VNSG CIO Presentation on Digital Transformation

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Timo ElliottVP, Global Innovation Evangelist

@timoelliott

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80% of CEOs think they deliver a superior customer experience

Source: The New Yorker

— but only 8% of customers agree.

What Is Digital Disruption Really About?

Millennials trust strangers over family and friends. They lean on

User-Generated Experiences for purchase decisions.

Source: Brian Solis’ Future of Business, 2013

73% of people surveyed wouldn’t care if the brands

they use disappeared from their life.

Source: Co.Exist

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“Customer experience is the last source of sustainable

differentiation and the new competitive battleground”- Gartner

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Disruption

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Airbnb is the worlds largest

hotelier — with no hotels

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Don’t be this guy

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This Doesn’t Help Much, Either…

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Are you the taxi company, or

Uber? (or both?)

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By 2020, information will be used to

reinvent,

digitalize, or

eliminate %of business processes and products

from a decade earlier.

From The Back Office To The Business Models of Future

”

“

17Internal

IT Craftsmanship IT Industrialization Digitalization

IT provides

innovations and new

capabilities

IT supports efficiency,

effectiveness, and

integrity

Engage

Offer

Monetize

Adapt

Create

Ideate

Digital provides

continual opportunities

for growth, innovation,

and differentiation

The Third Era of Information Technology

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IT Controls Less and Less IT Spending

A DECADE AGO TODAY

70% 58% <50%

2017

IT becomes a

standard part of

“products”

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Expectations Are High

More than 60% of CEOs expect 15%–50% of their

earnings growth in the next 5 years to come from

technology-enabled business innovations.– McKinsey study, 2013”

“

CEOs expect to double digital revenue over the

next 5 years.

– Gartner, 2015

“ ”

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Beware Of The Shark Fin

Innovators Early Adopters Early Majority Late Majority Laggards

ADOPTION BY DIFFERENT SEGMENTS OVER TIME

Network effects mean most of the benefits go to early

adopters, who disrupt traditional ways of working

Source: Accenture

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IT Overestimates Transformation Success

Only somewhat successful overall

Successful in some areas but not in others

Extremely successful overall

Largely unsuccessful overall

Very successful overall

Non-IT IT

Very or Extremely

Successful:

75% of IT

respondents

60% of Business

respondents

How successful have you been to date with your digital / IT transformation initiatives?

Enterprise Management Associates study, 2015, tranformingIT.org

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Executives Think Their Industry is Threatened…

Source: MIT Sloan Management Review 2015, Strategy, Not Technology, Drives Digital Transformation,

Don’tknow

To what extent are digital technologies disrupting your industry?

Greatextent

Moderateextent

Smallextent

Not at all

5%

16%

35%

41%

3%

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…But Their Organizations Don’t Think It’s a Threat

Source: MIT Sloan Management Review 2015, Strategy, Not Technology, Drives Digital Transformation,

Don’t knowStronglydisagree

Stronglyagree

Agree Neitheragree nordisagree

Disagree

I am satisfied with my organization's current reaction to digital trends.

6%

30%

20%

33%

10%

1%Don’t knowStronglydisagree

Stronglyagree

Agree Neitheragree nordisagree

Disagree

My organization views digital technologies as a threat.

20%

36%

17%18%

8%

2%

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They’re Divided On Whether It’s Doing Enough

Source: MIT Sloan Management Review 2015, Strategy, Not Technology, Drives Digital Transformation,

Don’t knowStronglydisagree

Stronglyagree

Agree Neitheragree nordisagree

Disagree

I am satisfied with my organization's current reaction to digital trends.

6%

30%

20%

33%

10%

1%Don’t knowStronglydisagree

Stronglyagree

Agree Neitheragree nordisagree

Disagree

My organization views digital technologies as a threat.

20%

36%

17%18%

8%

2%

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Good News: CIO Pay up 30%-40% Since 2012 (In the US…)

Competition in the digital age means boards often

view the CIO as a senior leader of the company...

Elite CIOs and other senior technology leaders are

earning more money than ever, a sign of demand

for people with a proven ability to bring in new

revenue through the use of data or otherwise

employ technology to outrun the competition.– Wall Street Journal, 2015”

“

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Digital Transformation

Balance the needs of today with a vision of the future

New

Customer Experiences

New

Value Creation Models

New

Business Models

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New

Customer Experiences

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We All Want Luxury Service

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Omnichannel Personalization

8 million members of Nespresso club

200,000 orders per day

20 different languages

200 Nespresso stores

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The Connected Car Experience

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New

Business Models

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Kaeser CompressorsEnabling Predictive Maintenance

A global leader in air compressors

≈€500 million, 4,800 employees,

50 countries, partners in

additional 60 countries

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Benefits

Customers

• Less downtime

• Decreased time to resolution

• Optimal longevity and performance

Kaeser

• More efficient use of spare parts, etc

• New sales opportunities

• Better product development

“We are seeing improved uptime of equipment,

decreased time to resolution, reduced operational

risks and accelerated innovation cycles.

Most importantly, we have been able to align our

products and services more closely with our

customers’ needs.”•

Kaeser CIO

Falko Lameter

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Kaeser Kompressoren – Just buy the air, not a compressor

35© 2015 SAP SE or an SAP affiliate company. All rights reserved.

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37© 2014 SAP AG or an SAP affiliate company. All rights reserved.

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New Applications And Business Models Made Simple

Weissbeerger Beverage Analytics

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Bypassing Existing Systems

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Information Is Money

By 2016, 30% of businesses will have begun

directly or indirectly monetizing their information

assets via bartering or selling them outright. .– Gartner 2015”

“

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New

Value Creation Models

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Co-Creation

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Port of Hamburg

Freight

Forwarders

& Truck Drivers

Port Road Management and

Operations Backend Systems

(Knowledge Base + Operations)

Real Time

IntegrationSmart

Operations

Platform

TRAILERTRUCK

Port Operator runs Real

Time Road Traffic Control

Systems

Built-in Telematics Unit

Tablets & Smartphones

PORT

Business Network of

950+ Connected Businessese.g. maintenance, spare, part, food and

beverage, medical, cargo, terminal,

marine, container, research and

engineering, warehouse and storage

related suppliers and service providers

Smart Logistics Hub

operated by

SAP Cloud

Parking Space

Providers

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Balance the needs of today

with a vision of the future

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STRATEGY, NOT TECHNOLOGY, DRIVES

DIGITAL TRANSFORMATION- MITSloan Management Review ”

“

Less digitally mature organizations tend to focus

on individual technologies and have strategies that

are decidedly operational in focus. Digital

strategies in the most mature organizations are

developed with an eye on transforming the

business.

“

”

© 2014 SAP AG. All rights reserved. 46

Design

ThinkingCut across existing silos,

start with the customer,

outside-in

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Never Let a Crisis Go To Waste…

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Own Culture Change

Build a community

Bottom-up innovation

Sponsor hackathons

Celebrate heroes

Accept fast fails

Paint the walls with data

Encourage self-service

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Pick Your Focus Areas

CustomerExperience

Omni-Channel

WorkforceEngagement

Assets& Internet of Things

SupplierCollaboration

Business Networks

Digital Core

Executive Dashboards

Source:

In-Memory Data Management: An Inflection

Point for Enterprise Applications.

Hasso Plattner Alexander Zeier

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SOCIALANALYTICS

MOBILEAPPLICATIONS

CLOUDNETWORKS

Simplicity is the Ultimate Sophistication

SIMPLE

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Simplicity Becomes Strategic

18%20%

25%

37%

Improvetransparency,accountability,

and risk

Improvecustomer orconsumer

engagement

Improveproductivity

Improveperformance

across allbusiness lines

KEY TAKEAWAY:

62% of

respondents say

simplification

improves

productivity and

business

performance.

Survey by SAP and Knowledge@Wharton 2014

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Cloud First

85% view cloud as part of their transformation initiatives

Top impacts of cloud on transformation were:

• Cloud is resource for accelerating transformation

• Cloud promoted more dialog between IT and the business

• Cloud has forced IT to reorganize

• (15% saw cloud as more disruptive than helpful)

Enterprise Management Associates study, 2015, tranformingIT.org

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Cloud Security Concerns? Think Again

Many enterprises are paying an opportunity cost

by allowing unwarranted security fears to inhibit

their use of public cloud services that would be

more secure, and more agile, than processes they

implement within their own data centers.

– Gartner: Top Strategic Predictions for 2016 and Beyond

”

“

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Cloud Security Concerns? Think Again

Recent history has shown that virtually all public

cloud services are highly resistant to attack and, in

the majority of circumstances, represent a more

secure starting point than traditional in-house

implementations. No significant evidence exists to

indicate that commercial cloud service providers

have performed less securely than end-user

organizations themselves. In fact, most available

evidence points to the opposite.– Gartner: Top Strategic Predictions for 2016 and Beyond

”

“

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Managing Risk

By 2017, the typical IT org will

spend up to 30% of its budget on

Risk, Security & ComplianceGartner

89%of CIOs say the discipline of risk management is

not keeping up.

of CIOs agree that the digital world engenders

new, vastly different and higher levels of risk.

69%

“”

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SAP HANA: Simple. Agile. Cloud.

Backed by >40 years of support for business-critical systems

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Conclusion

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Gartner on Digital Transformation

“No company, irrespective of size and industry, can

afford to avoid the digital disruption taking place.

Gartner predicts that this will be a defining year in

which CIOs will use digital to transform their risks into

bold business outcomes”

“As the digital business matures and becomes more

pervasive, organizations are making digital the core of

their enterprise strategy. The focus towards a true

digital business starts with the customer or citizen and

considers a whole new technology ecosystem”

Jeffrey Mann, Gartner research vice president.

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Determine Your Level of Digital Courage

Digital Core

Digital Product

Extensions

Digitally-Driven

Business Models

Digital Co-Creation Passively

Respond

Take the Lead

Change the

Game

ENTERPRISE CIO

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The World Has Changed.

What Are YOUR Next Steps To Transform Your Business?

Thank You!

Timo ElliottVP, Global innovation Evangelist

Timo.Elliott@sap.com @timoelliott