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Create SAP Convergence Instead of Business to IT Alignment

April 4th, 2011 by
Convergence is the answer beyond business to IT alignment in the SAP organization

Business to IT Convergence

This is part of an ongoing exploration of creating an SAP or Technology “Center of Excellence” within your enterprise.  For the background and key insights on this approach see the Series on SAP Competency Center or SAP Center of Excellence .

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The real future of technology is for IT to integrate with business, or in other words to “converge” business and technology.  The idea of “aligning” with business is too weak of a statement to define what IT and SAP must do within the enterprise to generate significant ROI.

Think about it, during the course of an SAP project the focus is on integrating the enterprise into a single data repository with dependent process chains.  Somehow that same level of integration is not required of the business and IT after you go live.

Product Convergence Lessons for Next Generation SAP Organizations

Convergence, convergence, convergence, what do I mean by convergence?  The idea behind convergence is the enabling of business with technology so that the two can not be distinguished from each other.  It means the lines between business and IT departments must be deliberately blurred.

Although the following examples are about product convergence they are great illustrations for how business and IT should integrate, or “converge” their functions.

  • ARPAnet which was created by the U.S. Defense Department’s Advanced Project’s group eventually became the Internet.  This was originally an advanced data and communications “fabric” that could withstand a nuclear war and route both data and communications in the event whole areas of the network were unavailable.  That back-end technology was later combined with early graphical software to create the public Internet as a global information resource never seen before in human history.
  • E-mail was a convergence of network technology with hardware, communication protocols, and then combined with software applications.  These combined to create a new form of communication which has transformed both business and social structures.  That convergence has extended to the Internet for various forms of “webmail.”
  • The advent of the personal computer and its increasing power made the way for decentralized processing in the form of “client-server” based applications.  Central business functions and tools could run on a server but each user’s experience and application needs could be tailored at their individual workstations.
  • ERP applications such as SAP’s ERP suite were made possible by the need for a centralized source of data, at the intersection of databases, network technology, and software user interfaces.  “Cloud” based applications or Software as a Service (SaaS) were an extension of that convergence to include remote hardware sourcing and access through the Internet.
  • Social media was the next “extension” of collaborative technologies.  They converged the Internet’s ability to connect people with software applications that allowed people to communicate in new ways. LinkedIn, Twitter, Facebook, and others are moving forward by connecting people to share more information in real time.

Look at most of Apple’s products.  For many years the Mac PCs and laptops only had marginal market share, while it is increasing it was their other products, their “convergent” products which produced explosive market penetration.  What was the difference?  It was convergence, the convergence of the customer experience with the things people use (see Business Strategy and IT Strategy to Reproduce Apple Innovation ).

What is Really Different About Apple Anyway?

Since Apple is so successful today we will look at their example.  The iPhone, iPad, iPod, all have one thing in common–, they took the idea of usability around the convergence of several technology streams to the next level.  Apple leveraged technology, communication, and entertainment to create something MORE than just a Graphical User Interface (or GUI), they created something useful for entertainment.  Apple products are a pleasure to use–, they created a “user experience.”  In the iPhone, even with its irritating lack of integrated e-mail calendar integration, it is a powerful business and personal communications tool which would have been considered a miniature PC a few years ago.

Apple didn’t really invent anything new.  Apple found that place of “convergence” with quality technology products and user experience

Apple didn’t invent the cell phone, portable music (remember Sony’s Walkman?), Internet data delivery (think, music sharing streaming software).  What Apple did was converge these technologies with a great front-end and delivery system.  Or as Steve Jobs has said, they “put a Mac in a cell phone.”  Apple also went one step further, they sought to own the entire content delivery infrastructure and the hardware architecture for their devices.  For the iPod it was the music delivery system (think iTunes), for the iPhone and iPad it was the extension of iTunes to add an Application store, etc.

That is an example of a product convergence that has had huge market impact.

Business and IT Convergence Can Transform Your Company

If we take this product concept one step further and apply it to IT and Business there are ways to bring about “convergence” in the IT enabled enterprise.

Business-technology convergence and business-technology management are terms that spring from a simple idea: Technology is a means for achieving business objectives; therefore, managing business and technology together provides significantly better results than managing them in separate silos. By converging business and technology management, enterprises can nimbly respond to changing marketplace dynamics, technology evolutions and competitive pressures—capabilities that are especially important during an economic downturn. [FN1]

[C]onverged enterprises know when to change the rules to maintain a strategic advantage over their competitors—and to sense and respond to changes in the marketplace.

I am a strong advocate for the convergence of roles between business and IT–, how will the IT organization know and understand the business “rules” without participating directly in business?

The best convergence candidates are likely your power users or super users who participated in your SAP project.  They come from the business but have exposure to the system and the challenges around IT.  The IT folks should also work in the business areas to become “super analysts.”  They need to know and understand how business actually gets done so they can figure out the best way to apply technology for business objectives to be addressed.

Completing the SAP Convergence

On top of the business users being integrated into IT and IT integrated into the business, the steering committee must not be disbanded.  This need cannot be stressed strongly enough.  That group of senior level business individuals are a key part of the “glue” for a successful and ongoing transformation of the business.  They are one of the critical ingredients for convergence to occur.

If you continue to develop your key business users and maintain your steering committee you have a power organization structure in place to build on convergence of business technology. For more information on the importance of continuing involvement by the steering committee long after the SAP project has gone live see my previous post on Using Your SAP Steering Committee for Business Transformation .

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[FN1]  http://www.baselinemag.com/c/a/Business-Intelligence/The-Value-of-Convergence-236013/




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Process Execution of Business and IT Innovation

May 3rd, 2010 by

Innovation

The idea of innovation in business or IT is generally an aspiration to most.  Leaders and managers occasionally mention the need to innovate but when they stop to consider what that means many of them abandon it as an impossible dream.  They wait for some strange spark, some odd occurrence to somehow spark the flame of new beginnings.

Execution of the Innovation Process

Inspiration for innovation or creativity can come from anywhere.  Frequently the innovation problem isn’t a lack of good ideas, or even innovative solutions–, too often it is a lack of execution.  Even though I’ve laid out a proposed business model for an innovation process in the post From Collaboration to Innovation to Market – Toward a Working Model too often the champions, or the owners for the process are missing from the major stages of execution.  There must be an “owner” or a “champion” at each stage, they might be the same person, or it might be a different person, but each stage needs someone to champion the new innovation to maturity and then to completion or it will die in the process.

The three stages I have defined are concieve, develop, and market.  For example, the conceive stage might have a marketing or sales person “own” that process to its development handoff.  That does not mean that engineering or some other key person from the development area should not be active in the early conception stages, only that the stakeholder(s) with the most influence at that stage should own that portion of the process.  At the develop stage it might be key product or service leaders who then move the idea from infancy and from concept to tangible product or service offering.  And then finally the market stage must have a champion from sales or marketing (or both) to ensure that it is properly positioned and prepared for market trials and finally the sales launch.

Without that critical leader at each stage of the process there is little chance of many successful innovations in products or services.  Your innovation engine will quickly run out of gas and go nowhere.  If you pursue any kind of innovation initiative without these key champions any “innovation” that survives will likely be more like minor tweaks or changes, more like continuous improvement than real innovation.  Those small incremental changes are the only things that might survive the process without strong leaders moving them forward.

Business Product, Service, and IT Innovation Series

A structured approach to innovation, to creating new products or services is possible, but it takes a deliberate, concerted and focused effort.  I’ve laid out the various posts on this site that explore how to create a business-centered innovation process:

 

From Collaboration to Innovation to Market – Toward a Working Model
http://www.r3now.com/from-collaboration-to-innovation-to-market-toward-a-working-model

A process oriented approach toward a process model for moving from collaboration to innovation to market. A first pass at integrating collaboration with a structured creative process and moving from idea (conceive) to design (develop) to market (sell).

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Business Strategy and IT Strategy to Reproduce Apple Innovation
http://www.r3now.com/business-strategy-and-it-strategy-to-reproduce-apple-innovation

Overview of Apple Innovation and the focus on Jobs as the head of Apple. The apple innovation secret (if it can be called that at all) is about relentlessly pursuing the customer experience at the point of customer frustration. Where there is customer frustration or customer dissatisfaction there is opportunity for gaining market share for the company who is able to address that point of frustration.

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Striving for a Customer Focused Approach to Innovation 1 of 3
http://www.r3now.com/striving-for-a-customer-focused-approach-to-innovation-1-of-3

Categorizing and Defining the 3 primary types of corporate innovation. I’ve dubbed these as “Stoic” (minimalist or continuous improvement); the “Stretch” (striving for a known future state); and the “Maelstrom” (directionless chaotic storm of ideas). The names you use really don’t matter, but these are the 3 types of what companies call “innovation” that I have seen.

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Striving for a Customer Focused Approach to Innovation 2 of 3
http://www.r3now.com/striving-for-a-customer-focused-approach-to-innovation-2-of-3

Explaining the use of an “innovation narrative” in the “Stretch” type of innovation. This method produces a future state narrative which may not be achievable but provides a customer and market focused direction to aspire to for new products or services. That narrative acts as a future state blueprint for product or service development to move toward.

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Striving for a Customer Focused Approach to Innovation 3 of 3
http://www.r3now.com/striving-for-a-customer-focused-approach-to-innovation-3-of-3

Practical ideas and practical application of some methods of moving toward an innovation culture. Some specific examples around how SAP (the big ERP vendor) has been very successful at integrating their customers, vendors, and their internal organization into an extended development dialog are explored. Includes an overview of how this all ties into the collaboration model I started in a post entitled “From Collaboration to Innovation to Market – Toward a Working Model”.

Good luck on your innovation journey!

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Business Strategy and IT Strategy to Reproduce Apple Innovation

December 2nd, 2009 by

innovation and strategic direction

What are the Apple Innovation Secrets of Steve Jobs’? 

Steve Jobs focuses Apple innovation on competitive pressures and value propositions.  It’s basic to his DNA and core to his management style to relentlessly focus organizational energy on customer centered innovation and customer experience.  In a nutshell Apple’s innovation “secret” (if it can be called that) is the relentless pursuit of innovation around the customer experience.  As early as 2002 Steve Jobs told the world what his competitive strategy was, and it is clear that as CEO he was carefully evaluating competitive pressures and opportunities in the marketplace:

For those paying attention after Jobs’ return, the CEO was telegraphing Apple’s trajectory.  “I would rather compete with Sony than compete in another product category with Microsoft… We’re the only company that owns the whole widget–, the hardware, the software, and the operating system. We can take full responsibility for the user experience.  We can do things the other guys can’t do.” (comments to Time in early 2002).

Lashinsky, Adam, “The Decade of Steve – How Apple’s imperious, brilliant CEO transformed American Business,” Fortune Magazine, pg. 96. November 23, 2009. 

Apple’s CEO owns the Apple corporate strategy, and he has chosen to do one simple thing that many companies talk about but few execute very well–, Steve Jobs’ Business and IT strategy is 100% focused on customer centered innovation.  He knew that you find business benefit looking outward, looking at market and business drivers rather than at products or services that exist in a silo.

I recently read a Fortune Magazine article extolling the virtues, or more the impact, of Apple’s Steve Jobs on business.  Certainly under Steve Jobs’ guidance Apple has come to represent the best of business innovation for several reasons:

  • Jobs built Apple as an innovative company
  • After he left Apple the company nearly collapsed
  • He returned and turned the company around from the brink of collapse
  • Jobs at Apple, through his innovative guidance, has transformed three primary industries –; personal computers (laptops and desktops), personal music, personal cell phones.

For this and other reasons Steve Jobs’ time at Apple has helped him become the king of American business transformation, at least according to Fortune Magazine.

The Direction of Apple’s Innovative Recovery and Company Turnaround

Just after the Y2K scare, while the world was buzzing about the tech bubble burst; speculating about Apple’s survival with Steve Jobs return; watching the AMD and Intel Chip wars heat up–, Apple strategically avoided a battle with its “logical” arch-rival Microsoft.  Instead Steve Jobs made a conscious decision to “take his marbles” and play a completely different game.

Rather than taking a weak company that was struggling to stay afloat and challenge the dominant market maker Steve Jobs defined the Apple innovation strategy to focus on the integration of technology and entertainment.  Apple’s core competence at the time was in PCs and Laptops, but as Jobs said, they were the only vendor that did it all, hardware, software, and operating system.  He took that same approach with music, helping to develop the ecosystem to support the IPod and to transform digital music distribution through ITunes and the online purchase of songs.

The PC wasn’t new, but Jobs’ approach to customer centered innovation was.  The music player wasn’t new, but the IPod certainly was, and it was focused like a laser on the end of Sony Walkman dominance.  Selling music “singles” wasn’t new, but Jobs’ focused Apple’s innovation on the ITunes store together with the widespread use of the IPod.  He created the device to play the music and he created the channel to distribute the music.  The cell phone wasn’t new, and while Blackberry and Nokia owned the market, the IPhone focused like a laser on innovative customer experience.

Start with a gut sense of an opportunity, and the conversations start rolling.

What do we hate?

A: Our cell phones.

What do we have the technology to make?

A: A cell phone with a Mac inside.

What would we like to own?

A: An iPhone, what else?

But Jobs also explained that in this specific conversation, there were big debates across the organization about whether or not they could and should do it. Ultimately, he looked around and said, “Let’s do it.”

I think it’s clear they also benefit from the inauspicious “leak” to the market. By that I mean this overly tight-lipped organization occasionally leaks early ideas to the market to see what kind of response they might generate. Again, what other company benefits from having thousands of adoring designers come up with beautifully rendered concepts of what they think the next great product should look like?

This PragMatic Marketing Post is about the idea that “you can’t innovate like Appleand I say, BALONEY!  

Steve Jobs isn’t dumb, quite the contrary, he’s smart enough to know that you CAN innovate like Apple and that’s why Apple’s internal innovation methods are kept so secret!  Not only that, the ACTUAL workings of Apple’s innovation is a secret and PragMatic article, like so many others, merely speculates about the details of the inner workings.  This article looks at the actual company history and Jobs’ statements.

From the very beginning of any market action by Apple, the corporate strategy is focused on being a market disrupter, and in turn a market maker, by focusing relentlessly on the customer experience.  And not just a focus with existing products or services, new products and services are designed, developed, and relentlessly pursued to please the end customer.  Have you visited an Apple store?  Maybe it’s time you did.

The Apple innovation difference is less about an inward focus on how to squeeze every last penny out of some process or on reducing costs, such as what “Lean” and “Six Sigma” advocates.  Instead, the Apple corporate focus as driven by the CEO was outwardly focused on the marketplace, on the customer, and how to direct that energy into improving revenue and profitability by addressing the frustrations (or needs /wants) of customers.  The Apple innovation difference is where the role of CEO is fixated on customer centered innovation.  Customer experience with Apple products was the center of innovation.  New products, new applications, and new markets all focused on customer experience.

Steve Jobs Innate Understanding of Marketing and Economics

One thing Apple did well was listen to the market, and then shrewdly move marketing programs to create “pent up demand” for a product that had not yet been released.  These new products were designed to elegantly, and as intuitively as possible, address marketplace frustration. 

Many commentators have described this as him having a “knack” for making market moves at the right time.  Baloney, Steve Jobs understands the fundamental core concepts of sales, marketing, and economics that few teach today. 

Apple’s core of innovation is centered on one thing, market demand.  There is no “law of supply and demand” there is only the law of demand.  The supply side of the economic paradigm is completely irrelevant.  The one thing that is important is the law of demand only. Stop for a moment and think about that, internalize it, and one day I’ll offer some insight that I gained from a wise college economics professor who taught me this.

Where there is marketplace frustration there is internal “pent up demand” for that frustration to be addressed. 

You can see this thinking in Apple’s current move today.  With the deep pockets of several successful product strategies, and on the heels of Microsoft’s dismal Vista operating system launch, Apple is now aggressively going after the company’s old arch rival.  The market has complained about Vista, about Microsoft security problems, about the forced upgrade march, about a whole host of problems Microsoft has experienced lately.  Apple is seizing on the market frustration with Microsoft products and the inherent, pent up demand for an alternative.  Apple’s timing is simply capitalizing on the Microsoft promotion of Windows 7.  Apple’s marketing message is resonating with the general populace and the pent up demand that is inherent in marketplace frustration with prior versions of Microsoft Windows.  That message is that the new Windows 7 operating system is simply another “fix” to a long line of broken operating systems.

At the time Microsoft is bringing out its latest flagship product, Windows 7, to address criticism of the Vista product, Apple is offering an alternative. A very successful and financially healthy Apple is now targeting Microsoft directly.

Steve Jobs as the Apple CEO has become quite skilled at setting strategic direction along a future timeline.  As the calculus of the recent attack on Microsoft’s new Windows 7 operating system shows Steve Jobs is also very adept and skilled at holding back to determine the right timing to attack a market.  Think about it, everyone in the IT world has known about the Windows Vista complaints for years.  And over the last few years that frustration in the marketplace has been building.  And right on the heels of Microsoft’s boatloads of marketing spend to address negative market perceptions with a “new” Windows 7 flagship product Apple then pounces.

None of this is magic, none of it is really that mysterious.  Steve Jobs as Apple’s CEO understands competitive pressures and value propositions.  Steve Jobs gets it, plain and simple he understands that the primary role of the CEO is to set strategic direction and long term goals.  He understands the real reason executive participation creates project success.

Does anyone really believe that the launch of ITunes, and the IPod, and the IPhone, or Pixar, or the latest attack ads on Microsoft were some seat of the pants reaction?  The quality and polish of Apple products, even when there are glitches, indicates that planning and strategy for all of these ventures took place quite some time in advance.  Even rapid development cycles for some of the hardware, software, and operating systems takes quite some time.  Just to get the integration as seamless as Apple products often are is no small task.  So many of these plans were probably several years in the making before being released to the public.

It needs to be said that Steve Jobs’ approach to innovation isn’t really a secret, the specific details may be, but the approach is plain old business and IT strategy–, Steve Jobs gets it! He plain understands business and IT strategy. 

What Does All of this Have to do with ERP and SAP?

A properly implemented ERP system, such as SAP, requires a solid corporate strategy that addresses competitive pressures.  To achieve that elusive business benefit from the technology spend it is crucial to have business drivers, business strategy, and the future state direction built into the application.

The underlying ERP and SAP business case for ROI, business benefit, and success must be focused on the intersection IT and business strategy.  The most successful business strategy is always looking carefully for upcoming market opportunities, and for enhancing the value proposition.  In that business strategy there are revenue, profitability, customer retention, and customer acquisition opportunities while focusing on the competitive drivers in the marketplace.  At the intersection of that business strategy is where IT, ERP, and SAP strategy intersect to enable the business strategy.  In the end, like any capital investment it’s all about how the asset is used, or not used, which determines payback and success with its deployment. 

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More Posts on How to Successfully Carry Out Innovation Initiatives in the Enterprise

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From Collaboration to Innovation to Market – Toward a Working Model
http://www.r3now.com/from-collaboration-to-innovation-to-market-toward-a-working-model

A process orieted approach to with the first steps of a process model for moving from innovation to market.  A first pass at integrating collaboration with a structured creative process and moving from idea to design to market.

=========================

Striving for a Customer Focused Approach to Innovation 1 of 3
http://www.r3now.com/striving-for-a-customer-focused-approach-to-innovation-1-of-3

Categorizing and Defining the 3 primary types of corporate innovation. I’ve dubbed them “Stoic” (minimalist or continuous improvement); the “Stretch” (striving for a known future state); and the “Maelstrom” (directionless chaotic storm of ideas). The names you use really don’t matter, but these are the 3 types of what companies call “innovation” that I have seen.

=========================

Striving for a Customer Focused Approach to Innovation 2 of 3
http://www.r3now.com/striving-for-a-customer-focused-approach-to-innovation-2-of-3

Explaining the use of an “innovation narrative” in the “Stretch” type of innovation. This method produces a future state narrative which may not be achievable but provides a customer and market focused direction to aspire to for new products or services. That narrative acts as a future state blueprint for product or service development to move toward.

=========================

Striving for a Customer Focused Approach to Innovation 3 of 3
http://www.r3now.com/striving-for-a-customer-focused-approach-to-innovation-3-of-3

Practical ideas and practical application of some methods of moving toward an innovation culture. Some specific examples around how SAP (the big ERP vendor) has been very successful at integrating their customers, vendors, and their internal organization into an extended development dialog are explored. Includes an overview of how this all ties into the collaboration model I started in a post entitled “From Collaboration to Innovation to Market – Toward a Working Model”.

=========================

Business Strategy and IT Strategy to Reproduce Apple Innovation
http://www.r3now.com/business-strategy-and-it-strategy-to-reproduce-apple-innovation

Overview of Apple Innovation and the focus on Jobs as the head of Apple.  The apple innovation secret (if it can be called that at all) is about relentlessly pursuing the customer experience at the point of customer frustration.  Where there is customer frustration or customer dissatisfaction there is opportunity for gaining market share for the company who is able to address that point of frustration.




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