E-3 Editor-in-Chief, Peter M. Färbinger spoke to Otto Schell from DSAG, the German-speaking SAP user group’s management board for industry and business processes, about the future topics of digital transformation and real time.
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Peter Färbinger: In your work environment, what has been affected by digital transformation? And what has not?
Otto Schell: Digital transformation is in full progress. Constantly and everywhere. It has played a permanent role since we began supporting corporate processes with IT. However, it‘s only now that new technologies are enabling us to do things in „real time“ that were conceived by us twenty or thirty years ago.
Färbinger: Could you give us an example?
Schell: Computer Integrated Manufacturing ,CIM, is now operating under the name of Industry 4.0 or Smart Factory. These new technical options are changing entire industries. Technology cycles have long since overtaken the classic business cycles. Digital transformation refers both to business processes / models and to the organization. Today, for example, it is necessary and also possible to develop and provide new applications in less than 24 hours in order to reorganize a sales or production process. The market and the customer will not wait – any longer. New, innovative and disruptive players are increasingly setting the pace. This concerns almost all business areas and sectors.
Färbinger: What does it mean for companies, their IT staff and IT?
Schell: The world is becoming increasingly networked and agile. However, in spite of increasing back-end complexity, front-end technologies must become increasingly simple and user-friendly to enable companies and their employees to work more productively, more efficiently and more cost-effectively. Operating a smartphone or installing an app presumes that the users have learned and accepted the standard. It is the backbone needed to cover both requirements and to create digital transformation. However, new technologies also enable completely new business models. When we talk about real time today, it really does means real time. With an immediate impact on previous actions and the philosophy of how to organize processes and companies. We are therefore currently in a period of constant change in our actions, in personal terms, but also in entrepreneurial and production-related terms.
Färbinger: How can we succeed in mastering these challenges without the entire organization or individual employees falling by the wayside? SAP calls for „Run Simple“
Schell: A business or production process becomes increasingly complex by means of its procedures and the partners involved. When I speak about simplicity, it is essentially about dividing process complexity into smaller packages and consistently planning and implementing the latter in an agile way. Companies must initially become aware of exactly what an end-to-end process entails. Which people, departments, partners and responsibilities are involved? Which systems, individual processes, process stages, and interfaces are affected? In other words, a form of „process inventory“ must be made.
Färbinger: Sounds simple.
Schell: But in practice, it is by no means so trivial. Many companies are organized into silos, in which a “silo mentality” also prevails. This is why open communication is vital. Specialist departments and IT must talk to each other a lot and openly. ln the next step, you need to ascertain whether the status quo of how work is done still fits in with the roadmap and future vision of the company. Digital transformation means nothing more than the consistent alignment of the organization for the future. This means anticipating technology requirements and adapting system landscapes in such a way that they can quickly cover any imminent requirements.
Who is responsible for this? Who can assume this broader view, required to resolve this silo approach to mentality, organization, processes and data? And then advance this topic?
Schell: I see this as the CEO‘s obligation. He is responsible for the overall organization and its sustainability. However, the CEO cannot do this on his own: he needs a transformation board, in which the various instances responsible work together openly towards the desired business direction. The major challenge is to break down time-honored structures and then address the topics „real time“ and „digitalization“. This is anything but easy. The interests within a company are too multifaceted. To put it cautiously, full transparency through digitalization is not a favored goal – even with a great number of managers bearing responsibility at division or board level.
Färbinger: How should companies go about this?
Schell: It must be clear to all those responsible, to all employees in the company, that Industry 4.0 is not just around the corner. It has had a foot in the door for a long time now and is already having a great influence on our business world. The basis for the transformation is transparent communication. In-depth change processes, like the next industrial revolution – and let us be clear that this is what we are talking about – must be understood and backed by the entire company.
Färbinger: How can we convince as many as possible to all pull together?
Schell: Tangible business plans with a clear added value are required – for sectors of industry, businesses, and users – not just existing business processes that can be simply streamlined and sold as innovation. Close coordination is required between specialist departments and IT, and other sets of skills are also required in the company. Digital transformation can mean fundamentally rebuilding the entire business concept. It is difficult to hold this discussion with the so-called “frozen” middle management. To do so, companies need young people with fresh ideas. Transformation is the necessity and simplicity a requirement of this generation. It‘s now a matter of showing that Germany is actually able to take part in the change. We at DSAG offer companies a platform for this.