Digitalist Flash Briefing: The AI Tidal Wave Is Coming To The Office

Peter Johnson

Today, we’re taking a look at how humans are beginning to collaborate with artificial intelligence in the workplace.

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Peter Johnson

About Peter Johnson

Peter Johnson is a Senior Director of Marketing Strategy and Thought Leadership at SAP, responsible for developing easy to understand corporate level and cross solution messaging. Peter has proven experience leading innovative programs to accelerate and scale Go-To-Market activities, and drive operational efficiencies at industry leading solution providers and global manufactures respectively.

The Finance Leadership Playbook Part 2: Stepping Up Automation To Drive Efficiency

Michael Diehl

Part 2 of the The Finance Leadership Playbook series

Finance teams are experiencing significant stress across their spectrum of responsibility. Customer expectations, channel proliferation, constant disruption, cost reduction, and volatile economic and political outlooks are adding more risk and uncertainty to an already high-volume, complex workload. With one decision or innovation, anyone from the CFO to the payables specialist can impact how the business navigates a fast-changing world while delivering on its commitments and operating competitively.

The spotlight on finance as the business’ top strategic partner shines brighter every day. However, the pressure to perform general activities—including budgeting, forecasting, planning and analysis, invoice processing, accounting of operating expenses, payroll administration, and internal and external reporting—continues to grow as available resources to execute them dwindle.

To refocus finance’s attention on strategic tasks without neglecting daily routines, activities need to be streamlined and organized more efficiently. The Oxford Economics study How Finance Leadership Pays Off – Efficiency Helps CFOs Stay Ahead of the Pack,” sponsored by SAP, recently revealed that automation is a key enabler of this shift. Nearly three-quarters (73%) of surveyed finance executives agree that automation is improving efficiency within their organization and throughout the company, freeing bandwidth for more strategic tasks.

The value of process automation

Although process automation is not a new concept, the potential for mechanizing the majority of finance’s work is gaining significant attention. The function is reaching a turning point where emerging automation technology offers an opportunity to improve efficiency and strengthen its reputation in the C-suite. For years, organizations have moved transactional tasks to shared service centers to increase scalability and take advantage of lower labor costs. Emerging technologies such as artificial intelligence are now opening the door for another quantum leap in efficiency gains.

Take, for example, Zalando. To complete its transformation into Europe’s leading online fashion platform for women, men, and children, the company created new products and services that allow all suppliers and buyers to interact with one another and benefit from high-performance billing and provisioning capabilities. With a smart data and automation strategy, Zalando is now equipped to process at least 10 times its previous maximum transaction volume. In turn, it has significantly accelerated all financial processes—from invoice processing and dunning to closing activities—with much more confidence.

The real-time actual-to-plan cash system

The ability to accurately predict cash and liquidity needs is certainly an important aspect of finance’s role. No other activity can have a greater influence on the efficiency of use of capital, reduction of expenditures, and mitigation of emerging risk in a world where globalization, financial complexity, and extensive regulations are a constant threat of disruption.

Bundesdruckerei GmbH, an electronic identity management solutions provider, is a prime example of how to automate financial forecasting. After establishing a single view of the truth with a secure unified data platform, the company accelerated processes, such as generation of profitability analysis reports, by 40%, on average. At the same time, it dramatically improved profitability analysis with reports delivered at unprecedented speed. This powerful solution for enabling future business models is providing decision-makers with the information they need instantly and eliminating the manual work to process and analyze data to derive real-time insights.

Management of evolving regulatory change and risk

If asked what keeps them up at night, most CFOs would say that risk mitigation and compliance are top of mind. In fact, the Oxford Economics study revealed that, for 68% of participating finance leaders, these two topics are prioritized higher than any other business objective. And nearly all respondents (93%) are given decision-making authority to enforce policies for adherence to regulatory requirements.

As demonstrated by Wheels India, this stressful aspect of every finance team’s day can be streamlined to the point where risk is minimal. The steel wheel manufacturer faced an ever-growing demand for improved flexibility and transparency. In response, the company invested in a solution for governance and reduced risk of improper user access.

This implementation transformed Wheels India into a more transparent environment with:

  • 60% fewer segregation of duties violations
  • 50% faster identification, categorization, mitigation, monitoring, and reporting of risks within business processes

Securing in-the-moment action with efficiency and flexible growth

Automation technology can not only liberate finance teams from straightforward, repetitive tasks, but also more complex activities such as collections and report-writing and analysis. Leading companies like these are connecting the dots between efficiency and performance with these forms of automation. They are the ones that can take immediate action on the latest market opportunities and risks by quickly reaching conclusions and developing context-sensitive behaviors.

Further explore the benefits of each of these pillars and the technologies that support them. Check for new installments to our blog series “The Finance Leadership Playbook” and read the Oxford Economics study “How Finance Leadership Pays Off: Efficiency Helps CFOs Stay Ahead of the Pack,” sponsored by SAP.

Learn how organizations are gaining instant financial insights and using them to make better decisions—both now and in the future. Register now for the 2017 Financial Excellence Forum, Oct. 10-11 in New York City.

Follow SAP Finance online: @SAPFinance (Twitter)  | LinkedIn | FacebookYouTube

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Michael Diehl

About Michael Diehl

Michael Diehl is the director of Global Finance Audience Marketing at SAP. His specialties include go-to-market strategy, thought leadership, demand generation, digital marketing, messaging, and positioning.

Will AI And Machine Learning Spell The End Of Retail As We Know It?

Joerg Koesters

According to IDC, artificial intelligence (AI) is expected to become pervasive across customer journeys, supply networks, merchandizing, and marketing and commerce because it provides better insights to optimize retail execution. For example, in the next two years:

  • 40% of digital transformation initiatives will be supported by cognitive computing and AI capabilities to provide critical, on-time insights for new operating and monetization models.
  • 30% of major retailers will adopt a retail omnichannel commerce platform that integrates a data analytics layer that centrally orchestrates omnichannel capabilities.

One thing is clear: New analytic technologies are expected to radically change analytics—and retail—as we know it.

AI and machine learning defined in a retail context

AI is defined broadly as the ability of computers to mimic human thinking and logic. Machine learning is a subset of AI that focuses on how computers can learn from data without being programmed through the use of algorithms that adapt to change; in other words, they can “learn” continuously in response to new data. We’re seeing these breakthroughs now because of massive improvements in hardware (for example, GPUs and multicore processing) that can handle Big Data volumes and run deep learning algorithms needed to analyze and learn from the data. Ivano Ortis, vice president at IDC, recently predicted:

“Artificial intelligence will take analytics to the next level, and will be the foundation for retail innovation, as reported by one out of every two retailers globally. AI enables scale, automation, and unprecedented precision, and will drive customer experience innovation when applied to both hyper micro customer segmentation and contextual interaction.”

Given the capabilities of AI and machine learning, it’s easy to see how they can be powerful tools for retailers. Now computers can read and listen to data, understand and learn from it, and instantly and accurately recommend the next best action without needing to be explicitly programmed. This is a boon for retailers seeking to accurately predict demand, anticipate customer behavior, and optimize and personalize customer experiences. For example, it can be used to automate:

  • Personalized product recommendations based on data about each customer’s unique interests and buying propensity
  • The selection of additional upsell and cross-sell options that drive greater customer value
  • Chat bots that can drive intelligent and meaningful engagement with customers
  • Recommendations on additional services and offerings based on past and current buying data and customer data
  • Planogram analyses, which support in-store merchandizing by telling people what’s missing, comparing sales to shelf space, and accelerating shelf replenishment by automating reorders
  • Pricing engines used to make tailored, situational pricing decisions

Particularly in the U.S., retailers are already able to collect large volumes of transaction-based and behavioral data from their customers. And as data volumes grow and processing power improves, machine learning becomes increasingly applicable in a wider range of retail areas to further optimize business processes and drive more impactful personalized and contextual consumer experiences and products.

The transformation of retail has already begun

The impacts of AI and machine learning are already being felt. For example:

  • Retailers are predicting demand with machine learning in combination with IoT technologies to optimize store businesses and relieve workforces.
  • Advertisements are being personalized based on in-store camera detections and taking over semi-manual “clienteling” tasks of store employees.
  • Retailers can monitor wait times in checkout lines to understand store traffic and merchandising effectiveness at the individual store level—and then tailor assortments and store layouts to maximize basket size, satisfaction and sell through.
  • Systems can now recognize and predict customer behavior and improve employee productivity by turning scheduled tasks into on-demand activities.
  • Camera systems can detect the “fresh” status of perishable products before on-site employees.
  • Brick-and-mortar stores are automating operational tasks, such as setting shelf pricing, determining product assortments and mixes, and optimizing trade promotions.
  • In-store apps can tell how long a customer has been in a certain aisle and deliver targeted offers and recommendations (via his or her mobile device) based on data about data about personal consumption histories and preferences.

A recent McKinsey study provided examples that quantify the potential value of these technologies in transforming how retailers operate and compete. For example:

  • Retailer supply chain operations that have adopted data and analytics have seen up to a 19% increase in operating margin over the last five years. Using data and analytics to improve merchandising including pricing, assortment, and placement optimization is leading to an additional 16% in operating margin improvement.
  • Personalizing advertising is one of the strongest use cases for machine learning today. Additional retail use cases with high potential include optimizing pricing, routing, and scheduling based on real-time data in travel and logistics, as well as optimizing merchandising strategies.

Exploiting the full value of data

Thin margins (especially in the grocery sector) and pressure from industry-leading early adopters such as Amazon and Walmart have created strong incentives to put customer data to work to improve everything from cross-selling additional products to reducing costs throughout the entire value chain.

But McKinsey has assessed that the U.S. retail sector has only realized 30-40% of the potential margin improvements and productivity growth their analysts envisioned in 2011—and a large share of the value of this growth has gone to consumers through lower prices. So thus far, only a fraction of the potential value from AI and machine learning has been realized.

According to Forbes, U.S. retailers have the potential to see a 60%+ increase in net margin and 0.5–1.0% annual productivity growth. But there are major barriers to realizing this value include lack of analytical talent and siloed data within companies.

This is where machine learning and analytics kick in. AI and machine learning can help scale the repetitive analytics tasks required to drive better leverage of the available data. When deployed on a companywide, real-time analytics platform, they can become the single source of truth that all enterprise functions rely on to make better decisions.

How will this change retail analytics?

So how will AI and machine learning change retail analytics, as they are currently defined? We expect that AI and machine learning won’t kill analytics as we know it, but rather give analytics a new and even more impactful role in driving the future of retail. For example, we anticipate that:

  • Retailers will include machine learning algorithms as an additional factor in analyzing and monitoring business outcomes in relation to machine learning algorithms.
  • They will use AI and machine learning to sharpen analytic algorithms, detect more early warning signals, anticipate trends and have accurate answers before competitors do.
  • Analytics will happen in real time and act as the glue between all areas of the business.
  • Analytics will increasingly focus on analyzing manufacturing machine behavior, not just business and consumer behavior.

Ivano Ortis at IDC authored a recent report, “Why Retail Analytics are a Foundation for Retail Profits,” in which he provides further insights on this topic. He notes how retail leaders will use new kinds of analytics to drive greater profitability, further differentiate the customer experience, and compete more effectively:

“In conclusion, commerce and technology will converge, enabling retailers to achieve short-term ROI objectives while discovering untapped demand. But implementing analytics will require coordination across key management roles and business processes up and down each retail organization. Early adopters are realizing demonstrably significant value from their initiatives—double-digit improvements in margins, same-store and ecommerce revenue, inventory positions and sell-through, and core marketing metrics. A huge opportunity awaits.

So how do you see your retail business adopting advanced analytics like AI and machine learning? I encourage you to read IDC’s report in detail, as it provides valuable insights to help you invest in—and apply—new kinds of analytics that will be essential to profitable growth.

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Joerg Koesters

About Joerg Koesters

Joerg Koesters is the Head of Retail Marketing and Communication at SAP. He is a Technology Marketing executive with 20 years of experience in Marketing, Sales and Consulting, Joerg has deep knowledge in retail and consumer products having worked both in the industry and in the technology sector.

Diving Deep Into Digital Experiences

Kai Goerlich

 

Google Cardboard VR goggles cost US$8
By 2019, immersive solutions
will be adopted in 20% of enterprise businesses
By 2025, the market for immersive hardware and software technology could be $182 billion
In 2017, Lowe’s launched
Holoroom How To VR DIY clinics

From Dipping a Toe to Fully Immersed

The first wave of virtual reality (VR) and augmented reality (AR) is here,

using smartphones, glasses, and goggles to place us in the middle of 360-degree digital environments or overlay digital artifacts on the physical world. Prototypes, pilot projects, and first movers have already emerged:

  • Guiding warehouse pickers, cargo loaders, and truck drivers with AR
  • Overlaying constantly updated blueprints, measurements, and other construction data on building sites in real time with AR
  • Building 3D machine prototypes in VR for virtual testing and maintenance planning
  • Exhibiting new appliances and fixtures in a VR mockup of the customer’s home
  • Teaching medicine with AR tools that overlay diagnostics and instructions on patients’ bodies

A Vast Sea of Possibilities

Immersive technologies leapt forward in spring 2017 with the introduction of three new products:

  • Nvidia’s Project Holodeck, which generates shared photorealistic VR environments
  • A cloud-based platform for industrial AR from Lenovo New Vision AR and Wikitude
  • A workspace and headset from Meta that lets users use their hands to interact with AR artifacts

The Truly Digital Workplace

New immersive experiences won’t simply be new tools for existing tasks. They promise to create entirely new ways of working.

VR avatars that look and sound like their owners will soon be able to meet in realistic virtual meeting spaces without requiring users to leave their desks or even their homes. With enough computing power and a smart-enough AI, we could soon let VR avatars act as our proxies while we’re doing other things—and (theoretically) do it well enough that no one can tell the difference.

We’ll need a way to signal when an avatar is being human driven in real time, when it’s on autopilot, and when it’s owned by a bot.


What Is Immersion?

A completely immersive experience that’s indistinguishable from real life is impossible given the current constraints on power, throughput, and battery life.

To make current digital experiences more convincing, we’ll need interactive sensors in objects and materials, more powerful infrastructure to create realistic images, and smarter interfaces to interpret and interact with data.

When everything around us is intelligent and interactive, every environment could have an AR overlay or VR presence, with use cases ranging from gaming to firefighting.

We could see a backlash touting the superiority of the unmediated physical world—but multisensory immersive experiences that we can navigate in 360-degree space will change what we consider “real.”


Download the executive brief Diving Deep Into Digital Experiences.


Read the full article Swimming in the Immersive Digital Experience.

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Kai Goerlich

About Kai Goerlich

Kai Goerlich is the Chief Futurist at SAP Innovation Center network His specialties include Competitive Intelligence, Market Intelligence, Corporate Foresight, Trends, Futuring and ideation. Share your thoughts with Kai on Twitter @KaiGoe.heif Futu

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Jenny Dearborn: Soft Skills Will Be Essential for Future Careers

Jenny Dearborn

The Japanese culture has always shown a special reverence for its elderly. That’s why, in 1963, the government began a tradition of giving a silver dish, called a sakazuki, to each citizen who reached the age of 100 by Keiro no Hi (Respect for the Elders Day), which is celebrated on the third Monday of each September.

That first year, there were 153 recipients, according to The Japan Times. By 2016, the number had swelled to more than 65,000, and the dishes cost the already cash-strapped government more than US$2 million, Business Insider reports. Despite the country’s continued devotion to its seniors, the article continues, the government felt obliged to downgrade the finish of the dishes to silver plating to save money.

What tends to get lost in discussions about automation taking over jobs and Millennials taking over the workplace is the impact of increased longevity. In the future, people will need to be in the workforce much longer than they are today. Half of the people born in Japan today, for example, are predicted to live to 107, making their ancestors seem fragile, according to Lynda Gratton and Andrew Scott, professors at the London Business School and authors of The 100-Year Life: Living and Working in an Age of Longevity.

The End of the Three-Stage Career

Assuming that advances in healthcare continue, future generations in wealthier societies could be looking at careers lasting 65 or more years, rather than at the roughly 40 years for today’s 70-year-olds, write Gratton and Scott. The three-stage model of employment that dominates the global economy today—education, work, and retirement—will be blown out of the water.

It will be replaced by a new model in which people continually learn new skills and shed old ones. Consider that today’s most in-demand occupations and specialties did not exist 10 years ago, according to The Future of Jobs, a report from the World Economic Forum.

And the pace of change is only going to accelerate. Sixty-five percent of children entering primary school today will ultimately end up working in jobs that don’t yet exist, the report notes.

Our current educational systems are not equipped to cope with this degree of change. For example, roughly half of the subject knowledge acquired during the first year of a four-year technical degree, such as computer science, is outdated by the time students graduate, the report continues.

Skills That Transcend the Job Market

Instead of treating post-secondary education as a jumping-off point for a specific career path, we may see a switch to a shorter school career that focuses more on skills that transcend a constantly shifting job market. Today, some of these skills, such as complex problem solving and critical thinking, are taught mostly in the context of broader disciplines, such as math or the humanities.

Other competencies that will become critically important in the future are currently treated as if they come naturally or over time with maturity or experience. We receive little, if any, formal training, for example, in creativity and innovation, empathy, emotional intelligence, cross-cultural awareness, persuasion, active listening, and acceptance of change. (No wonder the self-help marketplace continues to thrive!)

The three-stage model of employment that dominates the global economy today—education, work, and retirement—will be blown out of the water.

These skills, which today are heaped together under the dismissive “soft” rubric, are going to harden up to become indispensable. They will become more important, thanks to artificial intelligence and machine learning, which will usher in an era of infinite information, rendering the concept of an expert in most of today’s job disciplines a quaint relic. As our ability to know more than those around us decreases, our need to be able to collaborate well (with both humans and machines) will help define our success in the future.

Individuals and organizations alike will have to learn how to become more flexible and ready to give up set-in-stone ideas about how businesses and careers are supposed to operate. Given the rapid advances in knowledge and attendant skills that the future will bring, we must be willing to say, repeatedly, that whatever we’ve learned to that point doesn’t apply anymore.

Careers will become more like life itself: a series of unpredictable, fluid experiences rather than a tightly scripted narrative. We need to think about the way forward and be more willing to accept change at the individual and organizational levels.

Rethink Employee Training

One way that organizations can help employees manage this shift is by rethinking training. Today, overworked and overwhelmed employees devote just 1% of their workweek to learning, according to a study by consultancy Bersin by Deloitte. Meanwhile, top business leaders such as Bill Gates and Nike founder Phil Knight spend about five hours a week reading, thinking, and experimenting, according to an article in Inc. magazine.

If organizations are to avoid high turnover costs in a world where the need for new skills is shifting constantly, they must give employees more time for learning and make training courses more relevant to the future needs of organizations and individuals, not just to their current needs.

The amount of learning required will vary by role. That’s why at SAP we’re creating learning personas for specific roles in the company and determining how many hours will be required for each. We’re also dividing up training hours into distinct topics:

  • Law: 10%. This is training required by law, such as training to prevent sexual harassment in the workplace.

  • Company: 20%. Company training includes internal policies and systems.

  • Business: 30%. Employees learn skills required for their current roles in their business units.

  • Future: 40%. This is internal, external, and employee-driven training to close critical skill gaps for jobs of the future.

In the future, we will always need to learn, grow, read, seek out knowledge and truth, and better ourselves with new skills. With the support of employers and educators, we will transform our hardwired fear of change into excitement for change.

We must be able to say to ourselves, “I’m excited to learn something new that I never thought I could do or that never seemed possible before.” D!

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