What I Learned at the SAP CIO Summit Mendoza, Argentina

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This week I had the honor of presenting a keynote at the SAP CIO Summit in Mendoza, Argentina, attended by CIOs from all across Latin America.

The opening presentations were given by Leonel Graff, Managing Director, Latin America for SAP, and Guillermo Brinkmann, Country Manager for SAP Argentina. They gave an overview’s of SAP’s simplification strategy and what it means for today’s CIOs.

Leonel Graff and Guillermo Brinkmann

My presentation was on the subject business innovation – and what’s stopping us from doing more of it, faster. It clearly isn’t the lack of new, technology-fueled business opportunities. We can easily imagine wonderful scenarios where we delight our customers with combinations of the internet of things, big data, mobile interfaces, and social networks.

But then reality gets in the way. Our current business processes and information infrastructures are so complex and brittle that we don’t see a way to act on our business innovation dreams without wrenching change.

The answer is to first radically simplify existing processes and technology, leaving more time and resources for new ways of working. The presentation looked at companies around the world who have done just that. They are using new technology to get closer to their customers, inspiring and empowering their employees, making better use of resources in real time, and joining the network economy.

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The conference was also my opportunity to learn, so here are my key takeaways from some of the other sessions and discussions:

The exponential future of the future

Entrepreneur Santiago Bilinkis gave a presentation on “El Futuro del Futuro.” He argued that throughout history, technological progress has been linear, with steady, incremental growth over centuries. But the growth of computing power has been exponential, meaning each new increase can be the equivalent of a decade of technology progress in the past.

This has meant that all science is being dominated by information science. Biology, for example, has been revolutionized by the breakthrough processing of genomic data. Bilinkis believes that most people, companies, and governments haven’t yet fully grasped the effects of exponential technological progress an, how it will change the very nature of what it means to be human.

Bilinkis reviewed the latest scientific trends, and the various looming technology dilemmas they are creating. These included “what happens when prostheses become better than the real thing?”, “how will we program networked, self-driving cars to make the right ethical choices in an accident?”, “what will happen to Argentina’s beef industry when we can grow burgers in factories?”, “What will breakthroughs in scientific telepathy mean for communications in the future?”

One of the most common questions that Bilinkis is asked is “Is technology change a threat or an opportunity?” He believes that it’s clearly both. The key is to realize that ignoring change is the worst possible strategy for dealing with it. He urged the audience to force themselves to embrace new opportunities enthusiastically: “change is good! (if you are prepared!)”

Komatsu Chile sees big performance gains with migration to suite on HANA

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Juan Pablo Callejas and Rodrigo Montes of Komatsu Chile talked about their recent migration to SAP Business Suite on HANA. Komatsu supplies heavy machinery to mining and construction industries around the world. The Chile organization has 5,800 employees and 1,600 SAP users.

The company’s initial SAP implementation was in 2007, and the company uses a wide range of products, including ERP, CRM, SRM, SCM & PLM, SAP BW, BusinessObjects Enterprise, and Data Services.

Over recent years, the company has been growing at around 30% a year in terms of data and transactions, leading to slower SAP response times. And the need for high system availability meant that no SAP patches were being applied.

Things came to a head in late 2012, when the company was forced to rent another server in order to bring response times back to acceptable levels. With no end to data growth in site, the company kicked off a project in August 2013 to migrate to the SAP HANA platform.

The project was in three phases. First, working with the users to establish test case documentation, then installing the SAP patches, and finally, in February 2014, the migration to HANA and testing.

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Juan Pablo Callejas of Komatsu Chile, presenting the dramatically faster response times that resulted from migrating to SAP HANA

The project was completed in April 2004, on budget and 20 days earlier than initially planned. Removing aggregates and columnar compression has reduced the company’s 2.2 Tb database down to just 800 Gb. Performance of the system immediately dramatically improved, and has continued to improve over time.

komatsu smallerThe new system uses live replication to provide high availability and disaster recovery, with a second HANA system installed at a site 60km away. In the previous Oracle-based system, disaster recovery only covered 18% of operations, and could take 3 days to recover from a failure. The new system covers 80% of operations, and can be back up and running in just 15 minutes.

Rodrigo Montes went through more details about the project plan, emphasizing how important it was to find new ways of working with the business user community. This included sponsoring group activities, creating a open-space project room to encourage collaboration, and dashboards to show progress and promote friendly competition.

SAP Runs SAP

Mike Golz, SAP CIO Americas gave a great overview of how SAP has been dealing with technology change, embracing simplicity in order to drive innovation. With a series of well-chosen anecdotes, he talked about the real-world challenges the company faces with its major IT initiatives including integrating systems from acquisitions and making it easier for business people across the organization to access actionable analytic information.

Golz outlined the pragmatic steps the company has used to move from on-premise systems to running on SAP HANA in the cloud. Starting with the earliest versions of HANA, IT has been an aggressive adopter of in-memory technology as part of the “SAP Runs SAP” program.

The first phase involved using SAP HANA as a sidecar to provide real-time analytical power to existing applications such as CRM. The live data from the CRM system was provided directly to senior sales management for the first time. The new visibility resulted in dramatic improvements in data quality, as business units spent the time to ensure the data was correct in the system rather than extracting and massaging the data in Excel for each weekly forecast call.

Then existing solutions were extended with cloud-based applications such as SuccessFactors. Finally, the entire SAP landscape has now been moved to a mixture of managed and public cloud, with increasingly automated processes. For example, employees can now order items using the internal catalog and have the order sent to a supplier via the Ariba Network, with automatic payment of the resulting invoices. The service center now only deals with exceptions.

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Golz went over some of the benefits the company has realized over the course of the transitions, including a big reduction in the data footprint of the organization, down from 7.1 TB to 1.8 TB today. This is is planned to fall further with the adoption of increasingly HANA-optimized applications such as Simple Finance.

This simplicity has in turn created greater flexibility and efficiency. SAP can now close its books 8.5 days earlier, and now takes 80% less effort to change cost centers to reflect frequent organizational and product line changes.

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Golz believes that real-time organizations are clearly the future for today’s CIOs: “Any organization that has to wait for batch processes to load overnight is going to see a competitor come in and take that business.”

Omnichannel isn’t just for B2C

Joao Teixeira, Sales Director for Hybris in Latin America, gave a overview of how increasing consumerization means B2B companies are adopting the same sophisticated ecommerce interfaces as business to consumer organizations.

Today’s businesses expect supplier web sites to have the same ease of use and order flexibility that they find in their personal lives. He gave the example of a Brazilian steel company where the minimum length of steel might be 50m. A customer that only needs 30m might be prepared to pay the full price, but want to be able to order it with a cutting service – a level of flexibility that isn’t always supported in existing business ecommerce platforms.

B2B customers need extra functionality in their platforms to reflect the greater complexity of business models. For example, a medical supply organization moved to a new system because they had four separate business divisions all selling to the same hospital. Hospital employees had to access four different web sites from the same company, each with a different interface and login.

B2B commerce platforms also need to support more complex pricing models, with different customers seeing different options depending on the types of contracts negotiated, and more robust workflow, for example for purchasing authorizations.

Finally, just like in the consumer world, businesses expect to get the same information, options, and pricing with whatever channel they use to interact with your company, whether it’s through a web site or talking to a call center.

Technology helps sports run better

Daniel Duarte, head of innovation and customer experience at SAP labs Latin America, gave a wide-ranging overview of how SAP HANA and new sensors were being used to improve sporting performance and increase fan engagement.

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