Live Business: The Digitization of Everything

The fourth industrial revolution is here. Revolutions are fast, disruptive, and destructive. And there is no going back.

Since the beginning of the 21st century, we have been experiencing a digital transformation that has affected all aspects of society and the economy – and it has only just begun, say experts.

The world has already witnessed three industrial revolutions, which brought disruptive leaps in industrial processes, resulting in significantly higher productivity. The first revolution improved efficiency through the use of hydropower, increased use of steam power, and the development of machine tools. The second brought electricity and mass production through the use of assembly lines. And the third and most recent revolution further accelerated automation by using electronics and IT.

The fourth industrial revolution is already on its way. This revolution is all about hyperconnectivity: the exponential growth in the interconnectedness of people, organizations, and objects. The Economist Intelligence Unit put it succinctly when it stated, “More than a technological trend, hyperconnectivity is a cultural condition to which businesses have no choice but to adapt.”1

We see it in the growth of social networks that connect hundreds of millions of people together. Business networks have also prospered, connecting their supplier, customer, and payment systems to seamlessly engage in commerce.

And now we are seeing the beginning of mass adoption of connected sensors and devices to the Internet, otherwise known as the Internet of Things (IoT). The IoT will connect our existing people and business networks to everything else, to become, in essence, the very fabric that supports the new digital economy. When you couple these changes with improvements in the network infrastructure, Big Data analytics, and smart applications, which are all connected by the cloud, you have entered the era of true hyperconnectivity.

Although some areas of the economy will see fast and disruptive changes, others will change slowly and steadily at a more evolutionary pace. In either case, there is no going back. The Internet is combining with intelligent machines, systems production, and processes to form a sophisticated network. The world is turning into a huge information system.

Three Drivers of the Digital EconomyHere are some of the key characteristics of this information system:

Cyber-Physical Systems and Digital Ecosystems

IT systems today are already at the heart of the enterprise. In this new digital economy, those systems will be far more connected to all subsystems, processes, internal and external objects, and to supplier and customer networks. Complexity will therefore be much higher and will demand even more sophisticated technology offerings. IT systems will be controlled in real time. Enterprise systems of the future will have clearly defined interfaces that demand future proofing to ensure that they remain flexible. Using these technologies will make it possible to flexibly replace machines, processes, and even people along the value chain. These technologies enable highly efficient enterprises in which processes can be changed on short notice, and downtime can be minimized.

Smart Agents and Machines

sap_core_narrative_customer_image_1In the last industrial revolution, robots displaced many human workers, mostly through the automation of repetitive tasks. In the digital economy, robots will become intelligent and thus able to adapt, communicate, and interact. This adaptation will enable further productivity leaps for companies, having a profound change on cost structures, the skills landscape, and workflows. In the digital economy, robots and humans will work hand-in-hand, so to speak, on interlinking tasks by using smart sensor, human-to-machine interfaces. The use of robots is widening to include various functions, such as production, logistics, and office management (for example, to distribute documents). These robots can be controlled remotely. If a problem occurs, an employee will receive a message on a mobile device, with a link to a Webcam, so the employee can view the problem and give instructions to let production continue until the workers return the next day. Thus, the enterprise is operating 24 hours a day, whereas workers are there only during the day. In the context of manufacturing, this could translate to no more night shifts and skyrocketing productivity.

Big Data

Data is often referred to as the raw material of the 21st century. Indeed, the amount of data available to businesses is expected to double every 1.2 years.2 An enterprise of the future will produce a huge amount of data that needs to be saved, processed, and analyzed. Innovative methods to handle Big Data and to tap the potential of cloud computing will create new ways to leverage information. The ability of systems not only to employ predictive analytics but also to evolve to prescriptive analytics will be crucial in this step. While at the beginning of the 21st century, connectivity was a feature of only the digital world, in the new digital economy, the digital and real worlds are connected. Machines, workpieces, systems, and human beings will constantly exchange digital information. This means that physical things will be linked to their data footprint. Production with interconnected machines becomes smooth: one machine, as well as the conveyor or the logistic supply robot, is immediately informed when a part is produced in another machine. Machines automatically adapt to the production steps, coordinating almost as in a ballet, to automatically adjust the production unit to the series to be manufactured. The product itself may communicate when it is produced – through the IoT – and ask to be picked up, or send a notification to the ordering system to say, “I am finished and ready to be delivered.” Manufacturing plants are also interconnected to smoothly adjust production schedules among them and optimize capacity.

sap_core_narrative_report_digitize_every_section 04Rio Tinto’s Autonomous Trucks

Rio Tinto, a global mining company, is taking advantage of the increasing independence and adaptability of machines. The company has more than 60 autonomously operating dump trucks (out of a total fleet of over 300) in its Australian iron ore operations.3 The trucks operate at three mines, with the world’s first fully autonomous mine pit at the Yandicoogina mine in Australia. Rio Tinto controls the fleet from a remote operating center in Perth, 1,500 kilometers (930 miles) away. The trucks carry 290 metric tons of ore/rock with every trip.

There are no remote controllers with joysticks here. These are fully autonomous trucks that are connected to each other, to the control system, and to other machines in the mines, such as excavators, through the Internet. The trucks react to the motion of other pieces of equipment and adjust to the constantly changing layout of the mine, as ore and waste are removed.

Currently, the trucks are retrofitted Komatsu 930 models, which can dump cargo only in one direction, away from the driver’s cabin. Future improvements in IoT technology should allow the removal of driver cabins so that the trucks will be able to dump in both directions, reducing the need to turn and reverse these machines, which move very slowly. In 2013, Rio Tinto sold 244 million metric tons of iron ore from Australia and the trucks executed 800,000 truck moves. The elimination of the cab will reduce the moves to 400,000, producing huge savings in time and fuel costs.

To date, the interaction between the trucks and the Komatsu excavators is “semi-connected,” with the excavators still under manual control. The excavators’ buckets, which hold 60 to 70 tons of ore/rock, have sensors that communicate with the trucks. Excavator operators maneuver the buckets above the locations where the trucks need to be stationed. The sensors in the buckets communicate with the trucks and the trucks position themselves under the excavators. Eventually, the excavators are likely to become autonomous, too.

easyJet Builds Customer Intimacy

On November 10, 2015, the 20th birthday of the British airline easyJet, the company dispatched an e-mail to the millions of passengers who had flown with it during that time.4 Not so remarkable, you might think. What company wouldn’t trumpet 20 years of profitable existence?

But this was no chest-thumping message. Instead of highlighting the fact that the low-cost airline had survived and prospered during two decades of turbulence in aviation, the airline chose to celebrate its passengers instead. “Hi, Margaret,” it said to one customer. “Remember your first ever trip? It was September 26, 2007, when you left Glasgow behind and stepped onto the plane to Berlin. And you’ve come so far – 26,251 km to be precise. That’s more than halfway around the world! All in all, you’ve been on 12 adventures with us, spanning four different countries.”

As an example of the effective application of consumer-facing, digital-based networking, easyJet’s communication could hardly be made better. The airline mined volumes of accumulated data to launch a dialogue with its passengers that will surely, in the long run, serve to engage them more deeply. For good measure, easyJet dangled a carrot: “You’ve been to London with us, why not try Milan?”

The End of the Knowledge EconomyIn the examples above, we can see that hyperconnectivity is creating a more intelligent workplace that enables companies to devise new and better products and services. In concrete terms, all of this will happen because the surplus of data-rich devices will do much of the thinking on behalf of increasingly skilled workforces that can digest and interpret the data to the company’s benefit.

If we look at these and many other examples of how the digital economy is gathering steam, we see a pattern emerging: hyperconnectivity is driving down the cost of knowledge work. This is a profound change for businesses in every sector. Hyperconnectivity is part of new era in which the traditional rules of Peter Drucker’s knowledge economy are being replaced by the new thinking around the digital economy. Instead of the traditional approaches of gathering, processing, and moving data around while spending time building reports to be passed onto other parts of the organization, the digital economy emphasizes predictive, scenario, and prognosis-based decision making, all delivered by virtual teams that are assembled on an as-needed basis.sap_core_narrative_report_evrythng_grfx-01

The Old Model: Business as a Machine

So if knowledge work, the traditional foundation of the modern business, is becoming a commodity that can be delivered at ever-decreasing costs, what does that mean for the future of business?

In the knowledge economy, the business was considered a machine. A machine typically has the following characteristics:

  • A driver or operator controls it
  • It requires maintenance; it gets fixed when broken
  • It works in the same way its entire life; eventually things change; the machine wears down, and a new one is built or bought

Companies tend to be similar. A company performs a certain function, so it’s designed and built to perform that function. This works well in a stable environment. But over time, things change. The company grows. New systems are needed. Demand changes. Customers want different products and services. So we need to redesign and rebuild the machine to serve the new functions.

sap_core_narrative_customer_image_2This kind of rebuilding goes by many names, including reorganization, reengineering, right-sizing, flattening, and so on. The problem with this kind of thinking is that the nature of a machine is to remain static, whereas the nature of a company is to grow. This conflict causes all kinds of problems, because you have to constantly redesign and rebuild the company while operating it.

Ironically, the process for improving efficiency is often inefficient.
And the faster things change, the more of a problem this becomes, because companies are not machines; they are complex, dynamic, growing systems. After all, companies are really just groups of people who have banded together to achieve some kind of purpose.

Although a machine does whatever it was designed to do, organisms control themselves. An organism’s purpose does not come from an outside designer or controller but from within. An organism strives over time to realize its goals in the world. As conditions in the environment change, an organism responds by adjusting its behavior to improve its performance. In other words, it learns.

For many years, the machine view has prevailed, and many companies are designed as information-processing and production machines. But information processing is not learning. Production is not learning. Learning is a creative process, not a mechanical one.

Inherent in the mechanical view is the idea that all knowledge is explicit and can be represented in manuals, documentation, and quantitative
metrics. This is a behaviorist concept that harkens back to
Frederick Taylor, the father of scientific management, a theory of management that was based on measuring and analyzing work with the idea of reorganizing it to make it more efficient.5 The focus in scientific management is on defining and measuring work in the form of words, charts, and numbers. In other words, what can be seen and recorded is the only thing
that matters.

Hyperconnectivity is an assault on stable environments that have been the foundation of growth in the knowledge economy. The pace of change in the business world is accelerating to unprecedented speeds. For example, a retailer can engage with customers in the moment in a personalized one-to-one online relationship that is immediately known to a sales associate who helps the customer in a brick and mortar store. In another instance, employees build scenarios for the latest marketing campaigns that draw on real-time company data intermingled with live social network feeds. The new reality is that data can come from anywhere at any time in the new hyperconnected enterprise. The modern business needs to exchange data with its environment at unheard-of speeds.

Closed Versus Open Systems

sap_core_narrative_customer_image_3Most natural systems are open systems. An open system is simply a system that exchanges information with its environment. For example, you breathe in air, which provides your cells with oxygen, and you exhale carbon dioxide. You drink water and eat food to survive and you expel what you don’t need. Companies are open systems, too, because they exchange information with customers and suppliers.

A closed system is self-contained and isolated from its external environment. Most machines are designed as closed systems, with a hard shell to protect their delicate insides from the surrounding environment. For example, a watch has a hard case that protects its inner workings from the outside world. A watch can operate efficiently as long as that case is not violated. A factory works in a similar way. Like the inner workings of a watch, its internal processes are isolated from the outside world.

Because it is isolated from its environment, a closed system is easier to control. Performance is easier to measure because the environment inside the shell or system boundary is stable.

In contrast, an open system is continually exchanging energy with its environment, taking in information and adjusting itself based on feedback. This constant flux makes open systems more difficult to measure and control.

Auto manufacturers in the United States have traditionally focused on building factories to efficiently produce cars in large quantities. These factories are closed systems: as long as they get a constant volume of input, they produce a constant volume of cars. But the auto industry as a whole is an open system, subject to factors such as customer demand, which companies cannot control. The auto industry has outsourced the “open” part of their system to networks of dealers. The result is that auto makers continue to push cars out of their factories, even when demand drops. When this happens, the market becomes glutted with new cars and prices fall. Dealers can’t sell the cars, and manufacturers are forced to offer incentives and sell cars at a loss just so that they can keep the factories running.

From Machine to Adaptive SystemsAdaptive systems are a special class of open systems, characterized by dynamic networks of agents interacting with each other and their environments. Adaptive systems are continuously evolving and shifting. Examples of complex adaptive systems include ant and bee colonies, the stock market, and biological ecosystems, as well as human organizations such as political parties, companies, and cities. One trait of adaptive systems is that the behavior of the whole cannot be predicted by analyzing its parts in isolation.

So what happens if we rethink the modern company – if we stop thinking of it as a machine and start thinking of it as an adaptive system, one that operates within a larger complex adaptive system? What happens if we think of a company less like a machine and more like an organism? An organism that uses its senses, brain, and nervous system to tap into an ever-changing array of stimuli to instantly decide on the best course of action. Before we do this, let’s look at how a closed system manifests itself in the corporate world.

The Machine Fails

Historically, we have designed companies like machines, by division. We constructed the organizational chart to divide the big chunks of work and separate them from each other – finance, sales, and operations. We designed the workflows that process inputs into outputs: raw materials into products; prospects into customers; complaints into resolutions.

As we design this kind of company – the divided company – we need to separate functions. This results in people not always having a sense of the larger thing they are working on. They get very good at one of the tasks, but lose touch with the bigger picture. They become disconnected from customers and the larger purpose of the organization. We have to design rigid policies and procedures so that people will function efficiently and won’t interfere with each other’s work.

The problem comes with scale. As the number of employees grows, the profit per employee shrinks. It’s a game of diminishing returns. Efficiencies of scale are balanced by the burdens of bureaucracy. Divisions become silos, disconnected from each other. Overhead costs increase with size. Eventually, the company reaches a point at which the costs of control exceed the benefits of further growth, or the company becomes too internally focused and loses touch with the market.

Create a Live BusinessA connected company is a complex, adaptive system that functions more like an organism than a machine. To design connected companies, we must think of the company as a complex set of connections and potential connections: a distributed organism with brains, eyes, and ears everywhere, whether they are employees, partners, suppliers, customers, or assets. Design for connection is design for companies that are made out of people. It’s design for agility, robustness, resilience, for productivity, and for longevity. At SAP, we call this a “Live Business.”

Most importantly, a Live Business must be able to respond dynamically to change – to learn and adapt in an uncertain, ambiguous, and constantly evolving environment, continually learning as it goes.

Three Attributes of Live Businesses

What is it about companies that allows them to reimagine the traditional boundaries and value proposition of their industry? What can digital masters teach you about leading a digital transformation in your industry? How will you adapt to the emerging fluidity found in traditional roles?

In short, Live Businesses have three common characteristics:

sap_core_narrative_customer_image_4Seamless

These companies are using digital technology to offer a seamless, in-the-moment experience. Luxury products and services usually differentiate themselves through personalized or concierge-level services. Uber reimagined the luxury car service experience by making its automated process seamless. There is no dispatcher or customer service representative taking your order (and potentially writing it down incorrectly). That’s what people like about the experience – personalization through automation. Digital technology can unlock value through the delivery of seamless experiences, processes, and access to information across the enterprise.

sap_core_narrative_customer_image_5Connected

Seamless experiences can be achieved only when processes and the enterprise are connected to partners, things, people, and customers. Take Airbnb, for example. Bringing together all parties on a common transaction network enables a completely new experience for finding and fulfilling lodging needs. This reimagined process is created in the moment based on the current state of the ecosystem.

sap_core_narrative_customer_image_6Data driven

Digital experiences use sophisticated data analysis and user design to filter through large volumes of information. Rather than presenting all status updates, they show you only what you need to know now. For example, digital devices can sort through your schedule to go beyond just telling you the weather forecast for a particular day by also notifying you if you will need an umbrella when you travel to your next meeting.

So delivering seamless, connected, and data-driven experiences are the hallmark of leaders in the digital economy? That’s all well and good, but what does this mean for C-level executives (CXOs) who need to be those leaders?

“Then we woke up one day and realized we had to change. If you go to bed tonight as an industrial company, you’re going to wake up a software company…”

Three Dimensions of Live Businesses

As Jeff Immelt says, in the digital economy every company becomes a technology company.6 Technology will become a core corporate competency because it is the way to engage your constituents in the ongoing manner that’s characteristic of a Live Business. By using technology as a foundation for Live Business, companies will be able to reimagine their business across three dimensions:

sap_core_narrative_customer_image_7Reimagine Business Models

Expand beyond traditional industry boundaries. Focus on what your organization offers in the supply chain and what makes sense to outsource. Identify valuable strategic partnerships. Make the leap from an asset-based enterprise to a service- or outcome-based organization, as the ride-sharing service Uber has done. Uber replaced fleets of taxis with an on-demand pool of vehicles owned and maintained by drivers. And it replaced the hit-or-miss model of hailing a cab with a seamless, connected, data-driven model that matches riders with drivers in the moment.

sap_core_narrative_customer_image_8Reimagine Business Processes

Update or eliminate processes that don′t support digitization. Exploit hyperconnectivity, agility, and live access to digital assets to reinvent business processes routinely, not just now and then. For instance, adapt inventory-management and manufacturing processes to keep up with changing customer preferences, and improve collaborations with strategic partners.

Those collaborations are strengthened when companies and partners digitize their assets. Digital assets can sense their environments and communicate autonomously, opening up the door to automatic collaboration processes that seamlessly span companies and their partners, with no human intervention required.

sap_core_narrative_customer_image_9Reimagine Work

Improve existing processes to provide live information for better decision making. Use your digital core to empower employees and reduce the number of steps they must take to complete their work. Give them the best, most advanced tools with the simplest interfaces.

Providing employees with the right information at the right time lets them act in the moments when problems are still sparks, not flames. For example, let’s say a company is running a major sales promotion in Texas, and a live system signals that the campaign will falter and not meet sales targets with the current number of salespeople assigned in a particular area. Understanding the situation in the moment allows the company to evaluate options and then source contingent labor to alleviate this problem, thereby eliminating an issue as it arises as opposed to dealing with root-cause analysis when the campaign fails to hit targets.

Any one of these three areas could be reimagined independently. However, the power to truly recast your business for the digital economy comes from combining all of these elements together to create next-generation digital experiences for your customers, employees, and partners.
The Live Business in Actionsap_core_narrative_report_evrythng_grfx-02aIt is a truism that most companies will change their business models only if a competitor or new entrant changes the rules of the game. The Economist Intelligence Unit’s recent survey of global CxOs found that 60% of respondents are more concerned about their traditional competitors implementing a digital transformation than incumbents.7 Live Businesses deliver business model innovations like:

 

sap_core_narrative_report_evrythng_grfx-04

 

Digitize and share excess capacity and competency to monetize capital expenditures on plant, equipment, and other capital-intensive investments.

To maximize return on engagement, upend traditional metrics, which are used to drive efficiency at scale to minimize cost per unit, and focus instead on agility at speed.

Digitize process and service capacity and functional competencies to optimize utilization and build new revenue streams.

sap_core_narrative_report_evrythng_grfx-02bThe new reality is that any process that can be digitized will be digitized. This ushers in a future in which analytics and transactions will be combined in real time, and on the same platform. The result will be that business processes will never look the same. When you can start from an assumption of “everything’s connected,” the canvas for process design is transformed.

Process digitization eliminates one of the biggest drains on productivity: silos. You can’t fight turf wars over digitized processes that span the entire company. The world will open up beyond the four walls as well, enabling processes that can communicate and deliver autonomic capabilities across corporate boundaries. Some other intriguing ideas are:

 

sap_core_narrative_report_evrythng_grfx-05

sap_core_narrative_report_evrythng_grfx-02cThe future of work in the digital economy will require CxOs, not just chief human resource officers, to manage increasingly dynamic, distributed workforces. As Millennials transition to becoming the main body of the global workforce, organizations will need to adapt to new ways of working. An increase in contingent labor, which is driven by Millennials’ demand to work simultaneously on multiple jobs, will change the employer-employee equation. The employer-of-choice status goes beyond recruitment and retention to fundamentally revolutionize the way people engage. The advent of next-generation digital business processes will require ongoing training and skills development:

sap_core_narrative_report_evrythng_grfx-06Putting It All TogetherNext-generation business processes will not only span multiple business areas to drive efficiency internally or across the business network but they will also connect to devices and enhance the customer experience. For a Live Business to succeed, multiple aspects of the business must deliver coordinated responses to changing customer needs to develop long-term relationships with customers. It isn’t enough to have a digital customer experience – a Live Business connects this digital experience through every facet of the company, from employees to partners to assets, to essentially deliver live processes across the complete enterprise.

Create Frictionless Solutions

Imagine parking your hybrid car in a parking garage in a space equipped with a fast charger. When you return later, you unplug your car, and the display on the charging station shows the amount of electric power you used and the total charge. As you leave your parking space, the payment is automatically processed through the prepaid e-wallet incorporated into your car’s in-dash electronics system.

As you leave the garage, the ramp display shows the parking fee, which the near field communication transmits to your car’s electronics and ultimately displays on your in-dash screen. You approve the purchase, which gets charged to your e-wallet, and you drive off.

When you log in to your bank’s account, your current car electricity usage, the corresponding charge, and a parking charge are automatically assigned to the appropriate category and displayed in your personal finance management tab, which compares your current period usage with historical usage. This is plotted against your monthly budgets to improve tracking. You also have an option to review how your detailed car expenditures compare to those of similar customers.

Since your bank also offers car insurance, you opted in to share your connected car data with your bank at the time you were approved for a car loan from the bank. Your bank monitors your driving habits, usage, average speed, and other relevant telematics data. Based on your car usage, the bank automatically adjusted your premium downward and notified you of the adjustment when you logged into your online bank account.

Your bank also knows that your regular 36,000-mile service is due next month. Given that your bank participates in the business network that connects small businesses and consumers, the bank presents you with a list of bank-approved and highest-rated car mechanics on social media that are close to your location, and gives you an option to contact the business to schedule an appointment. Based on live, predictive analytics, your bank also knows that you will need a loan to finance the service and offers you a short-term, low-interest loan to cover the service expense.

This example illustrates how banks can use digital technology to run simpler and faster, use live data and predictive analytics, and partner with business networks to offer frictionless customer solutions on any device, all while reducing cycle times. By doing so, banks are becoming an integral part of customers’ daily lives.

The business benefits of this scenario are significant: companies will see a higher return on assets; higher customer satisfaction, engagement, and loyalty; higher net promoter score; and new revenue streams.

Redefine Consumers’ Perceptions of Utility and Value

Appliance companies as well as new technology-enabled consumer electronics companies are disrupting the consumer durables segment by adding digital interfaces and sensors to previously analog devices. As a result, they are transforming consumers’ perceptions of utility, value, and control.

Adding digital interfaces makes appliances like washing machines easier to use, while also redefining consumers’ perception of utility and value.

For example, consumers used to clean clothes on the basis of two or three combinations of options – water temperature, fabric type, and cycle time. The consumer also had to determine which combination of the three would deliver the best results, depending on the clothing he or she planned to wash.

Now, consumers choose how to wash their clothes based on desired outcomes – deep clean, sanitize, quick wash, wrinkle free, and so on. The machine’s intelligence calibrates the variables to achieve those outcomes on the consumer’s behalf rather than the other way around.

Companies are also embedding sensors into their appliances. Web-connected sensors detect detergent use and consumption, enabling consumers to reorder detergent and fabric softener automatically as needed and adjusting volumes and package sizes to ongoing consumption and use. What if the connected clothing you buy from Under Armour connects to the washing machine to tell it how dirty it is?

Sensors also monitor water, energy, and detergent use to recommend ways to minimize and optimize energy consumption and waste. They offer options for managing appliances from mobile devices, as well as coordinating appliance use with other devices based on options, for example, to run during off-peak hours.

More practically, sensors are now also monitoring the “health” of the appliances, giving appliance makers the capacity to monitor age and wear and tear, predict maintenance, improve forecasting for replacement parts, plan for services delivery, and minimize the risks of warranty claims and other potential product-related liabilities.

Incremental investments in digital technologies enable:

  • Digital interaction with other appliances and things through standards-based platforms
  • Previously impossible avenues for consumer engagement
  • Live forecasting and planning based on actual demand from within the home
  • Low obsolescence and write-downs
  • Significantly reduced service cost and liability risk

How You Can Become a Live Business

We stated earlier that a Live Business is akin to a distributed organism with brains, eyes, and ears everywhere. In the modern enterprise, they are employees, suppliers, partners, customers, or assets. These connection points map directly to key functional areas in the organization. Historically, these areas have been serviced by different enterprise solutions that interact with core systems but, more often than not, run as silos – reflecting the machine-like enterprise characteristics common in the knowledge economy. We see different siloed solutions to handle our employees, partners/supply chain, assets, and customers. These four areas are set for disruption in the digital economy. In a world where everything is connected, a Live Business breaks down these silos, creating visibility across the enterprise that is now within our grasp.

This opens up an intriguing question: What does the enterprise architecture, which seamlessly connects these systems to deliver success in the digital economy, look like? Connecting your employee and customer solutions systems through a traditional back-end would limit the delivery of the groundbreaking scenarios we’ve outlined above.

What’s necessary is a platform for digital business that not only has the scale to run your core processes but is also hyperconnected-aware to allow it to act as the hub that links any part of your business processes together to enable a fluid, nimble, real-time digital business – a true Live Business.

Digital Transformation Is Not a Piecemeal Project

As long as digital transformation is carried out only at the front end, it will not provide a reliable basis for building a competitive advantage or withstand the rising competitive pressure.

The four areas of disruption will be subject to ever-changing influences that will place continuing stress on your core business. A Live Business is one that is based on a framework that can help you develop, manage, and execute your digital transformation strategy. Linking the quartet to a digital business foundation, or a digital core, presents us with a means to understand, embrace, and deliver on the promise of digital transformation.

The Digital Business FrameworkSAP brings together the four fundamental areas of disruption that are central to the digital economy. By connecting them to a reimagined digital core, SAP Business Suite 4 SAP HANA (SAP S/4HANA), you can gain a platform for future business innovation. The digital core can act as the hub that links any part of your business process together to create a fluid, nimble, live digital business that adapts to an ever-changing environment, enabling you to lead in the digital economy.

Make a Choice

The digital economy will change even more in the next five years than it has in its first five. It will have more users (especially in developing markets), more mobile users, more users using various devices throughout the day, coupled with massive increases in devices autonomously connected to the Internet.

Businesses in particular need to make a choice. They can rise to the challenge of a new hyperconnected global marketplace and benefit from the expanded capabilities and higher growth rates that digital masters are already achieving. The alternative is to follow in the footsteps of such industries as music and publishing, which held on to outdated business models for too long and are now dealing with competitive environments that have been reshaped around them.

For those willing to think big, embrace change, move quickly, and organize differently, there are countless opportunities to reap the rewards of the digital economy in industries ranging from healthcare to retail and consumer goods.

By embracing the choice to be a Live Business, organizations will be able to respond dynamically – to learn and adapt in an uncertain, ambiguous, and constantly evolving environment.

Dinesh Sharma is Vice President, Digital Economy at SAP.
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  6. Larry Dignan, “GE’s Immelt on Software Strategy: ‘Why Not Us?’“ ZDNet, October 6, 2015, http://www.zdnet.com/article/ge-immelt-on-software-strategy-why-not-us/
  7. Hyperconnected Organisations: How Companies are Adapting to Hyperconnectivity (The Economist Intelligence Unit, 2015), http://www.economistinsights.com/technology-innovation/analysis/hyperconnected-organisations
  8. David Trites, “How Under Armour’s Digital Transformation Will Improve Your Health,” Digitalist Magazine, February 17, 2016, http://www.digitalistmag.com/customer-experience/2016/02/17/how-under-armours-digital-transformation-improve-health-04020474
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  10. SAP Benchmarks

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