The Future of the Digital Economy and SAP's Role

The Future of
the Digital Economy
and SAP’s Role
Sven Denecken, GVP Co-Innovation and Strategy, SAP S/4HANA
October 2015
@SDenecken

The Market
Perspective
@SDenecken

Macro perspective, the modern drivers of change
*Concept
Source:

Unboundary,
Inc.

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

Hyperconnectivity across people, business, and devices give
rise to a new digital economy powered by real-time data
75 billion connected devices
in the Internet of Things
Over 2.55 billion
social media users by 2020
U.S.$65 trillion in global trade
through connected businesses
Source: SAP Corporate Fact Sheet 1/2015Source: www.emarketer.comSource: Business Insider

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

Major tech trends drastically change "art of the possible"
Augmented reality
Immersive
visualiza<on,
e.g.

showroom
experience,

maintenance/
assembly

instruc<ons

Internet of things/device
interaction
Intelligently
connect
smart
objects

to
link
material
and
informa<on

ﬂows

Advanced robotics
Autonomous,
coopera<ng
industrial

robots
with
numerous
integrated

sensors

3D printing
Manufacture
tailored
products
in

smaller
lots,
more
distributed/
closer
to
point
of
sale/use

Big Data/Predictive analysis
Develop
deep
insights
into
supply

chains
&
beJer
forecast,
e.g.,

demand
and
capacity

Autonomous transportation
Intelligent,
autonomous
systems,

e.g.,
self-‐driving
vehicles/trucks,

unmanned
areal
vehicles
(UAVs)

Shift to the cloud
Highly
scalable
soPware-‐as-‐a-‐
service
apps
with
remote
storage

and
processing
power

Ubiquitous connectivity
"Always-‐on"
access
to
content
and

communica<on
capabili<es

Social, local, mobile
On-‐going
engagement
with

customers
and
communi<es
in
a

relevant
and
geo-‐contextual
way


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.

Internet
of
Things
Unit
of
One

Technology

induced

change

Digi<ze
The
Core

Service promise
Ability to deliver
End to end experience
The
end
to
end
digi0zed
enterprise

is
a
mandatory
consequence

[#/€]

<me
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

The digital economy is a reality
*MIT
Digital
Change
Survey,
2013

Of
business
leaders
said
that

achieving
digital
transforma<on

will
become
cri<cal
to
their

organiza<ons
within
the
next
two

years.*

78%

Of
employees
in
companies
where

CEOs
have
shared
their
vision
for

digital
transforma<on
feel
that
it
is

the
right
thing
for
the

organiza<on.*

93%

All
lines
of
business
running
in
real
<me
on
a
digital
business
plaZorm

The
digital
value
chain

Suppliers

People

Resources

Omnicommerce

Deliver
excep<onal
experiences
to
your

customers
across
every
channel
of

interac<on

To
enable
the
workforce
of
the
future

–
employees
and
con<ngent
labor

Enable
fric<onless
commerce
by

managing
suppliers
beJer

Manage
materials,
assets,
money,
and
other

resources
beJer

Customers

Business
network

Social

Internet
of
Things

Other
unstructured/
structured
data
The
digital
value
chain


The business models of the future
Customer
centric
Operationally
excellent
Globally
networked
Rapidly
innovating

Agile

•  Fast
adapta<on
of
business

strategies

•  Fast
innova<on

•  Highly
skilled,
empowered

people
in
cross
func<onal,

cross
organiza<onal
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
<me
customer

interac<on

•  Based
on
360°
customer

view

Next
genera0on
processes

•  Highly automated
e.g. "touchless order"
•  Embedded,
"real
<me"

decision
support

•  Highly adaptive
Empowered
consumer /
customer
Science and
technology
progress
GlobalizationCompetitive and
regulatory
pressures
Powered
by
digital
technologies


•  Definition of strategic digital objectives
•  Agile approach to strategy
Digital
strategy

•  Think and act like a VC
•  Still: leverage existing asset base
•  ...
Digital
disrup0on

Five main approaches towards digital transformation
Prioritized approache(s) are specific for each company
Create
value
from
data

•  Business model based on data
•  Digitally enhanced products
•  Product-‐related
services
based
on
sensor

data

•  ...

Digi0ze
core
business

•  Faster, simpler and further
automated processes
•  Seamless integration across all value
chain processes
•  Digital R&D, production, administration
•  ...
Enhance
digital
capabili0es

•  Analy<cs
capabili<es

•  Agile
working
mode

•  Agile
plaZorms,
con<nuous
delivery

•  PlaZorm
TCO

Improve
customer
experience

•  Relentless
customer
centric
focus

•  Connected
touch
points
in
customer

journey

•  Sales
channels
/
CRM

•  Mobile customer engagement
Digital
transformation
Build digital ecosystem
•  Posi<oning
in
relevant
ecosystem

•  Consume
digital
services

•  Partner
for
common
oﬀerings

•  ...


Plenty of digitization opportunities in core processes
Even though ERP processes seem to be unchanged at the top level
Automa<on
of

process
steps

Management
by

Excep<on

Insight
to

Ac<on

Process
Integra<on

Segment

of
One

Loca<on-‐
and
context

aware
processes

Self
service
processes,

any<me
&
anywhere

Omni-‐Channel
customer

engagement

Simpliﬁed
User

Experience

New

Devices

QR
Codes,
RFID,
Sensors

New

Technologies

New

Data

New

Services

Localiza<on
services

New

Tracking

Green
manufacturing,
CO2
tracking,

GRC
standards

Employee

Empowerment,
de-‐
layering

Procure
to
Pay

Plan
to

Product

Order
to
Cash

Request
to

Service

Finance

Human
Resources

Process digitization opportunities
Process digitization drivers

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
customiza0on
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
Personalized
Coupons
Plan Your Trip to
the Store
Personalized
Communication
Easy
Ordering
from app Curated
Experience
In-Store
Navigation
Auto-replenishment/
Subscription
Personalized
Coupons
Plan Your Trip to
the Store
Personalized
Communication
Easy
Ordering
from app Curated
Experience
In-Store
Navigation
Digital
store
front

Minimum Viable Product End to end digitized

SAP S/4HANA –
The Digital Core
@SDenecken

Understanding
the
new
value
levers

The
digi<zed
core
enables
transforma<on

Digital
economy

Mobile

Big
Data

Internet
of

things

Cloud

Subscrip0on

Digi0zed

core

Segment
of
one

Unit
of
one
Personalized

experience

Connected

manufacturing

Business
model

transi0on

Lot
size
one

Contextual

marke0ng

Digital
transforma<on

SAP S/4HANA Value Toolkit: digitize beyond the core,
embrace the digital economy
Internet

of
Things

Business

networks

Social

networks

Devices

Big
Data

People

Process
Enriched

Scalability
I
Real
<me
I
Predic<on
I
Simula<on

Live
Data

Granular
I
Responsive
I
Accurate

User
Empowered

Instant
insight
I
Contextual
informa<on
I
Personalized
experience

Segment
of
1

Lot
size
of
1

No
latency

Tradi<onal
core
value
play

SAP
S/4HANA
value
play

At
scale

Leading-‐edge
processes
I
Integrated
system

Digital
transforma<on
of
business
models

Digital
Core
Digital
Economy
Digital
Transforma0on


Connect
to
the
world’s
largest
business
and
social

networks
and
lead
business
innova<on
with
IoT

•  Instant
connec<vity
to
supplier,
customer
and
partner

networks

•  360
view
of
customers
with
access
to
all
interac<ons

•  Real-‐<me
connec<ons
to
sensors
embedded
into

products
and
assets

SAP S/4HANA's offers breakthrough capabilities for digital
transformation
Re-imagined business processes Advanced business analysis
Connections to IoT and Business NetworksImmediate
business
insight

Use
embedded
analysis,
predic<on
and
simula<on
to

an<cipate
future
business
outcomes

•  Contextualized
analy<cs
at
the
point
of
decision

making

•  Easy
to
use,
yet
sophis<cated
built
in
predica<ve

func<ons

•  What
If
analysis
tools
to
make
more
informed

decisions

Get
live
and
personalized
business
insight
to
make
any

decision
from
anywhere
on
your
device
of
choice

•  Single
source
of
truth
across
the
en<re
enterprise

data

•  User
experience
tailored
to
individual
business
roles

•  Interoperability
across
diﬀerent
devices
and
OSs

Run
digi<zed
business
processes
across
your
enterprise

with
a
modern
core

designed
for
the
digital
economy

•  Faster,
simpler
and
more
automated

business

processes

•  Seamless
process
integra<on
across
the
en<re
value

chain

•  Big
Data,
Cloud
and
Mobile
enabled
business
process


Exemplar Value Case: Digital transformation in Finance
and Logistics
Manufacturing

“In Sync” manufacturing
Ÿ  Ensure physical reality in production and representation in IT system are
always in sync
Ÿ  Drive more frequent Inventory updates in real time
Business outcome:
Ÿ  Reduce costs with always correct inventory information, less exception
handling
Ÿ  Improve product quality with early detection of master data errors
Key innovations:
Finance

Soft Close
Ÿ  Improve management and control of operations anytime within period
Ÿ  Allow immediate financial and business decisions (such as transaction-
based revenue recognition, calculation of overheads)
Business outcome:
Ÿ  Revenue and margin increase through real-time profitability analysis
Ÿ  Real-time revenue recognition for goods and services
Key innovations:
Process Enriched
Scalability I Real time I Prediction I
Simulation
Live Data
Granular I Responsive I
accurate
User Empowered
Instant insight I Contextual information I
Personalized experience
Digital
Core

Ÿ  Universal journal Ÿ  Intra-period reconciliation Ÿ  Real-time inventory management Ÿ  Inventory information at granular level

Connected
equipment.

Big
Data.

Industry
4.0

Internet
of
Things.

Connected
design:

Providing:
Complete
lifecycle
visibility
for
improved
design.

Business
outcome:
Lower
cost
and
higher
quality.

Serving
the
segment
of
one:

Providing:
BeJer
synchroniza<on
of
processes.

Business
outcome:
Higher
revenue
through
faster
<me
to
market.

Connected
manufacturing:

Providing:
Real
<me
informa<on
with
the
Internet
of
Things
.

Business
outcome:
Increased
cost
efficiency

&
asset
u<liza<on.
The Digital core
The manufacturing Digital transformation
Omni-‐Channel
commerce.

Internet
of
Things.

Big
Data.

Insight-‐driven
wholesale

distribu0on.

Omni-‐Channel
service:

Providing:
Mul<
channel
customer
interac<on.

Business
outcome:
Increased
revenue
and
customer
loyalty.

Profitability
op0miza0on:

Providing:
Customer
Life<me
value
based
targe<ng.

Business
outcome:
Increased
margin
per
customer
segment.

Connected
vending
machine
sales:

Providing:

Meet
customer
demand,
any<me,
anywhere.

Business
outcome:
Increased
customer
loyalty.

The Wholesale Digital transformationThe Digital economy
in Wholesale:
The Digital economy
in Manufacturing:
+
real
<me,
in
memory
plaZorm

+
role
base
&
mobile
UX

+
flexible,
lowest
data
granularity

+
predic<ve
and
analy<cal
driven

+
digital
readiness

+
guided
configura<on

Exemplar Value Case: Digital transformation in Manufacturing
and Wholesale

The Digital Transformation lever is huge
Mobile

Cloud

Big

Data

IoT

Business

Networks

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

Collabora<on
Web
2.0

New
value
chains

New
communica<on

mechanisms

Data-‐driven
development

Real-‐<me
analy<c

Data
as
new
economic
resource

Machine2Machine

communica<ons

Classic industry vs. digital
business
IT security, tracking
User
experience

Simplify
data
model

Flex
the
core


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

•  Reduc<on
of
entry
barriers

•  Share
of
industry
revenue
pool
generated
by
digital

•  Relevance
of
customer
behavior

Company
speciﬁc
drivers:

•  Digital
as
add-‐on
or
fundamental
transforma<on

•  Poten<al
to
leverage
digital
to
mobilize
and
innovate

company

Source: BCG experience
What is the right aspiration for your company in Digital?

SAP helps simplifies 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
SAP S/4HANA
Customer engagement and commerce
Human capital management
Procurement
Inter-enterprise
commerce
and spend
Suppliers
Workforce
Travel and entertainment

With SAP, CEO’s can 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
SAP HANA 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
INTERNAL

Run
simple
with
the
next-‐genera<on
business
suite

@
sven.denecken@sap.com
@SDenecken
https://www.linkedin.com/in/sdenecken
Sven Denecken, GVP Co-Innovation and Strategy S/4HANA
SAP SE

The Future of the Digital Economy and SAP's Role

More Related Content

What's hot (20)

Viewers also liked (20)

Similar to The Future of the Digital Economy and SAP's Role (20)

More from SAP Technology (20)

Recently uploaded (20)

The Future of the Digital Economy and SAP's Role