Digital transformation at the Regional Innovation Board, October 2015

Digital Transformation

Sven Denecken, GVP Co-Innovation and Strategy, SAP S/4HANA Rome, October 2015

@SDenecken

The Market Perspective

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Macro perspective, the modern drivers of change

*Concept Source: Unboundary, Inc.

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 3


As five billion people reach middle class, new challenges arise in customer expectations, workforce, and resource management

Dramatically Changing Workforce

82% customers stop doing business with a company due to a poor experience

$5.6T savings through connected vehicles

67% increase in crop yields 22% increase in supply

chain efficiency

Rising Customer Expectations

71% of business leaders believe that customer experience is the next battleground

High employee engagement: 3x higher operating margin

72% of Millennials feel their current organization is not

making full use of their skills

Pressure on Resources

Water 1.5x by 2030 Energy 1.5x by 2020

Food 1.5x by 2030 Metals 2x by 2030

Sources: Impact Report, Harris Interactive. Colin Shaw and John Ivens, 2010; Deloitte Millennial Study, 2015; Shell, 2014; WRI, 2014; SAP SE, 2014. Towers Watson, 2012

10.2% or U.S.$237 billion of profits are lost by the top 200 global companies due to hidden costs of complexity


Business Network

Say it’s decision making

75% 73%

60% Believe it’s technology Layers of legacy and interfaces make it difficult to keep pace with change

Say it’s business processes Business processes built for the Internet age, not the real-time digital era, where insights

are connected to action

Difficult to collect the right data, see from top level to

transactions, socialize decisions, and connect

decisions to actions

Source: The Simplicity Index 2011, 2015 Wharton-SAP Run Simple Survey.

The Digital Transformation

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The digital economy is a reality

*MIT Digital Change Survey, 2013

Of business leaders said that achieving digital transformaFon will become criFcal to their organizaFons within the next two years.*

78%

Of employees in companies where CEOs have shared their vision for digital transformaFon feel that it is the right thing for the organizaFon.*

93% All lines of business running in real Fme on a digital business plaMorm

The digital value chain

Suppliers People

Resources

Omnicommerce

Deliver excepFonal experiences to your customers across every channel of interacFon

To enable the workforce of the future – employees and conFngent labor

Enable fricFonless commerce by managing suppliers bePer

Manage materials, assets, money, and other resources bePer

Customers Busine

ss network

Social Internet

of Things

Other unstructured/

structured data

The digital value chain


Understanding the new value levers The digiFzed core enables transformaFon

Digital economy

Mobile

Big Data

Internet of things

Cloud

SubscripCon

DigiCzed core

Segment of one

Unit of one Personalized experience

Connected manufacturing

Business model transiCon

Lot size one Contextual markeCng

Digital transformaFon

Internet of Things Unit of One

Technology induced change

Why Digitize The Core?

Service promise Ability to deliver End to end experience

The end to end digiCzed enterprise is a mandatory consequence

[#/€]

Fme Digital Economy

Number of items/lots

value/size of items/lots

Unit of One

Digital store as typical fast market entry

Digital Customer Experience Segment of ONE

New customer expectations

Auto-replenishment/ Subscription

Personalized Coupons

Plan Your Trip to the Store

Personalized Communication

Easy Ordering from app

Curated Experience

In-Store Navigation


Marketing in real time to the Segment of ONE based on individual customer activities on all channels Individualized advertise-ments, discounts, product configurations, product recommendations, etc.

Mass customizaCon supported by real time

•  fulfillment monitoring •  processing of customer

change requests •  responses to unplanned

downtimes •  responses to changed parts

availability •  etc.

Digitzation of core processes is critical to scale up Example: Digital commerce – fulfillment example

Digital store is a typical MVP for fast market entry

Digitized core is needed for consistent customer experience

Digital store front Batch fulfillment

Digital shopper experience •  Mobile commerce •  In store navigation •  Easy ordering •  Peronalized coupons •  Curated expereince

Limited number of variants Weekly or daily planning, fulfillment and delivery tact Low flexibility for order changes and responses to unplanned down time, supply problems, etc.

Lot size one

✓ Auto-replenishment/ Subscription




Easy Ordering from app Curated

Experience

In-Store Navigation

Auto-replenishment/ Subscription




Easy Ordering from app Curated

Experience

In-Store Navigation

Digital store front

Minimum Viable Product End to end digitized


The business models of the future

Customer centric

Operationally excellent

Globally networked

Rapidly innovating

Agile •  Fast adaptaFon of business

strategies •  Fast innovaFon •  Highly skilled, empowered

people in cross funcFonal, cross organizaFonal teams

•  Driven by strong vision and leadership

"Plug and play" networks •  Global reach •  Scalable capacity •  "Pay as you go" •  Secure •  Actively managing risk

Segment of One – at scale •  Personalized, intelligent

products and services

•  Rich, real Fme customer interacFon

•  Based on 360° customer view

Next generaCon processes •  Highly automated

e.g. "touchless order" •  Embedded, "real Fme"

decision support •  Highly adaptive

Empowered consumer / customer

Science and technology progress

Globalization Competitive and regulatory pressures

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How to Start

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The Digital Transformation lever is huge

Mobile

Cloud

Big Data

IoT

Business Networks

Core Internal IT as service broker

Hybrid as the new norm

End2End process chain

How to leverage for my business

New enterprise architecture

Mobilize services, BYOD

CollaboraFon Web 2.0

New value chains

New communicaFon mechanisms

Data-‐driven development

Real-‐Fme analyFc

Data as new economic resource

Machine2Machine communicaFons

Classic industry vs. digital business

IT security, tracking

User experience

Simplify data model

Flex the core


Mobile

Right ambition level depends on both industry and company specific drivers

Opportunis*c adop*on of digital

technologies Transforma*on of core business model

Systema*c leverage of digital for performance improvement

Leverage digital to develop new compe**ve advantage

Industry specific drivers: •  Development of new business models •  ReducFon of entry barriers •  Share of industry revenue pool generated by digital •  Relevance of customer behavior

Company specific drivers: •  Digital as add-‐on or fundamental transformaFon •  PotenFal to leverage digital to mobilize and innovate

company

Source: BCG experience

What is the right aspiration for your company in Digital?


Simplify your technology architecture, business processes, and decision making


Applications Business Network

SAP HANA Platform

In-memory computing. Analytics. Services.

Every line of business and every industry

Customer engagement and commerce Human capital management

Procurement

Inter-enterprise commerce and spend

Suppliers Workforce

Travel and entertainment

Reimagine new business models to take advantage of the opportunities in the Digital Economy


Zero latency supply chains

Applications Business Network

Sales, Service, Marketing

Human Resources

Finance

Supply Chain

In Memory Platform Capitalize on the power of real-time data to deliver

innovation to business without disruption

Anticipate customer needs

Inspired and engaged employees

Instant cash flow visibility

Frictionless commerce

Deliver across channels

Fluid and scalable workforce

Predictable and optimized expense

Your journey to master simplicity and capture the Digital Economy starts today – at the pace you choose


Design Thinking Co-Innovation

Choose business processes

Choose decision scenarios

Choose technology platform Architectural plan Technical readiness assessment

Data discovery workshop Business strategy Data mapping

Industry value engineering Business scenario recommendation

Run Simple. Thank you. @SDenecken

Where to go for more information on Digital Transformation

Blog series on Digital TransformaCon ü hPp://scn.sap.com/community/cloud/blog/2015/01/17/digital-‐transformaFon-‐series-‐the-‐wrap

openSAP MOOC course on Digital TransformaFon ü hPps://open.sap.com/courses/dit1

Blog series on Digital TransformaFon use cases with S/4HANA

ü  hPp://scn.sap.com/community/s4hana/blog/2015/07/13/s4hana-‐-‐the-‐use-‐case-‐series-‐-‐intro

openSAP MOOC course on use cases S/4HANA ü hPps://open.sap.com/courses/s4h3


Run simple with the next-‐generaFon business suite

@ [email protected]

@SDenecken

https://www.linkedin.com/in/sdenecken

Sven Denecken, GVP Co-Innovation and Strategy S/4HANA SAP SE