How Digital Technology is Transforming Our WorldDigital Disruption
SAP Digital Report 2016
The Journey to Digital Transformation
Whats driving this enormous shift, and how can companies be prepared to take advantage of the vast opportunities that this progression will present? Also, how will businesses prepare for the inevitable risks that come along with change of this magnitude? We hope you will find some of those answers in this eBook.
This report is a unique opportunity to learn about digital transformation from some of the top companies in the technology and consulting industries today. It is produced by SAP, and includes a compilation of some of the latest thought-leadership perspectives from a variety of industry-leading SAP partners, such as Accenture, Capgemini, Cisco, Deloitte, EY, Hewlett Packard Enterprise, IBM, Intel, PwC, T-Systems and Wipro. This eBook is aimed at helping business leaders navigate their organizations through this technical shift in order to become leading digital enterprises.
Theres no doubt the business world is rapidly changing. It is racing at breakneck speed toward a digital economy in all sectors not just high-tech. Several technology and business drivers are propelling this evolution, and the massive digital transformation that is currently underway will affect businesses and consumers right across the globe in multiple sectors and in everyday life.
Digital transformation is the use of new digital technologies to enable major business improvements such as enhancing customer experience, streamlining operations, or creating new business models.Big & Fast Data: The Rise of Insight-Driven Business, Capgemini
Digital FoundationsThe underlying framework enabling digital technology to advance at its current rate. This framework includes Hyperconnectivity and Cloud Computing.
Digital DriversThe technology factors driving the exponential growth in digital computing. These include Data and Analytics, The Internet of Things (IoT), and Cyber Security.
Business DriversThe areas of business directing this digital shift, and the market and competitive forces that traditional businesses are facing in the digitally connected world. These include the areas of Customer Engagement, Business Innovation, Internal Process Changes, IT Transformation, and Digital Ecosystems.
Becoming a Digital EnterpriseHow to transform your business for success in the new digital economy.
In compiling this report, several megatrends emerged that are playing key roles in enabling this major digital shift across the enterprise landscape. These megatrends include the following categories:
The Megatrends Driving Our Digital World
Digital FoundationsEnabling Digital Transformation
Digital Foundations are the underlying technology factors enabling digital transformation to progress at its current rate.
This fundamental digital framework includes: 1 Hyperconnectivity 2 Cloud Computing
Companies are currently only scratching the surface when it comes to realizing the full potential of the networked economy. As digital ecosystems develop and the Internet of Things drives the need for more interconnectedness, businesses in every sector are moving toward hyperconnectivity, where everything and everyone is digitally connected.
Expansion of the already hyperconnected world is possible because of cloud computing. Hyperconnectivity enabled by cloud computing is rapidly accelerating business and product expansion into previously unknown and some still to be discovered areas and capacities.
This fundamental technology framework is a key factor, allowing businesses to realize the possibilities and true benefits of digital transformation across the entire enterprise.
The technology is available, the possibilities are endless, but the adoption is just at the beginning. Bob Parker, IDC Research, on SAP Radio Hyperconnectivity: Reinventing the World Economy
The GDP related to the Internet is worth over $4 trillion US, 3.5x more than the oil and gas industry #SAPDigitalReportShare This
HyperconnectivityEveryone has access to everything
Hyperconnectivity describes the rapid growth of interconnectedness between people, objects, and technology. People have access to more data and information than ever before, and they have the ability to develop and maintain more social and business connections across the globe than at any other time in history.
The Evolution of Hyperconnectivity
Hyperconnectivity has come about thanks to three phases of technological advancement:
1. The Internet enables all computers to connect on a single platform. Without the Internet, we wouldnt be digitally connected.
2. Mobile Technology continues to grow exponentially, which accelerates hyperconnectivity worldwide.
3. The Internet of Things is the next wave of advancement, and will take interconnectedness to an unprecedented level.
The Economist Intelligence Unit: Hyperconnected Organisations
Learn how the issues and opportunities of hyperconnectivity affect the economy in this video from the Economist Intelligence Unit.
Economic Impact of Hyperconnectivity
With mobile technology at an all-time high and the Internet of Things on the upsurge, the economic impact of hyperconnectivity on gross domestic product (GDP) is rising. A recent study using data from the World Economic Forum and other sources concluded that in the G20 countries, the GDP related to the Internet or digital activity is worth approximately $4.2 trillion U.S., roughly 3.5 times more than what the oil
Economist Intelligence Unit, The Economic Impact of Hyperconnectivity
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and gas industry generates. Growth is at about 8% in developed countries; growth in developing countries is escalating even faster, at roughly 18%.Economist Intelligence Unit, The Economic Impact of Hyperconnectivity
The Benefits of Hyperconnected Commerce
For business, hyperconnectivity means quicker, easier global connections and innovation throughout the entire business ecosystem in todays networked economy.
Businesses that successfully incorporate hyperconnectivity into their strategy are more likely to experience the following results:
More effective collaboration across divisions, geographies, and business networks including suppliers and customers
New data-driven organizational approaches
Accelerated business processes
Hyperconnectivity Coming to an Industry Near You
If you think your industry hasnt been touched by hyperconnectivity think again. While some industries, such as retail, publishing, travel, music, and media, have completely transformed with the digital shift already, many industries will likely undergo significant changes in the coming years because of the hyperconnected economy.
Industries such as finance, consumer goods, and others risk becoming irrelevant if they dont take action and start capitalizing on technology advancements, including analyzing and acting on the valuable data that they most likely already possess. Hyperconnectivity allows many industries to expand beyond their traditional boundaries and increases competition from entirely new quarters.
Digital Darwinism: Adapting to Hyperconnectivity
Digital Darwinism has been defined as the era in which technology and society are evolving faster than businesses can naturally adapt. In light of this, its promising that a global survey of 561 executives by The Economist Intelligence Unit revealed that:
Eight out of ten respondents believe hyperconnectivity has been beneficial for their organization
69% of business leaders believe their companies are adapting well to hyperconnectivity
47% say business processes have accelerated as a result
45% say collaboration, both within and between divisions, has improved because of hyperconnectivity
Only one-third say it presents more threats than opportunities
More than a technological trend, hyperconnectivity is a cultural condition to which businesses must adapt #SAPDigitalReport
Todays businesses operate in a digital world one thats faster and more volatile than ever before. Accenture, How high velocity enterprises are changing the game
The Hyperconnected Economy, The Economist Intelligence Unit
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On the flip side, 57% of business leaders say they have experienced notable competitive pressure from digital products launched by established companies in their industry. Despite this growing competitive pressure, only 19% believe they will need to radically restructure their business in response to growing hyperconnectivity.
Digital Disruptors are Redefining the Business Landscape
Those companies that are willing to radically transform and disrupt their industries are seeing substantial benefits. Disruptive technology like in-memory computing and digital accelerators like social, mobile analytics, and cloud computing, can create faster, smarter, more agile, and better connected enterprises.
Companies that are quick to adopt digital technology and become disruptors in their industry are reaping rewards such as:
Significantly reduced costs
Quicker time to market
Increased customer satisfaction
Learn how to become a high velocity enterprise in the Accenture video, Architecting the High Velocity Enterprise
Hyperconnectivity: Next Steps
If your company is lagging behind the digital disruptors in your industry, its time to catch up while you still can. Accenture outlines what companies should do to become a hyperconnected, high velocity enterprise:
Ensure your company has solid Enterprise Resource Planning (ERP) systems in place to manage and automate back-office functions
Incorporate advanced technologies, such as in-memory computing, cloud computing, and Big Data
Extend your digital capabilities with social media, mobility, and analytics
Collaborate with business partners for process and product innovation
Create new industry-specific solutions
Learn more in the Accenture report, How high velocity enterprises are changing the gameHow high velocity enterprises are
changing the game Powered by a new role for their enterprise systems
The (Hyper) Connected CarSAP and BMW show you whats possible with connectivity and the cloud.
An Age-Old Industry Uses New-Age TechnologySee how farming is being transformed by hyperconnectivity.
Making Digital Real With Hyperconnectivity
Cloud Computing Connecting in the Cloud
Cloud computing enables the growth of hyperconnectivity by allowing flexible, scalable connections to multiple applications.
What is The Cloud?
Gartner Research defines cloud computing as a style of computing in which scalable and elastic IT-enabled capabilities are delivered as a service using Internet technologies.1 Simply put, its a flexible way for businesses to access the technology they need, when they need it, without having to own and maintain their own servers and other hardware.1SCN Blog: A Brief History of Cloud Computing, Source: Gartner
Cloud Technology and Services: The Great Equalizers
Cloud technology is a great equalizer for organizations, whether a company is a huge enterprise or a small start-up. Companies of any size can now access technologies that may have been previously unattainable, such as advanced predictive analytics, and jumpstart their ability to disrupt the status quo and radically affect the competitive landscape.
Cloud has the power to fundamentally shift competitive landscapes by providing a new platform for creating and delivering business value.IBM: The Power of Cloud
How the Cloud Works
Deployment models are how cloud infrastructure is supplied to customers. There are basically four types:
1. Private Cloud: This is when the cloud infrastructure is supplied to a single tenant (organization) with multiple end-users. It may exist on- or off-site and may be managed by a third-party vendor
2. Community Cloud: A multi-tenant solution for a group or specific community (industry) that has shared software and/or platform use
3. Public Cloud: Provisioned for open use by anyone or any organization
4. Hybrid Cloud: When the cloud infrastructure is a combination of two or more distinct cloud models
Service Models define the type of capabilities provided to the end-user, and how they are delivered. These generally include three types:
1. Software-as-a-Service (SaaS): Users can access the providers applications, which run in a cloud-based infrastructure
64% of SMBs already use cloud-based software, and 88% expect to in the next 2-3 years. #SAPDigitalReport
Share ThisForbes.com: Roundup of Cloud Computing Forecasts and Market Estimates, Q3 Update, 2015, Source: The small business revolution: trends in SMB cloud adoption.
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2. Platform-as-a-Service (PaaS): Gives consumers the ability to deploy applications onto the cloud infrastructure using programming languages, services, and tools supported by the provider, but the customer does not own, manage, or control the underlying infrastructure
3. Infrastructure-as-a-Service (IaaS): Provides the capability for the consumer to provision access to fundamental computing resources within a cloud-based infrastructure. Many companies choose IaaS to maintain control of their overall infrastructure and automatically deploy servers, processing, networking, and storage capabilitiesSAP HANA Blog: What is the Definition of a Cloud?
Why Adopt the Cloud?
The cloud is changing the structure of the enterprise software market. Individual companies are looking to partner with the strongest cloud providers to secure their long-term growth potential. With cloud solutions, companies arent bound by the limitations of traditional systems, so growth and scalability are limitless for any size or type of business. This is enabling companies to innovate faster, increase revenue, and adopt new technology quicker and easier.
There are some key areas where adopting cloud technologies can reveal clear benefits:
1. Optimizing servers. With the cloud, you only select and pay for the capacity you need when you need it, which can reduce corporate costs
2. Dynamic scalability. The ability to scale up or down quickly is a big financial and competitive advantage for many companies
3. Shorter implementation time. Traditional business implementations or IT requests could take weeks or months. That can be reduced to minutes, or even real-time responses with the cloud
4. Maintenance and reliability. Traditional maintenance and regular updates can be a time consuming and expensive process. These areas are taken care of automatically in the cloud
5. Financial upside. Cloud service economies of scale can reduce operational costs and significantly reduce capital expenditures by eliminating the need for large capital expenditures in servers, hardware, backup systems, and disaster recovery functions, not to mention the space required for on-site servers, and even additional expenses such as power and cooling systems needed for on-premise data servers SAP Digitalist: How to Assess Your Cloud Migration Opportunities
Globally, cloud apps will account for 90% of total mobile data traffic by 2019. #SAPDigitalReport
Share This Forbes.com: Roundup of Cloud Computing Forecasts and Market Estimates, Q3 Update, 2015, Source: Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 20142019.
By 2018, at least half of IT spending will be cloud based. #SAPDigitalReport
Share ThisIDC FutureScape: Worldwide IT Industry 2016 Predictions
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Benefits and Risks of Cloud Computing
As with any major business decision, you need to consider both the benefits and risks. Some issues to consider with cloud computing include:
Security and privacy. Make sure your cloud provider understands and is able to reinforce your privacy, security, and compliance requirements. You should also ask if end-to-end encryption is available
Data location and ownership. In your mutual cloud agreement, ensure you understand who owns the data and where it will be stored geographically
Disaster recovery. Back up and disaster recovery capabilities and plans must be verified before signing an agreement with any cloud provider
Long-term cloud partnership. Understand that this will be a long-term partnership, so ensure you select a stable, reliable provider and sign a mutual agreement to assume the benefits and risks involved
5 Questions Before You Move to the Cloud
If you are thinking about cloud adoption, consider the following key questions first:
By 2018, over 50% of enterprises will create and/or partner with industry cloud platforms to distribute their own innovations or source others solutions.IDC FutureScape: Worldwide IT Industry 2016 Predictions
5QuestionsWill a move to the cloud meet and improve your business needs? If so, specify how.
Does the business need to meet any regulatory, compliance, or industry requirements that make cloud computing impractical or unsuitable?
What are the cost implications?
Do you have buy-in from your employees particularly the IT department?
Which business areas are most suitable for cloud migration, and how should they be prioritized?
SAP Digitalist: How to Assess Your Cloud Migration Opportunities
Cloud Adoption: Next Steps
Once youve answered these questions, youre ready to embark on your journey to the cloud:
Determine what is core and non-core to your company
Decide if the same issues will be core to your company five years from now (what is core now may change as the company evolves, and flexible cloud capabilities can adapt to that)
Re-evaluate your business model and identify what you need to maintain and control from a competitive standpoint, and what you dont
Evaluate business processes from top to bottom, including applications and infrastructure
Take advantage of the SMAC advanced technology forces: Social, Mobility, Analytics, and Cloud
Select a reliable, scalable cloud model that has a pay-as-you-go (PAYG) model The Truth About Cloud Economics, Harvard Business Review, Wipro perspective
To learn more about the business benefits and potential risks of cloud adoption, read How to Assess Your Cloud Migration Opportunities
Making Digital Real With Cloud Computing
Accelerating Fan EngagementSee how the National Hockey League (NHL) is changing the game for their fans with SAP HANA Cloud.
Transforming Tradition Learn how one of the worlds oldest industries is using some of the newest cloud-based technology.
Rapid Response to Disaster ReliefLearn how cloud-based technology is helping Plan International coordinate disaster response plans.
Digital DriversTechnology is driving digital transformation
Digital Drivers are the technological forces driving digital transformation in the world today.
Three technology forces are shaping the digital shift: 1 Data and Analytics2 The Internet of Things (IoT)3 Cyber Security
The amount of data created every day is astounding. The already vast amount of data at our fingertips is growing larger every minute thanks to the proliferation of connected sensors in products, machines, and monitors linked to the massive expansion of the Internet of Things (IoT). This is leading to some major challenges with cyber security, as every new smart product or device connected through the Internet creates a new avenue for hackers to infiltrate the system, and put your companys information at risk.
These three elements of technological change are keeping business leaders on their toes as they navigate their companies through the digital obstacle course and strive to surpass their competitors.
53% of executives expect to face increased competition from start-ups enabled by data #SAPDigitalReport Share ThisBig and Fast Data: The Rise of Insight-driven Business, Capgemini
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Data and AnalyticsData is driving competitive business and positive outcomes
Data and Analytics encompass the collection, management, and interpretation of internal and external data on a large scale that can be used to dramatically alter or improve organizational performance.
How Analytics Works
Advanced analytics is a grouping of analytical techniques used to model the past, respond to present events, and predict future outcomes. Predictive analytics includes statistics, data mining, modeling, and machine learning. These tools analyze current and historical data for informed projections about future behavior or events.
The Evolution of Data
The term Big Data encompasses the vast petabytes of data streaming from our computers, mobile devices, social networks, and machine sensors.
Less than five years ago, Big Data was thought of as a data management challenge. Today, supercomputing power is everywhere, microprocessors are in every device, computers can be scaled as needed, and in-memory, real-time computing solutions like SAP S/4HANA and SAP HANA Vora are revolutionizing business software. As a result, data volumes are expected to grow to six billion petabytes, including unstructured data such as social networking and low-level IoT data.
64% of executives say Big Data is changing traditional business boundaries and enabling non-traditional providers to move into their industry.Big and Fast Data: The Rise of Insight-driven Business, Capgemini
Within the next three years, the data created by IoT devices will reach 403 trillion gigabytes annually. #SAPDigitalReport
Share ThisSCN blog: 99 Mind-Blowing Ways the Digital Economy is Changing the Future of Business, Source: Cisco, Global Cloud Index
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Competing Smarter with Advanced Analytics
In 2015, an executive survey by The Economist Intelligence Unit (EIU) set out to assess trends in market-facing analytics. The EIU surveyed 300 senior executives in Asia-Pacific, North America, Western Europe, and Latin America. The report, Competing Smarter With Advanced Data Analytics, revealed that companies using analytics initiatives reaped multiple benefits.
In addition to cost-reduction, users experienced increased revenue, new business opportunities, and the ability to cross-sell existing products to customers. The keys to their success? Finding the right initiative, mobilizing qualified personnel, and selecting the right software and technologies.
Data-Based Insights Deliver Tangible Business Benefits
Capgemini and EMC conducted a separate study with over 1,000 business executives from nine regions, and found similar results. The study found data-based insights are driving competitiveness, and can lead to significant business value in four main areas:
1. More efficient business operations
2. Enhancing current revenue streams
3. Enabling entirely new revenue streams
4. Monetizing data itself through buying, selling, or trading data
Additional benefits of analytics include stronger customer insights, top-line growth, higher margins, and more product innovation as companies can gather feedback on a large scale and streamline that information into the product development process. This is an efficient and cost-effective way to test innovative new products.
To learn more, download The Economist Intelligence Unit report, Competing Smarter with Advanced Data Analytics
See more in the Capgemini video or full report, Big and Fast Data: The Rise of Insight-Driven Business
Big & Fast Data: The Rise of Insight-Driven BusinessInsights at the Point of Action will Redefine Competitiveness
An report by the Economist Intelligence Unit
Competing smarter with advanceddata analytics
Use Your Data to Drive Competitive Advantage
It appears that many business leaders understand the importance of analytical insight, but they dont know how to address it within their own organizations. Studies show that many enterprises are still crippled by technology challenges and unable to tap into the wealth of their data which leads to untold opportunities for those companies that are data driven.
Some business leaders are still intimidated by data because there has traditionally been a gap between the sheer volume of fairly unstructured data streaming in from multiple sources compared to the structured data readily available in company databases.
Another big challenge of data management for many companies is that analytics initiatives have traditionally been driven by lines of business (LoBs), specific to their own needs. This has established data silos within organizations, which create major obstacles when trying to create a company-wide data and analytics strategy.
Take the Next Step: Develop A Holistic Data Strategy
Creating a company-wide data and analytics strategy is a necessary step as entire industries move forward with digital transformation. Get started by enlisting multiple stakeholders within your organization to establish priorities and address these questions:
1. What results or insights do we expect from analytics?
2. How do I build this into my business plan?
3. What practical steps does my organization need to take?
4. Is my CIOs team capable of delivering on this, or do I need to involve others?
5. Technology architecture and platforms are important, but what other capabilities do we need?
6. What about ROI? When should I expect to start seeing returns on this, and where will they come from?
7. How do I build a culture of data-driven decision making? Getting Value From Big Data: Focus on The Opportunities, Not the Obstacles, SAP
Only 42% of companies say they know how to extract meaningful insights from their data #SAPDigitalReport
Share This 99 Facts on the Future of Business in the Digital Economy, Source: Oxford Economics, Workforce 2020
90% of companies think advanced/predictive analytics is important but
Making Digital Real in Healthcare Analytics
Improving Patient Quality of LifeReal-time data improves patient outcomes at Dartmouth-Hitchcock Medical Center.
Analyzing Patient Data in Real Time Seoul National University Bundang Hospital uses big data analytics to improve patient care and help doctors retrieve key data in real time.
The Internet of Things will increasingly connect people and businesses to everything else to become, in essence, the very fabric that supports a new networked economy. When these changes are coupled with improvements in infrastructure, data analytics, and smart applications all connected in the cloud businesses will enter the era of true hyperconnectivity.
Thought Leadership Paper: SAP Brings You the Internet of Things for Business: Connect Transform, and Reimagine Business in a Hyperconnected Future
Thought Leadership Paper: SAP Brings You the Internet of Things for Business: Connect Transform, and Reimagine Business in a Hyperconnected Future
Smart World - The Internet of ThingsYour fridge knows what you want for dinner
The Internet of Things (IoT) includes the billions of current and future smart devices, products, and machine sensors that are connected to the Internet. IoT applications can continuously generate data-driven intelligence from connected things, people, and devices to optimize business processes and automate operations.
Discover how to connect, transform, and reimagine business in a hyperconnected future in the SAP thought leadership paper
SAP Thought Leadership PaperInternet of Things
SAP Brings You the Internet of Things for BusinessConnect, Transform, and Reimagine Business in a Hyperconnected Future
How The Internet of Things (IoT) Works
There is a lot more to IoT technology than product and machine sensors. An entire infrastructure needs to be in place in order to capture and securely use the data streaming from millions or billions of devices.
This infrastructure must address a wide range of issues including: security and privacy; data integration, management and analytics; governance; data transportation; in-memory computing; and the power needed to keep all these devices operating.
For an in-depth look at how IoT technology works, view this Intel chalk talk video
Making the Internet of Things Real
In the year 2000, there were about 200 million things connected to the Internet. In 15 years, this number has increased to approximately 8 billion, and industry experts estimate that number will increase to approximately 75 billion connected things by 2020.
Connecting information, people, and things is the greatest resource ever to drive insightful action. The Internet of Things is relevant to every industry or sector, because IoT is not about Things. Its about what the Things can do to radically transform business processes.
Image from ASUG Webcast Series on IoT, Episode 1, Making the Internet of Things Real
Learn how to make IoT real in the ASUG webcast series on the Internet of Things
Whats New About IoT?
The Internet of Things is not a new idea. In fact, SAP has been working on IoT innovation since the 1990s in major sectors such as manufacturing, oil and gas, logistics, and transportation industries.
What is new about IoT are the factors that are allowing this growth to happen:1
1. Inexpensive sensors. The cost of product sensors has dropped dramatically, allowing even start-ups to easily create innovative IoT product applications
2. Stronger computing power. Analytics and in-memory computing solutions like SAP HANA and SAP HANA Vora enable the computing power necessary to gain insightful meaning from Big Data and data lakes in real time
3. Internet Protocol IPv6. The new Internet Protocol IPv6 enables immense IoT expansion by increasing IP addresses from 32 bits to 128 bits, which could support up to 78 octillion2 Internet addresses, allowing infinitely more people, processes, data, and things to be connected to the Internet
1ASUG IoT Webcast Series, Episode 1: Making the Internet of Things Real 2 SCN Blog: Cyber Insecurity: Trying to Waterproof a Sieve
Cisco calls the next wave of growth the Internet of Everything (IoE) a term coined to describe the convergence of people, process, data, and things to make networked connections more relevant and valuable, turning information into actions that create new capabilities.Cisco Whitepaper: Embracing the Internet of Everything To Capture Your Share of $14.4 Trillion
Forget about the Internet of Things. The next wave of growth is the Internet of Everything. #SAPDigitalReportShare This
To learn more about the Internet of Everything (IoE), see Ciscos video, Visualizing IoE
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The Business Benefits of IoT
In a 2015 Forrester Research study of global IoT leaders, almost half of the respondents say that IoT innovations enable businesses to operate more efficiently and help enhance customer experiences. Over a third indicated that IoT technologies enable new business models, such as usage-based pricing, rather than selling the product.
Why IoT Will Be a Game-changer for Many Industries Including Yours
IoT makes it possible for companies to do something unprecedented: continually monitor the status of their products and services in real time as customers or other users are still using them and make automatic changes to the performance or delivery of those items instantly.
Think of what this could mean for your business on the construction site, in the office, in remote branches or remote asset locations, in retail outlets, on the manufacturing floor, embedded in your products, and the list goes on.
Organizations that manufacture or operate large equipment, energy systems, transportation systems, cargo ships, and even commercial trucking operations can reap multiple benefits from IoT applications.
Retailers, consumer goods companies, and hospitality industries can also use product sensors in a variety of ways, such as wearables, store beacons, and clothing sensors, to enhance customer experiences, predict customer behavior, and keep supplies stocked properly.
Read more in the SAP Community Network Blog: Why the Internet of Things (IoT) is a Really Big Thing.
Learn more in the Forrester Report: The Internet of Things Has the Potential to Connect and Transform Businesses
A Forrester Consulting
Thought Leadership Paper
Commissioned By SAP and Intel
The Internet Of Things Has The Potential To Connect And Transform Businesses But Early Adopters Have Focused Mostly On Efficiency Plays
The Internet of Things will have a potential economic impact of $4 trillion to $11 trillion a year in 2025 #SAPDigitalReport Share This
99 Facts on the Future of Business in the Digital Economy, Source: McKinsey & Company, Unlocking the Potential of the Internet of Things
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What Should My Business Do About IoT?
Think about how the Internet of Things could transform the way you do business. SAP has a maturity curve for IoT that many early adopters are following.
Step 1: Get connected. Consider how your business can take advantage of IoT innovation, and tap into the network of connected things
Step 2: Automate your business. Transform the way you make decisions and take action by executing operational processes through predictive and automated response all the way to the edge of the network
Step 3: Reimagine your customers experience by enabling innovative new business models, value-added services, and customer responsive products
ASUG IoT Webcast Series, Episode 1: Making the Internet of Things Real
Tips to Get Started with IoT
Some business leaders are still hesitant to jump into IoT and get their feet wet, but many of their competitors are already waist-deep. According to an Economist Intelligence Unit study, Developing Smart Products, 74% of US and European retail, healthcare, and manufacturing companies have already developed smart products.
Through workshops with IoT industry leaders, Deloitte devised steps to help initiate a revenue-generating IoT solution for your business.
1. Start small. The less you invest, the less you have to lose. Start small and expand from there
2. Experiment. Perform trial runs with a few base options and use them as test beds. Experiment and see what works
3. Start with consumers. Targeting consumers is a relatively easy and cost-effective way to gain traction. Then use that momentum to bridge to the enterprise
By 2025, the total worth of the Internet of Things (IoT) technology could be $6.2 trillion most of that value is healthcare ($2.5 trillion) and manufacturing ($2.3 trillion).99 Facts on the Future of Business in the Digital Economy, Source: Intel, a Guide to the Internet of Things
4. Start with younger generations. They may have less disposable income, but younger consumers tend to be more innovative and less concerned with glitches when experimenting with something new.
5. Find value. Discover what people find valuable enough to pay for, and expand in that area.
6. Develop partnerships. Find a way to build partnerships and alliances. That way companies can focus on their strengths and share the risk. IoT experts say this last point forming partnerships is vital.
The Importance of IoT Partnerships
The development of vital partnerships between IoT providers and third-party suppliers, as well as cross-functional alliances between suppliers, will likely be the driving force behind streamlining processes and developing industry-wide standards in the IoT market in the future.
Forming partnerships can be difficult for some companies that are used to working on their own, because there are many challenging details to
work through, such as contractual agreements, ownership, and security issues. While it may not feel natural for separate entities to work as a team, IoT experts say its the best way to minimize the risk of producing complex IoT solutions.
IoT Growing Pains
Partnerships are not the only challenge when it comes to the rapid expansion in the IoT market. Today, the relatively young IoT market is complex and fragmented, and industry-wide standards still need to be established. These issues are expected to grow along with the growth in the industry.
Ongoing IoT Challenges
1. Complexity. By 2020, the level of complexity in the IoT market is going to be massive, with an estimated 2.5 billion people connected on social networks, 75 billion connected devices, and a projected $65 trillion in global business trade
2. Data-Driven Enterprise. Data volumes and types have changed dramatically, and data is the new goldmine for competitive business strategy
3. Digital Enterprise. The entire digital ecosystem will need to undergo significant changes in order to streamline the process and become a networked economy
ASUG IoT Webcast Series, Episode 2: From Big Data to Smart Data (IoT)
Learn the key findings from the Deloitte Internet of Things Grand Challenge Workshop
The Biggest Challenge of IoT?
Perhaps one of the biggest challenges of IoT expansion is the increased cyber security risk. Each new IoT device or sensor will have its own IP address, and with thousands of IoT products continually coming online, it presents a multitude of opportunities for hackers.
Business leaders need to take cyber security into consideration from the beginning when developing new IoT innovations. See the next portion of the eBook for more on cyber security.
Making Digital Real in IoT
Transportation See how sensors are helping the trucking industry improve efficiency, save money, and help the environment.
Retail / Hospitality What does the IoT have to do with beer? Find out in Intels video, Draft Beers New Best Friend.
ManufacturingDaikin Applied is transforming the HVAC industry with IoT innovation.
The use of sensors will grow 700,000% by 2030. #SAPDigitalReport
Share This99 Facts on the Future of Business in the Digital Economy, Source: SAP Center for Business Insight 2015. Calculation based on SPB Global, A trillion sensors is the equivalent of 150 sensors per human on earth.
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Cyber SecurityHigh-powered security needs to be the norm
Cyber security is the ongoing attempt to secure computer systems and networks, and protect the information being contained within and distributed to or from these networks. Cyber security aims to prevent theft of or damage to hardware, software, and information, and prevent the disruption of any services provided.
How Cyber Security Works
IT security is based on three elements:
1. Securing information. Addressing data privacy in the cloud and safeguarding information
2. Securing interaction. Providing a secure on-premise landscape when it is integrated with cloud and mobile technologies
3. Securing identities. Addressing identity management and single-sign-on (SSO) capabilities in hybrid infrastructures
These three elements form the key pillars for establishing a secure business application architecture.SAP CIO Guide: IT Security in Cloud and Mobile Environments
The Evolution of Cyber Security
Cyber criminals arent the hackers that used to breach a system just to see if they could do it. Today, many of these highly intelligent offenders are organized, patient, and well-funded, with the means to effectively compromise large-scale networks.
They also dont just target the weakest link anymore. Now, instead of considering a targets weakness, cyber attackers focus on the targets potential, often with damaging results as seen in recent headlines.
SCN blog: The Enterprise IT Security Threats Companies Face Nowadays
Learn more about cyber attackers today. Watch the EY video, CFO: Need to Know Cybersecurity
The Growth of Cyber Risks
Every business is at risk of a cyber attack every day. The results could have devastating impacts on your companys customers, bottom line, reputation, and potentially its very existence. No company is immune to a cyber attack. According to the Identity Theft Resource Center, security breaches reached a record high in the U.S. last year, involving approximately 675 million files. Over 30% of these breaches hit the business sector, including high-profile businesses like Neiman Marcus, Goodwill Industries, and Dairy Queen. SCN blog: Data security breaches: the ugly truths exposed, Source: Identity Theft Resource Center.
The threat of cyber security breaches will only increase as the Internet of Things (IoT) wave of connected applications enters the marketplace. The potential weaknesses of each new sensor, device, application, or system can expose the entire network and business operation to a security breach. The EY report, Cybersecurity and the Internet of Things, puts it this way:
There is no single object that can be described as the IoT infrastructure there are many disparate and uneven networks. Additionally, the number of connected devices in circulation being used for the vast amount of interactions has created further challenges in data privacy, data protection, safety, governance and trust.
Despite the risks, the majority of businesses are still unprepared for a sophisticated cyber attack, according to EYs Global Information Security Survey. The survey showed that 56% of organizations are unlikely to detect a sophisticated cyber attack, and 74% say their cyber security measures only partially meet their needs.
And while you may think that your company has not been the target of a cyber attack yet, chances are your enterprise security has already been breached in some way.
In the recent SAP Community Network blog, Cyber Insecurity: How to Waterproof a Sieve, Daniel Wellers, SAPs Director of Global Marketing, goes into detail about some of the increasing IoT cyber security risks.
Wellers warns that this includes home security systems, 911 operations, transit systems, services like power and sewer systems, and even pharmacies and hospital networks and of course, this also includes your business.
9 out of 10 companies have already been the target of a cyber attack. #SAPDigitalReport
Share ThisT-Systems: Advanced Cyber Defense by Telekom, Source: Global IT Security Risks Survey 2015, Kaspersky Lob
Get ahead of cybercrime with EYs Global Information Security Survey 2014 report
Insights on governance, risk and compliance
Get ahead of cybercrimeEYs Global Information Security Survey 2014
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Cyber Security: A Balance of Risk and Protection
While security is an important consideration in business today, each company and industry has to make its own decisions. Cyber security is a joint effort by the company, its industry, standards organizations, governments, and IT vendors. To accomplish a cyber strategy, businesses often need to make trade-off decisions: functionality versus security, usability versus security, supportability versus security, and profitability versus security. Security decisions also depend on local regulations, as well as company IT infrastructure and processes. A cyber security strategy needs to reflect both risk appetite and protection objectives.
How to Develop a Cyber Security Strategy
Take action immediately to ensure your organization has a solid foundation of cyber security, and then stay on top of it. The risks change every day, so it is not the type of policy you can develop and forget. It wont take care of itself.
When everything is networked, everything is hackable. And when everything is hackable, everything is at risk.Daniel Wellers, Director, Global Marketing, SAPSCN blog Cyber Insecurity: Trying to Waterproof a Sieve
38% more cyber security incidents were detected in 2015 than in 2014
See more statistics in PwCs infographic, Security at a glance: How businesses are responding to rising cyber risks, Insights from the Global State of Information Security Survey 2016
Consider taking a holistic approach to cyber security that involves your entire operation and your business partners. Outline your IT security based on governance, risk, and compliance. To establish and maintain a company-wide security strategy, you can refer to SAPs three building blocks for establishing IT security:
1. Secure Information. Take steps to ensure data protection and privacy, data encryption, and message security
2. Secure Interaction. Ensure network and communication security, and channel encryption
3. Secure Identities. Focus on the key elements of identity and access management
SAP CIO Guide: IT Security in Cloud and Mobile Environments
Ask The Right Questions About Your Assets
EY recommends three questions you should ask to determine which assets to protect:
1. Which assets, if lost, would impact the day-to-day operations of the business?
2. Which assets, if compromised, would result in lost consumer confidence?
3. Which assets, if breached, would cause serious damage to the companys reputation and shareholder value?
Ask The Right Questions To Establish a Security Strategy
EY also has a series of questions you can ask to establish your corporate security priorities and help to create a security strategy.
What is our overall risk tolerance?
What is my organizations current exposure to cyber risk?
How does our level of preparedness compare to our competitors?
Is our cyber risk exposure consistent with our risk tolerance?
Are there adequate processes in place to prevent, detect, contain, and respond to a cyber attack?
Do we have a plan in place for how we will respond to a cyber attack?
Have we thoroughly tested the plan so there is no delayed response when the breach occurs?
Digitalist Blog: 7 Questions CFOs should ask about cyber security, Source: EY Information Security Survey 2014
Learn more in the EY report, Cybersecurity and the Internet of Things
Cybersecurity and the Internet of Things
Insights on governance, risk and compliance
Business leaders can no longer ignore the increasing cyber threat. Its forcing companies and their business partners to constantly adapt their IT security strategy and concepts to manage their business processes securely. Business leaders need to consider cyber risk the same way they would any other risk, and take appropriate measures to reduce that risk for their organization.
Digital Technologies Are Not the Only Drivers
Technology is not the only factor driving the digital transformation taking place today. Business drivers also play a significant role. The next section of the eBook will focus on what these business drivers are, and how they are pushing the business world toward digital transformation.
Making Digital Real in Cyber Security
Banking and capital markets are prime targets for cyber criminals. Learn more in the EY Video: Cyber security for banking and capital markets.
Read about Deutsche Telekoms Cyber Defense Center and see how T-Systems tracks cyber attacks in real time using a security dashboard.
Cyber crime is a daily threat, and the longer you wait, the greater the risk. #SAPDigitalReportShare This
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Business DriversCorporate and market factors shaping digital transformation
Business Drivers are the factors prompting organizations to adopt digital technologies in response to the new market and competitive forces of the digital era.
The areas of business changing as a result of the digital shift include:1 Customer Engagement2 Business Innovation3 Internal Process and IT Transformation
Digital transformation has opened new opportunities for businesses to become more competitive and innovative. The business goals of growing market share and profitability are driving digital transformation as masses of businesses adopt new digital technologies and techniques to stay ahead.
Businesses are innovating products and services to better engage increasingly connected and informed digital customers. This business innovation is leading to internal process change and IT transformation, in order to keep up with the rapidly changing digital economy.
86% of CEOs are personally championing the use of digital technologies in their company. 99 Facts on the Future of Business in the Digital Economy Source: PwC, 18th Annual Global CEO Survey
Customer EngagementA laser sharp focus on the digital customer
The customer experience has changed in recent years. Traditional shoppers have transformed into digital consumers. They pursue their own independent research, have high expectations of their shopping experiences, and want products personalized to their own needs. Businesses must rethink how to engage with their customers.
The Evolution of the Customer Experience
Ten years ago, there were no Internet comparison sites or social networks. Shopping was slow and relatively uninformed. Now, with social media, smart phones, and the Internet, the balance of power between buyer and seller has swung to the buyer. In the past, customers were often reliant on sales people for product information, but the digital consumer now checks reviews and alternative sources for information on products, services, and prices independently online. This is true not only in B2C markets but also for B2B, where customers have historically relied heavily on sales reps.
Digital consumers new purchase processes are having a profound impact on how businesses need to interact with them.
Consistent and Omni-channel Service
When consumers check out a vendors offering, they expect to search for products, read reviews, and experience standard pricing, whether they are shopping from their mobile or laptop, by telephone, or in a bricks and mortar store. Their purchase decisions and brand loyalty are heavily dependent on a positive buying experience. So businesses must now deliver an omni-channel experience throughout the customer journey.
57% of a B2B purchase decision is made before buyers talk to a sales rep. #SAPDigitalReport
Share This 99 Facts on the Future of Business in the Digital Economy Source: CEB, The End of Solution Sales
70% of consumers are more likely to recommend a brand because it provides a simpler experience, and 38% are willing to pay more for a simpler experience.99 Facts on the Future of Business in the Digital Economy Source: Siegel+Gale, Simplicity Index
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In B2C markets, great strides have been made toward providing omni-channel shopping experiences. However, a November 2014 Forrester survey of 930 B2B buyers revealed that B2B markets still lag behind when it comes to omni-channel service expectations.
To remedy this, the Forrester report recommends that B2B companies invest in e-commerce capabilities that:
1. Support a variety of channels
2. Tailor experiences for different users
3. Leverage reporting and analytics to measure effectiveness
4. Provide a single view of inventory across all channels
5. Aid personalization
6. Support enterprise-wide digital business transformation
Engaging with, Not Marketing to, Digital Customers
As digital consumers review numerous sources of information on their shopping journey, brand managers have to work harder to keep them
engaged. To stay in touch with prospective customers, they must create engaging user experiences and marketing content, and find ways to touch the consumer across several points of contact over an extended period of time.
Pre-purchase actions online by digital consumers generate data that reveals behavioral habits, preferences, likes, and dislikes. This data is of fundamental value to brand managers because it can enable one-to-one, pre-emptive customer marketing, which can be much more effective than mass-market broadcasts. But managing vast volumes of data isnt easy, as we addressed in the Data section of this eBook.
To find out more, read Forrester Consulting: Building the B2B Omni-Channel Commerce Platform of the Future
A Forrester Consulting
Thought Leadership Paper
Commissioned By Accenture and
hybris, an SAP company
Building The B2B OmniChannel Commerce Platform Of The Future
Maximize customer data by merging & analyzing disparate data channels to decode big picture trends & patterns. #SAPDigitalReport
To get maximum value from customer data, businesses need to:
Merge data from different channels
Use analytics to decode trends and patterns
Piece together a comprehensive picture of their customers
This will give them the insight to pre-empt their customers needs providing a powerful tool for further marketing and engagement.
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Building More Profitable Customer Relationships
In a recent article, EY urged businesses to use their rich customer data to work out customer lifetime profitability. Determining this metric is the first step towards taking a more strategic approach to managing and engaging with customers.
Key to this approach is evolving the right systems and practices:
Improve your customer relationship management (CRM) systems so that you have the ability to collect and analyze customer data
Identify the most profitable and least profitable customers and focus on each type of customer in a different way, in order to nurture and grow the customer relationship
Take a collaborative approach to customer service across the entire organization
Product Personalization: The Internet of Me
Todays consumer has a big appetite for personalized devices. These are everyday products, such as watches, running shirts, and security systems that incorporate intelligent sensors. Personalized devices provide a product experience that reflects consumers preferences, habits, and contexts, making them more relevant and engaging. Accenture dubbed the trend towards personalization The Internet of Me.
The Internet of Me and digital personalization of products is a key trend that will fundamentally change consumer markets and heighten the already-heated competitive environment. Accentures Technology Vision 2015 survey of business and technology executives confirmed that 81% of respondents cited customer experience as one of the top three priorities for their organization.
Two thirds of consumers are expected to purchase connected home devices within the next five years, and the ownership of consumer wearables is expected to double by 2016. Read The Battle For Customer Engagement: How The Internet of Me Is Changing all The Rules to find out more.
Find out more in EYs Customer Lifetime Profitability: How to grow and manage your best customers.
The Accenture Report proposes the following steps for getting started on the route to personalization:
1. Start using your customer data to discover what connected devices they currently use or intend to purchase, and what their goals are with the new technology
2. Prepare to shift toward a world where every customer has a unique view of your product
3. Evaluate competitors for their use of mass personalization strategies and learn what companies in related industries are doing as well
4. Identify emerging edge technologies that can supplement your existing product or service by providing either new channels to your customer or new data for contextual insights
For more steps to personalization read the Internet of Me section of the Accenture Technology Vision 2015 Report.
Making Digital Real with Customer Engagement
Harnessing customer data to boost sales and loyaltyCox Communications uses big data and predictive modelling, with SAP Predictive Analytics, to reach more customers with the right offers, boosting sales and customer loyalty.
Personalization increases fan connection and salesThe German Football Association developed an SAP CRM solution (powered by SAP HANA) to enable sharp, effective marketing campaigns and increase sales.
Shifting B2B e-commerce sales to a higher gear 3M worked with SAP hybris software to build a B2B e-commerce platform with the imagery, search, and navigation features their customers wanted.
Business InnovationCreating an innovative digital business
When did you last ask yourself: What does my company really do for our customers?
Business innovation has always been an important aspect of corporate progress, but sometimes innovation can get lost in the shuffle. As a company grows in complexity, there is a tendency for it to organize itself around products or types of customers, rather than its reason for being. Over time, the company slowly loses sight of its original goal, leaving it ripe for disruption.
Employees in large organizations are often highly specialized and focus only on their specific business areas. This can engender a silo mentality, which results in less sharing of resources and ideas between different business areas.
Innovation can also be stifled because executives dont see the need to change when things are going well. They are even less inclined to do so when an innovative idea threatens to disrupt existing sources of profit. The traditional position is that it is less risky and less expensive to be a follower. In the digital economy, this position could be the riskiest approach of all.
Find out more about business model innovation and IT in the SAP guide, How CIOs Can Become Business Innovators
InquiryBy Axel Uhl and Elana Varon
SAP Center for Business Insight | Brief | Q&A | Case Study | Inquiry | E-Book 1
How CIOs Can Become Business Innovators
THE DEFINITION OF BUSINESS INNOVATION HAS EXPANDED. NO LONGER IS IT JUST ABOUT PRODUCTS AND SERVICES; NOW BUSINESS INNOVATION ALSO INCLUDES IT-ENABLED BUSINESS MODELS. ITS THE WAY APPLE INVADED THE MUSIC BUSINESS WITH ITUNES WHILE REIMAGINING ITS BUSINESS TO SELL SERVICES THAT MAKE ITS IPOD, IPHONE, AND IPAD PRODUCTS MORE COMPELLING TO USE.
Innovation: a Business Imperative
Innovate or die a chilling sentiment haunting the C-suite in the digital age.
Its not that the concept of innovation is new. Businesses have always had to adapt to survive: technologies change, customer expectations change, and competitors catch up and pose a threat. But what is new is the pace of innovation, which has accelerated exponentially thanks to the potential thats been unlocked by digital technologies.
We are in the age of the networked economy, in which people, places, organizations, and objects are increasingly linked together in ways
that drive tangible economic gains. A further development, the sharing economy, is unleashing a wave of digital disruption in which entire industries are being rendered irrelevant by innovative new business models.
Wildly Popular and Massively Disruptive: The Sharing Economy
The growing number of mobile platforms connecting people who have certain goods, services, and/or skills with those who dont has caused massive disruptions for numerous industries. Peer-to-peer commerce has enabled the sharing economy, in which individuals can monetize assets that are not being fully utilized. With this new business model, innovative new businesses are leaping on the opportunity to own the customer supply interface between the buyer and seller. Airbnb, the worlds largest accommodation provider, owns no real estate; and Uber, the worlds largest taxi company, owns no cars.
Uber and Airbnb are just the start. The sharing economy will grow 3,000% from 2015 to 2030. #SAPDigitalReport Share This99 Facts on the Future of Business in the Digital Economy, Source: SAP Center for Business Insight 2015 calculation based on PwC, The sharing economy sizing the revenue opportunity
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Key to Innovation: Adopt Digital Technologies
Away from the high-profile headlines, other enterprises are scrambling to leverage digital technologies. Many businesses have already deployed cloud and mobile technologies to optimize internal processes. Big Data is coming of age as digital technologies are used for customer engagement and to create innovative new business models. But innovating in the digital era is not just about adopting new technologies. Its also about embracing a culture of innovation, encouraging collaboration and risk taking, and tapping into digital ecosystems to achieve results well beyond the scope of an individual business.
Core Technologies Driving Innovation
Any company wanting to stay ahead in the new digital era must harness the core technologies that are driving innovation.
The Cloud is facilitating innovation by eliminating capacity constraints allowing businesses to scale their IT capacity up and down to meet fluctuating levels of demand. For example, in the IT service industry, moving to the cloud has meant that time to market for new system development is no longer hampered by data center constraints.
In-memory computing is enabling organizations to process and analyze large quantities of structured and unstructured data at lightning speeds.
Real-time analytics capabilities are facilitating the development of ingenious new entertainment solutions that delight customers.
Mobile technologies have been used by many organizations to streamline internal processes by enabling operational employees to stay connected via a tablet or smart phone. Now mobile is increasingly being used to invent new services focused on engaging the customer.
While each of the digital technologies can have a major impact independently, todays most innovative and potentially most profitable digital projects combine analytics, cloud, and mobile technologies to create products and services that engage customers and create new revenue streams.
At the current pace, by 2027, 75% of companies in the S&P 500 will be new companies not in the index today #SAPDigitalReport
99 Facts on the Future of Business in the Digital Economy. Source: Seeking Alpha: Increasing Churn Rate in the S&P 500
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Becoming an Innovation-Driven Organization
Follow these five key steps to become a more innovative organization:
1. Nurture a culture of innovation. Disruption needs to be an ongoing conversation within the organization as a whole, not merely a topic to be discussed at specific meetings
2. Breakdown silos. Most innovative ideas occur when previously unconnected areas of thinking collide. Establish a more open culture to encourage sharing of information
3. Focus on the customer. Design thinking, a business methodology used to solve complex problems, can help with reimagining products and services from a customers point of view
4. Act on insights from Big Data. As powerful analytics expose previously unseen patterns, decision makers need to be willing to accept insights that contradict established practices
5. Reduce complexity. By simplifying existing business and decision-making processes, you can create a strong platform for the next wave of game-changing innovation
Design thinking is a powerful new way to solve problems and unlock potential by tapping into the human side of technology. Learn more in the video, Design Thinking with SAP
81% of survey respondents believe that in the future, industry boundaries will dramatically blur as platforms reshape industries into interconnected ecosystems. Accenture Technology Vision 2015
Digital Ecosystems are Redefining Businesses and Industries
Traditionally, businesses have tried to develop and launch products with minimal cost and time to market (while meeting perceived customer requirements). But as the Internet of Things (IoT) provides connections to more and more objects and processes, business are starting to realize that by tapping into these digital ecosystems, they can create new products and services that were previously well beyond their scope. In other words, by integrating with this huge network of connections and
other digital partners, businesses can shape experiences and outcomes for their customers in a way that would have been impossible operating as a single entity.
By combining the power of technology platforms with industry expertise, companies are creating new business models and capabilities that are vital to creating disruptive innovation, leading in key markets, and driving growth. Integral to these platform models are the ecosystems they create to deliver value.
Steps to Develop or Join a Digital Ecosystem
1. Identify potential digital partners and ecosystem scenarios from existing business partners and potential new digital partners both within and outside your industry
2. Based on your digital business strategy and potential partner scenario, consider if you will initially join, partner, or create your platform ecosystem
3. If you are likely to build a platform, identify technology partner options
Find more steps to developing a digital ecosystem in the Accenture Technology Vision 2015 Report.
Accenture Technology Vision 2015
Digital Business Era: Stretch Your Boundaries
Making Digital Real with Business Innovation
Real-time Fantasy Football in the CloudIn the U.S., the National Football League (NFL) has created an innovative player comparison tool for fantasy football players that uses real-time analytics and the cloud.
Swarovski Goes Mobile Swarovski, the producer of luxury cut lead glass, worked with SAP to develop a digital mobile app to showcase its 200,000 different crystals to customers.
Collaborative Technology Powers the Intelligent InfrastructureThe Port of Hamburg (HPA) created a digital ecosystem to better manage port traffic and reduce waiting times.
Internal Process & IT TransformationBusiness innovation demands modern technologies
The digital age is putting untold pressure on companies to transform their business processes and IT organizations. As businesses become more innovative with their digital endeavors, many companies must adjust their internal processes and IT systems in order to capably support the company in this new digital era. Cloud technologies are changing the function and role of on-site IT departments, and innovative new products, solutions, and even newly developed business models and divisions are forcing organizations to fundamentally change the way they operate.
The rapid evolution of technology innovation is overturning existing business models. How do you structure a sales channel if customers are using multiple channels to make a purchase? Which department is responsible for cloud operations used in IoT product innovation IT or product development? And which department owns the data collected and analytics tools used for marketing and strategic business decisions
IT or marketing? These are all questions being discussed as companies adjust their business processes to navigate a course to business innovation in the digital economy.
By 2020, information will reinvent, digitalize, or eliminate 80% of business processes and products.Digitalist Blog: 99 Mind-blowing Ways the Digital Economy is Changing the Future of Business
Learn how leaders are addressing digital technology in the Deloitte video, Inspiring Disruption
Many companies find that business model innovation is being driven by four main factors, referred to as SMAC:
Social media is increasingly used by customers as well as by employees
Mobile devices and bring-your-own-device (BYOD) adoption has changed many business processes
Analytics use cases and future needs must be taken into consideration
Cloud platforms and applications can fundamentally change businesses processes
Since all four of the SMAC elements involve digital technology, they would traditionally fall under the IT umbrella. Many companies are struggling with how to manage these drivers, however, because they touch every aspect of the business.
Specialized and strategic IT expertise is needed to help businesses deal with these factors, and organizations are quickly learning that the role of the IT organization is evolving.
A New Style of IT
Traditionally, IT has been an internal corporate function focused on improving business processes by automating systems, maintaining on-site servers and networks, and updating software not to mention responding to an untold number of IT services requests regularly submitted by employees across the organization. The goal of optimizing business processes, especially core systems such as Enterprise Resource Planning (ERP) and Supply Chain Management (SCM), is still a major focus, however, IT is undergoing a fundamental evolution in response to new digital technologies.
Changes to the IT organization are becoming more urgent as the following influences continue to mount:
The expectations of empowered digital customers are driving IT to re-engineer existing processes and systems for maximum customer engagement
The Internet of Things (IoT) is introducing new challenges to data storage, automation, and cyber security
Cloud-based IT capabilities offer flexible and scalable options that can reduce capital spending on IT infrastructure, operational spending on power and cooling systems for data servers, and resources required to operate on-site IT infrastructure
For a detailed look at aligning business and IT strategies, read the Hewlett Packard Enterprise viewpoint paper, Transform Business
The increasing threat of digital disruption is challenging IT leaders to play a new role in business model innovation, and pushing IT professionals to incorporate a broader range of skills.
This doesnt mean that IT jobs will be lost quite the opposite. IT is an integral part of this digital transformation process, and business leaders must work alongside IT leaders (and all other divisions of the organization touched by digital transformation) in order to take advantage of business innovation in the networked economy.
The Connective Tissue Between Business and IT
In the digital era, IT leaders must understand the business landscape as well as the latest technologies. Armed with both perspectives, they can encourage business leaders to create new business strategies and models that exploit digital technologies. The Chief Information Officer (CIO) or the Chief Technology Officer (CTO) is often the person tasked with this role, but as the digital era comes of age, there is increasingly another player at the table in the C-suite: the CDO. In some organizations
this position is known as the Chief Data Officer, and in others, its the Chief Digital Officer. In either case, its a person responsible for the digital transformation underway in the enterprise.
For IT leaders and their teams to be a driving force behind innovation, they must find ways to reduce the time and energy spent on dealing with productivity-threatening system problems and day-to-day operations and maintenance. Combined, these activities take up 80% of their time, energy, and resources, leaving only 20% percent for innovation.
How ITs Changing Role Will Alter the Enterprise
ITs role is expanding to become an essential catalyst for developing new business services.
From systems of record to systems of engagementCorporate ITs main focus used to be on transaction-based systems, with business users working with the data, rather than engaging with the systems. In the digital era, users expect a rich user experience that IT can help deliver.
The key is to understand and to make use of new technologies. And who is best suited for this job? IT of course. IT needs to see new technologies coming. Then own and leverage them to their advantage.SCN Blog: Digital Transformation As The Opportunity For IT to Regain Boardroom Influence
The number of Chief Digital Officers has doubled each year since 2005 totalling ~2000 CDOs worldwide today #SAPDigitalReport
The CDO Club
https://twitter.com/intent/tweet?text=The number of Chief Digital Officers has doubled each year since 2005 totalling ~2000 CDOs worldwide today &hashtags=SAPDigitalReporthttps://twitter.com/intent/tweet?text=The number of Chief Digital Officers has doubled each year since 2005 totalling ~2000 CDOs worldwide today &hashtags=SAPDigitalReporthttps://twitter.com/intent/tweet?text=The number of Chief Digital Officers has doubled each year since 2005 totalling ~2000 CDOs worldwide today &hashtags=SAPDigitalReporthttps://twitter.com/intent/tweet?text=The number of Chief Digital Officers has doubled each year since 2005 totalling ~2000 CDOs worldwide today &hashtags=SAPDigitalReport
Demanding new business modelsIn the digital era, business leaders are being challenged to optimize the bottom line while looking for innovative new revenue streams. Many legacy systems are not capable of addressing these new challenges, so this is having a profound impact on the way IT must operate.
IT operations become IT service integrators IT resources have become so readily available from the cloud that todays IT teams must act as comprehensive service integrators.
Steering Toward IT Transformation
To work with the digital disruptions facing business processes, IT leaders must consider a number of changes to reconstruct how their IT department operates:
IT organizations must create new types of business solutions where the user experience is paramount
CIOs and CTOs must optimize legacy investments while introducing new architectures that can serve the mobile information revolution
IT architects and leaders must understand both business and technology processes in order to recommend new business strategies and models that exploit digital technologies to their competitive advantage
IT operations must offer comprehensive services aggregated from a variety of sources, both internal and external
Learn more about The Fusion of Business and IT in this Deloitte video.
To find out more, read the Hewlett Packard Enterprise viewpoint paper, Leveraging Architecture in the New Style of IT.
Five Steps to Transform your IT Function into a Driver of Innovation
1. Understand what exists. Before IT can improve or optimize, it needs to understand the systems, processes, and people already in place
2. Take small steps to reduce the 80%. Try to spot problems in current operations and processes that directly impact the business. Solving them will encourage business leaders to support IT transformation
3. Deliver business value at a reduced cost. Employ tools that automate maintenance and support tasks whenever possible
4. Optimize labor resources. Ensure the right person is doing the right task. Train employees in the right disciplines and outsource strategically
5. Run IT as a business. Once your streamlining activities yield more room for innovation, look beyond efficiency. Make strategic investments to help IT improve customer satisfaction and set up service-level agreements and KPIs to help manage the businesss expectations
Find out more about transforming the IT organization in the SAP and CIO whitepaper: Optimizing IT to Drive Business Innovation.
Success in the digital future will depend on your companys ability to implement digital technologies innovatively, by rethinking strategy, culture, and talent.99 Facts on the Future of Business in the Digital Economy Source: MIT Sloan Management Review, Is your Business Ready for a Digital Future?
Making Digital Real with Internal Process and IT Transformation
Transforming IT Operations for a Sustainable InnovationBonfiglioli transformed their IT with SAP to create a foundation for value based, strategic innovation.
Holistic IT Landscape for Increased Revenue and Margins EvoBuss holistic IT landscape results in improved customer satisfaction and accelerated after-sales service.
IT Infrastructure Transformation Around The WorldLearn how 20th Century Fox and other global companies have adjusted their IT infrastructure.
SAP Customer Success Profile | Automotive | EvoBus GmbH
EvoBus and SAP have a 15-year history of successful collaboration. Working with the Business Transformation Services group of the SAP Consulting organization, EvoBus developed a new road map and process design to replace existing aftersales systems with a new combination of SAP applications. The SAP Dealer Business Management application and surrounding systems have made EvoBus Aftersales Services known as OMNIplus more efficient.
EvoBus: Increasing Customer Satisfaction and Accelerating Aftersales Service with SAP Solutions and Services
2013 SAP AG or an SAP affiliate company. All rights reserved.
Becoming a Digital Enterprise
Disrupt or Be Disrupted.
Technology innovation is changing the game for businesses, industries, and markets today.
At the heart of this digital transformation is a host of new technologies that are disrupting the old ways of doing business with employees, partners, suppliers, and customers.
These include the SMAC technologies Social, Mobile, Analytics, and Cloud, as well as a multitude of various other advanced technologies, including many associated with the expanding Internet of Things (IoT).
By the end of 2017, two-thirds of the CEOs of Global 2000 enterprises will have digital transformation at the center of their corporate strategy.IDC FutureScape: Worldwide IT Industry 2016 Predictions
Technology is used to cut costs rather than improve customer experiences
Your customer base is aging, with few or no new customers coming in
Your customer satisfaction is low, and customer service is very hands-on without a lot of digital touch points
Time to Make the Important Digital Decisions
As the digital economy continues to advance, business leaders are quickly realizing that they need to make some important decisions about the future of their company, centered around these options:
1. Fully embrace digital transformation with the use of digital technology to drive significant business improvements and stay ahead of the competition
2. Partially embrace digital changes by choosing selective uses for advanced technology
3. Maintain the status quo and try to survive the digital disruption by competitors in the industry
Disruptive Forces: Warnings Ahead
A recent IBM study of 5,247 C-suite executives from organizations covering 21 industries in more than 70 countries says CXOs believe technology and market factors are the biggest external forces affecting their organizations .
72% 71% 55% 51% 48%
Twin forces: Technology and market factors are transforming the competitive landscape.
IBM: Redefining Boundaries, Insights from the Global C-suite Study
The study also warns business leaders to watch for the following signs that could indicate your industry is set for digital disruption:
Venture capitalists are increasingly interested in companies related to your sector
Learn more about IBMs Redefining Boundaries, Insights from the Global C-suite Study
IBM Institute for Business Value
Redefining Boundaries Insights from the Global C-suite Study
enterprise-wide, with buy-in from both executives and employees. This must start at the top
2. Develop the vision of how you want your business to transform, and strategies on how to get there. Executives must develop a road map, weigh the costs and benefits of change, and invest for maximum impact. Then communicate that vision to people across the organization
3. Design thinking. Start with a look at your customer(s), and blend business, technology, and human values to generate innovation through design thinking
4. Remove obstacles and take action with short-term wins and long-term goals
5. Cultivate a culture of innovation. Ensure employees are continually trained on new and evolving technologies, and focus on creating and maintaining a culture of digital and business innovation
Companies must decide which option is best for them within their industry landscape. Not all companies are successful at digitizing their business processes to their full advantage. Some merely substitute technology for their traditional processes, without truly transforming those methods. This approach is less likely to deliver many of the benefits, such as cost savings, increased efficiency, improved customer engagement, and competitive advantage, which can only be fully realized when advanced technology supports true digital transformation.
Steps to Becoming a Digital Enterprise
To outpace todays market disruption, businesses must equip themselves with technology that will help them adapt quickly to change. So how do you get there? Here are some steps you can take to become a digital enterprise:
1. Get executive buy-in. Appointing one digital leader is only the beginning. All C-level executives must be aligned in a new digital direction. True digital transformation will only be successful if it is
Strategic transformations may address a wide spectrum of issues, including business and operating models, products and services, marketing, customer relationships, technologies, human resources, and corporate cultures.Hewlett Packard Enterprise: Transform Business
For more information on becoming a digital enterprise, read the SAP whitepaper, Conquering Disruption Through Digital Transformation
Now its your turn. Take the next step to become a digital enterprise.
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