Go Digital or Die – Thoughts on the Digital Transformation

I recently spoke with my good friend, Dr. Chakib Bouhdary who helps drive our overall strategy at SAP about his view on you, our customers and partners, the industries you participate in and how we can better serve you, especially as it relates to the enterprise platform technologies that SAP delivers (Bias disclosed up front as I run the platform business for SAP).

During that conversation, I had a “moment of clarity”.  We ended up talking for several hours about how organizations are looking to transform themselves in unprecedented ways. Partly due to the accelerated digital world in which we live and partly due to the seemingly constant disruptions that emerge from unexpected vectors in the markets in which we all participate. In many ways, I think the best word I can come up with to capture the sentiment of the conversation is “transcendence”. My moment of clarity led me to the conclusion that organizations are looking to transcend their own business and established processes, their competition, even their respective industries and become something more profound and valuable than the company they are today.

Now, translating that desire to “transcend” into something we can tangibly discuss, I will frame it in the following way, and give full credit to Chakib for bringing me to a stronger conviction regarding this:

Many of you are looking to find ways to become an end to end digitally integrated entity. Putting aside the mechanics of this for a minute (i.e. public/private cloud, etc.), you are looking to find ways to connect every aspect of your business…seemingly disconnected events become connected, consequential and valuable. Like turning a tweet into a receipt. In order to go down this path, your company must become more digital, aware, intelligent and ultimately a digital enterprise.

Now I am about to take some serious liberties with Chakib’s comments and put this is in my own words, which I simply refer to as the “Digital Thesis”. The substance behind the digital thesis is:

To participate in a Digital Economy, an organization must become a Digital Enterprise and in order to become a Digital Enterprise, that organization needs a Digital Core.

I’ll spend a few minutes covering each element of the thesis, as I believe it will drive the conclusion that your organization needs a Digital Core.

Digital Economies: As economies (or marketplaces) evolve, they become more efficient over time. Any economist will tell you that. What is clear to me is that the next frontier of efficiency for all global economies is digital and driven by ones and zeroes, regulated by hyper efficient algorithms all of which will be modeled, executed and continually optimized in real time. In a Digital Economy, a very real currency is the data exchanged between entities, not just goods, services and monetary funds in the traditional sense. You need to look no further than the Financial Services “economy” to get a glimpse of what your industry will look like in a very short period of time.

Digital Enterprise: So if we are to believe that all economies either are or will become entirely digital as the next frontier of efficiency, what then becomes of the companies that participate in those economies? There are three organizational scenarios that I believe will play out:

  • Organizations that believe that they don’t need to rapidly evolve. They will die.
  • Organizations who choose believe that digital “elements” of their business (like a cloud based CRM product) will somehow make them a digital enterprise. These companies will not be competitive and will either suffer significant devaluation over the next decade or will be acquired.
  • Organizations who know what the coming Digital Economy for their respective industry will require to win and are earnestly building a Digital Core, connected all the way to the Digital Edge of their business and beyond. These companies will win.

If you don’t believe me, allow me to retort with: Uber.

Which transportation company, prior to the arrival of Uber, had the end to end, digital capability and processes to rapidly respond? The answer is none. If they had, Uber would never have risen to its current level of relevance and validation.

Digital Core: Which leads me to my final and most important point, the need for a Digital Core, connected to every part of your business all the way to the edge and beyond. SAP offers a Digital Core for your business. This core is called SAP HANA and it provides fundamentally different ways for your business to operate than how you’ve been running things to date.

Here’s a helpful graphic showing HANA at the core of a Digital Enterprise, working in tandem with an innovative suite of digital, responsive business applications:

blogpic

 

To fully appreciate how this works, you first need to think of HANA as a platform, a Digital “operating system” for your whole company that enables your business to consume everything happening in and around your business in real time. Not just transaction data, like what you sold today, but the context around the transaction, like what someone said about the purchase. All of this, beautifully intermingled into one platform. That way you aren’t spending valuable investment dollars on integrating data, you’re investing those dollars on ways to connect with your customer in the moment and, ultimately, sell more.

As I indicated earlier, that Digital Core must be connected with the rest of your business. SAP happens to have a solution for that as well, which we call S/4HANA (see picture referenced above). It’s a new suite of business apps that reduce process complexity and digitize all the antiquated, analog parts of your business. S/4 in turn is integrated with a powerful set of cloud applications that enables your business to connect directly with your customers (Customer Engagement and Commerce), suppliers (Ariba, Concur), employees (SuccessFactors, Concur) and devices (HANA Business Cloud Platform).

So to be clear, we are delivering it all, today. The complete and comprehensive framework for a true digital enterprise that is dramatically simplified with LESS technology that does MORE vs. our competitors’ plans which require more technology to do less.

We truly believe that HANA can be the single digital core for your business and that is the reason we are moving every application to run on this new, singular platform. There is a video I highly recommend you watch where Mike Ettling, who leads our SuccessFactors business globally, talks about his plans for successfactors and SAP HANA.

 

I think this makes it clear that our direction as a company is simple: SAP HANA for everything.

And why not? Why should anyone keep taking the medicine that’s been prescribed to us for the past 30 years by other platform vendors that have failed to deliver simplified technology that does more with less?

We’ve developed a simple yet powerful solution that delivers so much more than what traditional, legacy “stack” vendors provide through their complex, expensive technologies.  SAP HANA is being used by thousands of companies to achieve results they thought previously unattainable! We can help you transcend the technology of the past and go beyond the database to something more meaningful, more profound.

Our goal is clear – enable your organization to become a Digital Enterprise that is simple, agile and responsive. The road to the Digital Enterprise has an on-ramp waiting for you, and that on-ramp is called SAP HANA.

 

Steve

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