Soccer team in a huddle

Peeling Back the Digital Onion

January 6, 2016 by John Hunt 214

How major industry participants are digitizing their businesses.

Ninety percent of CEOs believe they must digitize their business – but only 25 percent of them have a plan. Pat Bakey, President of Industry Cloud at SAP, explains: “The issue is how to go digital, because there is no cookie cutter approach. That’s why we have  launched digitization frameworks for all industries.”

The threat of falling behind when fundamentally new business paradigms emerge is very real. Consider this: 440 companies have dropped out of S&P 500 index since its inception 60 years ago.

Peter Maier, General Manager of SAP’s Energy & Natural Resources business unit, believes that SAP “can now show customers how to avoid getting ‘Amazoned.’” He adds: “Digital transformation does not stop at industry boundaries. This opens great opportunities for innovative business models for our customers – and great new potential for our unique range of industry solutions on a single real-time SAP HANA platform.”

In preparation for SAP’s 2016 Field Kick Off Meetings later this month, Maier and Bakey recently hosted digital industry summits where 20 leaders at SAP explained how companies are using IT to transform their business operations. Here are summaries of what some of them said.

Ninety percent of CEOs believe they must digitize their business – but only 25 percent of them have a plan.

Hans Thalbauer, SVP for Extended Supply Chain, explained how food manufacturers are reimagining their industry using 3D printing. In his presentation, a pasta producer tests a system whereby restaurant patrons could order meals incorporating their own unique pasta preferences such as gluten-free cherry flavored spaghetti!

3D printing in cosmetics provides a completely different set of opportunities, as demonstrated by E.J. Kenney, SVP of Consumer Products. In his presentation, we learn what it means when people can create their unique color of lipstick. Customers are delighted to experiment with style and manufacturers save on merchandising and distribution costs.

Georg Kube, VP for Industrial Machinery & Components, explained how Harley Davidson is reaping the benefits of their digitization strategy. A new factory with digitally connected workstations and transport systems has allowed the company to reduce production times from 21 days to 6 hours while enabling customers to configure more than 1,300 product options.

Ray Adams, Field Services Director for Chemicals, illustrated how Muntajat sells, distributes and services 10 million tons of petro-chemicals in 120 countries without production capabilities. Like Uber in transportation and Facebook in media, Adams highlights how outsourcing is going well beyond the non-strategic operations of the past.

A common theme across industries is the trend toward paying for results. Joseph Miles, VP of Life Sciences, explained how a major biotech company is pricing an anticholesterol drug not based upon the number of pills, which has historically been the case, but based upon the extent to which the drug solves the patient’s problem.

Michael Shomberg, VP of Engineering, Construction and Operations, showed how a large contractor in the Middle East faced the challenge of becoming more efficient or going out of business. By deploying new sensors that allowed the company to monitor and enhance utilization, the company was able to save $15 million a year – and stay in business.

Lori Mitchell-Keller, GM of Consumer Industries, demonstrated how a sensor in the sole of a shoe could revolutionize the experience of the consumer, the retailer and the manufacturer. The jump in efficiency could lead to decreased costs while increasing both vendor profits and customer satisfaction.

Robert Cummings, Head of Insurance, talked about how digitization is revolutionizing a services industry. He suggests that more is likely to change in the next five years than in the insurance industry’s 350-year history. Cheap sensors and hyperconnectivity are making it possible for insurers to decrease risks, and hence lower premiums, as opposed to the historical role of simply spreading the costs.

Falk Rieker, VP of Banking, showed how Kabbage, a lending institution in the U.S., has reduced the time needed to approve a loan from the industry average of 20 days to just seven minutes. At the same time, Rieker paints a vision of how banks can access new, more profitable revenue streams such as an end-to-end home buying service.

Mark Lehew, VP of Sports & Entertainment, shared the opportunity presented by video, sensors and wearables in the sports arena. This technology could help prevent injuries, improve coaching and personalize player training. Mark explains that if the average professional athlete earns $2.6 million per year, improvements in any of these areas can yield a large financial benefit.

All video presentations are available here.

Top image via Shutterstock


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