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Differentiating Products With Data-Based Services

Don Gordon

Ever since Steve Jobs revealed the first iPhone, people have come to associate big tech launches with physical products. So when SAP chairman Hasso Plattner, Prof. Dr. h.c. mult., unveiled the new SAP digital innovation system last month, many people in the SAPPHIRE NOW audience reflexively looked around for a nonexistent device.

The fact is, value and differentiation are migrating away from physical products like devices and toward data-based services that fundamentally change the way consumers interact with those products. For consumer products (CP) companies, adapting to this change is imperative because today, even new and highly sought-after products become commoditized more quickly than ever before. For CP companies, this means they need to:

  • Innovate ways to be more efficient using IoT and analytics across lines of business (for example, in manufacturing and supply chain operations to increase efficiency as a way to lower costs)
  • Create innovative data services around products – for example, by building sensors into products. In this case, the data is what allows for differentiation. It’s what makes the product more valuable to the customer. And it’s how CP companies can increase market share, customer retention, and margins.

So where does a digital innovation system come in? It is, as Mala Anand, executive vice president and president of SAP Leonardo, Data, and Insights at SAP,  explained, a “digital innovation system that enables customers to rapidly innovate and scale that innovation to redefine their business for the digital world.” You might think of it as a digital services innovation platform that brings together the power of machine learning, IoT, analytics, and Big Data in ways that were previously not possible.

With all of these technologies unified, it’s much easier to harness data to drive process, value, and customer experience transformation. Consider this: When customers – both B2B and B2C – purchase and use connected, self-aware products, they can passively send product and usage data in the course of daily activities and work (for example, usage levels, wear and tear rates, maintenance information, and functionality used and not used).

This data can be used to inform every aspect of the product value chain. For example, when a customer purchases a smart refrigerator, they agree to passively stream product and usage data from that refrigerator on a continuous basis. Sensors can be built into it to capture and send performance and operations data useful to every player in the product value chain. As an interactive product, the refrigerator can send data (or alerts) when compressors are overheating, vibrations or temperatures are exceeding desired maximums, or Freon levels are low.

The value of this data can extended to a CP manufacturer’s entire extended value chain. For example, a refrigeration manufacturer with commercial and consumer product lines could include B2B traditional suppliers that enable the manufacturer to make better products, as well as involve other providers of data-based services around the product to expand the customer value proposition, as shown in the illustration below.

transformation of the refrigeration value chain

Transformation of the refrigeration value chain

So from this perspective, the future of CP lies in harnessing new kinds of data – and IDC appears to agree. In a May 2017 Analyst Connection, Simon Ellis, program vice president at IDC, forecasted that 90% of the growth in the CP industry over the next decade will go to companies that successfully engage directly with consumers. “While this may mean direct-to-consumer selling, it is most likely to be about a ‘brand relationship.’ The successful engagement will be one that turns data and information from consumers into product and service offerings that meet or even exceed consumers’ expectations. The 90% is a projection, of course, and the actual results may be higher or lower, but the point is that to succeed in the future, CP companies will need to engage with their consumers in a new way.”

I invite you to read Ellis’ paper, “Using Data to Digitally Transform Consumer Products,” He provides valuable insights into how untapped digital technologies have the potential to harness data to drive new capabilities and data-driven services, deliver totally new insights into the changing behaviors and needs of customers, and more.

 

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About Don Gordon

Don Gordon leads global Consumer Products industry marketing for SAP. Previously he led global Retail industry marketing for IBM. He lives in Philadelphia, considered by many to be the finest city on earth.

IoT And The New COO Scorecard

Tom Raftery

“Real knowledge is to know the extent of one’s ignorance,” said Kong Qui, better known as Confucius. I doubt he had chief operating officers (COOs) in mind when he said it, but 2,000 years later, he still makes a good a point. The Internet of Things (IoT) is taking us into unprecedented disruption, opportunity, and innovation. Business models are fluid, existing processes are becoming less relevant, and for many, we don’t know what we don’t know yet. IoT is not only changing how we do things, but also the definitions of our roles and our measurements of success – particularly for COOs. If ever there was a time for a bit of professional navel gazing, it’s now.

In the same way that CEOs and founders need entrepreneurial skills to devise new business ideas and create a culture of innovation, COOs must also be somewhat “intrapreneurial.” But that remit is changing from operational to transformational. And not everyone knows how to get there.

In my last blog, I touched on the transformational effect of IoT on almost every division and line of business head in the organization. Here I’ll talk specifically about COOs, because they’re at the digital coalface leading this transformation.

Of course, business transformation is hardly a new concept for a COO, but the seismic impact of IoT has permanently raised the bar. A new playing field with unparalleled processes, potential, and performance metrics is redefining what success looks like.  So much so that IDC has created a scorecard for the new COO remit, giving actionable evaluation measures and advice on how to think and execute differently in the brave new world of digital transformation. (If you’ve not yet seen it, it’s worth a read for the success of your future career, not just your current role.)

As organizations digitally mature, the KPIs for COOs are becoming more closely aligned to the broader organizational objectives with subtle, yet critical, interdependencies. IDC’s COO Scorecard identifies five key dimensions for these KPIs:

  1. Operational vision. The ability to gain active responsibility for technology governance while maintaining fidelity to corporate IT standards and guidelines.
  1. Connected assets and processes. The ability to connect corporate assets to improve effectiveness (inclusive of efficiency, reliability, and availability) and to digitally connect processes, both intracompany and intercompany, to create a more responsive operating capability.
  1. Connected experiences. The ability to support corporate’s transformation initiative based on digitally connected products and services to enable higher levels of customer satisfaction and to unlock information-based revenue opportunities.
  1. Intelligent decision making. The ability to connect corporate strategy with operational decision making, down to tactical plans, on an organizational scale.
  1. Talent and culture. The ability to create an environment where people are committed and enabled to change, where employees at any level move in the same direction promoting the same shared values.

What we are talking about here is essentially changing the COO’s remit from a utility to a transformer – and mastering that change in the process. The real issue is not if a company’s business model will transform (competition and disruption will typically take care of that), but rather whether COOs understand how best to steer the ship while this is happening. I don’t just wish you success in your company’s transformation, but also the digital acumen for you to make it happen.

Check out The COO Scorecard for Digital Transformation to see how you’re doing in advancing your organization’s digital maturity.

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About Tom Raftery

Tom Raftery is VP and Global Internet of Things Evangelist for SAP. Previously Tom worked as an independent analyst focussing on the Internet of Things, Energy and CleanTech. Tom has a very strong background in social media, is the former co-founder of a software firm and is co-founder and director of hyper energy-efficient data center Cork Internet eXchange. More recently, Tom worked as an Industry Analyst for RedMonk, leading their GreenMonk practice for 7 years.

How The Internet Of Things Is Fueling The F-35 Of The Farm Fields

John Ward

Eric Froebel is a man who truly appreciates the sophistication of modern farm equipment.

“With all its onboard software and hardware technology, a state-of-the-art tractor or combine is more like a fighter jet than the family car,” he observes.

Froebel, who is director of global engineering processes and IT architecture at AGCO Corporation, is not exaggerating. Loaded with sensor-driven telematics, GPS positioning, automatic guidance systems, and wireless data transfer technology, it’s easy to imagine a top-of-the-line tractor as the F-35 of the farm field.

This is exactly the kind of farm equipment that AGCO is known for manufacturing. And Froebel sees such high-tech machines as a present-day necessity.

“World population is growing, while the planet’s arable land is decreasing,” Froebel says matter-of-factly. “That means the yield from smaller amounts of land has to feed more people.”

There’s little doubt that sophisticated farm equipment and the larger world of the Internet of Things (IoT) will play an important role in boosting future harvests.

The IoT of farming

In fact, IoT could be biggest thing in agriculture since the domestication of farm animals.

“Smart agriculture and precision farming are taking off, but they could just be the precursors to even greater use of technology in the farming world,” notes a recent article in Business Insider. “The IoT is set to push the future of farming to the next level.”

The article points out that advancements such as agricultural drones, farm-field sensors, and self-driving tractors promise to be powerful tools in improving the efficiency of day-to-day work out on the farm.

Furthermore, this technology will be churning out enormous amounts of data.

Business Insider predicts IoT device installations in the agriculture world will increase from 30 million in 2015 to 75 million in 2020, and that the average farm will generate an average of 4.1 million data points per day in 2050.

Maximizing the yield from this data will be key.

AGCO’s vision of the connected farm

Part of AGCO’s vision is a next-generation approach to precision agriculture that it calls Fuse. Fuse is designed to provide mixed-fleet farming operations with improved access to their farm data to make more informed business decisions – resulting in enhanced productivity and profitability. It connects the entire crop cycle from enterprise planning and planting to crop care, harvesting, and grain storage.

“Of course, we want our equipment to talk to each other and to our management systems,” says Froebel, “but our strategy reflects a more open architecture. If a farmer already has a farm management solution, we want to be able to feed that system information too.”

Wheels firmly on the ground

But agricultural sophistication comes with its challenges as well. For farmers, these include issues such as data privacy and equipment maintenance that is, in itself, high-tech.

Again, better quality data is likely part of the solution.

“We want to gather live maintenance data from our machines,” says Christian Klingler, AGCO’s manager of global costing tools and process. “Not only so the farmer can manage their own equipment, but also for us as a manufacturer to use a means to improve our products.”

With global brands that include Massey Ferguson, Challenger, GSI, Valtra, and Fendt, AGCO is committed to promoting sustainable farm mechanization around the world.

Wherever it operates, one thing is certain. The piece of equipment tilling today’s farm fields is not your grandfather’s tractor.

Fueled by still-evolving IoT technologies, these modern miracle machines seem to do everything but fly.

Learn more about SAP Leonardo – SAP’s system of breakthrough technologies and services that let you take full advantage of embedded IoT capabilities and other innovation technologies through the cloud. Join us at Leonardo Live in Frankfurt July 11-12. #LeonardoLive. Learn more here.

Please follow me on Twitter @JohnGWard3.

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About John Ward

John Ward is an Integrated Marketing Expert at SAP. He has over 30 years of professional writing experience that includes marketing material, sales support, technical documentation, video scripting, and magazine articles.

Running Future Cities on Blockchain

Dan Wellers , Raimund Gross and Ulrich Scholl

Building on the Blockchain Framework

Some experts say these seemingly far-future speculations about the possibilities of combining technologies using blockchain are actually both inevitable and imminent:


Democratizing design and manufacturing by enabling individuals and small businesses to buy, sell, share, and digitally remix products affordably while protecting intellectual property rights.
Decentralizing warehousing and logistics by combining autonomous vehicles, 3D printers, and smart contracts to optimize delivery of products and materials, and even to create them on site as needed.
Distributing commerce by mixing virtual reality, 3D scanning and printing, self-driving vehicles, and artificial intelligence into immersive, personalized, on-demand shopping experiences that still protect buyers’ personal and proprietary data.

The City of the Future

Imagine that every agency, building, office, residence, and piece of infrastructure has an entry on a blockchain used as a city’s digital ledger. This “digital twin” could transform the delivery of city services.

For example:

  • Property owners could easily monetize assets by renting rooms, selling solar power back to the grid, and more.
  • Utilities could use customer data and AIs to make energy-saving recommendations, and smart contracts to automatically adjust power usage for greater efficiency.
  • Embedded sensors could sense problems (like a water main break) and alert an AI to send a technician with the right parts, tools, and training.
  • Autonomous vehicles could route themselves to open parking spaces or charging stations, and pay for services safely and automatically.
  • Cities could improve traffic monitoring and routing, saving commuters’ time and fuel while increasing productivity.

Every interaction would be transparent and verifiable, providing more data to analyze for future improvements.


Welcome to the Next Industrial Revolution

When exponential technologies intersect and combine, transformation happens on a massive scale. It’s time to start thinking through outcomes in a disciplined, proactive way to prepare for a future we’re only just beginning to imagine.

Download the executive brief Running Future Cities on Blockchain.


Read the full article Pulling Cities Into The Future With Blockchain

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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.

Raimund Gross

About Raimund Gross

Raimund Gross is a solution architect and futurist at SAP Innovation Center Network, where he evaluates emerging technologies and trends to address the challenges of businesses arising from digitization. He is currently evaluating the impact of blockchain for SAP and our enterprise customers.

Ulrich Scholl

About Ulrich Scholl

Ulrich Scholl is Vice President of Industry Cloud and Custom Development at SAP. In this role, Ulrich discovers and implements best practices to help further the understanding and adoption of the SAP portfolio of industry cloud innovations.

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4 Traits Set Digital Leaders Apart From 97% Of The Competition

Vivek Bapat

Like the classic parable of the blind man and the elephant, it seems everyone has a unique take on digital transformation. Some equate digital transformation with emerging technologies, placing their bets on as the Internet of Things, machine learning, and artificial intelligence. Others see it as a way to increase efficiencies and change business processes to accelerate product to market. Some others think of it is a means of strategic differentiation, innovating new business models for serving and engaging their customers. Despite the range of viewpoints, many businesses are still challenged with pragmatically evolving digital in ways that are meaningful, industry-disruptive, and market-leading.

According to a recent study of more than 3,000 senior executives across 17 countries and regions, only a paltry three percent of businesses worldwide have successfully completed enterprise-wide digital transformation initiatives, even though 84% of C-level executives ranks such efforts as “critically important” to the fundamental sustenance of their business.

The most comprehensive global study of its kind, the SAP Center for Business Insight report “SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart,” in collaboration with Oxford Economics, identified the challenges, opportunities, value, and key technologies driving digital transformation. The findings specifically analyzed the performance of “digital leaders” – those who are connecting people, things, and businesses more intelligently, more effectively, and creating punctuated change faster than their less advanced rivals.

After analyzing the data, it was eye-opening to see that only three percent of companies (top 100) are successfully realizing their full potential through digital transformation. However, even more remarkable was that these leaders have four fundamental traits in common, regardless of their region of operation, their size, their organizational structure, or their industry.

We distilled these traits in the hope that others in the early stages of transformation or that are still struggling to find their bearings can embrace these principles in order to succeed. Ultimately I see these leaders as true ambidextrous organizations, managing evolutionary and revolutionary change simultaneously, willing to embrace innovation – not just on the edges of their business, but firmly into their core.

Here are the four traits that set these leaders apart from the rest:

Trait #1: They see digital transformation as truly transformational

An overwhelming majority (96%) of digital leaders view digital transformation as a core business goal that requires a unified digital mindset across the entire enterprise. But instead of allowing individual functions to change at their own pace, digital leaders prefer to evolve the organization to help ensure the success of their digital strategies.

The study found that 56% of these businesses regularly shift their organizational structure, which includes processes, partners, suppliers, and customers, compared to 10% of remaining companies. Plus, 70% actively bring lines of business together through cross-functional processes and technologies.

By creating a firm foundation for transformation, digital leaders are further widening the gap between themselves and their less advanced competitors as they innovate business models that can mitigate emerging risks and seize new opportunities quickly.

Trait #2: They focus on transforming customer-facing functions first

Although most companies believe technology, the pace of change, and growing global competition are the key global trends that will affect everything for years to come, digital leaders are expanding their frame of mind to consider the influence of customer empowerment. Executives who build a momentum of breakthrough innovation and industry transformation are the ones that are moving beyond the high stakes of the market to the activation of complete, end-to-end customer experiences.

In fact, 92% of digital leaders have established sophisticated digital transformation strategies and processes to drive transformational change in customer satisfaction and engagement, compared to 22% of their less mature counterparts. As a result, 70% have realized significant or transformational value from these efforts.

Trait #3: They create a virtuous cycle of digital talent

There’s little doubt that the competition for qualified talent is fierce. But for nearly three-quarters of companies that demonstrate digital-transformation leadership, it is easier to attract and retain talent because they are five times more likely to leverage digitization to change their talent management efforts.

The impact of their efforts goes beyond empowering recruiters to identify best-fit candidates, highlight risk factors and hiring errors, and predict long-term talent needs. Nearly half (48%) of digital leaders understand that they must invest heavily in the development of digital skills and technology to drive revenue, retain productive employees, and create new roles to keep up with their digital maturity over the next two years, compared to 30% of all surveyed executives.

Trait #4: They invest in next-generation technology using a bimodal architecture

A couple years ago, Peter Sondergaard, senior vice president at Gartner and global head of research, observed that “CIOs can’t transform their old IT organization into a digital startup, but they can turn it into a bi-modal IT organization. Forty-five percent of CIOs state they currently have a fast mode of operation, and we predict that 75% of IT organizations will be bimodal in some way by 2017.”

Based on the results of the SAP Center for Business Insight study, Sondergaard’s prediction was spot on. As digital leaders dive into advanced technologies, 72% are using a digital twin of the conventional IT organization to operate efficiently without disruption while refining innovative scenarios to resolve business challenges and integrate them to stay ahead of the competition. Unfortunately, only 30% of less advanced businesses embrace this view.

Working within this bimodal architecture is emboldening digital leaders to take on incredibly progressive technology. For example, the study found that 50% of these firms are using artificial intelligence and machine learning, compared to seven percent of all respondents. They are also leading the adoption curve of Big Data solutions and analytics (94% vs. 60%) and the Internet of Things (76% vs. 52%).

Digital leadership is a practice of balance, not pure digitization

Most executives understand that digital transformation is a critical driver of revenue growth, profitability, and business expansion. However, as digital leaders are proving, digital strategies must deliver a balance of organizational flexibility, forward-looking technology adoption, and bold change. And clearly, this approach is paying dividends for them. They are growing market share, increasing customer satisfaction, improving employee engagement, and, perhaps more important, achieving more profitability than ever before.

For any company looking to catch up to digital leaders, the conversation around digital transformation needs to change immediately to combat three deadly sins: Stop investing in one-off, isolated projects hidden in a single organization. Stop viewing IT as an enabler instead of a strategic partner. Stop walling off the rest of the business from siloed digital successes.

As our study shows, companies that treat their digital transformation as an all-encompassing, all-sharing, and all-knowing business imperative will be the ones that disrupt the competitive landscape and stay ahead of a constantly evolving economy.

Follow me on twitter @vivek_bapat 

For more insight on digital leaders, check out the SAP Center for Business Insight report, conducted in collaboration with Oxford Economics,SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart.”

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About Vivek Bapat

Vivek Bapat is the Senior Vice President, Global Head of Marketing Strategy and Thought Leadership, at SAP. He leads SAP's Global Marketing Strategy, Messaging, Positioning and related Thought Leadership initiatives.