emerging in some companies. Others are turning to e-aggregator platforms to  keep their business afloat while changing company practices and assets to the digital economy.

Here are a few examples of promising companies and how they’re innovating to meet disruption.

Esurance

Esurance started in 1999 as an online-only business. With over five million customers, it has seen rapid growth since its beginnings. And because the insurer started out with a direct insurance digital approach, it is ahead of the game in terms of digital transformation since many competitors are still struggling to move away from their agency-based model.

Though it’s not available nationwide, it has become available in 43 states, which is still significant growth for a company that is not yet 20 years old. Esurance offers much lower rates, due to its direct insurance approach that cuts out many middleman expenses. As one of the first direct insurance companies, it is still catching up to competitors for customer service, but may very well be an example of future insurance company operations.

Haven Life

When it comes to fast approval, Haven Life has Big Data science down perfectly. This MassMutual spin-off claims it can approve most customers for new term life insurance in about 20 minutes. The company bases its decision on motor vehicle records from the state, prescription drug information, a customer questionnaire, and other data available to the company. The quick decision process will make the company much more popular among individuals seeking insurance policies under $1 million. As the system is based entirely online, it reduces agency costs significantly.

Moneysupermarket

In the UK, a newer e-aggregator platform helps customers compare prices and purchase insurance online. Moneysupermarket provides fast access to other online services as well. It was launched in 1999 as a digital-only solution that compares mortgage rates. In 2003, the insurance portion of the platform began with a mission to save at approximately 10 million households at least £200 through competitive shopping.

The company streamlines the process by having the prospect fill out a single form. That information is then used to pull quotes from multiple insurance companies. The prospects can compare the different policies to see which one is the best fit for their situation. They can then either select and purchase at that time or come back at a later time to finish the process. The company benefits by seeing additional sales at a much reduced cost compared to traditional marketing channels.

The role Big Data plays

Insurance businesses are also forming new business networks to provide a more tailored product to clients. As an example, State Farm and ADT provide a paired offering that protects connected homes through a single service. This helps customers reduce the number of businesses they must work with. At the same time, both companies benefit with increased business as customers turn to the network for simplicity.

Meanwhile, the Internet of Things is creating a new level of hyperconnectivity and data harvesting behind the scenes. Insurance rates currently based on a doctor’s visit will instead draw information from wearable devices, workout records, and pharmacy records. Rate reductions for self-driving cars will be based on the percentage of time the car is driven by a human versus driven autonomously.

With all these changes disrupting the industry, remaining flexible and connected makes all the difference. Is your company ready to meet the changes digital transformation is causing? If you aren’t, it is time to look at options to become more agile.

Learn more about how we can help you meet the challenges of disruption head on today. Please download our Insurance White Paper “How Insurers Can Prepare for the Digital Revolution” today to see what SAP has to offer. We will work with you to develop an insurance business that’s ready to meet the needs of the digital world.

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Joe Pacor

About Joe Pacor

Joe Pacor is senior director, Industry Cloud Marketing-Insurance at SAP, responsible for driving the growth of SAP's value proposition as a technology provider, trusted business partner, and thought leader for the insurance industry.