You’re probably familiar with alchemy, a seemingly magical process of transformation, creation, or combination. It’s the process of taking something and turning it into something extraordinary. You might be able to guess, then, that digital alchemy is the process of creating something extraordinary through digital transformation.
Recently I had the privilege of interviewing Peter Maier, SAP general manager for energy & natural resources. Peter is passionate about digital transformation and its ability to profoundly change industry.
Following is an excerpt from our conversation; for more, read the full interview.
Malaya: A recent global study, conducted in conjunction with Oxford Economics, has revealed some key digital transformation traits in terms of leadership. These included investing in next-generation technology, prioritizing talent, seeing digital transformation as truly transformational, and focusing on the customer first. What leadership qualities do you believe really embody the delivery of digital transformation?
Peter: It is important to understand that digital transformation is not a purely IT-related topic; this is confirmed in every conversation I have with customers. If customers already have that mindset, then technology is no longer the limiting factor. This is very different from the past, when we all had great ideas but were hindered by the available technology. That’s not the case anymore. The biggest challenge today is having great ideas and the creativity to realize them.
In energy and natural resources (ENR), I see two main drivers for digital transformation. The top line is the driving force where products and services can be differentiators, like in utilities or chemicals. On the oil and gas side, as well as in mill and mining, efficient and safe asset operations and maintenance is a long lever for a successful business: How can I use digital technology to optimize asset operation? How can I safely and efficiently deploy and manage my workforce?
Digital transformation is not a technology conversation. It is a business conversation that should be led and owned by the head of the company. The impact of digital transformation on the enterprise needs sponsorship and engagement from the top if a “leap of faith” is required to get to the next stage.
Malaya: What leadership qualities would you recommend that we need to develop or enhance to complement our customer?
Peter: We are living in very exciting times, but my philosophy is simple: We first need to listen. We have one mouth and two ears for a good reason. I have made it a habit to first establish executive engagement and alignment with my customer. What really is top of mind in the business? Where are the challenges and opportunities?
But it doesn’t stop there. I have experienced great executive alignment early in the engagement, but then found the engagement lacking during the actual execution. I also found the opposite: great execution with specific business units, but no alignment on the executive level. Another point I would make is that we need to understand that our customers are expecting continuous, reliable business outcomes. Consistently we get questions from our customers’ boards: What will we achieve with digital transformation? Business outcomes matter all the way – and that makes a big difference compared to the past when digital technology was firmly in the IT domain.
Based on executive engagement, the next step is getting a plan in place that is tuned to delivering continuous value. Here we have the opportunity to show our strength by bringing our solutions together to address our customers’ pain points and business priorities. What does the customer really need? How to get there? What is the value and cost? How long does it take? Who else has done it? How can you help mitigate the project risk? That’s it. Very simple.
Malaya: From an ENR perspective, we are able to articulate and impart our visions for the industry through roadmaps and strategy. How are we positioned to be the partner of choice when it comes to innovation with our customers?
Peter: The key point in the ENR space is that we lead again with the business process and make technology relevant in this context. We need to lead the business process innovation: What will industry processes look like three to five years from now? We have to renew our focus on this business process leadership. We need to lead with industry processes. Then we need to make technologies like blockchain, machine learning, or predictive analytics relevant for the business of our customers.
Customers are asking questions like: “How will blockchain make me more efficient?” “How will machine learning change my customer engagement process?” “How does predictive maintenance optimize asset operations?” This shows how important it is to make technology relevant in the industry context. Based on a lot of customer conversations, they are absolutely keen on innovating. But customers also realize that innovative technologies require a stable core which runs 24/7 and runs the business transactions behind everything.
Recently I have discussed with customers how we manage spectators in a sports stadium and how this might be applicable to personnel in a mine. This transfer of ideas and practices across industry boundaries is a big innovation driver for our customers.
Malaya: You are talking to many customers. Are there typical innovation and transformation paths you discuss or recommend?
Peter: There is no one-size-fits-all approach. I recommend a transformation journey along milestones that deliver tangible and early benefit to the business. That may be workforce management topics, resolving supply chain issues, or optimizing asset management. Short-term success motivates tackling more substantial projects like re-imagining core business processes that may require moving to a new digital core.
We also have customers who start their digital transformation with the digital core because the current processes are based on best practices from the ’70s and ’80s. Those customers have the great opportunity to leapfrog a few technology generations by adopting a digital core.
The third focus area for our customers are specific innovations that give them the competitive edge. Here we bring the cloud platform to compose new solutions and services that build on the microservices provided by our line of business solutions and the digital core. This is a big accelerator, because you don’t start from scratch, but rather build on a powerful foundation.
To read the full interview, click here.
Learn how to bring new technologies and services together to power digital transformation by downloading The IoT Imperative for Energy and Natural Resource Companies. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?