deal architect

SAP BAU excerpts – Ch. 3 – Integrated Mobility

As part of the launch of the Business as Unusual book (click on badge on left to get to the Amazon page) by Thomas Saueressig and Peter Maier that we helped conduct interviews and research for, we will share excerpts from each of the 10 chapters/300 pages, and also give you a “behind the scenes” view by sharing snippets of some of the over 100 SAP, customer and partner video interviews that ended up in the book.

Here are some excerpts from the second Megatrend – Integrated Mobility. Includes quotes from executives at MHP, a Porsche unit, Stadtwerke Augsburg, Gebr. Heinemann, SAP and others.

“I’m a Traveler of Both Time and Space” - Paul Salopek embodies the lyrics from Led Zeppelin’s epic tune “Kashmir.” Since 2013, Salopek’s “Out of Eden” walk for National Geographic is scheduled to take him more than 37,000 kilometers from Africa to the tip of South America… Mimicking both Japan and the US, China has added on average 10 airports a year in the last few decades. From zero high-speed rails in the year 2000, it now has over 40,000 kilometers of it. Other countries have evolved differently. Netherlands is known for its bicycle culture, and Indonesia for its motorbikes. Norway has the highest electric vehicle adoption rate in the world. In Saudi Arabia, nomads can be spotted ferrying camels with pickup trucks. By the time Salopek finishes his journey, he will have witnessed the extremely wide spectrum of mobility available to modern humans. New choices keep growing as old ones persist—it’s and, not or.

In 2018, the German automotive conglomerate Volkswagen announced talks to form a joint venture with Didi Chuxing, China’s biggest ride-hailing service. The partnership would include Volkswagen managing a fleet of around 100,000 cars for Didi, some two-thirds of which would be Volkswagen models. At first glance, this announcement might sound like a major fleet sale for Volkswagen. But Marcus Willand, a partner at MHP, a consulting firm that is part of Porsche (itself part of Volkswagen), saw it differently: “Actually, you could read this transaction as a signal that Volkswagen was slipping back one link in the mobility supply chain, going from major OEM [original equipment manufacturer] to tier-1 supplier.”

Hagen Heubach, global vice president of SAP’s automotive industry business unit, is responsible for leading the entire end-to-end solution portfolio for automotive customers at SAP. His department is responsible for formulating a central strategy and pushing strategic engagements in the automotive space and the future of mobility. Through his customer engagements, he has observed a profound change in attitude: “All our customers—OEMs, truck manufacturers, bike manufacturers, suppliers, national sales companies, mobility providers—are facing a run-and-disrupt scenario. They say ‘Hey, I need to run a very profitable and traditional business, and, at the same time, I need to disrupt myself into this new, sustainable mobility world.’

In the last few years, CASE has become a rallying cry for rapid change in the automotive sector. In this framework, vehicles and mobility are connected, autonomous, shared, and electric. In the discussions for this book, both Willand and Heubach made the case for CASE.

Even if the car manufacturers carefully choose a focus in the CASE space, they must still keep up with evolving regulations and with changes in consumer demand. Electric vehicle sales represented just 9% of all passenger car sales in 2021, so even with rapidly increasing market share, especially in China and Europe, there’s a long way to go fore-mobility. Stellantis CEO Carlos Tavares has lamented that policymakers, in their publicly announced timelines, appear to “not care” whether automakers have enough raw materials (or time) to support the shift to electric vehicles. ExxonMobil CEO Darren Woods said in an interview that their internal scenarios show that every car in the world will be electric by 2040, interestingly without being concerned that Exxon- Mobil’s overall business would suffer significantly. We’re a still long way off from this scenario. One consequence of this slow-motion shift in mobility is that SAP has had to support automotive customers and their business models in multiple dimensions as they gradually transition.

Jörg Ferchow, chief solution manager at SAP, provides an overview of SAP E-Mobility to build, run, and manage such networks. In this model, vendor-independent charging devices would connect to a cloud solution that uses the Open Charge Point Protocol (OCPP) that has become predominantin the market.

In this young but fast-growing market, SAP expects a wide range of partners who build, service, resell, and operate charge points. Even though electric vehicles only make up about 5% of total vehicles on the road in 2022, already a complex ecosystem of players and processes must be navigated and integrated.

Steffen Krautwasser manages SAP’s impressive global vehicle fleet of 27,000 cars, 17,000 of which are in Germany. He explained how the fleet has evolved and how he has been one of the early adopters of the SAP E-Mobility solution… For a single corporate campus, 600 charge points is a quite significant number. Krautwasser assumes he will need 1 charging station for every 5 cars, which means that he has to plan for a setup of 3,500 charging points in 2030. Already this estimate has required elaborate planning and coordination between SAP’s facilities group and its local electric utility. Bolting charge points to garage walls is the smallest issue. Getting the necessary power infrastructure up and running requires detailed planning and sophisticated agreements with utility providers.

As shown in Figure 3.2, making batteries and pushing their performance to new levels involves a wide range of industries such as mining, chemicals, utilities, mill products, and high tech involved in the lifecycle of developing, producing, servicing, and recycling batteries for electric vehicles.

Shared mobility is definitely not a new concept. In some communities, geographic and spatial limitations, coupled with population trends, have resulted in a long history of shared mobility….Augsburg in Bavaria is a university and tourist town an hour’s drive west of Munich. Augsburg is famous for the Fuggerei, the world’s oldest public housing complex still in use, founded in 1521 by the rich Fugger family of merchants. The municipal utility company Stadtwerke Augsburg (swa) supplies electricity, natural gas, district heating (the next generation of “steam heating”), and drinking water for 350,000 people, and it has also expanded into the mobility space, pioneering a flat rate mobility package in 2019. Isabella von Aspern leads digital transformation at swa and spoke about matching mobility offerings with the services demanded by citizens in her community.

(SAP’s Senta Belay) painted the vision for urban mobility scenarios to include the following:

• Car sharing, in which multiple consumers access a single vehicle
• Ride sharing, in which contracted drivers provide rides to individual consumers
• Ride pooling, in which multiple individuals might share a single vehicle in a trip—a more public version of carpooling
• Ride hailing, in which pooling and sharing services are initiated through mobile devices
• Corporate mobility and mobility budgets, in which organizations co-fund their employees’ travel
• Subscription mobility, in which individual consumers pay to access a multi-vehicle fleet that could contain, for example, different types and sizes of vehicles
• Micro-mobility, in which smaller vehicles, such as bicycles and scooters, are available

Roland Vorderwülbecke, director of IT at Gebr. Heinemann, a global operator of the Duty Free & Travel Value shops at airports, described how 2020 delivered shocks to the travel industry due to reduced flight schedules, airport closures, and international travel bans. In 2021, some travel resumed, but waves of reinfections bogged down the business. Even a surge in travel in 2022 brought continued challenges, such as staffing problems at airlines, security, airport baggage, and other operations.

Enter Catena-X, a network specific to the automotive industry designed to create a single uniform data exchange standard along the entire automotive value chain. SAP, BMW, and a number of other major German companies are founders of this partner network. Heubach summarized its goals: “With Catena-X, we’re getting rid of blockages where the players cannot (or don’t want to) talk to each other on the network. We are building an industry business network where SAP can connect to Siemens, SupplyOn, etc., using the same standards. We are opening up rather than trying to be the dominant player, but in exchange we’re getting so much more interaction, so much more traction with the market with these value cases.

A twin of this post will include video excerpts from conversations with many of these executives so you can put a face and voice to those in the book.

Other posts on the other chapters to come.

SAP BAU Videos – Ch. 5 Lifelong Health

The SAP Business as Unusual book by Thomas Saueressig and Peter Maier was released on December 20. (click on badge on left to link to the Amazon page). The book relies heavily on conversations with SAP, customer, partner, research firm and SAP.iO Foundries startup executives in over 25 countries and on visits to Industry 4.0 and Customer Experience Centers at key SAP global locations.

We ended up with hundreds of hours of videos and 2,500 pages in transcripts, slides and research papers. We plan to showcase a selection of video excerpts for each chapter so readers can get to know the contributors a bit better and get a glimpse at some of the SAP assets described in the book. These are bite sixed excerpts – in most cases less than 5% of the conversations we recorded.

Leading off for Ch. 5 and Megatrend 4 of 8 – Lifelong Health  – is Michael Byckkowski, head of SAP’s healthcare Industry Business Unit (IBU) at SAP. The chapter includes plenty of his commentary and that from other SAP executives and those at Discovery Health, Zuellig Pharma, DXC Technology and others

Maia Surmava, now CEO of US of its Vitality division, explains the phenomenal growth of Discovery Health across countries and sectors from its humble beginnings when S Africa first became an independent nation. She also describes the intense data-centric culture of the company, a legacy of its founders who are both actuaries.

Daniel Laverick, head of digital and data solutions at Zuellig Phama in Singapore, describes for the SAP Business as Unusual book, the overnight need for eCommerce and other digital solutions across 13 Asian countries they service as the COVID pandemic started. He also discusses automation in the form of robots and drones in their warehouses, how blockchain is helping against counterfeiting in that part of the world and the complexities of cold chain logistics for vaccine distribution in distant and tropical destinations.

Copellia Rose, healthcare leader at SAP partner, DXC Technology in Brisbane, Australia discusses for the SAP book, Business as Unusual, enhancements they developed to assist healthcare providers deal with a highly stressed workforce due to the acute pressures resulting from the COVID pandemic.

Mandar Paralkar, head of Life Sciences at SAP, discusses how SAP is delivering new functionality in the form of cloud apps surrounding S/4HANA. He elaborated on two such applications already delivered - Intelligent Clinical Supply Management and Batch Release Hub for Life Sciences and two in early stages of specification and development - Cell and Gene Therapy (GCT) orchestration and Cold Chain logistics.

The twin of this post with text and graph excerpts is here

Analyst Cam: SAP – Enable Now

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Eva Zauke, Executive Vice President, Global Head of Enterprise Adoption at SAP.

She presented earlier about localizations. Customers need software which reflects unique business practices in multiple countries and also have trust and confidence that they can comply with unique government regulations in each of the countries. This time she presents on another role she plays which is focused on enablement of users and facilitating software adoption in the customer workforce.

Think back to the days we used classroom training to learn about features in enterprise software. Often that required spending weeks at a vendor’s facility.  When you hear Eva talk about SAP’s Enable Now you realize how far we have come when the training is delivered as employees are on-boarded, when it is available as in-application help and it utilizes much more friendly e-learning concepts. And as partners train their own employees through a similar regimen, how much better the knowledge transfer.

She goes through several uses cases and describes deployment at 8 customers across industries and countries.

Very nicely done in about 25 minutes.\

 

Salesforce: Plenty of growth markets

Most of the recent analysis I have read about Salesforce has focused on the stakes taken by Starboard Value and Elliott Management. Activist investors play a useful role as they push for efficiencies and resets to increase shareholder value.  I hope in this case, however, the activists don’t just use old playbooks and benchmarks. We have entered a very different world of enterprise applications. Four big drivers – COVID, the Ukraine energy crisis, climate change urgency and major digital transformations – have opened up a slew of new enterprise application markets.

Take intelligent returns in retail as nearly 15-20% of ecommerce sales are returned and have to be efficiently restocked, refurbished, scrapped or donated to charity. Or complex CPQ as companies “servitize” and bundle products, services, spares, financing and more in outcome based contracts. Direct to consumer models that take advantage of new micro-fulfillment ecosystems. Field service of complex equipment which leverage mixed reality and digital twins. Smart insurance as cars get smarter and more connected. EV battery charging operations. Applications for the emerging hydrogen economy. Applications for the growing utility prosumer market. Telemedicine. Digital mortgages.

I could highlight another hundred such applications which have emerged or accelerated in the last few years. These are nascent markets and easy to dismiss.  There is plenty of wishful thinking – help me find the next ERP or CRM market. I have been in the industry long enough to have seen when both ERP and CRM were tiny markets. I have seen them mature and I am seeing them get commoditized as too much investment has chased after core functionality in each.

I have spent a fair amount of time with Salesforce’s vertical teams and many have presented in my Analyst Cam video series. They are not anywhere as deep as SAP’s vertical capabilities but that is by design. Salesforce focuses on front office, revenue centric apps, not as much on operational areas that SAP thrives in. But compared to other enterprise vendors and even hyperscalers, Salesforce is very well positioned when it comes to many verticals. 

As I like to say business as usual, circa 2019, is a recipe for mediocrity. We have had too many black swan events in the last few years to pretend the world has not turned upside down. One of my recommendations as Salesforce and its investors chart a new course is to double down on its application savvy and lead its customers with a new generation of enterprise applications. Plenty of growth opportunities to mine and generate shareholder value. 

SAP BAU excerpts – Ch. 5 – Lifelong Health

As part of the launch of the Business as Unusual book (click on badge on left to get to the Amazon page) by Thomas Saueressig and Peter Maier that we helped conduct interviews and research for, we will share excerpts from each of the 10 chapters/300 pages, and also give you a “behind the scenes” view by sharing snippets of some of the over 100 SAP, customer and partner video interviews that ended up in the book.

Here are some excerpts from the fourth Megatrend – Lifelong Health

The last few years have been sobering: As we reflect on the challenges we’ve faced, we must also look ahead to how these challenges and their solutions can be applied in the years ahead. We’ve seen exciting advancements in many spaces. The clinical trials for the COVID-19 mRNA vaccines were some of the quickest ever recorded. The logistics of global vaccine distribution were complex, demanding cold-chain specifications, and many distributors came through with flying colors. Applying machine learning to mRNA biology is leading to potential new applications and drug candidates. Telemedicine took off. Hospitals learned to reconfigure their facilities and workforces at breakneck speed. The lack of previous investment in public health highlighted a need for correction. Mental health received a lot more focus. Many companies elevated the role of the chief medical officer (CMO). Ordinary citizens became much more medically aware thanks to COVID-19-tracking dashboards like the one at the Johns Hopkins University School of Medicine. Focus on value for money has grown, increasing to attention to the many inefficiencies found in healthcare systems, especially in the US.

Let’s start with a perspective from Michael Byczkowski, SAP’s global vice president and head of the healthcare industry business unit. While healthcare is a highly local affair due to myriad regional rules and certifications, Byczkowski brings a global perspective when dealing with healthcare customers and partners around the globe—whether in Australia, Canada, Germany, Singapore, South Africa, the UK, the US, and beyond.

Byczkowski then turned to how workforce resilience, sustainability, and mental health became crucial because of the frequency of mutation of the COVID-19 virus, which brought waves of variants and thus surges of new patients and uncertainty about whether previous treatments and protocols would continue to be effective. He focused on Coppelia Rose, global human experience management and healthcare leader at DXC Technology in Brisbane, Australia.

As described by Rose, DXC designed a solution: We specifically saw an opportunity to help frontline healthcare workers and developed an eight-module Workforce Suite for Healthcare (available on the SAP Store). What we saw with the frontline workers was stress and burnout. So, we said, ‘What could we do to support that?’ It’s all well and good to measure it. We can do a survey and measure stress. But what are we offering to actually help on the ground? DXC developed a mental health support app that complemented the solution. This mobile application for frontline healthcare workers allows them to connect with other people in a similar role. Working long hours in protective gear fighting for (and often losing) the lives of patients created extreme stresses for frontline workers, and connecting with peers to talk about their experiences and struggles was important: I was interested to learn about the moral injury associated with healthcare workers where they ask, ‘Could I have done more? That patient didn’t get to say goodbye to their family, and I was standing there with an iPad.’ It’s different from trauma. Exposure to trauma is, ‘I’ve seen patients that have lost limbs.’ But with COVID they suffered from what is called moral injury, and that’s a different thing to cope with.

The solution uses features from SAP SuccessFactors. Then, DXC brought in SAP Fieldglass capabilities for contingent workers, travel nurses, agency nurses, and locum tenens (temporary) physicians. (Locum tenens is Latin for “placeholder.”) Next, they brought in Qualtrics XM for the employee experience and extended that product to incorporate an Oldenburg Burnout Inventory calculator, which runs on SAP Business Technology Platform (SAP BTP), to measure occupational burnout and stress.

SAP already had the Information Collaboration Hub (ICH) for Life Sciences to help the industry in its elaborate track-and-trace requirements to fight counterfeit drugs. The solution creates a network of marketing authorization holders (comparable to original equipment manufacturers in the automotive and other discrete manufacturing industries), contract manufacturing organizations, providers of active pharmaceutical ingredients and other substances, third-party logistics providers, and regulatory bodies. The ICH can exchange large volumes of data and messages in different formats to meet quality management and regulatory requirements. The Vaccine Collaboration Hub shown in Figure 5.2 extended the capabilities of the ICH to meet pandemic-specific requirements

Byczkowski commented on the importance of trusted data custody: Our core advantage at SAP is that we are trusted as being a kind of ‘Switzerland of data.’ We have a solid reputation across all industries as a good custodian of our customers’ processes and data. We don’t want to look at their data or mine them for secondary use cases. It’s like when you rent a safe deposit box in a bank vault: what you put in the box is not our business. SAP also doesn’t own our own clinical information system, so we are an attractive partner for health system vendors and healthcare providers. Because we are neutral, we can connect companies seeking to derive additional value from their data in the data economy."

In “The Industrialization of Intelligence,” Byczkowski cited the example of British ship doctor James Lind who conducted “the first controlled comparative study in the history of medicine in 1747, identifying the use of citrus fruits as an effective way of treating scurvy.” He also used a modern example how far we have come in another paper: The AI-driven Ping An Good Doctor online platform in China has more than 400 million registered users for services like online consultations, referrals, registrations, and online drug purchases. They have an in-house medical team with more than 1,800 experts. The Good Doctor knows 3,000 diseases and is continuously trained with data from hundreds of millions of consultations. The AI system doubles the efficiency of doctor consultations, and greatly reduces the number of misdiagnoses and missed diagnoses. This type of high-tech diagnostics is available in the most remote Chinese village and improves the patient’s experience with remote medical consultations.

We talk a lot about patient-specific drugs for rare diseases caused by monogenic disorders. There a drug is specifically designed for individual patients and their genetic setup. Defective genes can often be fully repaired, healing the patient completely. This can truly save people’s lives—and spare public health systems millions of dollars/euros because one does not need to treat or support the patients over their entire remaining lifetime. But more often one checks for specific biomarkers to ensure that a drug can actually deliver the expected results and not just cause negative side-effects. In breast cancer, for example, a treatment with Olaparib is only viable if the patient has a mutation in her BRCA1 or BRCA2 genes. The research is accelerating: In recent years, drugs to treat what are considered “rare” diseases represented 25% of all newly introduced drugs with new active ingredients.

Discovery Health….was founded in Johannesburg, South Africa, in 1992. One of its founders, Adrian Gore, wrote in McKinsey Quarterly about “gut instinct” when he saw the connection between lifestyle choices and sustainable insurance: When I started out as a young actuary in a life insurance company, South Africa was moving from an apartheid state to a proper democracy and was facing some serious challenges, particularly in healthcare. There was an undersupply of doctors, an unusual combination of disease burdens, and a new regulatory environment that had zero tolerance for the discrimination of the past, and rightly so. This meant you couldn’t rate customers on preexisting conditions. Finally, unlike most countries, where a national system partially covers risk, there was no unified public health insurance system at that time. When you put those four things together, sustainably financing healthcare becomes a very complex undertaking. When we formed Discovery, we asked, ‘How do you innovate and build a health insurance system that can work in this kind of environment?’ Our gut instinct was that if you can make people healthier, you can offer more sustainable insurance. It turns out that three lifestyle choices (smoking, poor nutrition, and poor physical activity) contribute to four conditions (diabetes, cancer, heart disease, and lung disease) that drive over 50% of mortality every year. So, lifestyle choices are fundamental to any social insurance system. The behavioral science tells us that people need incentives to make a change. But that wasn’t universally known at the time; we were just a start-up acting on a hunch.[

Maia Surmava was chief information officer (CIO) and head of clinical systems at Discovery Health and has recently been appointed CEO of Vitality US, a subsidiary of Discovery Health. She explained her company’s multi-faceted profile: We’re not your traditional health insurer that measures and prices risk; rather, we manage and reduce risk, delivering on our core purpose of making people healthier. As a payor and care enabler, we play several roles. For example, in the digital health space, we empower our members with health insights and identify preventable risks and best actions to improve their health. We’re laser-focused on navigating members to the right care, at the right place, at the right time, and supporting our members at the key points in their healthcare journey. At the same time, we empower providers with insights to personalize treatment and trigger appropriate interventions.

Zuellig Pharma, based in Singapore, is a $13 billion distributor for most major pharmaceutical companies. Daniel Laverick is the head of digital and data solutions at Zuellig Pharma. He is driving a “digital-first organization” in a region where many of their 13 Asian markets still run immature technologies on immature infrastructures. Zuellig Pharma had to move fast when the COVID-19 pandemic changed the distribution of medical supplies and vaccines to both big pharmaceutical chains and small pharmacies. Laverick described the challenge at the start of the pandemic: The pharmaceuticals industry relies on traditional, very labor-intensive processes. Sales reps would go out and visit customers. Collectors would pick up cash from the customers and take it to the bank. These were very manual processes. Overnight, there were no sales reps and there were no collections. People couldn’t process orders in the offices, and so we had to pivot very quickly just to run our standard day-to-day operations. We always had a plan to launch e-commerce and digitize our order-to-cash process. We always had a plan to automate collections rather than send out collectors. But this was a 24- to 36-month plan to roll out across 13 markets. We had to hugely accelerate that and launch in eight weeks in all of the markets.

Zuellig Pharma has a unique digital application, the eZTracker. This blockchain-based solution is built on SAP BTP and delivers the following features:

• Product verification for patients and healthcare providers to assure key stakeholders of product authenticity and quality, facilitate patient education, and streamline product recalls
• Tracking and tracing of sales rechanneling activities to monitor gray markets, reduce revenue loss, strengthen brand trust, and comply with local regulations
• Enhancing cold chain monitoring to verify that products are stored and delivered at temperatures that maintain their quality
• Driving auto-replenishment to minimize medicine stock shortages and facilitate customer returns
• Streamlining e-product information to shift from paper leaflets to digital documentation without compromising trust

SAP’s Mandar Paralkar talked about some of the rapid changes in life sciences, emphasizing both the need for improving value for patients and for common sense in regulations. We tried to keep pace with his rapid-fire examples: Traditional pharma makes small, comparatively simple, chemically synthesized molecules. Take aspirin, as an example. Each molecule is made from only 21 atoms in C9H8O4, and they flood your body to take your headache away and make your blood thinner. If you think that paracetamol is more sophisticated: C8H9NO2 has one less molecule and features a little blue extra nitrogen atom. But the industry is moving to big, complex molecules made from many thousands of atoms; they are called biologics. Here is a random example: Adalimumab is an antirheumatic drug with the sum formula C6428H9912N1694O1987S46. Of course, big molecules are more difficult to manage during the manufacturing process, and they are way more expensive to produce than small molecules. But they also promise great health outcomes, so patients will hope to get their (or their health insurer’s) money's worth.

SAP has been accelerating new industry-specific functionality delivered as cloud extensions that keep the digital ERP core free from modifications and complex add-ons. In prior years, we have delivered the cloud solutions SAP Information Collaboration Hub for Life Sciences and SAP Advanced Track and Trace for Pharmaceuticals. Paralkar provided an update on new cloud applications around broader functionality for R&D and clinical projects, sourcing and procurement, supply chain resilience, sustainable and compliant manufacturing, and commercialization via SAP S/4HANA, focusing on three new cloud applications (Intelligent Clinical Supply Management, Batch Release Hub for Life Sciences, Cell and Gene Therapy (CGT) Orchestration) and one (cold chain logistics) where SAP is in the early stages of developing specifications.

The department of urology at UKHD initiated the OP 4.1 project to develop a prototype digital platform for the operating room of the future that could better put technologies to work, such as robotics and IoT devices. Cooperating partners on this project include the German cancer research center DKFZ, the endoscope maker KARL STORZ, mbits imaging, SAP, and Siemens Healthineers. The project is funded by the BMWi, Germany’s Federal Ministry for Economic Affairs and Energy. Byczkowski of SAP added some perspectives on the project: One of the goals of the project is to show that we can simplify the market introduction of software-based innovations into clinical practice. For most software innovations, the barriers to market entry are currently still too high, which is why many do not make it into the operating room and into the daily clinical routine. This is often due to a lack of access to relevant data from medical devices or due to limited opportunities for professionally implemented sales and support.

Byczkowski has a bird’s-eye view of all the players that influence healthcare and their interactions. He envisioned a network for life sciences, healthcare, and beyond to inspire innovative business models, products, and services, all eventually supporting processes across industry boundaries, as shown in Figure 5.4.

Byczkowski was enthusiastic about the success of large platform providers in other sectors: When you look at Amazon, Alibaba, or Apple, you realize that the platform business model offers great commercial opportunities with a global reach. Different vendors and types of vendors can be all brought together on one single platform offering excellent consumer experiences.

A twin of this post will include video excerpts from conversations with many of these executives so you can put a face and voice to those in the book.

Other posts on the other chapters to come.

Analyst Cam: SAP – Think global, act local

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Eva Zauke  Executive Vice President, Global Head of Enterprise Adoption at SAP and discusses the massive localization effort as the vendor has 585 local versions (including support for payroll processing in 104 countries) as it supports 200+ million users at 440k customers worldwide.

The pace of legislation their software has to help their customers stay in compliance with keeps growing with COVID, and now sustainability regulations around a growing number of plastic taxes and ESG reporting. In 2022, these were 1300 legal changes across the countries. And this is a growth of 10% year over year.


click on the image to enlarge

 She also says governments are becoming more “creative” and digitalizing compliance a lot more. They are also adjusting to business model changes as companies move to more subscription billings. As governments turn over in most democracies, they invariably bring new legislation and override previous legislation. In turn, customers are constantly evaluating new locations as they try to avoid high-inflation, supply chain bottlenecks and high-tax regimes and jurisdictions with what they consider onerous requirements. So beyond compliance, there is also a planning angle for the CFO. She covers a handful of real world customer scenarios.

She ends with a reminder that SAP was born global 50 years ago. In fact, I have heard, Hasso Plattner, one of the co-founders talk about their work with one of their first customers, ICI, the global chemical company. This video takes you down that memory lane.

Very nicely done in about 25 minutes.

SAP BAU Videos – Ch.7 Sustainable Energy

The SAP Business as Unusual book by Thomas Saueressig and Peter Maier was released on December 20. (click on badge on left to link to the Amazon page). The book relies heavily on conversations with SAP, customer, partner, research firm and SAP.iO Foundries startup executives in over 25 countries and on visits to Industry 4.0 and Customer Experience Centers at key SAP global locations.

We ended up with hundreds of hours of videos and 2,500 pages in transcripts, slides and research papers. We plan to showcase a selection of video excerpts for each chapter so readers can get to know the contributors a bit better and get a glimpse at some of the SAP assets described in the book. These are bite sixed excerpts – in most cases less than 5% of the conversations we recorded.

Leading off for Ch. 7 and Megatrend 6 of 8 – Sustainable Energy  – is Benjamin Beberness, Global Vice-President for the Oil, Gas, and Energy Industry Business Unit (IBU) at SAP. He asks will the energy sector  be comparable to a Kodak or an Amazon, and believes it is the latter innovating and changing rapidly.  

The chapter includes plenty of his commentary and that from other SAP executives and those at Accenture, Shell, Galp Energia and others

Muqsit Ashraf and David Rabley discuss Accenture's research and guidance on the complexities of energy transitions across sectors and global regions.

Andy Brown, CEO of Galp Energia discusses the low carbon transition 9inlcuding a major initiative around lithium processing for batteries at Galp Energia, an energy company headquartered in Lisbon, Portugal and broadly the role for other oil and gas/energy companies - the need for them to "build the plane as you fly it" and in reverse the need for societies to leverage the mega project management expertise, the risk taking appetite, and the technology and engineering skills of the major oil and gas companies.

Daniel Sellmann, Marcus Bechmann and Mateu Munar of the Utilieis IBU at SAP discuss how utilities are at the forefront of a low carbon transition. They discuss decentralized grids, prosumers, community batteries, the opportunity around electrification of transportation and many other trends.

Peter Koop, Global Lead for Energy Transition for the ENR Industries at SAP, discusses the growing excitement for a hydrogen fueled world. He discusses the various "colors" of hydrogen and the likely use cases across various industry sectors.

The twin of this post with text and graph excerpts is here

SAP BAU excerpts – Ch. 7 – Sustainable Energy

As part of the launch of the Business as Unusual book (click on badge on left to get to the Amazon page) by Thomas Saueressig and Peter Maier that we helped conduct interviews and research for, we will share excerpts from each of the 10 chapters/300 pages, and also give you a “behind the scenes” view by sharing snippets of some of the over 100 SAP, customer and partner video interviews that ended up in the book.

Here are some excerpts from the sixth Megatrend – Sustainable Energy

Figure 7.1 shows that, over the past 800,000 years and many ice ages, the concentration of carbon dioxide in the atmosphere has oscillated between 200 and 300 parts per million (ppm). Just a blink of the eye ago (in 1950), the carbon dioxide concentration exceeded the former maximum and has continued to shoot up ever since.

Using oil and gas will deplete the planet’s reservoirs over time, even if we continue to discover new oil and gas deposits. We already need more sophisticated extraction technologies: In early rushes for oil, all you had to do was poke a hole in the ground and install a tap. Today, we need hydraulic fracturing and horizontal drilling and cathedral sized offshore rigs. Using oil and natural gas as fuels can be considered a barbaric use of hydrocarbons that have enabled the huge field of organic chemistry to make the paints, plastics, and performance materials that shape our world.

Benjamin Beberness, vice president and global head of the oil and gas industry business unit at SAP and a former chief information officer (CIO) in the utility industry, explains the different understandings of the word “energy”: “In the utility business, when you talk energy, you’re thinking of electricity and of the natural gas that we pipe to households. In the oil and gas industry, by contrast, when you talk energy, you’re talking mostly about energy from fossil hydrocarbons, about generating renewable energy with wind and solar, and about hydrogen to store and move renewable electricity over space and time.”

Stephan Klein, senior vice president of SAP Customer Success, commented on how the discussion and concerns about sustainable and renewable energy span across industry boundaries: Earlier this year, I was quite surprised when the organizers of the World Utilities Congress in Abu Dhabi asked me to speak about whether liquefied natural gas (LNG) is a transitional fuel or a long-term component of the energy mix. Previously, LNG would be a recurring topic in oil and gas conferences, and a utilities event would have me speak about renewable energy production or the digital prosumer. This time, they wanted to discuss the role of hydrogen and chasing zero emissions. Utilities or oil and gas conference—different attendees, but the same big topic: the sustainable energy transition.”

Discussions about sustainable energy are not limited to Europe. Darren Woods, CEO of ExxonMobil, spoke about climate change and ExxonMobil’s business in a 2022 interview with CNBC: Two years ago, [the conversation was all] wind and solar, period. Today, it’s wind and solar and carbon capture and hydrogen and biofuels and ammonia. So already, in the course of a very short period of time, there’s a much broader recognition that there are a number of solutions required to make this thing work.

Accenture has long been a strong SAP partner in the oil and gas and utility industries. Muqsit Ashraf, CEO of Accenture Strategy, has been helping clients plan for energy transitions. He added a historical perspective on such transitions: “The world has been in an energy transition for centuries. We moved from biomass to coal to oil to now a multi-fuel energy mix. The two distinctive attributes of the current transition are significant demand-side changes required alongside supply-side shifts, and the convergence of multiple sectors needed to enable the transformation of the energy system.”

We are moving from single dominant energy sources to an energy mix of multiple sources. In its publication The Changing Joule Dynamic, Accenture noted the transition from the predominant use of wood to coal in the early twentieth century, followed by oil taking over in the 1960s. Since then, coal and oil have been joined by gas, nuclear power, hydropower, and wind and solar power in the market (with biomass such as wood sources on the decline). The paper doesn’t identify a dominant energy source: “No single winning fuel in the medium-term future. Uncertain paths for all energy sources.” Definitely an interesting analysis. Keep in mind that Accenture’s publication focuses on the changing energy mix and shows a drop of coal and oil in the energy mix, but in absolute numbers, the total energy demand has still skyrocketed from 7,300 terawatt hours (TWh) in 1840 to 159,000 TWh in 2021—that’s a factor of 22.

As shown in Figure 7.2, Det Norske Veritas (DNV), anticipates that energy consumption will peak at 617 exajoules in 2030 and then slowly decline to 590 exajoules in 2050. In that window, it projects, the share of renewable energy such as wind and solar will increase; hydropower, bioenergy, geothermal, nuclear fuels, and natural gas will stay flat; and the consumption of oil and coal will decline. By 2050, DNV anticipates that renewable energy (wind, solar, biomass, hydropower) and fossil energy (oil, gas, coal) will be of similar orders of magnitude. We won’t be the judge of where nuclear energy falls in this mix.

Peter Koop, global lead for energy transition for the energy and natural resources sector at SAP, has watched the renewables sector mature since he worked on his thesis at the Fraunhofer Institute for Solar Energy in the mid-1990s. Koop explained his point of view that solar power disrupts other energy carriers: “One was a large-scale power solar plant in Chile. The winning bid came in at $0.011 per kilowatt-hour. That’s full production cost. Another was in South Africa. The tender was for a gigawatt, guaranteed to be available from 5 am to 9 pm. The bidders could bid nuclear, coal-fired, gas, renewable fuel, whatever— no constraints. The winner was a solar and battery combination, so a large solar farm and batteries to store the electricity for use in the morning and in the evening. That was the cheapest, most reliable combination. That says everything. For new projects, renewable energy plus batteries should be the solution to consider.”

Daniela Sellmann, global vice president and head of the utilities industry business unit at SAP, cites another nation’s use of primary energy sources: “Iceland already started its green journey in the 1970s due to skyrocketing oil prices and its respective reliance on this resource at that time. Thus, the country has been amongst the first to invest into geothermal energy, and is now acting as worldwide sparring partner for other utilities on their way to a greener future. Today Iceland’s main primary renewable energy comes from geothermal (66%), with hydro in second place. Iceland is a role model with 85% of the total primary energy supply being derived from domestically produced renewable energy sources. This is the highest share of renewables in any national total energy budget. The remainder 15% are mainly due to transportation and shipment.”

Beyond the new load placed on power grids, yet another concern is the range of relatively scarce minerals required for an energy system moving to renewables. For example, do we have enough lithium, nickel, cobalt, and other minerals for the batteries and motors needed for electric vehicles and for power storage? The CEO of automaker Stellantis, Carlos Tavares, has warned: “The speed at which we are trying to move all together for the right reason, which is fixing the global warming issue, is so high that the supply chain and the production capacities have no time to adjust.

Simon Michaux, research professor of geometallurgy from Geological Survey of Finland (GTK), gave an even more cautious perspective in a report: “The mass of lithium-ion batteries required to power the 1.39 billion EVs proposed in Scenario F would be 282.6 million tons. Preliminary calculations show that global reserves, let alone global production, may not be enough to resource the quantity of batteries required.”

For now, let’s go back to DNV’s research showing the projected energy mix in 2050 and to Accenture’s analysis: Both suggest the need for a system-wide transformation of the energy system. Simply replacing gas-guzzling cars one-to-one with electrical vehicles will overload the grid if the grid doesn’t adapt. Grid-level battery storage for 100% of intermittent wind and solar energy is certainly neither practical nor affordable. The energy system of the future will be diverse. As DNV predicts, hydropower, nuclear, and geothermal energy will continue to play small but varied roles on a global scale even in 2050. But preference for and access to these sources is often regional. For example, France and several other EU countries will continue to use nuclear energy as an important source of electricity. Growing yet cautious optimism surrounds small modular reactors (SMRs) that can be slotted into brownfield sites in place of decommissioned coal-fired plants, but we sit on the fence here, at least until the technology has proven itself. For Norway and Brazil, both blessed with plenty of deep valleys and rivers, hydroelectric power will continue to be the dominant energy source. For Iceland, Kenya, and the Philippines, geothermal energy is critical. All these energy sources go through their individual waves of innovation—like supercritical geothermal power and gravity powered energy storage.

Our estimates suggest that about 80% of all business transactions worldwide touch at least one SAP system, so we must enable the business processes and business analytics that help our customers and the world economy transform to a system of renewable energy. On the global, national, and industry levels, the overall framework for this transition must be defined. But actions making a difference happen at the corporate, community, and personal levels. Koop focused on SAP’s areas of action, as defined in the SAP Climate Strategy Framework.

SAP’s five pillars reflect mitigation and adaptation strategies. Mitigation must be considered at a global scale since greenhouse gas molecules stubbornly ignore borders, while adaptation is occurring at a local level. For example, many coastal cities are building defenses to protect against sea-level rise, and farming communities are moving to drought-resistant crops.

Accenture’s David Rabley said that, in the popular narrative, people love to jump to the last element—the frontier discussion—and to debate the role of synthetic fuels and green, blue, and pink hydrogen. He finds that this attitude jumps the gun, and he cautioned that no simple path exists to immediately decarbonizing the transportation, cement, or steel industries: “We first need to find solutions that work with today’s assets. There is a significant set of near-term opportunities around driving efficiencies, driving increased energy management solutions, impacting demand, impacting the feedstocks of today’s value chains.”

On Rabley’s point about understanding the energy system to decarbonize it, Beberness discussed the concept of “emissions intelligence” that SAP is piloting with Accenture: “If you look at what software companies are providing, including SAP, the focus is on outward-facing reporting, as with the SAP Sustainability Control Tower. But in addition, our CEO, Christian Klein, talks about a green ledger. For finance, companies have their credits and debits. They now require the ability to track their environmental, social, and governance credits and debits as well. SAP is the only company that can extend the financial ledger with a green ledger to integrate emission-related factors in daily operational decisions. Effective action to implement the net-zero strategy so many of our customers are committed to emission intelligence.”

According to the Illinois Petroleum Resource Board (IPRB), one barrel (roughly 119 liters) of crude oil can produce either 39 polyester shirts, 750 pocket combs, 540 toothbrushes, 65 plastic dustpans, or 23 hula hoops—just a few examples among thousands of other products. You may argue that we could make do without pocket combs and hula hoops, but the IPRB also lists N-95 masks, cell phones, computers, and car tires— hydrocarbon-dependent products we would sorely miss. Essentially, pharmaceuticals and everything made from plastic or other high-performance materials depend on the oil industry.

As Sellmann explained: “The early experience with renewable energy has motivated utilities companies to develop new solutions for their industrial customers. Now, the proliferation of storage batteries, electric vehicles, connected fridges and digitally controlled A/C systems creates new opportunities to engage with consumers and make them part of a decentralized ‘virtual’ power plant. If you allow your utility provider to remotely control storage batteries, your freezer, and when exactly your car gets charged, you probably won’t even notice the demand side management, but you’ll contribute to stabilizing the grid and maximizing renewable energy. But for this we require heavy investments from utilities in smart and intelligent technologies and infrastructure.”

Sellmann’s colleagues Markus Bechmann and Mateu Munar discussed new opportunities for utilities. Bechmann commented: “In the old energy world, a consumer was a point of delivery with a meter and an address for the bill. Now, utilities want to sell and deliver comprehensive energy services. The transition from consumer to prosumer is a big shift in the industry.”

Munar focused on an example from Australia: “We are starting to see ‘community batteries,’ where prosumers can store excess power from their solar panels. It is allowing utility companies to delay investments in substations. The good news for us: You need new digital capabilities to make these models work, and our SAP for Utilities solutions are the platform to develop, deploy, and operate these innovative services.”

Koop is particularly excited about green hydrogen from Australia. Fortescue Future Industries and its partners plan to produce 15 million tons of green hydrogen per year by 2030. For Koop: “Australia today exports coal. To replace that revenue stream or even massively increase that, it’s logical to invest in green hydrogen. In the future they could also become a big exporter of green steel because they have the iron ore. Green steel should be in high demand as cities grow with global population and increasing urbanization.” Koop anticipated similar investment in hydrogen production in Middle Eastern and African countries, which enjoy a lot of space and sunshine like Saudi Arabia, as they look to replace oil revenues or develop new industries.

In recent years, Galp Energia has been expanding its retail business and investing in renewable energy sources. Beberness described the radical transformation journey Galp Energia has been on, led by a CEO who envisions the company becoming “the Amazon of energy.” That CEO is Andy Brown, who arrived to Galp Energia in early 2021 after a 35-year career at Shell.

At CERAWeek in 2022, Brown outlined his goals for Galp Energia: to spend half its capital on zero-carbon dioxide sources of energy and to reduce its own emissions by 40% by 2030.

Brown even hoped that the oil and gas sector would become more ambitious and saw creating credibility in sustainable energy investments as a central issue for oil and gas producers: “How we build credibility around investing large amounts of capital in the new energy space is, I think, is a crucial thing for oil and gas companies to come to terms with. This middle ground is biofuels, hydrogen, and carbon capture and storage because it’s business we understand, we can demonstrate it, we can deliver in that space. But we have to place very big bets to create momentum for the energy transition. It will need a lot of commitment, dedication, investment, risk-taking on new technologies and new value streams that the companies have yet to demonstrate.”

Carlos Maurer, executive vice president for sectors and decarbonization, laid out Shell's strategy for decarbonizing global sectors, using aviation as an example: “It includes participating in the Clean Skies for Tomorrow initiative for aviation and our effort around Sustainable Aviation Fuel (SAF). It currently accounts for less than 0.1% of the world’s consumption of aviation fuel. We announced our ambition to have at least 10% of our global aviation fuel sales as SAF by 2030. We are working with Rolls-Royce to test 100% SAF in airplane engines for the first time.

As summarized in Figure 7.6, Shell’s Energy Transition Progress Report for 2021 listed the variety of energy pathways for some sectors, noting that a fifth supply—mitigation and offsets—focuses on CCS and on nature-based solutions and is applicable across all sectors.

Accenture’s Ashraf emphasized the need for flexibility during the energy transition, which extends to several industries and geographic regions at different paces. For example, Accenture is collaborating with Equinor, Shell, and Total on a carbon capture and utilization storage project called the Northern Lights. Meanwhile, most industry leaders are developing a broad portfolio to develop solutions during this energy transition.

Time will tell which initiatives and ideas will develop the biggest momentum and impact in the transition to a sustainable energy system that will preserve fossil hydrocarbons for more intelligent uses than burning them and create a system that doesn’t require our great-grandchildren to pedal for 10 hours to generate a single kWh of electrical energy.

A twin of this post will include video excerpts from conversations with many of these executives so you can put a face and voice to those in the book.

Other posts on the other chapters to follow.

Analyst Cam: Visier – Workforce Analytics

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Jake Sorofman, CMO at Visier, a Vancouver, BC based vendor focused on people and broader workplace analytics. The management team traces its lineage to Business Objects and Crystal Reports with ties to the city, both now part of SAP

Jake does a nice job describing their niche in the market and positioning against analytical capabilities of bigger HCM vendors and specialists like Tableau. A telling comment from him is “Only about 15% of employee data lives inside of your HR”

He adds “On average, our customers are integrating data from seven to 12 different systems, where people data lives. We normalize it, we standardize it. And we deliver it as a set of insights to anyone who needs it to make better decisions, whether that's the HR team, HR, business partners, people managers, executive teams.  A key differentiator of Visier is that we've prebuilt 2000+ questions and corresponding analytic models to answer these questions.

So this is not a custom build platform, It is very different from what you'd expect from a general purpose, Business Intelligence platform. We are an analytic application that is built around understanding people with 80 to 90% of the questions you'd ever need to ask available out of the box.”

Another use case is customers benchmarking against peers using their database of metrics. They go to market direct and also embedded in the solutions of a few partners.

The slide below shows how SapientInsights rates them against the competition (BTW Stacey Harris, author of the slide, has summarized her annual results in this series – see here

As a CMO (and former marketing analyst at Gartner), he thinks we have been overly focused on the customer and on operations for the last couple of decades. It’s time for focus on human resources. Vinnie Vertical happens to think it is time for industry functionality but he does make an important point.

Very nicely done in about 20 minutes.

SAP BAU Videos – Ch.6 The Future of Capital and Risk

The SAP Business as Unusual book by Thomas Saueressig and Peter Maier was released at the end of December (click on badge on left to link to the Amazon page). The book relies heavily on conversations with SAP, customer, partner, research firm and SAP.iO Foundries startup executives in over 25 countries and on visits to Industry 4.0 and Customer Experience Centers at key SAP global locations.

We ended up with hundreds of hours of videos and 2,500 pages in transcripts, slides and research papers. We plan to showcase a selection of video excerpts for each chapter so readers can get to know the contributors a bit better and get a glimpse at some of the SAP assets described in the book. These are bite sixed excerpts – in most cases less than 5% of the conversations we recorded.

Leading off for Ch. 6 and Megatrend 5 of 8 – Future of Capital and Risk – is Falk Rieker, Global Head of Banking IBU at SAP. The chapter includes plenty of his commentary  and that from other SAP executives and those at Bank of London, Deutsche Börse Group and ERGO Mobility Solutions.

Anthony Watson, Founder and CEO of Bank of London explains their role as a clearing bank (the first approved in the UK in decades) and how it is more of technology vendor, not a traditional financial institution.

Lars Bolanca, SVP of Deutsche Börse Group, one of the most influential global exchange/market infrastructure providers, explains their value chain.  He also describes the balancing act of constantly innovating to keep up with new financial instruments and their massive volumes while complying with stringent regulations in multiple global jurisdictions.

Karsten Crede, CEO of ERGO Mobility Solutions, part of Munich Re, presented at an SAP Fioneer Conference. In this excerpt, he explains how auto insurance has to become smarter in line with increasingly smart vehicles and how insurance companies need to step up as strategic partners and not be viewed as Tier 3 suppliers in the auto supply chain

Stuart Grant, Head of Capital Markets at SAP, discusses the fintech space and how SAP works with next-gen financial institutions like Mollie and Bank of London.

The twin of this post with text and graph excerpts for this chapter is here 

The many shades of verticalization

Vinnie Vertical is wary of the term “industry clouds”.  I liked the self-checking for stores AI solution Google presented to analysts this past week in prep for NRF, the big retail show in New York. However, too often there is focus on general-purpose cloud infrastructure, workflow or platform technology.

To me, vertical software is about industry-specific functionality. As one of my managers at PwC used to ask, somewhat crudely, “What do it do?”  

I see industry offerings from vendors falling into 5 broad buckets – the last 2 reflect functionality which has spawned from major shocks from COVID, Ukraine crisis, climate change urgency and digital transformations in the last few years. They have opened up many new industry scenarios and new applications opportunities

Vertical customers, but mostly horizontal functionality

There are plenty of back office (financial, hr, procurement) and CRM vendors with basic industry specific functionality. Everybody needs a general ledger, a payroll, an SFA solution. There is a continuous market for them as companies refresh older versions, as they grow globally or through M&A. However, many of these vendors pretend that just because they have hundreds of banking or utilities customers, they have vertical functionality for those sectors. They may have some features unique for those sectors, but to me that is spray painted, skin-deep verticals.

Vertical, but dated functionality

In this category you have vendors who can genuinely say they have modules for specific industries. However, they often reflect functionality which was designed decades ago. Two good examples are PSA aimed at the service sector and MRP for manufacturing. For PSA, many solutions still mostly optimize employee resources when we have moved to what I call “clover-leaf talent models” 

Also, most PSA vendors have ignored the servitization trend where product companies have been aggressively moving into a different form of services which leverage IoT data, digital twins, techs with mixed reality technology to service complex equipment, and use outcome-based business models and SLAs.  As far as MRP, most were designed to optimize material and labor resources, when the modern shop floor additionally has plenty of robotics and sensors.

Vertical books of record, but difficult to consume

There are vendors who have put significant effort to create what I call “operational books of record” – say claims processing in insurance or core banking or clinical systems in healthcare. Many (most), however, did not invest much time thinking about migration from legacy versions. They assume customer will happily utilize systems integrators for the migration. Many a Board of Directors have reacted with “sticker shock”, rejected the project and told executives to patch the legacy application or in some cases even to custom build the replacement. Clearly, vertical functionality is a “necessary” but not sufficient, condition for adoption. The challenge is too many vendors try to sell wall-to-wall suites. They forget the old adage – “how do you eat an elephant? A small bite at a time”

Contemporary, vertical extensions

Here I am seeing vendors who are starting to target specific use cases like curbside pickup and last mile delivery in retail, micro-fulfilment and related bot technology in logistics, telemedicine in healthcare etc. They are high value and much easier for customers to consume. Look at the many uses cases across industries Salesforce has presented in my Analyst Cam series.  As they describe in their new book, Business as Unusual (click on badge on left) SAP has been developing e-mobility, gene and cell therapy, intelligent returns and other contemporary industry applications as cloud modules.

Orthogonal  applications

Accenture's design agency Fjord, coined the term "liquid expectations" several years ago— "when you experience a service in one industry, it raises the bar for what you expect from other industries." These days those expectations also rapidly travel over national borders. Industry lines are blurring - pharmacies and retailers offer healthcare clinics as an example. As we mentioned earlier, Product companies are selling a blend of digital and labor services – they need CPQ functionality which can bundle product, spare parts, monitoring, maintenance, financing and other elements. SAP’s definition of consumer industries used to be retail, consumer packaged goods, and wholesale distribution. A few years back, they added healthcare and life sciences. Now the scope also includes agribusiness. When you look at applications across processes, regions and industries you find what I call orthogonal applications. No, these are not horizontal applications in category 1 – these are a new breed of applications which cut across multiple dimensions.

In a continually evolving world, Plenty of others will continue ask about multi-tenancy and salivate about ChatGPT. Vinnie Vertical will continue to ask “what do it do in an enterprise setting?”

SAP BAU excerpts – Ch. 6 – The Future of Capital and Risk

As part of the launch of the Business as Unusual book (click on badge on left to get to the Amazon page) by Thomas Saueressig and Peter Maier that we helped conduct interviews and research for, we will share excerpts from each of the 10 chapters/300 pages, and also give you a “behind the scenes” view by sharing snippets of some of the over 100 SAP, customer and partner video interviews that ended up in the book.

Here are some excerpts from the fifth Megatrend – The Future of Capital and Risk

In the 2015 movie The Big Short, actors Margot Robbie and Selena Gomez and celebrity chef Anthony Bourdain explained complex financial terms like synthetic collateralized debt obligations (CDOs) using simple, everyday examples. You may laugh at the oversimplification of arcane economic lore, but consider that Hollywood has come a long way since Mary Poppins, set a century earlier, which showed two young kids causing a run on a London bank over a twopence.

In reality, the average person understands very little of the complexity of financial markets. Even industry insiders struggle to keep up with terms unique to financial markets, like “bear hugs,” “sushi bonds,” “suicide pills,” and the “dead cat bounce.”

This chapter focuses on the banking and financial services space, where the stakes are always high and digital innovation percolates throughout the sector. Banking goes back in time to the dawn of history in Mesopotamia with the first coins and evolved into its modern form in Renaissance Italy in the 14th and 15th centuries. Today, fintech startups attack the foundations of a banking system that is rooted deep in history and epitomized by marble-clad buildings. The insurance industry also looks back on thousands of years of history, and the modern concept of property insurance emerged after the Great Fire of London in 1666.

SAP is largely known as an ERP vendor in industrial markets, but we are also an influential player covering a surprising set of spaces and niches in the vital and fluid financial services sector:

• More than 14,000 banks in 150 countries are SAP customers.
• Half of the world’s central banks and 40% of stock exchanges run on SAP.
• SAP banking systems process more than 1 billion financial transactions every day.
• More than 1,000 banks and non-banks run SAP’s core banking solutions, and more than 1,250 banks run SAP solutions for financial accounting, controlling, and risk management.

(Falk Rieker, global head for the banking industry business unit at SAP) has outlined three main trends across the financial services sector—industry convergence, competition for talent, and business networks—that impact industrywide priorities of hyper-personalization, intelligent operations, cryptobanking, performance and compliance.

Beyond its business network portfolio of the SAP Business Network, SAP Concur, and SAP Fieldglass, among others, we are squarely in the middle of conversations about industry-specific networks like Catena-X across sectors. Customers in the financial sector want to discuss how SAP is shaping ecosystems, how we partner, and which lessons we have learned.

Anton Tomic, who covers the insurance sector and is based in Düsseldorf, Germany, talked about new industry networks: “Our insurance customers are looking at mobility of the future, health of the future, housing of the future, travel of the future, and wealth management of the future. They are embedding themselves and looking to increase their services, expanding beyond their traditional insurance premium revenues.”

(Stuart Grant, head of capital markets at SAP) drew on an example of how a toy company expanded into a completely different industry:  “It’s a bit like when Lego realized their competition wasn’t other toy manufacturers, but rather the likes of Netflix and Amazon and Disney because what they were actually competing for was the time and attention of their customer, who is often a child. And so that’s why they started creating Lego movies. We see the trend that financial services get distributed and commoditized by other industries, disintermediating banks, and insurers from their customers. Can that trend be reversed? Can financial services organizations actually bring capabilities from other industries into their portfolio and differentiate that way?”

Grant noted opportunities around behavioral banking, which uses data to help consumers set financial goals and then rewards them for positive steps: ”Personalization also extends to customer contracts and fee structures. Financial service providers need to better align with the commercial terms that they have with their customers. Discovery Bank calls their model ‘behavioral banking,’ and it is all about personalization and rewarding customers for responsible and healthy behaviors. Or take our SAP BRIM product for billing and revenue innovation management that is used by many of our investment firm customers. It enables them to roll back from the general ledger environment to accounts receivables and billings, the revenue engine. It helps them plug their revenue leaks.”

Cryptobanking, or the management of digital currency assets, is another priority for SAP’s customers in the financial services space. According to Rieker, SAP helps with the accounting side and the custodial side of managing cryptocurrency accounts. You may have heard that it doesn't take a banking crash to lose cryptocurrencies; a smartphone crash can be enough. Rieker explained how VAST Bank protects cryptocurrency holders: “That information is then stored by the bank, and this has significant advantages because if you lose the key at Coinbase then it’s gone. Here, you don’t lose your assets with the key because the bank has the key as well.”

When you talk to Rieker and his team, you hear mention of clearing banks; new insurance models for emerging e-mobility markets; and ecosystems around real estate, healthcare, and retirement assets. You’ll also hear about SAP’s core banking and insurance products, which are now managed by SAP Fioneer, a joint venture with Dediq GmbH. Rieker can rattle off the names of customers that are using the SAP Fioneer functionality: “Core banking, in our definition, is lending, deposits, checking accounts, and payments. We have hundreds of customers, and they range from large customers like the Commonwealth Bank of Australia and Standard Bank of South Africa, to very small, specialized organizations. We see a large opportunity with fintechs and with small to mid-sized banks to implement our solutions in the cloud. Replacing core banking applications in larger organizations is more complex, quite similar to the slow migration of core ERP functionality in many industrial markets.”

A number of SAP banking customers have settled into unique niches. Rieker cited Compartamos Banco, a Mexican bank that has been a pioneer in extending microloans to women across Latin America: They offer group loans, typically for a group of 10 women with microbusinesses. On average, they are of four-months’ duration and for around $200. But if one of the women can’t pay an installment, the others need to stand in for her. These loans are unsecured, yet amazingly they have a default rate of less than 2%.”

Rabobank, the large Dutch bank, started issuing Renewable Energy Green Bonds in 2016 and has since introduced a complete Sustainable Funding Framework under which several types of sustainable financial instruments can be issued (e.g., bonds, loans, derivatives, commercial paper, certificates of deposit, etc.) According to Forbes, Vast was the “first federally chartered bank [in the US] that allows people to buy, sell and exchange crypto directly from a bank account.” Because crypto prices require much more granular fraction values than traditional currencies, the decimalization feature in SAP system is particularly attractive to banks like Vast, Grant said.

We continue to explore fascinating niches in the financial industry as we turn to discuss the Bank of London—which Grant called “the first new UK clearing bank in over a century.”

The Bank of London was launched in November 2021 and boldly calls itself a “leading edge technology company.” Founder and CEO Anthony Watson introduced himself as “primarily a technologist, not a banker.” He started his career at Microsoft, ran international technology for Wells Fargo, and became the chief information office (CIO) for Europe for Barclays Bank and later for Nike.

Discussing the Bank of London’s technology decisions and SAP’s role, Watson said the first time he was highly impressed with SAP software was at Nike, where 10,000 SKUs per season needed to be processed. He realized its applicability to financial services then, and years later when he was at the Bank of London and had winnowed 17 system choices down to 3, he was sure SAP would make the cut—and we did. Watson said “On a low transaction, low-cost basis, many new solutions probably work well. But if you need something battle-hardened, battle-tested that has significant volumes... Think about Lloyds Bank, which is one of the biggest clearing banks in the UK. Twenty percent of the UK's GDP probably goes through it. It's not going through a cloud-based startup bank. It's going through an iron-clad, hyper-scalable processing engine because Lloyds can't afford to get payments wrong. Ever.”

Watson said the core banking platform is what ultimately makes or breaks a bank’s processing, which is why he chose SAP: “SAP has always been known in the marketplace as a super-reliable platform, but one that is very expensive, and very difficult to change. We've taken out all the unwieldy pieces we don’t need and put our cloud wrapper around the core processor, which we kept intact to become hyper-agile. SAP has its limitations, but nothing is as stable or scalable as its core banking platform, at least that we've seen in the marketplace. It is unwieldy, and we spent two years making sure we had—from a client-customer perspective—a cloud-native, open-API, straight-through processing system.”

Many investment banks are using SAP solutions in creative “off-label” ways. JP Morgan Asset Management has embedded its liquidity platform directly into SAP S/4HANA, so corporate treasurers can invest that capital directly in the markets to improve efficiency. Rieker has called this approach “embedded finance”

The Investors Group has used SAP HANA to aggregate data from many different systems, Grant said. It has combined and aggregated years of product, customer, and transactional data while maintaining the granularity of the data underneath. Then, the company has applied machine learning capabilities on this data to provide its clients an individualized roadmap for their financial lives.

Grant’s unicorn of choice is Mollie, a Europe-based transaction solution that is gradually spreading beyond its Dutch roots. Mollie maximizes the use of the existing frameworks that are already in place: Visa and Mastercard, PayPal, Apple Pay, and others. Mollie acts as an aggregator and provides a consistent transaction framework for retailers regardless of the underlying transport mechanism.

Deutsche Börse Group traces its history back to 1585, but its modern digital incarnation is only 30 years old. Within this short timeframe, Deutsche Börse has become one of the most influential international exchange organizations and market infrastructure providers. It claims that around 60% of the European energy trade flows through its platform, and that the same volume is true for commodities, foreign exchange, and more. Their biggest exchanges are 360T for foreign exchange and Xetra, the fully electronic trading platform where 90% of stock trading in Germany occurs.

Lars Bolanca, senior vice president and the head of corporate IT, explained how Deutsche Börse supports the full value chain of financial markets from pre-trading over trading and clearing to post-trading.

Bolanca noted that Deutsche Börse’s indices business supports nearly 800,000 structured products and is already looking ahead to reconciling tomorrow’s trading patterns against a heavily regulated global marketplace: “And in the future, you’re looking at blockchain applications. How do you manage digital assets independent of borders, for example?”

Having previously worked at SAP, Bolanca said he has been pleased to see SAP become a lot more familiar with the finance sector: “ In our ambition to lead modern technology also in the corporate services world, we keep pushing SAP to upgrade to financial services industry needs when it comes to data protection, managing services in the cloud, audit trails, information security, constant evolution of conformity, real-time reporting on incidents or security breaches, and so on. This is something I would say has accelerated in the last two or three years. Prior to that, SAP appeared—especially due to acquisitions—to be mainly focused on the US market, with products like SAP Ariba and SAP Fieldglass. They have really made good progress in the last couple of years, but still have some way to go.”

Grant agreed with Bolanca’s candid assessment of SAP’s growth in this space: “I think it is a fair statement. Historically, SAP was focused on core banking and core insurance areas. The exchanges, asset management, and investment banking are different animals. SAP has acquired a customer base through various acquisitions and we have a strategy in place.”

Tomic provided a perspective on the challenges the established insurance players have been facing:We estimate that only 40% of insurance companies have a digital go-to-market strategy. They face competition from Google which is experimenting with auto insurance. Amazon has a partnership around small business insurance.”

But this challenge is nothing compared to Ping An out of China, as business analyst Simon Taylor explained on his Substack page: “The story is that Ping An is a tech giant masquerading as an insurance and financial services conglomerate. Annually, Ping An commits 1% of revenue— roughly 10% of profits—to R&D across its ‘five ecosystems’: financial services, healthcare, auto, real estate, and smart city. In another stroke of strategic clarity, they then cut those five ecosystems with three core technologies: AI, cloud, and blockchain.” Its Good Doctor service is merely one example of Ping An’s huge impact.

Reinsurance is a traditional market for SAP, and reinsurance giants Munich Re, Swiss Re, and IRB Brasil all use SAP’s reinsurance solution, part of SAP S/4HANA for insurance. This solution supports all forms of reinsurance—obligatory and facultative, proportional and nonproportional, assumed and ceded, life and non-life.

Tomic pointed out that the SAP Fioneer solution portfolio can run multiple insurance lines of businesses—life, health, property, and casualty—and their related end-to-end processes all on one platform, from policy management to claims. Particularly in Asia, many big insurance carriers run multiple lines of business, which fits nicely into the “super apps” we see across so many industries there.

In our discussion of the Integrated Mobility megatrend in Chapter 3, we broadly considered the impact of CASE trends on the automotive industry. ERGO Mobility Solutions, part of the Munich Re family, was launched in 2017 to understand, influence, and capitalize on disruptive mobility trends.

ERGO’s thinking has followed the CASE framework, seeing possibilities for multimodal, data-driven mobility that involves the following insurance-related features:

• Connected mobility supports pay-per-use insurance, connected assistance, digital and travel concierge services, and even digital claims.
• Autonomous mobility with advanced driver assistance systems and automated vehicles changes the risk structure and risk allocation.
• Car sharing, ride hailing, ride sharing, and mobility as a service use convenient, effective, and efficient insurance models that protect drivers, their passengers, and vehicle owners.
• Battery-powered vehicles carry specific risks and need additional products like battery warranties and insurance for widely distributed charging infrastructures.

Figure 6.3 shows a topology of applications ERGO is deploying to help cover all these scenarios. SAP S/4HANA is the engine behind the box called the Motor Insurance Platform. The layer at the top contains the functions supporting digital interactions with customers, both in car and over better-established mobile and desktop channels. At the bottom, you’ll find a true treasure trove of car and driver data that waits to be exploited by AI and used by smart processes. The middle layer contains modules that connect driver and vehicle data to support designing and selling additional services but also includes functionalities like claims management or collections and disbursements to link car and driver to policy and claims management, augmented by real-time data coming from the vehicle itself.

A twin of this post will include video excerpts from conversations with many of these executives so you can put a face and voice to those in the book.

Other posts on the other chapters to come.

SAP BAU Videos – Ch.4 - New Customer Pathways

The SAP Business as Unusual book by Thomas Saueressig and Peter Maier was released at the end of December. (click on badge on left to link to the Amazon page). The book relies heavily on conversations with SAP, customer, partner, research firm and SAP.iO Foundries startup executives in over 25 countries and on visits to Industry 4.0 and Customer Experience Centers at key SAP global locations.

We ended up with hundreds of hours of videos and 2,500 pages in transcripts, slides and research papers. We plan to showcase a selection of video excerpts for each chapter so readers can get to know the contributors a bit better and get a glimpse at some of the SAP assets described in the book. These are bite sixed excerpts – in most cases less than 5% of the conversations we recorded.

Leading off for Ch. 4 and Megatrend 3 of 8 – New Customer Pathways – is Matt Laukaitis, EVP/Global GM, Consumer Industries at SAP. The chapter includes plenty of his commentary, that from Fressnapf, the largest European pet product retailer, and other SAP executives such as Achim Schneider, Global Head of SAP’s retail industry business unit and Ritu Bhargava, chief product officer of SAP’s CX solutions. It also profiles the Intelligent Store at the SAP Experience Center in Walldorf.

Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer, Publicis Groupe has this to say about the book

“The last several years have seen a rapid evolution of commerce from a simple wholesale business model to a robust "platform" model with a rich combination of products and services, often with a recurring component. This book provides an ideal playbook as to exactly how those changes have impacted customer expectations, and most importantly what companies need to do to meet those new expectations.”

In the chapter, Manuel Cranz, VP of Enterprise Architecture at Fressnapf, talks about their ecosystem of physical and growing digital products and services for pets and their owners. It has over 18,000 stores across 11 European countries.

In a series of conversations, Achim Schneider showed off his global reach as he discussed technology in stores and the continued growth in direct to consumer models.

Ritu Bhargava describes a visit to a Coop grocery store in Switzerland – the future of customer experience in retail. 

Ritu had talked about The Intelligent Store at SAP’s Customer Experience Center at Walldorf. Here is a short tour and the chapter describes further the technologies at this showcase store  

The twin of this post with text and graph excerpts is here

SAP BAU excerpts – Ch. 4 – New Customer Pathways

As part of the launch of the Business as Unusual book (click on badge on left to get to the Amazon page) by Thomas Saueressig and Peter Maier that we helped conduct interviews and research for, we will share excerpts from each of the 10 chapters/300 pages, and also give you a “behind the scenes” view by sharing snippets of some of the over 100 SAP, customer and partner video interviews that ended up in the book.

Here are some excerpts from the third Megatrend – New Customer Pathways:

Nineteenth-century Philadelphia retailer John Wanamaker allegedly complained, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” These days we brag that we can effectively measure payback from digital campaigns, but that’s not the whole picture: A third of the world’s advertising money is still spent on billboard, direct mail, print, and other analog media.

SAP has over 13,000 retail and countless consumer product customers in over 100 countries. None of them are exactly alike. They are carving a dizzying range of pathways to their customers. In this planet-scale laboratory of experimenting with new customer pathways, we’ll search for patterns and discuss the outlook for retailers and their technology providers like SAP.

Matt Laukaitis is executive vice president and global general manager of SAP Consumer Industries. He offered SAP’s definition of consumer industries: “Consumer industries, in our former definition, included retail, consumer packaged goods, and wholesale distribution. A few years back, we also added healthcare and life sciences. Then earlier this year, we expanded our scope to agribusiness because we see so much opportunity across channels as companies operate beyond traditional industry boundaries. In each of those sectors, we’re seeing significant conversation about building pathways directly to the consumer.”

Laukaitis pointed out that the COVID-19 pandemic has changed the attitude towards innovation and risk: Companies got addicted to rapid innovation. In the past, there were a million reasons why corporate inertia would say, ‘You know, we’ve thought about a curbside pickup, but we don’t need to do that now. We’ve got so many other priorities.’ But many of our customers surprised themselves when they were pressed to change: they could get new services like curbside pickup done in a couple of weeks. Now the leadership teams of companies and their boards have come to like the new speed, saying, ‘Okay, now we know we can do things very quickly, so let’s start knocking down this list that previously looked kind of unassailable.’

Accenture’s design agency, Fjord, coined the term “liquid expectations” for the idea that customer experiences are fluid across industries. Laukaitis agreed with this notion: “Consumers don’t care if a brand is owned by a traditional consumer products company, by a retailer, or by a healthcare or financial services company. They go for products and services that meet their needs and preferences, and don’t care about historic industry boundaries. This also motivates players to venture into new territories and to experiment with disruptive business models.”

Achim Schneider is global head of SAP’s retail industry business unit. He provided more examples of blurring of industry boundaries, citing one organization’s expansion to an adjacent industry as a customer experience mechanism and organic branding opportunity: “Sansibar started as a small company on an even smaller island, Sylt, in North Germany. They run fashion stores and have their own brands. They sell over 1,500 wines at stores across Germany. They have a hospitality and catering business, and they run fancy restaurants. I think that kind of combination is becoming more and more important for these hospitality retailers. On the other side of the planet, Jumbo Seafood in Singapore is moving in a similar direction. And a huge Korean restaurant chain told us ‘Well, we think we are more of a retailer.’”

Ralf Kern is global vice president of SAP’s retail business unit. He described how customer expectations vary with the retailer they engage with: “If you shop in a convenience store, you’re happy if you’re in and out within a minute and you get exactly what you need. At a fashion retailer, like Louis Vuitton, you may have a glass of champagne, and stay a couple of hours and expect service to get your selection right. At a DIY store, you may want to rent an appliance and get it delivered to your home and have a painless return process, and if you find that you couldn’t make the bathroom tiles stick as well as you thought you would, they can give you advice or the phone number of a reliable craftsman. In Germany, if you go to an Edeka, you expect a broad selection of fresh grocery compared to an Aldi, a Lidl, or another discounter.”

Figure 4.1 shows the wide range of pathways to companies beyond going direct-to-consumer(D2C); the many different forms of business-to-business transport, the key roles of wholesalers/distributors and retailers and the many sales options consumers can choose from. Successful consumer product companies manage to hide the complexity of the system from the consumers by delivering a unified and engaging experience. Seamless channel orchestration for sales and fulfillment is only one part of the customer journey: Intelligent, fair, and convenient returns and reimbursement processes, warranty and repair management, recycling, and refurbishing…all these processes are even more complex and have a lasting effect on customer experience and loyalty.

Schneider pointed out, however, that D2C is hardly a new trend and that additional expenses for shipping and handling, for example, might make some products more profitable for D2C channels than others: “Adidas, Nike, Under Armour, and others have been going direct for a long time. Adidas has grown to 12,000 stores since it entered China in the late ‘90s. I think that was a very clear indicator how many consumer packaged goods companies are thinking. If I have a Nike store, it could be a franchise store or it could be an owned Nike store. For the consumer, it’s the Nike brand. However, it might be a bit different in cosmetics or personal care brands going direct to customers.”

One D2C challenge is how to compete with the scale of fulfillment logistics of an Amazon or a Shopify. Many consumer companies are used to shipping pallets, not single items. Going with specialist third-party logistics companies for order fulfillment has been the solution for some. As we discuss in Chapter 9 on the Resilient Supply Networks megatrend, support for “micro-fulfillment” has emerged, including smaller warehouses closer to consumers, warehouse bots that can be deployed as a service, and last-mile delivery ecosystems. All these approaches can reduce the historical fulfillment barrier to online D2C commerce.

While returns have always been a business reality for retail organizations, the uptick in the returns rate is worrisome. Laukaitis commented on how organizations can respond, citing one online apparel and footwear retailer who he believes applies best practices for returns management: “Zappos and other retailers have conditioned consumers to expect a hassle-free returns experience. It is important to consider both the employee and customer experience in this process and understand how to optimize margins for the business. It’s essential to empower the people at the customer interface to handle items and guide the consumer through the returns process. Then it’s important to educate the store and warehouse employees on how to inspect the returned products and to decide on the best routing of the returned product.”

Best practices also vary with the type of product. Laukaitis used SAP customer Tapestry, which has luxury brands such as Coach, Kate Spade New York, and Stuart Weitzman under its umbrella, as an example: Luxury brands have returns policies that are pretty generous because they want to be customer-focused. But how do they make sure every return makes sense? The speed of adjudicating the return is critical. The verification process obviously has to be pretty tight, given the high dollar value of those products. For example, are there particular products within the Coach portfolio that cause more trouble from a return perspective, or are there certain things that the associate has to be trained to look for before they actually accept it at full value? Provenance and authenticity are vitally important to the brand, so it's essential to avoid restocking counterfeit items.”

This pursuit of high-quality, intuitive, and customer-centric store experiences has naturally changed how stores are organized. Schneider provided us an idea of how retail stores have been morphing: “Stores are becoming small logistics centers. It does not matter if they are grocers or hard goods retailers. Customers are ordering online and picking up instore. How can you ensure that you have the right product at the right time in the store if you promise a less-than-two-hours pickup time? In fashion, stores are becoming experience centers. You get the consultation and you can see, touch, and feel the fabric. You order, and you get it shipped home. Stores don’t have to have all the colors and sizes of the products available. You just have the selection there. Some stores are using technology”

SAP has a focus on smart stores at the SAP Experience Center at Walldorf, where it showcases some of the technologies you can experience:

• Devices for counting people to analyze traffic into and out of the store and monitor key passageways like stairs and elevators
• Demographic cameras pointed at an entrance to register the age and gender of consumers
• Multi-3D sensors that detect dwell time and route
• Cameras directed at shelves to detect when a product is no longer available—perhaps selected, replaced by customers in the wrong spot, or out of stock
• Electronic shelf labels that can be updated with new prices in real time

In contrast to Fressnapf’s growth during the COVID-19 pandemic, retailers depending on traffic at airports and other travel venues would experience a very different range of challenges. As we discussed in Chapter 3 on the Integrated Mobility megatrend, Gebr. Heinemann is the market leader in Europe and one of the top global players in the duty-free and travel retail industry worldwide.

Roland Vorderwülbecke, director of IT at Gebr. Heinemann describes some of the challenges .. the company has very few touchpoints with individual customers. Customers enter one of its Duty Free & Travel Value stores only when they are traveling, and only when circumstances allow time for shopping either at the origin airport or at the destination airport. It takes a long time—sometimes years—to develop even two or three touchpoints with a single customer, depending on their travel patterns. How do you convince such customers to share data to participate in a loyalty program and how do you build a community around them? Often, the promotions offered do not fit with travel plans. The company is moving from a push to a pull model and developing a "next-best offer" mindset. In the past, Gebr. Heinemann has tried out digital displays in stores—one was internally called a “Digital Instore Assistant” to guide customers—but utilization was low. Now, the company is leaning more towards a high-touch clientele service model in their stores, according to Vorderwulbecke.

Ritu Bhargava described how the SAP architecture supports its customers. The management of commerce, service, and customer data is the technical and business foundation, provided by SAP S/4HANA. The next layer enables different business models, from B2B over B2C to all the variants of business-to-business-to-consumer (B2B2C). “Across CX, there needs to be a layer that breaks down the process- and databased organizational and technical silos. This flexible and modular layer provides the basis for a great deal of business innovation. For example, our intelligent commerce solution will leverage this layer in the future. Our customers experiment a lot and not everything will work out, stick, and stay, so we give them the option to subscribe to modular extensions on a consumption basis. This way they pay ‘by the drink’ on their journey to shape the ultimate customer experience.”

A twin of this post will include video excerpts from conversations with many of these executives so you can put a face and voice to those in the book.

Other posts on the other chapters to come.

SAP BAU Videos – Ch.8 - Circular Economy

The SAP Business as Unusual book by Thomas Saueressig and Peter Maier was released on December 20. (click on badge on left to link to the Amazon page). The book relies heavily on conversations with SAP, customer, partner, research firm and SAP.iO Foundries startup executives in over 25 countries and on visits to Industry 4.0 and Customer Experience Centers at key SAP global locations.

We ended up with hundreds of hours of videos and 2,500 pages in transcripts, slides and research papers. We plan to showcase a selection of video excerpts for each chapter so readers can get to know the contributors a bit better and get a glimpse at some of the SAP assets described in the book. These are bite sixed excerpts – in most cases less than 5% of the conversations we recorded.

Leading off for Ch. 8 and Megatrend 7 of 8 – Circular Economy – is Stephen Jamieson, Global Head of Circular Economy solutions at SAP. The chapter includes plenty of his commentary and that from execs at Eastman, Ellen MacArthur Foundation and others.

Aldo Noseda, CIO of Eastman describes how the use of data science and mathematics has turbocharged their R&D allowing them to bring innovations like molecular recycling of plastics at scale

The chapter has several perspectives from/about the Ellen MacArthur Foundation which has been very influential in propagating Circular Economy thinking

James Sullivan of SAP talks about 4 societal drivers – investors, regulators, employees and consumers, especially younger ones shaping Circular Economy trends

The chapter profiles several startups which provide edge solutions to help to help on Circular Economy initiatives. The SAP.iO Foundries accelerator has convened several in its Sustainability cohort.  Carlos Oliveira, CTO at Algramo provides an overview on their solution. Consumers pay for bite-size purchases at their point of need e,g, detergents are dispensed in public laundromats into reusable containers.

he twin of this post with text and graph excerpts is here 

SAP BAU excerpts – Ch. 8 – Circular Economy

As part of the launch of the Business as Unusual book (click on badge on left to get to the Amazon page) by Thomas Saueressig and Peter Maier that we helped conduct interviews and research for, we will share excerpts from each of the 10 chapters/300 pages, and also give you a “behind the scenes” view by sharing snippets of some of the over 100 SAP, customer and partner video interviews that ended up in the book.

Here are some excerpts from the seventh Megatrend – Circular Economy

In the 2016 science fiction movie Arrival, linguist Dr. Louise Banks is recruited to help understand seven-legged aliens who communicate with inky circles. Once decoded, the circles communicate their cyclical worldview where the past, present, and future can all be seen at the same time, bending the linear flow of time, upsetting the principles of causality and breaking Ludwig Boltzmann’s unbreakable laws of thermodynamics.

Circles show up in many spiritual settings. In Christianity, three interconnected circles represent the Holy Trinity. In Islam, the circle is a symbol of the sky and infinity. Mandala is Sanskrit for “circle” and plays a major role in Hindu and Buddhist culture. The ouroboros—the snake eating its own tail—comes from Egyptian mythology.

Modern humanity has institutionalized circular thinking with the preface “re-.” Terms like return, recycle, refurbish, and re-commerce are increasingly common in today’s digital commerce. But they have been a long time in the making. The Japanese have been reusing their paper since the eleventh century…. In some ways, humanity has made significant progress. Aluminum recycling is a success story: Nearly 75% of all aluminum ever produced is still in use today. Recycling aluminum only requires around 5% of the energy needed to mine the bauxite and make new aluminum.

You may be shocked that, after millennia of our obsession with circles, only 9% of the 100 billion tons of material produced globally is recycled every year. Per Stephen Jamieson, global head of circular economy solutions at SAP: “This essentially means 91 billion tons a year of material is being left to a fate in the natural environment every year. And we continue to extract another 91 billion tons of materials every year to produce brand new versions of so much.”

Jamieson likes to use the expression “dark side of the moon” to explain how little we have focused on how much “stuff” we produce, consume, and waste on our small planet. “The challenge with the linear economy today,” he said, “is that the moment that something is sold, the lights go out and there is little visibility on the whole flow from point of sale through to plastic trash floating in the ocean.”

Jamieson said he believes we need to take a “vertical” approach (i.e., by industry and subindustry) to the type of major materials we use: “Each material has its own role in the circular economy and has its own challenges and dysfunctions. And, as you’d expect, each material needs to be treated with its own set of solutions. Take textiles: To produce cotton clothes, we use 250 billion tons of water annually.Yet, 85% of that fabric goes into landfills after only five or six wears.”

At least cotton decomposes in landfill, other than clothes that are made from synthetic fibers that can last for centuries. SAP has identified and catalogued other materials— plastic, food, building materials, electronic components, and batteries—that create a significant waste impact and an opportunity for SAP to work with customers on intelligent solutions for more circularity.

Anja Strothkämper, vice president for agribusiness and commodity management at SAP, agreed with the possibilities of more sustainable agriculture. “Crop rotation and variation is indeed a way of being more natural about the soil rather than applying tons of fertilizer or crop protection. The food industry knows that the same crop tastes the same and the consumers like the acquired taste. But I think the industry is getting more flexible and sees an opportunity with customers who don’t fancy crop protection chemicals. If we buy locally and accept or even seek variation in taste, then the industry can offer a compelling variety of fruits and vegetables. I think this is all changing. Paradigms are changing.”

Jamieson cited progress in SAP’s customer base:

• Clothing retailer H&M has been piloting clothing rental models in their stores in Stockholm, Sweden. While its business has historically been in product sales, the company is experimenting with a new business model.

• Queen of Raw is a marketplace that gives a new lease of life to sustainable materials, including organic cotton, peace silk, faux leather and fur, and quality deadstock fabrics.

• Consumer goods giant Procter & Gamble uses SAP’s asset management solutions to improve or reduce the wastage out of diapers. It is looking to make diapers with less plastic and to develop new ways to recycle a classical one-way product.

Matt Reymann, global vice president of the chemicals industry business unit at SAP, agreed with that materials-based approach, and noted that you’re more likely to find surprises where you don’t expect them. For starters, Reymann said, the chemicals industry gets a bad rap, which it doesn’t fully deserve: “In the past, chemicals have been considered a part of the problem. But they can also be a part of the solution moving forward. I look at the 2021 Nobel Prize in chemistry. It was given to two gentlemen who discovered a new type of catalyst. It took them two decades to be recognized, but we now have improved ways to make medicine and pharmaceuticals, or even solar cells.”

James Sullivan is vice president of sustainability management and strategy at SAP…Sullivan cited research on consumers’ willingness to spend as indicating mostly indifference to product sustainability in the past. Now, he said, a real shift has occurred, driven especially by the younger cohorts: “We now have data that shows that products marketed as sustainable are growing much faster than conventional products in about any category that you look at. What’s more, the margins for these products are higher. The data have been robust through COVID, and robust across generations. Generations Y, Z, and younger are pushing change, and they’re not even attheir full spending power yet.”

Sullivan (also) explained: “Consumer product companies are getting a handle on their scope 3 emissions and product carbon footprints especially for their upstream agriculture ingredients. Raw materials like palm oil from verified sustainable and non-verified sources often get mixed after the first stage of the supply chain; the origin information will be hidden or lost. Unilever ran a proof of concept for Green-Token by SAP in Indonesia. They sourced 188,000 tons of oil palm fruit from their suppliers, and our solution created tokens that mirror the material flow of the palm oil fruits through the supply chain to track unique attributes and link them to the oil’s origin”

The circular economy is not just about compliance—it’s also about opening up opportunities for new products and revenues. Examples come from Eastman, based in Kingsport, Tennessee, which is not only innovating at a fever pitch in its labs, but also deploying promising technologies at scale. One focus area is the mechanical recycling of plastic waste, retrieved from home recycling bins and sorted at a recycling center. Next, the material is shredded, melted, and re-formed as plastic pellets to make new products. Mechanical recycling works well for items that are marked with resin identification code (RIC) 1 or 2—products like clear, single-use water bottles. The system doesn’t work as well with RIC 3 to 7 products like plastic eyeglass frames, which often end up in landfills or incinerators. In 2023, Eastman will complete construction and begin operation of what will be one of the world's largest plastic-to-plastic molecular recycling facilities at its site in Kingsport, Tennessee. Through methanolysis, this world-scale facility will annually convert 100,000 tons of polyester waste that often ends up in landfills and waterways into durable products, creating an optimized circular economy.

Aldo Noseda is the chief information officer (CIO) at Eastman. While he oversees IT, he has a much broader mandate: to drive digital innovation at the century-old company, once part of the iconic Eastman Kodak family. Noseda has had a long career in the chemicals industry: He worked at Monsanto, now part of Bayer, for 27 years and can easily explain complex concepts like “mass balance.” Noseda then explained how Eastman is also transforming the world of fashion with its Naia™ Renew cellulosic fiber “It’s a pretty cool product. It’s very similar to silk, so it has a luxurious, cool touch which glides smoothly over the skin, even though it’s synthetic. Naia™ Renew is an innovative solution for the fashion industry’s sustainability— enabling circularity at scale. The fiber is produced from 60% sustainably sourced wood pulp and 40% certified (mass balance approach) recycled waste plastics. Naia™ Renew is a beautiful product, created from hard-to-recycle waste materials that would otherwise be going to landfills or waste incinerators.”

Beyond SAP’s vision and our broad portfolio of sustainability and circularity solutions, we tap into the creativity and innovation of a vibrant ecosystem of startups for whom circular thinking is foundational to their products and services. For example, we’ve worked with Edinburgh-based data analytics group Topolytics and its WasteMap platform that blends mapping with machine learning. This company is on a mission to make the “world’s waste visible, verifiable, and valuable.” We have jointly created Scotland’s Waste and Resources Map as a showcase that generates a live view of materialsthat flow into, within, and out of Scotland.

Several startups in the SAP.io Foundries program cohorts are focused on the circular economy. For instance, Algramo, whose name translates to “by the gram,” is based in Santiago, Chile. This company works with consumer packaged goods companies like Unilever to rethink the packaging and refilling of home and personal care products, pet food, and other products usually sold in plastic containers. Algramo is working on a system of vending machines that refill reusable smart containers using radiofrequency identification (RFID) and mobile apps to track consumption, usage patterns, and the container lifecycle.

Dame Ellen Patricia MacArthur is a highly decorated sailor. In early 2005, she broke the world record for the fastest solo nonstop circumnavigation. She completed her 27,000-mile journey in 71 days, overcoming an array of bad weather and other technical challenges. Long-distance sailing requires careful preparation and logistics: You must take everything you’ll need with you because you can’t just pull over at the next supermarket to pick up the things you’ve forgotten or run out of. She described how months of isolation on a self-contained boat made her see the parallels to our planet: Earth may be powered by the sun and not by the wind, but we equally need to make do with what we have “on board.” Take this perspective, and you can clearly see that our linear lifestyle of “take, make, use, dispose” can’t work in the long run.

Jamieson explained the vision that the foundation has initially developed for the fashion industry but that can be applied to other material cycles:

• Virgin resources are minimized by increasing the use of existing products and materials.
• By-products are minimized and treated as valuable materials.
• Recycled content is used to protect finite feedstocks and to stimulate recycling.
• Virgin input comes from renewable feedstocks using regenerative production practices.
• Renewable energy is used for manufacturing, distribution, sorting, and recycling of products.

A twin of this post will include video excerpts from conversations with many of these executives so you can put a face and voice to those in the book.

Other posts on the other chapters to come.

SAP BAU Videos – Ch.9 - Resilient Supply Networks

The SAP Business as Unusual book by Thomas Saueressig and Peter Maier was released on December 20. (click on badge on left to link to the Amazon page). The book relies heavily on conversations with SAP, customer, partner, research firm and SAP.iO Foundries startup executives in over 25 countries and on visits to Industry 4.0 and Customer Experience Centers at key SAP global locations.

We ended up with hundreds of hours of videos and 2,500 pages in transcripts, slides and research papers. We plan to showcase a selection of video excerpts for each chapter so readers can get to know the contributors a bit better and get a glimpse at some of the SAP assets described in the book. These are bite sixed excerpts – in most cases less than 5% of the conversations we recorded.

Leading off for Ch. 9 and Megatrend 8 of 8 – Resilient Supply Networks - is Martin Barkman, senior vice president of solution management for SAP’s digital solution management team. The chapter includes plenty of his commentary and that from execs at Evonik, Beckhoff and others and discusses SAP Industry 4.0 showcases and its growing ecosystem of new supply networks.

Thomas Meinel of Evonik, one of the largest chemical companies in the world, presents on how their thinking has evolved around supplier networks.

Anja Strothkaemper of SAP presents on disruption in agribusiness due to the Ukraine war, climate change and lingering COVID impact and how SAP is helping a wide range of sectors in the farm to fork value chain navigate these cross-currents

Hari Ashvini of SAP presents on new supply chain players they are partnering which are particularly important in micro-fulfilment scenarios

SAP has Industry 4.0 showcases set up around the world. The video below has excerpts from an hour -long tour of the showcase set up in Newtown Square, PA. It walks through robotic, machine vision and other sensor technologies for use cases in discrete and process industry settings.

The twin of this post with text and graph excerpts is here

SAP BAU excerpts – Ch. 9 – Resilient Supply Networks

As part of the launch of the Business as Unusual book (click on badge on left to get to the Amazon page) by Thomas Saueressig and Peter Maier that we helped conduct interviews and research for, we will share excerpts from each of the 10 chapters/300 pages, and also give you a “behind the scenes” view by sharing snippets of some of the over 100 SAP, customer and partner video interviews that ended up in the book.

Here are some excerpts from the eighth Megatrend – Resilient Supply Networks.

In its heyday, Ringling Bros. and Barnum & Bailey Circus required more than 100 rail cars to ferry about 1,300 workers and performers, plus animals with their cages and equipment. The circus would travel up to 15,000 miles over an 8-month season and visit as many as 150 towns. These days, we build digital twins of physical objects, even circuses. The Tibbals model (on the campus of the Ringling Museum in Sarasota, FL) gives visitors a more visceral experience of the complex logistics circuses had to operate year after year without any of today’s technologies.

We appear to be lurching from one (supply chain) crisis to another. Shouldn’t our supply chains have become much more resilient in the century since the circus’s heyday, given all the planning and execution technology we now have? Many of these incidents are discrete and have varying points of failure, but with so many businesses blaming poor performance on COVID-19 or Brexit or the war in Ukraine, we are masking the root causes of these problems.

Martin Barkman, senior vice president of solution management for SAP’s digital solution management team, provided a historical perspective of how the modern supply chain has evolved over the last few decades and has faced various disruptions: “What used to be kind of linear, sequential supply chains where you make it over here and sell it over there, have now become much more intertwined and connected. Supply chains are more like networks than they are vertically integrated, linear, or sequential. That has created a whole new level of dependencies that never existed before.

He recommended employing a broad definition of supply chains—encompassing everything from design to operations—and a focus on four dimensions: agility, productivity, connectivity, and sustainability.

At Hannover Messe, SAP’s booth is an event fixture, and we use the trade fair to show off our solutions and many of our industrial partners’ robotics and other technologies. This year, SAP presented how digital technologies can be applied in the design-to-operate cycle for discrete manufacturing and for process manufacturing. Hannover Messe is an event for a few days, but customers visit us year-round, so we decided to place permanent Industry 4.0 showcases at our corporate headquarters in Walldorf and in major SAP locations around the globe. The showcases are great conversation starters, with digital technology working hand in hand with physical machines to make innovation tangible and spawn creative discussions.

Several discrete and process manufacturing tracks exist in the tour. The use cases on the discrete manufacturing track include the following:

• Digital logistics: Outbound delivery with transportation management
• Intelligent workers: Gesture-based interfaces
• Digital twins: As-manufactured twins of the final manufactured equipment
• Quality: Automated testing and quality management
• Intralogistics and the automation of production material flow: Automated warehouses, automated conveyors, robotics integration, dynamic routing, and modular manufacturing
• Intelligent factory: Final assembly of variants, 3D work instructions, digital product history, and labor certifications
• Manufacturing insights: Plant and overall equipment effectiveness (OEE) insights, global insights, and dashboard designers

The tour shows off the industrial partnerships SAP has formed that have matured over the last decade. The demo in Newtown Square featured xPlanar tiles from Beckhoff, which use magnetic levitation (maglev) technology to move products around like an automated guided vehicle (AGV) would. Daymon Thompson and Jeff Johnson at Beckhoff described how the push for flexible manufacturing and personalized products have popularized the concept of a “lot size of one” in the logistics space. This concept has led to an explosion in robot designs. According to Thompson, Beckhoff's customerbase includes numerous machine builders, so it has decades of experience providing advanced machine controls, servomotors, mechatronics, IoT solutions, and more. The machine builders work with end users to figure out how to deploy next-generation machine designs that are more flexible and provide more throughput.

Evonik, headquartered in Essen, Germany, is a global leader in specialty chemicals. Its tagline is “leading beyond chemistry,” and its vision is to make “towels fluffier, mattresses bouncier, animal feed healthier, medications more effective, and tires more fuel efficient.” Thomas Meinel, senior vice president and the head of indirect procurement at Evonik, talked about the evolution of business processes for Evonik’s business, with over 35,000 suppliers in some 100 countries….”We used to buy physical products like pumps. In the new world, we often buy digital products. In the past, I knew my supplier base and it didn’t change much. The world was pretty stable. Not anymore: we have many more crises, technology shifts, and so on. So, we need more than a Google search to find and qualify new suppliers, we need intelligent scouting capabilities. We also have a lot more data and need more automation.”

As senior director of corporate business development, Hari Ashvini leads SAP’s engagement with emerging partners. Ashvini ran through a gamut of supply chain ecosystem topics: on-demand warehousing, on-demand logistics, warehouse robots, and supply chain visibility. The common theme is that none of these services can be imagined without the extensive use of digital technologies and real-time integration between SAP systems, warehousing infrastructure, and robotics. Beyond more resilience and efficiency for individual components of the supply chain, networking between shippers, customers, and logistics providers with value-added services can make a big difference.

Jeff Howell, head of SAP’s high-tech industry business unit, Howell also talked about the work SAP is doing with its partner PDF Solutions to improve yield management (in the semiconductor sector). In this context, PDF stands for Probability Density Function, not for Adobe’s portable document format, and hints at the kind of analytical services this company provides. It looks at parametric data and tries to balance tolerance with desired yields: Overly restrictive tolerance thresholds mean lower yields, while overly relaxed tolerances result in more defects—a classic type I versus type II error tradeoff. For readers who like statistics, manufacturing the latest generation of computer chips takes 1,000 production steps and over 3 months. What is the required quality level per manufacturing step to get a 70% yield at the end?

These concerns illustrate two conflicting challenges in the food supply chain: the sheer quantity required to feed the world and the need for sustainable farming practices to produce food that qualifies as organic. Digital technologies can overcome this challenge. Satellites can provide near-time imagery of farms and fields to determine where fertilizer, irrigation, and crop protection are required—not too little, not too much. Satellite and sensor data digitally and remotely control farming equipment for the best quality and the highest productivity with the smallest possible environmental impact.

Barkman compared reactive with resilient (supply chain) organizations as follows:

A twin of this post will include video excerpts from conversations with many of these executives so you can put a face and voice to those in the book.

Other posts on the other chapters to come.

SAP BAU excerpts – Ch. 3 – Integrated Mobility

As part of the launch of the Business as Unusual book (click on badge on left to get to the Amazon page) by Thomas Saueressig and Peter Maier that we helped conduct interviews and research for, we will share excerpts from each of the 10 chapters/300 pages, and also give you a “behind the scenes” view by sharing snippets of some of the over 100 SAP, customer and partner video interviews that ended up in the book.

Here are some excerpts from the second Megatrend – Integrated Mobility. Includes quotes from executives at MHP, a Porsche unit, Stellantis, Stadtwerke Augsburg, Gebr. Heinemann, SAP and others.

“I’m a Traveler of Both Time and Space” - Paul Salopek embodies the lyrics from Led Zeppelin’s epic tune “Kashmir.” Since 2013, Salopek’s “Out of Eden” walk for National Geographic is scheduled to take him more than 37,000 kilometers from Africa to the tip of South America… Mimicking both Japan and the US, China has added on average 10 airports a year in the last few decades. From zero high-speed rails in the year 2000, it now has over 40,000 kilometers of it. Other countries have evolved differently. Netherlands is known for its bicycle culture, and Indonesia for its motorbikes. Norway has the highest electric vehicle adoption rate in the world. In Saudi Arabia, nomads can be spotted ferrying camels with pickup trucks. By the time Salopek finishes his journey, he will have witnessed the extremely wide spectrum of mobility available to modern humans. New choices keep growing as old ones persist—it’s and, not or.

In 2018, the German automotive conglomerate Volkswagen announced talks to form a joint venture with Didi Chuxing, China’s biggest ride-hailing service. The partnership would include Volkswagen managing a fleet of around 100,000 cars for Didi, some two-thirds of which would be Volkswagen models. At first glance, this announcement might sound like a major fleet sale for Volkswagen. But Marcus Willand, a partner at MHP, a consulting firm that is part of Porsche (itself part of Volkswagen), saw it differently: “Actually, you could read this transaction as a signal that Volkswagen was slipping back one link in the mobility supply chain, going from major OEM [original equipment manufacturer] to tier-1 supplier.”

Hagen Heubach, global vice president of SAP’s automotive industry business unit, is responsible for leading the entire end-to-end solution portfolio for automotive customers at SAP. His department is responsible for formulating a central strategy and pushing strategic engagements in the automotive space and the future of mobility. Through his customer engagements, he has observed a profound change in attitude: “All our customers—OEMs, truck manufacturers, bike manufacturers, suppliers, national sales companies, mobility providers—are facing a run-and-disrupt scenario. They say ‘Hey, I need to run a very profitable and traditional business, and, at the same time, I need to disrupt myself into this new, sustainable mobility world.’

In the last few years, CASE has become a rallying cry for rapid change in the automotive sector. In this framework, vehicles and mobility are connected, autonomous, shared, and electric. In the discussions for this book, both Willand and Heubach made the case for CASE.

Even if the car manufacturers carefully choose a focus in the CASE space, they must still keep up with evolving regulations and with changes in consumer demand. Electric vehicle sales represented just 9% of all passenger car sales in 2021, so even with rapidly increasing market share, especially in China and Europe, there’s a long way to go fore-mobility. Stellantis CEO Carlos Tavares has lamented that policymakers, in their publicly announced timelines, appear to “not care” whether automakers have enough raw materials (or time) to support the shift to electric vehicles. ExxonMobil CEO Darren Woods said in an interview that their internal scenarios show that every car in the world will be electric by 2040, interestingly without being concerned that Exxon- Mobil’s overall business would suffer significantly. We’re a still long way off from this scenario. One consequence of this slow-motion shift in mobility is that SAP has had to support automotive customers and their business models in multiple dimensions as they gradually transition.

Steffen Krautwasser manages SAP’s impressive global vehicle fleet of 27,000 cars, 17,000 of which are in Germany. He explained how the fleet has evolved and how he has been one of the early adopters of the SAP E-Mobility solution… For a single corporate campus, 600 charge points is a quite significant number. Krautwasser assumes he will need 1 charging station for every 5 cars, which means that he has to plan for a setup of 3,500 charging points in 2030. Already this estimate has required elaborate planning and coordination between SAP’s facilities group and its local electric utility. Bolting charge points to garage walls is the smallest issue. Getting the necessary power infrastructure up and running requires detailed planning and sophisticated agreements with utility providers.

As shown in Figure 3.2, making batteries and pushing their performance to new levels involves a wide range of industries such as mining, chemicals, utilities, mill products, and high tech involved in the lifecycle of developing, producing, servicing, and recycling batteries for electric vehicles.

Shared mobility is definitely not a new concept. In some communities, geographic and spatial limitations, coupled with population trends, have resulted in a long history of shared mobility….Augsburg in Bavaria is a university and tourist town an hour’s drive west of Munich. Augsburg is famous for the Fuggerei, the world’s oldest public housing complex still in use, founded in 1521 by the rich Fugger family of merchants. The municipal utility company Stadtwerke Augsburg (swa) supplies electricity, natural gas, district heating (the next generation of “steam heating”), and drinking water for 350,000 people, and it has also expanded into the mobility space, pioneering a flat rate mobility package in 2019. Isabella von Aspern leads digital transformation at swa and spoke about matching mobility offerings with the services demanded by citizens in her community.

(SAP’s Senta Belay) painted the vision for urban mobility scenarios to include the following:

• Car sharing, in which multiple consumers access a single vehicle
• Ride sharing, in which contracted drivers provide rides to individual consumers
• Ride pooling, in which multiple individuals might share a single vehicle in a trip—a more public version of carpooling
• Ride hailing, in which pooling and sharing services are initiated through mobiledevices
• Corporate mobility and mobility budgets, in which organizations co-fund theiremployees’ travel
• Subscription mobility, in which individual consumers pay to access a multi-vehicle fleet that could contain, for example, different types and sizes of vehicles
• Micro-mobility, in which smaller vehicles, such as bicycles and scooters, are available to cover short distances

Roland Vorderwülbecke, director of IT at Gebr. Heinemann, a global operator of the Duty Free & Travel Value shops at airports, described how 2020 delivered shocks to the travel industry due to reduced flight schedules, airport closures, and international travel bans. In 2021, some travel resumed, but waves of reinfections bogged down the business. Even a surge in travel in 2022 brought continued challenges, such as staffing problems at airlines, security, airport baggage, and other operations.

Enter Catena-X, a network specific to the automotive industry designed to create a single uniform data exchange standard along the entire automotive value chain. SAP, BMW, and a number of other major German companies are founders of this partner network. Heubach summarized its goals: “With Catena-X, we’re getting rid of blockages where the players cannot (or don’t want to) talk to each other on the network. We are building an industry business network where SAP can connect to Siemens, SupplyOn, etc., using the same standards. We are opening up rather than trying to be the dominant player, but in exchange we’re getting so much more interaction, so much more traction with the market with these value cases.

A twin of this post will include video excerpts from conversations with many of these executives so you can put a face and voice to those in the book.

Other posts on the other chapters to come.

SAP BAU Videos – Ch.2 - Everything as a Service

The SAP Business as Unusual book by Thomas Saueressig and Peter Maier was released on December 20 (click on badge on left to link to the Amazon page). The book relies heavily on conversations with SAP, customer, partner, research firm and SAP.iO Foundries startup executives in over 25 countries and on visits to Industry 4.0 and Customer Experience Centers at key SAP global locations.

We ended up with hundreds of hours of videos and 2,500 pages in transcripts, slides and research papers. We plan to showcase a selection of video excerpts for each chapter so readers can get to know the contributors a bit better and get a glimpse at some of the SAP assets described in the book. These are bite sixed excerpts – in most cases less than 5% of the conversations we recorded.

Leading off for Ch. 2 and Megatrend 1 of 8 – Everything as a Service - is Tortsen Welte. He wears two hats at SAP. He leads solution management for the aerospace and defense industry, looking at industry trends, focusing on enablement through leadership, and connecting development with the SAP field organization. He also leads a cross-industry team focused on the Everything as a Service megatrend, especially as complex equipment makers are learning to blend hardware, software, spare parts, financing, monitoring, maintenance and other services into coherent solutions with different commercialization models.

The executives from ASG, Tetra Pak, Bain & Co and Capgemini below are quoted extensively in the chapter

Prof. Tim Baines of Advanced Services Group leads off with a history of the servitization trend. Since 2011, ASG has focused on the adoption of servitization and outcome-based business models and is respected globally in both the research community and the industrial community for their work on servitization.

Alejandro Chan of Tetra Pak, the largest food packaging company in the world, provides a perspective on how Circular Economy thinking has become one of the major drivers of the servitization trend

Mark Burton of the strategy firm, Bain & Co summarizes some of the major planning considerations as his clients move to 'as a service' business models

David Lowson of the global outsourcer, Capgemini discusses how servitization has become a major driver for many of his clients to embark on big digital transformation projects and upgrade to S/4HANA

The twin of this post with text and graph excerpts is here

SAP BAU excerpts – Ch. 2 – Everything as a Service

As part of the launch of the Business as Unusual book (click on badge on left to get to the Amazon page) by Thomas Saueressig and Peter Maier that we helped conduct interviews and research for, we will share excerpts from each of the 10 chapters/300 pages, and also give you a “behind the scenes” view by sharing snippets of some of the over 100 SAP, customer and partner video interviews that ended up in the book.

Here are some excerpts from the first Megatrend – Everything as a Service. Includes quotes from executives at Tetra Pak, Bain & Co, the Advanced Services Group at Aston University, Capgemini and SAP.

“In 1995, astronomer Carl Sagan had a pessimistic view of the coming transition from the industrial economy to a service economy…. Others predicted a nation of low-skilled workers, and similar fears arose in other developed countries. Around the same time as Sagan’s words, a more optimistic expert, Gartner analyst Roy Schulte, wrote a note predicting the growth of a different breed of services in the software engineering space... Both Sagan and Schulte were prescient in their own ways. Low-wage employees in retail and food service are today some of the world’s largest working populations. Meanwhile, a Google search for “service-oriented architecture” (SOA) fetches nearly 3 million references plus 16 million for “microservice,” the modern form of SOA.”

“Jeff Immelt, former CEO of GE, co-authored an article in 2019 describing how GE’s manufacturing businesses were among the earliest to morph: “GE was probably the first manufacturer to internalize that digital technologies could disrupt its businesses. However, that happened only after a GE scouting team searching for megatrends serendipitously figured out through its online research that some incumbents, such as IBM, and several high-tech startups were gathering data from GE’s customers to develop novel data based services in sectors such as aviation and power.” And it’s not just GE: The floodgates have opened for a new generation of offerings and business models.”

“Neither Sagan nor Schulte predicted this blending of labor and digital services and the creation of new bundles of physical products, software, financing/leasing, spare parts, and consumables, never mind all the after-sales monitoring, maintenance, and other services.”

“Mark Burton could easily be a historian of the services economy. He is a Bain & Company partner focused on business-to-business (B2B) models and value-based pricing. He speaks frequently about time and materials, fixed price contracts, subscription software models, and outcome-based contracts.”

“Thousands of companies have attempted to follow the role models Burton has highlighted to differentiate from competitors and generate the following benefits for their business:

• More predictable revenues
• Improved attachment rates for aftermarket services
• Continuous engagement with customers, resulting in better insight into their individual experiences and needs

This trend is now dubbed servitization. In a world of global competition, many physical products can be copied and commoditized quickly. If you embed software to make your products smarter and add layers of innovative services, especially physically local services, you’ll raise significant barriers for your competition.”

“Professor Tim Baines at the Aston Business School in Birmingham, UK, is executive director of its Advanced Services Group (ASG). Since 2011, ASG has focused on the adoption of servitization and outcome-based business models and is respected globally in both the research community and the industrial community for their work on servitization.”

Over the years, ASG has developed its “services staircase,” shown in Figure 2.1, that progresses from supplying products at the bottom level to guaranteeing the outcomes of a business platform at the top.”

“Torsten Welte wears two hats at SAP. He leads solution management for the aerospace and defense industry, looking at industry trends, focusing on enablement through leadership, and connecting development with the SAP field organization. He also leads a cross-industry team focused on the Everything as a Service megatrend, especially as complex equipment makers are learning to blend hardware, software, spare parts, and services into coherent solutions with different commercialization models…. Moving from a product-based to a service-based business model impacts several enterprise areas, from product design to balance sheet structure and customer engagement. Welte estimated that over 3,000 SAP customers across a wide range of industries could benefit from the pioneering efforts of the aerospace sector in delivering products as a service.”

“Rolls-Royce has been diligently building a massive engine performance database for each flight. It has also created a digital twin of every single engine. Digital twins are models based exactly on the physical component; they use data from sensors on the physical machines to monitor operations and predict breakdowns, thus enabling maintenance that reduces downtime and ramps up reliability. Using the volumes of rich data created by its digital twins, Rolls-Royce can reliably predict every major maintenance event an engine is likely to encounter over its lifetime. Such forecasting precision allows for planned downtimes, less frequent swapping of engines, and less unproductive time while the engine is “off wing.” In an industry that is highly regulated and whose reputation rests on safety, this forecasting allows the company to, in its vernacular, “not be overly conservative.””

“While each Tetra Pak customer will have to make their own calculations, (Alejandro) Chan said that the company will guide them using its simulation tool to compare three business models: buy, lease, or servitize. Servitization is becoming a common customer request, he added….

Chan said he has seen companies without well-established service business failing to develop successful service-based business models. These companies find that they don’t have much communication with their machines, and their predictive maintenance capabilities are still immature. In contrast, he said, Tetra Pak has more than 60% of its installed bases connected to Tetra Pak to capture machine data to optimize services.”

“From SAP’s perspective, servitization is widely helping to drive software upgrades. David Lowson, who runs the SAP Center of Excellence for Capgemini in Europe, has seen servitization become a top business driver for customers moving to SAP S/4HANA, noting that it has joined agility, simplification, and sustainability as motivations to upgrade software systems.”

A twin of this post will include video excerpts from conversations with many of these executives so you can put a face and voice to those in the book.

Analyst Cam: Salesforce Verticals – Media and Entertainment

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Christopher Dean, GM and SVP, Communications and Media for Salesforce.

He provides sweeping coverage of evolving media world. Contrary to popular belief print, radio, and store advertising are not exactly dead. Similarly, not everyone has cut their cable cords.

He points out that “retail media networks at both ecommerce vendors, as well as brick and mortar and clicks and mortar vendors, have about a $100 billion market opportunity to add an advertising business on top of their traditional e commerce business. And it's extremely high margin as well.” A subset of that is healthcare media with chains like Walgreens growing nicely in that segment.  

He spends a fair amount of time going through Salesforce capabilities supporting the lifecycle from development of content to revenue generation. Not surprisingly, Salesforce is strong in the revenue generating end and supports various business models - subscriptions, commerce, advertising and IP licensing and royalties.

He runs through several of their global customers – Multichoice which is Africa’s leading entertainment company with presence in over 50 countries, Sony Pictures, NBC, NY Times, Forbes Australia and several others

Very nicely done in 25 minutes.

 

Analyst Cam: Workday Verticals Planning and Analytics: Part 3 – Healthcare

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

We are running a series of posts on Workday’s Industries.  Tom Peff in Product Marketing kicked it off with their Planning and Analytics across the Service Sector where they focus. Yesterday, Greg Volpe, Solution Marketing Director, drilled down into analytical applications in Higher Education. Today, William Bercik, Sr. Director, Healthcare Strategy will do the same for Healthcare. In the New Year, we will have a focus on Workday’s transactional capabilities in some of these sectors.

William addresses the organizational areas Workday covers for healthcare customers even though they don’t have clinical functionality (but do have impressive administrative capabilities) in the graph below

He covers several use cases and solution sets – Advanced Analytics, Planning Model Toolkit and Cost & Profitability Management.

He also provides a synopsis of implementations at Fairview Health which operates 10 hospitals and 48 primary care clinics, and Christiana Care with 50,000 patient admissions a year.

Nicely done in 17 minutes   

 

Analyst Cam: Workday Verticals Planning and Analytics: Part 2 – Higher Education

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

We are running a series of posts on Workday’s Industries. Yesterday, Tom Peff in Product Marketing kicked it off with their Planning and Analytics across the Service Sector where they focus. Today, Greg Volpe, Solution Marketing Director, drills down into analytical applications in Higher Education. Tomorrow, William Bercik will do the same for Healthcare. In the New Year, we will have a focus on Workday’s transactional capabilities in some of these sectors.

Workday has over 350 customers in this vertical. Greg defines them as ranging from “small community colleges up to large research institutions and institutions with medical facilities”. He identifies some of the challenges the industry faces. Even before COVID, there was a secular decline in student enrollments, especially with foreign students. Most educational institutions also persist with dated technologies. With growing cost pressures, there are moves to shared service models across multiple entities. And the clear need for better profitability analysis.

He does a nice job walking through 9 planning trends in the graph below:

He runs through a case study around faculty and other staff insights and planning at Wake Forest U and Financial Planning at U of Virginia.

Nice overview of the state of the sector and Workday’s coverage in  22 minutes.

Analyst Cam: Workday Verticals Planning and Analytics: Part 1 – Across Service Sectors

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

Over the next few days, we will profile a series of posts on Workday’s Industries. Kicking it off today is Tom Peff in Product Marketing. He covers Workday’s Planning and Analytics across the Service Sector where they focus. Tomorrow, Greg Volpe will drill down into the analytical applications in Higher Education, and day after William Bercik will do the same for Healthcare. In the New Year, we will have a focus on Workday’s transactional capabilities in some of these sectors.

Tom starts off acknowledging that planning and analytics applications tend to be horizontal and apply across industries. However, Workday development has also focused on areas  “that benefit certain industries disproportionately.” He discusses each of the unique functionalities below.

He next talks about Industry Models mapped to key Use Cases in 13 industries. As he says, each has micro-verticals – so under banking, you also have credit unions, regional banks and asset management. You can filter using a vertical lens. If you are a nonprofit, what are the critical models that you need to render and operate your business? Grant planning, program expense, budgeting, personnel planning, membership and events etc.

He then presents on a library of 70 Common templates that partners have developed around use cases in different industries. That is part of a marketplace that Workday is evolving which will not just focus on Planning apps. It will also include apps build on their development platform, Extend and packaged applications that partners have built.

Finally, he provides a glimpse at how Workday is organizing for more of a vertical push.   

Nice kickoff to the series in about 25 minutes

SAP BAU Videos: Ch.1 - The End of Business as Usual

The SAP Business as Unusual book by Thomas Saueressig and Peter Maier is being released this week. (click on badge on left to link to the Amazon page).

The book relies heavily on conversations with SAP, customer, partner, research firm and SAP.iO Foundries startup executives and on visits to Industry 4.0 and Customer Experience Centers at key SAP global locations.

We ended up with hundreds of hours of videos and 2,500 pages in transcripts, slides and research papers. We plan to showcase a selection of video excerpts for each chapter so readers can get to know the contributors a bit better and get a glimpse at some of the SAP assets described in the book.

Leading off this chapter is Tilman Goettke, who was the lead SAP executive coordinating the BAU project. He discusses how the book came about, why Thomas and Peter chose the unusual title (pun intended), how they settled on the 8 megatrends which make up the bulk of the book, why sustainability gets play in several of the megatrends and the “thought experiments” which forced “zero base” and “blank page” thinking around each of the trends.

Next, we introduce you to the two authors and provide a glimpse into few of the many conversations we had with each and presentations we saw them make. Thomas’s encyclopedic knowledge of SAP product portfolio and Peter’s vast knowledge of industry trends is mind-blowing. Like kids, Tilman and I could listen to them for hours.

Here is an excerpt from a presentation Thomas made to analysts. In just a few minutes, he previews how we are moving from enterprise level computing to network models. He touches on the Catena-X auto industry network that the book covers in detail in the Integrated Mobility chapter. He talks about digital twins that the book covers in Everything as a Service megatrend. He previews the vast global coverage SAP provides. The book presents interviews from executives in over 25 countries.

Peter adds to Thomas’ points in the excerpt below. He talks about how large companies keep expanding into multiple industries, and why traditional industry definitions are increasingly dated. As we move to a networked economy, we increasingly see how networks span multiple sectors – the impact of chips and sensors on the auto sector was brought out very clearly in the last two years. 

Similarly, their drill down by sector is impressive

Here is Thomas talking about the Industry 4.0 showcases SAP has set up around the world. We describe them in the Resilient Supply Networks megatrend and profile executives from SAP’s robotics partner, Beckhoff whose xPlanar tiles are part of the mix of solutions at the centers.

Here is Peter talking about the changing energy sector especially after the shock of the Ukraine crisis. He talks about how Shell is segmenting its customer base and in the Sustainable Energy megatrend we discuss Shell’s emerging portfolio of solutions   - biofuels for aviation, hydrogen for heavy industry, carbon capture for others.

One of the other impressive contributions Thomas and Peter have made to SAP is build an Industry Business Unit (IBU) structure. Over the next few weeks we will profile IBU executives talking about the 8 megatrends which make up the bulk of the book. Trust me, they are an absolute joy to spend time with – they are sharp in their industry focus and know their customers and industry specific partners cold. In some ways, they are the best vertical industry analysts - who just happen to work for SAP. 

Analyst Cam: Blended Conversations in Zoho’s Service Desk

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Dilip Nagarajan, CRM Product Manager at Zoho. He demoes Blended Conversations introduced in their Desk product in the Fall 2022 release announced today.

That’s ‘blend’ as in human-driven and bot-powered conversational service experiences. In effect, it allows customer service agents to delegate tactical tasks to bots, while retaining control of the overall service experience.

Desk is one of the most utilized applications in the Zoho family of products. While Dilip demoes with a WhatsApp interface, Zoho’s Instant Messaging (IM) Framework also supports Facebook Messenger, Telegram, WeChat and other services and allows for mixing them in customer conversations.   Impressive how easy the low-code tools Zoho delivers makes leveraging of such automation. The productivity impact across 100K customers who use Desk should be dramatic.

Dilip also walked me through the enhancements to the UI delivered in this release. They deliver speed and accessibility improvements for users with cognitive and other shortcomings. That deserves its own episode at a later time

SAP BAU excerpts – Ch. 1 – The End of Business as Usual

As part of the launch of the Business as Unusual book (click on badge on left to get to the Amazon page) by Thomas Saueressig and Peter Maier that we helped conduct interviews and research for, we will share excerpts from each of the 10 chapters/300 pages. We will also give you a “behind the scenes” view by sharing snippets of some of the over 100 SAP, customer and partner interviews we conducted.

Tilman Goettke, on Peter Maier’s Industries team, was the glue that held together the BAU project. He helped identify the 8 megatrends which make the bulk  of the book. He guided us through the vast SAP Industries empire. He also contributed the most to this lead chapter.

“Critical reader engagement begins with selecting the megatrends that form the back- bone of this book. We expect each reader to agree with the inclusion of some mega-trends, perhaps frown at others, and conclude we missed yet another megatrend or two. if you have this response: Excellent! We’ve started a discussion that may lead all of us to new insights and into uncharted territories. We have no illusions of giving definitive and holistic answers about the trends driving the future of business, economy, and society; instead, let’s see how these trends play out.”

“Let’s now take a closer look at each megatrend and their relationships to various industries and to each other. After a short introduction to each, we invite you to immerse yourself in a thought experiment to explore the trend, consider your own exposure, and imagine ways to explore and create business opportunities to capture the potential of megatrends for your organization. If our thought experiments resonate with you, perhaps you can use them with your peers to think outside the box of everyday operations.

Each upcoming section identifies the industries with the biggest exposure to and influence on the megatrend. We also support a non-linear reading experience by closing each section with a short list of closely related megatrends, so you can follow your personal megatrend thread.”

Figure 1.2 Industry and Megatrend Heatmap, with Higher Exposure to Megatrend Marked in Darker Shading

The chapter also has 8 “thought experiments” similar to the one around the mobility megatrend below.

Don’t be surprised if on your next visit to SAP HQ in Walldorf or one of their other major centers around the world you get pulled into sessions which discuss such scenarios. It is a cool way to get away from “business as usual” thinking

However, we don’t mean to scare you away …the rest of the book doesn’t give you too many quizzes and exercises…what it does is excite, educate and entertain. As I like to describe the book: “It’s new energy, new medicine, new mobility, new financial instruments, new customer pathways, new supply chains, new business models – and yes, recycled everything using circular economy principles.”

It is dripping with innovation. Order a copy today – it is available for purchase now (click on the badge on top left) and will be released on December 20 for your holiday reading. If you prefer eBooks, they are available on the SAP Press site here

Much more to come.

Analyst Cam: SAP Utilities and Sustainable Transitions

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Daniela Sellmann, Global VP & Head of the Utilities IBU at SAP and Kim Maren Ekrutt, Head of Innovation & Sustainability at the IBU.

Daniela, who I interviewed for the upcoming SAP book Business as Unusual, provides a nice update on trends affecting the sector – Ukraine, extreme weather, the maturing of decentralized grids and the “Flexsumers” who are generating their own power with renewables. She also provides an update of the updated SAP core offering for Utilities and startups like Exnaton and others founded to take advantage of the changing utilities sector.

Kim focuses more on sustainability – especially the water element of utilities. She also describes how sustainability is “moving up the stack” – beyond just compliance and reporting to creating sustainable products, services and business models.

Very nicely done in under 20 minutes.

SAP "Business as Unusual" excerpts

The Business as Unusual book authored by Thomas Saueressig and Peter Maier that we helped interview a wide range of SAP, customer and partner executives for is being released on Amazon in two weeks – see book page at https://amzn.to/3B4g9gk

As I have done for many of my books, I will excerpt in posts over the next few weeks from each of the 10 chapters. I will also profile short segments from the video interviews we conducted to give you a “behind the scenes” feel for the massive effort which ended up in over 2,500 pages of transcripts, presentations and research materials. That was chiseled down to 300 pages “dripping with innovation”

I have described the book as new energy, new medicine, new mobility, new financial instruments, new customer pathways, new supply chains, new business models – and yes, recycled everything using circular economy principles.  It's remarkable how many industry sectors and global regions SAP is fluent in. 

Let’s start with the Preface from the two authors and their backgrounds. Click on each to enlarge font.

Much more to come.

 

Analyst Cam: SAP S/4HANA as “next-gen” ERP

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Jan Gilg, President of S/4HANA Development at SAP.

I invited him to provide an update on S/4HANA. He spends most of the presentation discussing how this is a very different iteration of ERP beyond just the cloud-driven architecture which too many vendors emphasize even after 25 years of SaaS.

There is a lot more focus on new business models and industry networks, on the changing mix of  products and services at most customers, the need to be much responsive to climate change urgency, and the transition to very different UX with the impact of AI and collaboration products like Teams.

As I mention to him, I was part of the Gartner team which popularized the ERP term in the 90s. This is definitely not that vision of ERP. It has come a long way.

I have invited him to come back and present on how customers are seeing different value points in justifying their moves to S/4HANA and also on how SAP is delivering vertical industry functionality in and around S/4.

Very nicely done in about 25 minutes.

Analyst Cam: IFS Labs – Hybrid in all its glory

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Bas de Vos, VP of IFS Labs

I first met him at the IFS Unleashed event in Miami last month. He presented on the main stage on 5 themes.

He then kindly gave me a tour of the show floor where you saw many of the concepts he presented in their physical manifestation complete with a miniature wind turbine. The opposite of a digital twin - a physical twin of what he had described on stage. See the full presentation below.

Next, I invited him to the Analyst Cam series and he discussed the role of IFS Labs, his definition of innovation, and summarized what he presented in Miami for our audience.

Too many vendors talk glibly about hybrid events and functionality. Spend some time watching both his Unleashed presentation and our conversation since – one 20, the other 30 minutes. In person on the show floor, on stage and on Zoom, Bas showed how effortlessly you can present complex use cases in industrial settings both in digital and physical, paper, analog world.

Fascinating!  

Burning Platform: Manufacturing in 2050

In the 82nd episode of Burning Platform, we host Maggie Slowik, and Andrew Burton. Global Industry Directors for Manufacturing at IFS presenting a shortened version of a session they hosted at their Unleashed Event in Miami a few weeks ago.

They talk about the many challenges manufacturers face from supply chain disruptions, talent issues, navigating inflation, cybersecurity threats, growing ESG and other regulations among them.  Manufacturing today is not for the faint hearted, but they talk about so many new opportunities that have opened up from those who persist with smart, connected products; circular economy thinking, the move of value to data and the changing mix of data – from 40% generated by machines in 2021 to 60% in 2025.

They talk about the metaverse. IFS is already well ahead with use of mixed reality in its field service scenarios. Andy and Maggie talk about it in the context of the shop floor.

They cover changing ecosystems and shortening supply chains from a geographic perspective as companies rethink “lean” and lowest-cost sourcing,

2050 seems a long way off. But they quote a young blogger who says that much earlier, by 2030, things are going to be essentially ownerless. “We already see the beginning of that with certain things like bikes, clothing as a rental, certainly cars. So we're sort of heading towards ‘Servitization”, a service-oriented future.” They provide several examples of products evolving to services during the session.

Very nicely done in about 30 minutes.

In a session I will run next week, you will see Bas de Vos, who runs IFS Labs, present many examples of the technologies which are rapidly changing the shop floor and the man/machine symbiosis in manufacturing.

Book speedwriting?

I asked followers on LinkedIn how they would use 4 months of sabbatical credits like I have accumulated over two decades at Deal Architect. I got plenty of suggestions including this from Andre Blumberg, CIO at Hong Kong based CLP who I have profiled in earlier books

“Four months? You’d write two books, easily.”

Andre is an ultra-marathoner so I am flattered by his standard of speed, but my style of book writing depends on a large number of conversations with executives. I have said often if my voice is more than 10% of a book, I have failed. My blogs, Instagram and other social media is where I share plenty of my voice. In our advisory work, clients get plenty of my voice. But books that I help write are for story telling by innovative executives. And arranging such conversations takes plenty of time.

But surely, having 7 earlier books helps shorten writing time? It does, up to a point.

I recently shared details of two books my team has helped with in the last 18 months – Moment of Service by Darren Roos, CEO of IFS and Business as Unusual by Thomas Saueressig and Peter Maier of SAP.

Moment of Service involved about 50 conversations with IFS, customer and partner executives resulting in 1,000 pages of transcripts, slides and research material and took my team about 4 months. We delivered a draft of 300 pages. The IFS team added their voice and trimmed that total content down to  a very readable 200 pages.

Business as Unusual involved about 150 conversations resulting in 2,500 pages of transcripts and other materials and we delivered a first draft of 400 pages. Took us roughly 6 months. SAP and Rheinwerk Publishing added material, trimmed other and ended up with a 300-page book dripping with innovation stories.

So could we have done either much quicker?

Firstly, it absolutely helps to start with a premise and a pool of potential interviewees. Darren Roos had a pretty crisp definition of the Moment of Service theme. IFS had gone through a branding exercise a few months earlier. Most of his customers and partners were comfortable with the concept. Still the logistics of identifying who to interview, arranging the recordings , transcribing them, getting approvals is a labor-intensive process.

The SAP book subject matter was much more complex. It covers 8 “megatrends”  - Resilient supply networks, Future of capital and risk, Integrated mobility, Everything-as-a-service, Sustainable energy, Lifelong health, New customer pathways and Circular economy. We were looking for very innovative customers who were pushing the boundaries of low-carbon energy, breakthrough medicine, new financial instruments, differentiated store experiences, new business models etc. We were looking to interview a broad range of specialty research firms and partners beyond SIs. We ended up with  strategy firms, Bain and Co and Accenture Strategy,  the mobility services firm, MHP which is part of Volkswagen, the industrial robotics firm, Beckhoff, the Advanced Services Group at Aston U and the energy research firm, Det Norske Veritas among others. Frankly, without SAP’s amazing industry and global reach we would have not got that variety with other vendors even if had taken 3x the time.  

But hasn’t technology and automation helped make the process speedier? Absolutely, in the data collection process. No way could I have traveled to 35 countries to meet with interviewees especially with pandemic travel restrictions. Zoom and Teams were a massive help. So was being able to listen to the digital files of interviews as if they were podcasts on my walks and via Bluetooth in the car. Helped me decide what to excerpt from each.

Tech has also helped make easier the graphics that IFS and SAP developed for their books. Printing and Distribution has similarly become more efficient. SAP Press is offering the Business as Unusual book through many more booksellers around the world and in more eBook formats

Given all the advances in AI, voice recognition and transcription technology has surprisingly not improved much. We have so many accents, acronyms and jargon in tech world that machines just cannot keep up with Tina, who has transcribed most of my book interviews for the last 5 years. And the SAP book in particular has whole bunch of chemistry, geology. medicine, automotive, banking and other lingo in addition.

Same thing with editing. I like to cite the experience from the Godfather movie. Coppola shot 90 hours of film and delivered a 2-hour version to the studio. The studio asked him for more and the released version was about 3 hours long – still less than 5% of what was filmed! Two of the 6 editors won Oscars for their work. 50 years later, I find editing is still an art form. Good editors are worth their weight in gold.

So 2 books in 4 months? Sorry Andre, like I told you if I was to use 4 months of sabbatical time to write another book, it would be fiction. About an analyst who is in the middle of international intrigue and chaos and saves the world. Jack Ryan if he had stayed an analyst.

If the Mrs. would allow me to spend 4 months looking like this nerd 😊

The underappreciated telecom sector

I have had several reasons recently to think about the state of our connectivity.  In the last month, my wife, my daughter and son have been on separate trips to three continents. They have kept connected, informed and entertained at a fraction of what I used to pay on international trips just a few years ago. In the last couple of years, I have interviewed nearly 750 executives across 50 countries for books and video episodes via Zoom and Teams. Pre-COVID, I would have hopped on planes to get this level of executive access. On a recent weekend, I watched my alma mater, TCU play on a Saturday evening in Austin, TX.  I got up early the next morning to watch the Cricket World Cup in Melbourne, Australia, then a couple of hours later watched my NFL football team, the Bucs play the Seahawks in Munich, Germany.

It’s incredible how today’s telecoms and media companies have shrunk the world and democratized access to billions. As Hemingway famously said “it was gradually, then suddenly”. The industry has been turbocharged in the last few years.

Can you imagine if we got some similar payback and productivity from airlines or public utilities or healthcare?  Yet, telcos do not get much customer love. They don’t rate very high in terms of brand reputation or customer satisfaction.

It was nice to hear David Fan, GM of the Salesforce Communications Cloud present on the dynamic industry in the Analyst Cam series here. Even more, I was pleased to see this short report (just 3 chapters) that David sponsored titled "Trends in the Communications Industry". It is the result of  a survey of 500 industry experts and 6,000 consumers of wireless, cable and B2B telco services from around the globe.

The survey highlighted several trends and I have excerpted some key ones, many of which telcos need to monitor

The sector has become hypercompetitive, beyond just price

The survey reports

“When asked about what might make them consider switching internet service providers, respondents cite price and speed at the top. Unsurprisingly, with hybrid work models growing in popularity, reliability is also a big factor. In fact, more than 1 in 10 consumers say they'd consider changing internet providers for either better reliability (13%) or improved customer service (12%).”

and

“Fifty percent of wireless customers and 47% of cable customers believe they get the best service when they threaten to switch to a different provider. This indicates that more work needs to be done at addressing customer satisfaction throughout the lifecycle — not just when people threaten to leave.”

Hybrid customer experiences are still not optimized

“35% of those surveyed say they prefer to do business online and in stores. This means that optimization of physical experiences cannot be ignored. Customers want the best of both worlds. Providers need to plan for, and support, the joining of online and offline experiences. The ability to move from one channel to another is a key customer success factor.”

Customer satisfaction is driven by a handful of outcomes

While these expectations keep evolving, what keeps customers happy are actually pretty tactical. Here are some of their expectations of their cable providers.

Consumers are willing to pay more for wireless 5G, but have a fuzzy knowledge of what it does for them

The survey reports “only 44% of respondents were “very familiar” or “extremely familiar” with 5G technology. However, 67% of respondents said they would be willing to pay more for 5G.

5G could dramatically broaden telco ecosystems

Percentage of providers who think 5G would attract more partnerships and bundling options in the following areas

Developers could expand ecosystems even further

The report says

“Now that networks are being modernized and made accessible via APIs, the challenge becomes attracting developers who know how to build and connect applications with devices. Hyperscalers (companies, like AWS or Google Cloud, with the ability to scale computing resources on demand) have dedicated developer communities that could be great assets to traditional providers.”

B2B customers want collaborative and more digital experience

The survey showed

“B2B users report experiencing frustration when trying to manage accounts online (39%), make large purchases (36%), and request changes in service (36%). B2B users also reported frustration when using assisted digital services (31%) and self-service (34%) tools. Also concerning is that only half (53%) of procurement employees said they felt comfortable managing their enterprise accounts online without sales agent assistance.”

The report has plenty more interesting nuggets. Check it out and my Analyst Cam episode with David. It is a critical sector which is delivering very high value to us consumers and workers. Let’s engage more proactively with the sector while continuing to demand more from it.

Analyst Cam: Salesforce Verticals – Manufacturing Cloud

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Achyut Jajoo · SVP and GM, Manufacturing and Automotive presenting an update on their Manufacturing Cloud.

Unlike other industries Salesforce has presented in recent Analyst Cam episodes, the Manufacturing Cloud is not new. It was launched in 2020. Salesforce is focused on the customer facing side of manufacturing – what it calls “digitizing the front and middle office”, not operational functionality for the shop floor or product lab that many ERP vendors target.

Achyut identifies that for most manufacturing businesses, less than 10% of revenue is net-new business. Most of the business is in “run rate, long term customer agreements, or you're bidding on long term projects and programs”. Most companies were using Salesforce as a CRM for net new business. 90+%  of the business was being done in Excel spreadsheets or by tapping into the ERP or other sources where long-term customer agreements are recorded. 

Some of the use cases the Manufacturing Cloud focuses on  – modernizing commercial operations, simplifying partner engagement and transforming service experiences. That translates to focus on functionality identified below

Achyut also identifies 4 “sub-sectors” they are focused on: a) complex equipment manufacturers, b) production parts suppliers (like automotive suppliers) whose products are inputs for other manufactured products and equipment. c) chemical manufacturers. d) distribution-oriented manufacturers that distributing their products through a  channel ecosystem.

He presents on 2 customers – Swissbit (sensors and chips) and Tenneco (automotive components).

He also asked me to pass along that Salesforce is hosting a Manufacturing Summit on December 1 in Chicago. If you're interested in connecting with the team at the event, you can find the agenda and registration information here.

 

 

Burning Platform: The year in industry events and travel

In the 81st episode of Burning Platform, we host Jon Reed of Diginomica and Brian Sommer of Techventive to discuss the good and bad in industry events we experienced this year and on the state of business travel.

I carved the recording into two videos.

Part 1 covers the slides all three of us presented. Jon kicks it off at 0.59 “I felt before the pandemic events were largely what I would call legacy and not creative enough. And I felt the same as we went into virtual events that most of those events were really passive viewer experiences that really weren't very engaging and very good. Have however, seen a little bit of progress.” He provides a score card in his slides on how hybrid events have evolved.

Brian, starting at 12.00 is entertaining as he describes the trials and tribulations of post-COVID travel. He has several hilarious slides and also useful advice on what events should aim to deliver for customers, prospects and partners (and also how partners could be effectively using the events) – and yes, us analysts.

I start at 24.08. I had much less travel than either Jon or Brian last couple of years, But I made up with over 700 virtual conversations – about 200 for books by execs at IFS and SAP my team has contributed to and another 500 in various video episodes of Analyst Cam, Burning Platform and New Normal. I also describe the events I was at in-person and some of my travel experiences.

Part 2 is more of discussion between the 3 of us. We cover what we like and don’t like about keynotes and guest speakers, whether we prefer dedicated analyst summits or use conferences, need for expanding ecosystems and their presence at events, showcasing differentiation products and business models and lots of other areas event planners will find helpful

 

 

Analyst Cam: Blink – Empowering Frontline Workers

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Sean Nolan, CEO of Blink, which offers mobile access for frontline workers in a variety of verticals – “nurses, refuge collectors, retail staff, hospitality staff, aged care workers, anyone who doesn't sit behind a desk all day, they probably don't have a workplace device, like a laptop or a phone given to them so probably has got personal devices. Most don't have a workplace email address or sort of digital identity necessarily.”

He provides a use case at the UK transit carrier, Stagecoach – where drivers use his app to access Trapeze rostering, GreenRoad telematics and Oracle HCM applications. The more useful the applications. the more engagement of the frontline workers and more chances they will adopt even more digital functionality

I know I am a broken record asking vendors to verticalize but it is heart breaking  to hear so many essential workers are in his words “to a large part digitally disconnected from the organization.” His goal is to fix that but giving them access to a variety of relevant applications like training, benefits and even accident and near miss reporting, which he says is one of the more attractive use cases for their software.

Listen to his pitch and applicability in the verticals they are targeting. Nicely done in under 20 minutes. He was introduced to me by Workday Ventures, one of their investors.

Analyst Cam: Papaya Global – workforces without boundaries

As we have moved to virtual briefings, I have increasingly been excerpting short video segments (with permission) as part of my Analyst Cam series.

This time it is Eynat Guez, co-founder and CEO of Papaya Global. Papaya offers a global workforce management platform in 160+ countries. Her elevator pitch: “Global payroll technology was broken. So we fixed it.” I was introduced to her by Workday Ventures, one of her investors.

As you listen to her, it becomes clear that payroll processing across so many jurisdictions is hairy enough. Their efficiently handling payments to employees, to taxing authorities, benefit plans etc. with the fragmented global financial services landscape, one pay cycle after another, is even more valuable to clients.

Eynat covers the fragmented competitor landscape – payroll outsourcers, HCM software vendors, Employer of Record service providers and firms that provide 1099 type contractors. One of her big advantages is a highly streamlined onboarding process for clients.

They have 1,500 clients. 30% of which are F5000 companies. Customers let them handle their processing, or avail of a technology licensing model. Eynat says the latter is growing significantly in popularity.

She talks about one of her clients CyberArk with over 2.000 global employees. She describes how Papaya consolidated what was being done by multiple providers.

Very crisply done in under 25 minutes.

 

 

Burning Platform: The state of US Healthcare

In the 80th episode of Burning Platform, we host Dr. Geeta Nayyar (“Dr.G”), SVP and Chief Medical Officer at Salesforce

Jujhar Singh, EVP & GM, Salesforce Industries recently gave us an update on Salesforce’s health and life sciences cloud from their Dreamforce event.

With Dr. G,  the conversation is more about how to fix US healthcare – we spend a fifth of our GDP on that sector and our health outcomes don’t reflect that. She identifies a slew of areas she would prioritize for tackling

We talk about how most enterprises turned on a dime at the start of COVID and how McKinsey says if we can sustain that intensity, we may have the most innovative decade ever. And whether that is likely to happen in healthcare, given its ossified nature.

We talk about the promise and frustrations of electronic medical records. We discuss why public health performed inconsistently during the pandemic and how we can build public trust in those institutions

Healthcare is stubbornly regional, even country specific in medical practices, regulations, even payer/provider structures and how we can move to benchmark more across countries. We talk about a consumer-led movement transforming healthcare and a proactive focus on wellness versus the traditional focus on treating symptoms.

Dr. G covers an incredible amount of ground in around 20 minutes. Must see TV!