CEOs also indicated that the bulk of money to fund digital initiatives comes from self-funding, rather than existing budgets, as the primary purpose of many of these initiatives is to increase revenue, rather than to save costs.

“This should give CIOs pause for thought, given conventional IT management works mostly on the basis of using operational budgets,” said Andy Rowsell-Jones, vice president and distinguished analyst, Gartner.

Analysts discussed digital transformation strategies at the recent Gartner Symposium/ITxpo, held on the Gold Coast, and outlined the top 10 ways to fund the shift to digital business.

1. Internal self-funding: digital revenue pays
According to Gartner, this approach will only work for short-term projects to gain immediate revenue returns, such as digital marketing campaigns or price-elevating product features, but not for disruptive market change. It requires clear revenue attribution.

2. Within existing budgets
This approach can work for superficial digital business change over two or three years, if there is a excess budget to work with, but will not be suitable for rapid transformation as it could stall existing business.

3. Investment from reserves
If reserves are healthy, using this option may accelerate digital transformation with low financial impact on current operations.

4. Increase relevant budgets and cut others
This approach may be used in cases where digital business growth will substitute for heritage business slowdown, and is useful if digital business is recognisable and deliverable in the same corporate structure to the same customer base. Gartner said it is not appropriate, however, for adjacency moves or radical industry reinvention.

5. Increase relevant budgets and cut profits
Perhaps most suitable where a threatening competitor makes the need for transformation obvious to all investors or stakeholders, or for private or family-held companies. May be required for deep, multiyear strategic change, with clear and careful explanation to investors.

6. New bond or equity capital from investors
Another approach if digital transformation requires heavy, multiyear investment. Small, fast-growing companies may raise equity capital by issuing more shares, while larger mature companies with strong reputations can raise debt capital through corporate bond issuance.

7. Borrow capital from lenders
For short-term financing requirements, loan capital could bridge gaps arising from digital transformation, but will typically only be supported in “conventionally describable, measured risk” situations.

8. Off balance sheet entries
For risky or unusual experiments, companies may consider placing all or part of the new digital initiative in a separate company with investors. According to Gartner, this is useful for ‘farming’ digital ecosystems and startups by working with VCs and incubators as co-founders, as well as for industry consortia.

9. Divestitures
Where digital disruption is highly impactful in an industry, this involves selling legacy business units early in the disruptive process to buyers who will essentially run them until they are no liable viable. These funds could then be used to fund new digital business ventures and revenue streams.

10. Asset disposals
Physical assets which are less useful in the digital business era can also be sold off in order to fund digital projects.

Whatever strategy CEOs and CIOs decide to employ, time is of the essence, according to Rowsell-Jones.

“This year and next are likely to be the optimal timing points of overlap between the business cycle and the tide of digital business change,” he said. “In two years’ time, the rising cost of capital could make strategic investment more expensive, and playing digital catch-up is harder.”

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Following the commencement of the GST roll-out and Digital India initiative, 51 million Indian SMEs will have to onboard or scale their technology infrastructure, leading to an industry-wide requirement for digital experts with enterprise-level expertise.

“Our partner ecosystem is the ‘lifeline’ that connects us and our customers,” said Deb Deep Sengupta, president and managing director, SAP Indian Subcontinent. “Currently, an estimated 2 lakh SAP consultants thrive within our partner ecosystem which contributes approximately US$8 billion in revenues. SAP in India has a defined and clear partner strategy that propels our objective of growing together.”

Among the programs launched by SAP India through the partner ecosystem to target the digital gap are an acceleration of Bharat ERP program training, the expansion of SAP Authorised Training Centres in tier two and three cities, providing digital learning kits, and integrating new technology curricula across universities and education institutions.

At SAP India’s annual Partner Summit 2017, the company announced the launch of Partner Packaging Factory – an industry-first online initiative that aggregates end-to-end SAP packages developed by partners.

The packages are built to include SAP software, services, maintenance and hardware, and currently includes 45 templatised solutions for SAP S/4HANA and SAP Cloud, with solutions for SAP BusinessObjects Business Intelligence and SAP Analytics Cloud coming soon.

“SAP Partner Packaging Factory opens up an exciting new customer engagement opportunity for our partners,” said Anthony McMahon, senior vice president, general business (SME) and channels, SAP Asia Pacific Japan. “It is a one stop shop for SMEs to evaluate SAP solutions and fast-track their digital transformation journey.”

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What’s at stake? The Accenture Research and the World Economic Forum found that industrial manufacturers could help unlock about $100 trillion in value over the next seven years if they digitised to leverage the IIoT. The result would be a vast improvement in income, profits, employment, health and safety, industrial value creation and resource efficiency for their organisations.

“The industrial sectors, comprising two-thirds of the world’s gross domestic product, will be changed beyond recognition by digital technology, disrupting decades-old business habits, conventions and operating models,” said Eric Schaeffer, senior managing director, Accenture and author of the new book.

“Businesses need to embrace this change, and to harness its potential. For this, they need a clear strategy for managing the necessary organisational pivots, and the right digital capabilities for this new era of digitised manufacturing,” he said.

Schaeffer identified the six key competencies organisations require to excel in the outcome economy:

1. Synchronising lifecycle clocks to account for the fact that hardware, products and production assets will age more slowly than the software that directs them.
2. Embedding software intelligence and connectivity in sheet metal products will enable interaction with the production environment.
3. Using analytics to gain insights and decision support from data gathered by connected products and other data sources will be the norm. Manufacturers not embracing the practice will find themselves at a major disadvantage.
4. Making manufacturing agile by adopting industrial automation wherever possible to increase shop floor speed and flexibility will become mandatory.
5. Transitioning to as-a-service business models will enable organisations to shift to the outcome economy, where combinations of products and services will no longer be acquired as property, but rather used flexibly on an as-needed basis.
6. Creating and running ecosystems of suppliers, customers, partners, start-ups, academia and competitors will be the new paradigm as no single company will own the entire digital value chain.

The book makes a strong case for organisations to switch their strategy from products to services, value and outcomes to not just survive digitisation but to thrive with increased growth, profits and competitive advantage.

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Overall, India achieved a digital experience score of 44 per cent, with automotive proving to be the top-performing sector, followed by banking. Lagging in digital experience are telcos, utilities and government.

A significant digital gap exists between the best and worst performing brands across all markets in Asia Pacific Japan, with the gap between the highest and lowest scoring brands around 60 percentage points.
Industry reports state that India’s economy is expected to grow from US$2 trillion to US$10 trillion by the year 2030.

“Digital transformation will be crucial for accelerating the growth of India’s economy,” said Deb Deep Sengupta, president and managing director, SAP Indian Subcontinent. “The report corroborates the need for the industry to identify ‘Digital Business Leaders’ who can address the digital experience that businesses provide to their customers. SAP feels proud to be associated with these ‘Digital Winners’ who have embraced a digital mindset and a will to succeed in this digital economy.”

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The move comes in response to an increase and acceleration of subscriber demand in LTE and a broader range of mobile services, requiring service providers to adapt to the rapidly increasing rate of growth in data traffic.

By merging their services, PCCW and SAP will be better equipped to help mobile operators meet these challenges, with the offer of new services such as ENUM capabilities for cost-efficient routing of VoLTE traffic.

“By combining the strength of SAP Digital Interconnect, an industry leader in global roaming services, with PCCW Global’s voice footprint and extensive MPLS backbone, we aim to deliver customers unrivalled scale, quality and flexibility in mobile services. This collaboration has extensive future potential globally and is intended to benefit operators both in the short- and mid-term,” said Sethu Meenakshisundaram, president, SAP Digital Interconnect.

The new single IPX offering will enable the delivery of new and advanced services such as high-quality GRX, LTE data roaming, diameter, SCCP, Flex IPX (bandwidth on-demand), VoIPX, VoLTE and Globalview for advanced analytics and reporting.

Leading Hong Kong mobile network operator and an operating division of HKT, CSL, will use the combined IPX domain.

“We are delighted to be one of the first to benefit from this latest development. With PCCW Global and SAP Digital Interconnect, we can now access a broad range of services that support both our current and future needs,” said Richard Midgett, managing director, wireless business, HKT.

PCCW Global is headquartered in headquartered in Hong Kong, with regional centres in Belgium, China, France, Greece, Japan, Korea, Singapore, South Africa, the United Arab Emirates, the United Kingdom and the United States of America.

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Built on the SAP BusinessObjects Cloud solution, the SAP Digital Boardroom provides a holistic 360 degree view of an organisation’s position in the market, using essential business intelligence embedded in the system. The SAP Digital Boardroom is designed to harmonise the view of company operations across all lines of business on multiple devices into a single unified view, enabling executives to see all aspects of their business at once, rather than in separate silos.

“This is a true business advantage all C-Suite executives need in the fast-moving digital economy,” said Scott Russell, president and managing director, SAP Southeast Asia.

“SAP Digital Boardroom gives senior management and C-Suite executives access to business data and analytics, allowing them to gauge their company’s standing in the market as compared to their competitors,” said Ryan Poggi, managing director, SAP Philippines.

“Personal business information such as financial performance, customer count, supplier system and more can be viewed almost immediately with real-time content, which are needed for faster and better decision-making.”

“Using the Digital Boardroom to address challenges in the digital economy, company executives can obtain comprehensive data-driven insights answering ad hoc questions and simulate the impact of ‘what-if’ scenarios to financials and operations,” said Poggi.

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Content management and digital experience company CoreMedia has previously integrated its platform with SAP Web Channel Experience Management and Internet Sales Application.

The new integration will enable operators of Hybris-based web shops the ability to create personalised shopping experiences, through delivering customised shop designs along with product information and marketing content from many different sources combined. Built-in digital asset management features make it easy for shop owners to manage and integrate digital content such as graphics or videos, and e-commerce teams can easily personalise content.

“If you want to create profitable omni-channel shopping experiences, you need to be able to seamlessly bring together attractive content and current transactions, all within each client’s individual context. So for us, the tailored integration of SAP Hybris and our CoreMedia LiveContext solution was the logical next step,” says Sören Stamer, CEO and founder of CoreMedia.

“The financial benefits for SAP Hybris customers are enormous. Thanks to our more efficient, highly automated processes, we can deliver a significant reduction in production costs. At the same time, we’re enabling a faster time-to-web. In addition, our new system boosts revenue so you can increase the quality of the shopping experience, the average revenue per user, repeat-customers, and significantly enhance the organic web traffic from search engines.”

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SAP has reported the results of the Asia Pacific Japan Digital Experience Report, which captured the views of nearly 19,000 consumers on more than 46,500 digital interactions.

Consumers who were delighted with their digital experience were more than five-and-a-half times to remain loyal to a brand that those who were unsatisfied, with only 13 per cent of unsatisfied respondents planning to remain loyal.

At the regional level, there was a strong link between digital experience performance and the willingness of consumers to provide personal personal data. Among delighted consumers, 55 per cent would disclose their buying preferences (only 12 per cent of unsatisfied customers would); 53 per cent would disclose their education level (12 per cent of unsatisfied customers); 51 per cent would disclose their occupation (11 per cent of unsatisfied customers); and 49 per cent their social media usage (8 per cent of unsatisfied customers).

Delighted consumers in South East Asia were much more likely than those in Australia, New Zealand, Korea and Japan to share their personal information in order to gain a better digital experience.

When ranking the components of a delightful digital experience in order of importance, ‘safe and secure’ was by far the most important attribute (63 per cent), followed by ‘available anytime on my terms’ (41 per cent), ‘providing relevant offers without infringing on privacy’ (38 per cent), and ‘cohesive, integrated and simple’ (also 38 per cent). Brands that performed well also scored significantly higher in more emotional attributes such as ‘predicts my preferences’ and ‘excites and engages me’.

On the results, Adaire Fox-Martin, president, SAP Asia Pacific and Japan, said, “It is Asia’s moment for digital. The connection between the digital experience and business outcomes, particularly customer loyalty and advocacy, highlights the urgency at which brands in the region must drive the digital experience to thrive in the digital economy. Failure to do this will see brands left behind by new, non-traditional players prepared to seize the opportunity and deliver digital experiences that delight.”

To download the Asia Pacific and Japan Digital Experience Report 2016, visit APJ Digital Experience Report.

SAP has conducted similar studies in Australia and New Zealand, and you can find coverage of the Australian and New Zealand digital experience reports here.

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Using a network built on the SAP HANA Cloud Platform, SAP Payment Engine and Ripple’s enterprise blockchain solutions, ATB transferred CA$1000 (EUR667) to ReiseBank. SAP also provided a mobile user interface for demonstration purposes.

The transaction, which typically would have taken between two and six business days to process because of requirements such as settling with the counterparty bank and reconciling accounts, was completed in around 20 seconds.

The blockchain was originally created as the foundation for trading digital currency bitcoin, and is a distributed ledger that allows a network of computers to settle transactions securely and almost instantly.

SAP and Ripple worked with a team at ATB Financial to design and build a proof-of-concept prototype based on the technology in nine working days.

“Although we are very much still in the early stages of blockchain adoption, it was highly encouraging to see in a true demonstration the potential it has in transforming cross-border payments, making them almost instantaneous and reducing potential errors,” said Curtis Stange, chief strategy and operations officer, ATB Financial.

“Using SAP HANA Cloud Platform, we’re able to experiment and be nimble with emerging innovations like blockchain. The next stage for us, working with SAP and Ripple, will be to understand how the front-end experience should work for the benefit of our customers,” Stange added.

The test transaction demonstrated how banks can improve the efficiency of cross-border payments to enhance their global networks.

“Banks like ATB that take a positive and proactive approach to blockchain now can position themselves advantageously for when the technology enters the mainstream,” said Bernd Leukert, member of the Executive Board of SAP SE, Products and Innovation. “ATB’s blockchain transaction underscores the value of running a business on a full-fledged digital core so it can react quickly to emerging possibilities and avoid the threat of disruption.”

In 2011, ATB Financial successfully migrated its entire legacy banking system to a major new core system built using SAP solutions.

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The service pulls together insights into physical consumer behaviour, based on near-real-time mobile data, as well as details on where consumers are coming from, age groups and gender, comparison with other locations and competitors and the devices they are using. Data is anonymised and aggregated to protect the privacy of individual subscribers.

“A wealth of information is available about consumer behaviour online but, until now, it was impractical for businesses to get similar information about consumer behaviour at physical locations,” said Jonathan Becher, chief digital officer and head of SAP Digital.

“SAP Digital Consumer Insight allows businesses of every size to benefit from knowing more about consumers at a given location. The insights will allow them to improve their products and services, run better marketing campaigns, scout locations for expansion and even learn more about competitors.”

The service will initially be based on US mobile data, with SAP planning to add data from additional geographies by the end of the year. It is expected to be particularly attractive to independent marketers, retailers and business owners, as well as those in marketing, sales and planning departments and agencies.

Emma Matthieson, director of marketing, Brooklyn Bowl, said, “A crowd can change from night to night. We want to be able to customise the overall experience as much as possible – from music to menu to drink specials. SAP Digital Consumer Insight lets us see the mix of people coming in for each event. We can also tailor our advertising to bring in similar people who will love the experience.”

Pricing starts at US$439 for one data file, or five data files for US$1429.

The announcement was made at the 28th annual SAPPHIRE NOW conference.

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