How do you change the status quo in your company? People are so busy doing the work in the business they are running, at the same time you want them to think out of the box
“Companies must have very different business models, if they want to survive in the future.”
This was one of the key messages Dr Chakib Bouhdary, global digital transformation officer at SAP, brought to a recent meeting with New Zealand CIOs.
Bouhdary was in Auckland to launch the SAP New Zealand’s Executive Digital Exchange (EDX) – a global community of digital innovation leaders.
The EDX consists of senior digital leaders committed to sharing information and ideas with their peers, in an open and confidential forum.
At the first EDX meeting in New Zealand, business technology leaders who attended came from a range of sectors, including dairy, local government, consumer goods and agriculture.
The EDX forum aims to create a community of SAP customers who will meet and discuss, face to face or online, about how they can remain competitive in the digital era, he states.
He says the first EDX forum was launched in Paris last year and this was followed by Russia and South Africa early this year. New Zealand joined the forum in March, ahead of Australia.
He shares some of the common themes raised by the New Zealand CIOs and those of their counterparts in EDX forums across the globe.
He says discussions with executive peers cover a range of areas.
“How do you grow your business by changing completely the products, services and the customer experience? Everybody is trying to debate how to do that,” says Bouhdary.
“How do you change the status quo in your company? People are so busy doing the work in the business they are running, at the same time you want them to think out of the box.
“So how do you run [the business] and innovate?”
"At the Auckland forum, one of the things we talked about is that digital is a journey, not a destination," says Bouhdary.
“You are never going to finish, you have to start somewhere. Your starting point determines a lot of what you can do and cannot do.
Companies with a very clean set of data can move faster, he states. “But if you have a legacy of a messy architecture, you have to clean up your mess.
“You really need to get into simplification [of systems], because you have to release that cost to focus on innovation,” he says.
This is a journey where you do not buy products anymore, you are buying partners.
The epicentre of digital transformation
There are 10 criteria that are the absolute essence of innovation, he says.
- Industries are blurring
- Data is a new enterprise asset
- Natural language will transform how we interact and consume technology
- Customer and consumer experience is the epicentre of digital transformation
- People and machine collaboration drives step change in productivity
- The Internet of Things and connectivity digitalise every value chain
- Cloud will become the main technology delivery mechanism
- Edge computing accelerates innovation and maintains data integrity
- Next-gen apps are smarter, dynamic and loosely connected
- Open architecture accelerates innovation and lowers cost.
He shares some of the questions digital leaders and their executive peers need to answer, based on the insights shared by the EDX participants in Auckland and across the globe.
“How do you understand your customer, how do you better market to them?
“How do you integrate your supply chain with the Internet of Things and blockchain?”
“What does work look like two or three years from now, when you have natural language entering the workplace through Alexa (Amazon’s virtual personal assistant). How does Alexa talk to SAP?
“What does the workforce of the future look like? How are we going to find some of the roles that don't exist today?”
“How do you really focus on CX, so you will move people from the back office to support the customer experience?
What are the implications of smart machines to people, culture, management and planning?”
Pieter Bakker, CIO at Frucor, is a founding member of the EDX in New Zealand.
Bakker says the discussions initiated by EDX is useful as Frucor has embarked on a multi-year digital journey.
"We are now on the second year,” says Bakker. “We are looking at internal ways of working and using the new digital environment in a different way, as opposed to the email culture that exists in most organisations.”
"It is also around digital ways of working with our consumers and customers, driven by the digital platform and digital ways of working,” he says.
“How do we now stretch beyond that, how do we reset the next three years for us beyond what we have envisioned, beyond our current view?”
Solving the next-gen business problems
Bouhdary, meanwhile, says he also discussed with the New Zealand CIOs the digital transformation at SAP.
In 2010, as chief strategy officer, Bouhdary led the renewal of SAP’s strategy, focusing on how it can innovate around digital, cloud, mobility and big data.
We changed the business model, the culture, focused on millennials and invested in innovation centres, he says.
We changed the business model, the culture, focused on millennials and invested in innovation centres
"We decided we are a company that solves business problems, and we decided to solve the next-generation business problems.
"But to do that we have to completely imagine what is the future, and the future is smart apps," he says.
The SAP business model transformation that resulted doubled the company’s revenue and profit in five years.
SAP made significant returns on investments in emerging markets and in strategic acquisitions, including Hybris, Sybase, SuccessFactors and Ariba.
“We had to change some critical elements of our business model,” he says.
We looked at how cloud will disrupt us, he says.
“We pulled pieces out of ERP and we put them in the cloud, HR, procurement. We dismantled our own solutions to be more agile and innovative.
“We are becoming more than an application company, we are becoming a platform company,” he states.
“We are making it simple so companies do not have to buy machine learning here, analytics there. A lot of these challenges forced SAP to change everything. Now it is all in one platform.”
Bouhdary says organisations undergoing digital transformation need to look at three critical areas.
First is they need to really understand the digital capabilities and what is possible today and tomorrow, he states.
Second, people need to reimagine the different ways to step change, not just incremental, productivity growth or new revenue growth for the company.
“You have to think big, because if not, you will just continue business as usual.”
"Third, you really need to start identifying very pragmatic steps in execution and some governance on how are you are going to transform your business,” says Bouhdary.
“This is a journey where you do not buy products anymore, you are buying partners... It can be between you and the technology company, between you and the suppliers.
“You are not looking at a project that starts here and finishes there.
“This is a completely new philosophy of how you innovate,” he states.
“You are never fully done, because every time you think you finish, and as you have more and more data and intelligence, you improve your decisions.
"Then suddenly, there is a new solution.”
“We live in a world now where there is ongoing innovation and change,” he concludes.
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