Crossing the “digital chasm” with SAP Leonardo

28 September 2017

Julien Delvat

Julien Delvat

SAP S/4HANA Consultant

What is a “digital chasm”?  Is it opening up in front of your organization, and if so what’s out there to help you close the gap?  Julien Delvat, the Digital Transformation Mentor, finds a potential hero in this story – SAP Leonardo.

Conference season is upon us. Within the SAP universe, there have been numerous events targeting various audiences: operational, tactical, and strategic.  I’ve been fortunate enough to attend several over the past few weeks and something has become clear: a digital chasm is beginning to open up.
 
Leading the charge, early adopters have welcomed the digital core, embedding it in their organizations, and they are now leveraging real-time analytics and moving to digital innovation technologies like blockchain, IoT, or machine learning. In the meantime, the vast majority of the SAP customer base sit on previous instances of Enterprise Resource Planning (ERP) software, struggling to keep operations under control while staying compliant with evolving rules and regulations.
 
How can these organizations leapfrog their outdated ERP platform, cross the digital chasm and arrive in the nirvana of blockchain, IoT and machine learning.  The answer is simple: SAP Leonardo.
 

ERP maturity

At the STRATEGIC level, C-Level decision makers focus on topics that influence their business model (customer enablement portal, conversion to product-as-a-service) or contribute directly to the organization’s mission and objectives (e.g. Central Finance for Merger and Acquisitions)
 
At the TACTICAL level, Directors prioritize projects related to changes in regulation (Revenue Recognition, Indian Tax calculation, GDPR) or add visibility to the existing processes (Analytics, Data Warehouse, Planning).
 
At the OPERATIONAL level, Managers spend most of their time improving the reliability of processes (period close, transaction processing, data quality) or rolling out existing solutions to a larger end-user base.

Depending on the maturity of your organization and platform, as well as your business environment, you might see yourself prioritizing a combination of these three levels. This is also highly dependent on your organization’s culture of innovation.


The digital chasm

Companies adopt technology and innovation at different paces. The behavior is very different between the early market and the mainstream market. "This was first described by Geoffrey A. Moore in his book "Crossing the Chasm".
 
In our ERP world, there is a “digital chasm” between organizations that are just trying to keep operations under control and those that have been able to embrace and adopt new technologies, setting up platforms for digital innovation.
Crossing that chasm can take a lot of time, energy, and resources with multiple strategies that can be adopted to create what Gartner calls the “backbone of innovation”.
 

Strategies for digital innovation

However, in this race for digital innovation, not all strategies are winners. In fact, there are most certainly some losing ones amongst them, e.g.
  • Reinvent the Company
    Start an extremely long and expensive project with low probability of Return on Investment (ROI)
  • Stay in the Sandbox
    Try to solve a burning challenge by putting together a draft solution that becomes viral and IT has to maintain a rogue application that’s incompatible with the business model
  • Analysis Paralysis
    When struck by fear of failure or not having the right license or resources, or by waiting for the “right” moment, the status quo is frequently the de facto strategy
There must be a better route to successfully realizing significant innovation. Nonetheless, does that route really require a digital core?
 

Digital innovation with SAP Leonardo

Several conversations Bluefin have with customers begin around the belief that starting strategic initiatives with SAP Leonardo is out of reach because they haven’t deployed SAP S/4HANA and completed their migration to a digital core. The situation is actually very different.

Launched at Sapphire in June this year, Leonardo is SAP’s umbrella for innovation. More than just a toolbox of buzzwords like blockchain, IoT, or machine learning,

Leonardo is a process that can be leveraged to identify “problems worth solving and solutions worth making”.

 Since it combines technologies from SAP and non-SAP, the availability of a digital core is not a prerequisite. For instance, SAP’s support organization is leveraging decades of support tickets and chats as a training set for its machine-learning-based support agents (aka bots) independently of its transaction system. One of our Consumer Packaged Goods (CPG) customers is currently evaluating embedding sensors in its products to collect consumption information into Hadoop and bring it into its SAP data warehouse through SAP VORA to get a 360 view of the customer. This IoT / Big Data scenario is again independent from the system of record.
 
In short, there is a growing digital chasm in our ERP world. However, organizations don’t need to feel shackled by their lack of a digital core; they simply need to adopt new practices for digital innovation with tools like SAP Leonardo.


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About the author

Julien Delvat

SAP S/4HANA Consultant

With over 15 years’ experience of developing cost management applications at SAP Labs France, coupled with significant experience of architecting, designing and implementing these systems for clients across the globe and industries, Julien is perfectly placed to offer Bluefin’s customers unrivalled expertise in the colliding worlds of finance and technology. It’s not with good reason he’s known as a ‘Costing Geek’!

When it comes to collaborating with clients, Julien likes to get under an organisation’s skin. He wants to know what makes a company tick, what their priorities are and what the reality is on the ground. Doing this assists him to build information systems that reflect their true business needs.

Julien’s contributions to the SAP Financials community have been recognized through publications in professional blogs and journals like SCN.com and SAP Expert, as well as multiple speaking and panel opportunities at conferences like SAP Financials, SAP Controlling, Sapphire / ASUG, and SAP TechEd. He is most passionate about his roles as an ASUG volunteer for the Financials community and as an SAP Mentor, working as a trusted advisor to build new communication channels between SAP and its customers.