Sven Denecken, global vice president, co-innovation and strategy, SAP SE, will be visiting Australia as a keynote presenter at the SAUG National Summit 2015. He spoke to Freya Purnell about innovation, digital transformation, S/4 HANA, and his request for Australian customers.
FP: What does innovation mean to you, in the SAP context?
SD: Innovation is only happening when it is in the hands of the end user. So whatever we do from a technology perspective, whatever we do from a strategic perspective, the rubber hits the road once an end user gets benefit out of it. I will be laying out what we see is happening with digital transformation. The pace is just increasing, and a lot of innovation is coming from market trends, from macroeconomic topics, so what we see out there is innovation in social, customers and technology. I want to talk about how if you look at digital transformation end-to-end beside those usual trends like the Internet of Things and big data, how it comes back to the end user, to the customers, and what are the drivers.
FP: What do you think customers are expecting in this digital world, and are their expectations ahead of what enterprises are able to deliver at the moment?
SD: Yes, definitely they are. If you just look at the statistics like the number of connected devices, the people who are using collaboration via social media today, the globally connected trade, there is a lot happening already out there. On the other side, there is the customer as consumer, who as the segment of one has very clear expectations, and we fall flat on that in the IT industry in reacting to those trends. So I would like to wake up IT leaders and explain how they need to start not only talking about Internet of Things or big data or business networks; they need to start to understand what does the segment of one mean, what does a lot size of one mean, what does agility of business process mean.
FP: What do you think the barriers are for IT professionals to make that leap and to think in that way?
SD: The biggest barrier is actually complexity. More than three-quarters say it is the business process that is the barrier, because they have not been built for the digital era. About 70 per cent say it’s the decision-making, so how do I get the right data at the right moment as part of my business process to make the right decision. Even 60 per cent believe it’s technology itself – the layers and how business solutions were built in the past. I will look at all of those things – how you can optimise your business process to be ready for the digital era, how can you have real-time support of decision-making, and how, if you run your company in-memory, can you tackle those layers of legacy that have been produced in the past.
FP: Why is co-innovation so important to SAP?
SD: If you look at the reality of digital economies, there are four constituents which matter – the customer, the supplier, and inside the company, people and resources. While companies are focusing very much on optimising inside their four walls, now they realise that their customer actually is driving their business. Many people think they’re still in B2B, but in reality, they need to know the customer of their customer. Your end customer changes your business.
To get that done, it’s the question of having those people sitting together, collaborating, working, looking at technology in a co-innovative approach to find out what does this end-to-end business process mean. This approach … works best if you know why, what technology can help, and then how you implement it.
FP: You’re also presenting some sessions on SAP S/4 HANA. What are some of the key questions about this that you’re hearing from customers?
SD: I think there are three things that we need to explain. First of all, what was the purpose of developing a completely new suite. We understand that it is all about the end user, it is all about that process enrichment we need, and it’s about that real life data means real-time. We [decided] this is the right moment to extend the traditional core value play of a business suite, towards an extended value play. Let’s use all that real-time technology, and all of those new interaction possibilities with a completely new user experience, but let’s set that in context with technical trends like the Internet of Things, big data, business networks, devices, you name it, and let’s make clear why we need that – because a segment of one means you as an individual will decide if you buy, how you buy, how fast you buy, and that means the company needs to react to that lot size.
Second, we want to explain what is really under the hood of S/4 HANA. We will explain with very concrete user cases if you digitise your core, if you connect it to the cloud, if you connect it to business networks, this is what you’re going to get.
Third is, of course, the question of how to get there. So how do I get from my current state to that new state? It’s not a big bang. It’s where is the business value, where do I start, and how can I gradually move.
FP: You’re also specifically talking about how S/4 HANA can be utilised in the finance sector. Why does it lend itself so well to finance, and what are the opportunities for customers in that area?
SD: There are two things that I found intriguing when we started with the finance area. You could even argue Simple Finance was the precursor [of S/4 HANA], where we started to investigate if you run your finance operations in real time, what is the benefit for finance, but also how can you change the interaction between the finance department and the business? Because controllers today want to help the business, but a lot of the data comes after decisions have been made. So how can we provide the right finance information at the time a business leader makes his decisions?
The second thing was, if you imagine virtually a boardroom, there’s only one guy who always has the right information, and that’s the CFO. That’s why we decided to start to tackle it from there, because we envision that different departments working in real time will work much closer together. Companies who use Simple Finance not only optimise their finance [function], they optimise their entire company.
FP: Anything else you would like to highlight about your appearance at the Summit?
SD: I want to sense where Australia is, where the customers are on the mental shift towards digital transformation. I think we need to understand that in the end, a digital core is the foundation of transformation. I want the companies to understand why and how we’re doing it.
Today, two clever kids with the technology at hand can disrupt entire companies. Two clever kids can do things where you needed an IT department’s entire infrastructure two years ago. So my purpose is to shake things up a bit. Why did SAP with more than 270,000 customers decide we needed a new suite? This was bold, but I want to explain the rationale, and I want to sense how far [along the digital transformation journey] the community is down there.
Sven Denecken will be presenting several sessions during the SAUG National Summit 2015, including ‘Digital transformation and innovation with SAP solutions’, and ‘The business case for transforming finance by transforming information with S/4HANA’. The Summit will be held 18-19 August at the Hilton Hotel, Sydney. Visit www.saug.com.au/events/event/saugsummit2015 to find out more and to register.
