Digital Transformation, Part 1: Rapid State of Change

nnovation is a game changer. There’s a new sense of urgency. We are in the middle of a digital transformation and businesses need to face it – or get disrupted. One message that we hear repeatedly when co-innovating with enterprises across the globe is: “We need to accelerate the pace of change and innovation for us and for our clients.”

And at the heart of this change is the cloud.

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But what is digital transformation really about? Have we simply digitized by adopting technology without truly innovating the way we work? Let’s talk about what has changed in business and how a cloud-first and outcome-based approach can help.

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Cloud Myth Buster Summary – the wrap

During the last few weeks we enjoyed demystifying the most common legends about Cloud for you. We hope we turned cloud for you from an indomitable beast into a pet.

Adopting and managing Cloud is a question of knowledge, it´s a question of awareness of risks and abilities. And finally every single customer needs to answer the question himself on how well the cloud provider did his homework to domesticate the beast and unlock the value of cloud for enterprise usage.

Cloud is a catalyst for the entire industry to undergo a significant transformation. With the arrival of this technology, status quo is changing faster than ever and require companies to change and adopt – or go out of business. Every single company needs to find a way to transform the business into the digital age.

We hope we have contributed to a better educated conversation about cloud. Also we wouldn’t like you to miss a summary of our series. here we go:

Myth Buster Summary - Infographic

#1: SAP is not a cloud player

True choice in where and how to adopt cloud based solutions – complimenting new or innovating existing processes. SAP offers customers the freedom to do this in a non-disruptive way. This creates new opportunities for all our customers and helps grow our cloud community every day. We have already cloud customers in 25 industries and 100+ countries all over the world.

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#2: SAP software is hard to use

SAP combines its achievements in business expertise over the past decades with the newly emerged focus on people and how they work. Our next generation cloud portfolio is delivered with a “mobile first” development approach and a consumer-like user experience.  Social collaboration is embedded in our product design. And we run hundreds of design-thinking and co-innovation workshops around the globe to engage the end user in our user interface designs. More than 36 million subscribers to SAP Cloud Services experience it every day.

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#3: You have to stay on premise or move to the cloud

In 2017, 50% of large enterprises will have hybrid cloud deployments by 2017. Therefore SAP’s cloud portfolio has been designed to serve the hybrid cloud reality. We bring SaaS, PaaS and integration content together to ensure interoperability for our customers. This delivers the freedom to pick and choose whatever creates value for the customer, independent of the technology stack. Cloud Computing will simply become an additional option in a heterogeneous but integrated landscape.

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#4: Running mission critical systems in the cloud is not secure

SAP handles data with the utmost discretion and strives to deliver services and support that allow business-critical processes to run securely. SAP is used to work with sensitive customer data for more than 4 decades now. Data security and data privacy stays part of our DNA. We protect our customer data with a defense in depth strategy where all layers are secured, not only our Cloud Data Centers that by the way meet a Tier-4 standard..

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#5: Cloud business is not proven

At SAP we are proud that we run our cloud built for Business. Forming the industry’s largest cloud base with more than 36 million end users subscribed to SAP´s cloud services, we are on our way to become the Leader in enterprise cloud business services. We help our customers and partners to gain competitive advantages and realize business benefits in the cloud. A proof point is the Ariba Business Network where more than 1.5 million businesses from more than 191 are connected, transacting more than $600 billion worth in commerce.
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#6: Cloud is only for small businesses

Early SaaS vendors focused on smaller companies as their business is often less complex, customer complexity might increase with the size of organization. We also see some industries which are more complex than others, irrespective of the company size. Differences lead to differentiated deployment footprints between On-Premise, Cloud, Managed Cloud and Hybrid landscapes. The entire SAP cloud portfolio is designed to serve various customer footprints and to ensure SAP serves large customers in the cloud with the same completeness and sustainability as On-Premise. This concept created a 70.000+ customer cloud installed base already of which 60% are classified as large enterprise.
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#7: Cloud is all about TCO

Early cloud Decisions were mainly driven by scale and reduction of costs. No upfront investments ( CAPEX ), but ratable payments over time ( OPEX ) lower the risk profile significantly. Beyond TCO, today´s business is driven by Speed and Agility. 52% of the Fortune 500 firms since 2000 are gone as they have been out-innovated by others– This makes Pace of inn ovation the #1 driver for cloud. SAP’s cloud solutions allow an agile adoption of new business models and capabilities, speed up innovation cycles and allow the required flexibility in the structure of organization, processes and IT to stay ahead of the game.

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#8: Cloud can’t adapt to my needs

Stand-alone SaaS solutions deliver simplification, innovation and velocity on the one side and offer a flexible cost structure on the other. Therefore enterprises suffer from the loss of flexibility due to higher standardization of SaaS solutions and accept the control in the hand of the solution provider. PaaS brings back some of the adorable enterprise aspects. With the combination of SaaS & PaaS enterprises have the best of both worlds. Control and flexibility paired with OPEX and Velocity makes SaaS the #1 innovation engine in the IT and PaaS the enabler for large scale enterprise SaaS adoption.

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#9: Cloud is hype in consumer-oriented industries only

SAP’s delivers a simplified consumption model that comes with a great user experience to bring the pace back to business that is required to stay competitive. But each industry adopts at own business priorities and own pace. Based on Public Cloud and Managed Cloud environments we see companies of any size and any industry moving their differentiating and non-differentiating processes to the cloud and gaining their individual advantages with a significantly simplified consumption of services.

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So much for busting some of the key myths we have come across in our cloud strategy and co-innovation work. We hope you enjoyed this series and you s tay tuned and in contact with us.

Sven Denecken ( @SDenecken ), Bert Schulze ( @BeSchulze ), Nikolai Vetter ( @NikolaiVetter ), and

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Originally appeared in SCN

Many people see in cloud computing only the people-centric, mobile-first, and analytic-driven applications which can be purchased with a credit card. This would undervalue the transformative power of the cloud.

If your cloud vision is narrowed down to SFA (sales force automation) or even any cloud CRM, then you need to accept that your applications will be siloed and integration with the rest of the business will be ad hoc at best.

A quick fix cloud application can become a long-term business problem when there is no integration between the application and the rest of the organization, especially at a process level.

To truly leverage the cloud for your business, cloud applications need to be considered in conjunction with a modern platform (PaaS) AND flexible integration capabilities. SAP h as taken this kind of holistic portfolio approach (more details ).

More and more companies across an increasingly broad range of industries are harnessing the potential of cloud computing. Here’s a look at this week’s cloud news, including discussions of big data and predictive analytics, Europe’s struggle to unify regulations, and the US Army’s currently-cloudless processor.

Where Cloud Will Pay Off: Predicting the Future (Forbes): The cloud allows businesses to process huge amounts of data at real-time speeds. The result—predictive analytics—is that businesses are transforming to be able to react to rapidly changing customer needs.

Heaven help them: Army needs a good cloud to save lives (Washington Times): The army’s processor, the Distributed Common Ground System (D-Sigs), has received criticism for its general poor performance and lack of cloud processor, which would provide intelligence analysts with more data. Major General Harold Greene, deputy for acquisition and systems management at Army headquarters, recently discussed the complexity of the system and outlined future plans for D-Sigs.

Big Data, Big Opportunities Infographic (CloudNewsDaily) : Big data is being harnessed across a broad range of industries, improving the way companies react to customer demands—check out this infographic to see how.

Cloud for Europe launches as SAP backs EU rules on data privacy (ZDNET): SAP European Chairman Franck Cohen firmly supports unified EU regulations on cloud security, stating that currently there are different priorities and privacy concerns across EU countries, and that the continent needs to take a consistent, unified approach to security regulations.

November is here, and gamers are anticipating the launch of Xbox One and PlayStation4 in the next two weeks. , we discussed the potential rewards and downfalls of cloud-based gaming consoles—on one hand, developers will be able to more efficiently improve games even after they have been released, but on the other, potential connectivity problems have the power to destroy user experience.  It seems that connectivity is already expected to be a problem for Xbox One users.

Microsoft’s lead program manager John Bruno has been quoted on IGameResponsibly as saying the host OS frequently requires an update, causing the system to reboot—often in the middle of a multiplayer session. Furthermore, Bruno admitted that it is up to game developers to include offline mode options for games, and he couldn’t confirm that some of the top games would allow for that kind of play.

It’s possible that these challenges will be eclipsed by the improved design allowed by cloud technology, but gamers are understandably worried about the transition to cloud-reliant gaming.

Who are the cloud leaders?

Research from Oxford Economics revealed certain companies that are further along in cloud platform deployment. These leaders are more bullish on cloud’s potential to drive revenue and cut costs and more likely to prioritize virtual collaboration as a goal of mobile strategy, to have a BYOD policy, to have launched a managed service offering, and to use a cloud-based mobile app platform in production.

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Will cloud leaders continue to advance and remain ahead of other companies, or will widespread advances across companies close the gap? What will the next set of cloud leaders look like?  Our research suggests that leaders will focus on integrating platforms.

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Cloud leaders are already finding ways to use the cloud to collaborate with partners, suppliers, and/or customers. These leaders are using the cloud to innovate at the pace of business and meet rapidly changing market needs in real time and to participate in networks set up by technology providers. This trend will likely accelerate in the coming years, allowing companies to run more flexible, agile, and cost-effective IT departments and unleashing unprecedented business and IT gains.

Though security issues persist, investment in cloud continues to grow

Though companies are concerned with security breaches in the cloud, many recognize its potential to improve efficiency and facilitate global collaboration. Read more in this week’s cloud news:

Consumerization of IT (CMS Wire): Companies are rapidly adopting BYOD policies—what are the best ways for companies to transition to cloud, and what are the potential challenges of rapid adoption?

Box CEO Aaron Levie Criticizes The NSA, Warns Of Cloud Balkanization (Forbes): Levie argues the balkanization of cloud data laws across Europe could be threatening to business and would get in the way of customers’ needs to share and collaborate with partners outside their region.

Almost a quarter of German companies now see the cloud as very risky, after NSA leaks (GigaOm): A new PwC survey found 22%of German companies now see the risk of using cloud services as “very high,” and another 54% see it as high or very high.

British Business and Transport Embrace the Cloud With Help From Silicon Valley (International Business Times): In an attempt to streamline services, Gatwick Airport and National Rail are using cloud technology to integrate data and IT. The airport’s CIO Michael Ibbitson believes it will significantly improve passenger experience.

Among the predictions about the future of the cloud offered at a recent technology event in San Francisco: The role of IT will become more business-focused as routine operations are off-loaded. Some very large companies will migrate all of their technology infrastructure to the cloud, sooner rather than later. And computing power will follow the same trend as electric power did a century ago, becoming a utility delivered from industrial-grade plants (an idea popularized by Nicholas Carr’s 2008 book, The Big Switch ).

Significant progress toward some version of this future already is in evidence, as shown by our study, Unlocking the Cloud. And companies are moving quickly to further their cloud presence–92% of our survey respondents expect to achieve moderate to significant improvements in speed and efficiency of processes via the cloud.

As the chart shows, key business functions such as HR and finance will see rapid cloud adoption in the next three years, and companies expect to see significant gains in productivity, innovation, and efficiency as a result.

Our boldest prediction, made in the paper “Connecting the Cloud,” concerns the power of networked clouds. We say that cloud-derived advances to date are “only incremental gains compared with those promised by the merger of disparate clouds, whether operated by different groups within the same company or by external business partners.” Integration of cloud-based operations into business networks promises a variety of payoffs, including better performance across functional areas (e.g., supply chain, purchasing, payments); increased ability to partner with other firms and take advantage of new technology; and access to new markets and customers.

Nobody who works in technology thinks this will be a picnic. Chuck Hollis, chief strategist for VMware, has posted at his blog a litany of cloud-related woes suffered by vendors and customers in the early days of the transition. But he also sees a way forward, to a market where services tailored to business needs become essential to enterprise users. Here, high-level capabilities, not price, will emerge as the key differentiator. Writes Hollis, “As an IT vendor, you’re known by the quality of your people; I can’t [see] it being all that different in an enterprise public cloud world.”

The reward from open and integrated cloud networks is return on investment that is greater than the sum of its parts.

Cloud integration will dictate the benefits or setbacks cloud users see from their investments, but capitalizing on cloud-integration strategies requires a significant amount of groundwork. Cloud leaders typically share several good habits when it comes to cloud networking, including:

  • Building vendor networks. Leading organizations look to build vendor networks rather than taking a one-off approach. One of the benefits of building cloud platforms is the simplicity of adding services. Without adequate planning, however, a random collection of solutions can emerge as a problem. In many cases, organizations benefit by selecting a vendor as a core cloud provider and filling in additional needs with boutique solutions. The integration of services is crucial.
  • Engaging in ongoing reviews. Maintaining an inventory of cloud services and understanding what is in place at any given moment is essential. It is also important to identify any unauthorized services that a department or employee might procure. In the end, IT executives must ensure that all services are in sync and security does not fall between the cracks.
  • Centralizing controls and end-to-end visibility. It is critical to put monitoring and controls in place in order to gauge performance and understand how systems and data are being used. It also is important to validate service levels and confirm vendors’ claims that their systems are realizing the terms of service-level agreements.
  • Relying on KPIs. Key performance indicators are an essential component in cloud environments. Although every organization is different and each must determine which KPIs are most critical, common yardsticks include availability; capital vs. operating-expense costs; workload compared to utilization; SLA response error rates; and revenue efficiencies.
  • Recognizing that governance and security are critical. Strong single-sign-on authentication is essential, as are security tools, including firewalls, intrusion detection, data encryption, and endpoint security. An enterprise must also embrace a lifecycle approach to data—assigning tiers and classifications—so that it can be used effectively while managing costs.
  • Building a pool of IT talent. It is critical to hire and develop talent that matches requirements. Clouds represent different challenges than traditional client-server environments. Finding talent that fundamentally understands clouds and how they integrate with existing IT assets is indispensable.