For decades, a CIO’s responsibility was to reduce costs and keep the a company’s IT infrastructure running. Now, CIOs and IT departments are tasked with driving business innovation, writes CAMERON BEVERIDGE, Director: Cloud at SAP Africa.
Businesses acknowledge they are buried under mountains of inefficiencies and missed opportunities. CEOs understand that digital is an opportunity or a threat. So, the question is not about awareness, but how to unleash the power of digital transformation while finding a balance between maintaining a healthy business and current infrastructure, and innovating without disruption.
The mandate from business to IT has shifted. For decades, a CIO’s chief responsibility was to reduce costs and keep the lights on just enough to run mission-critical processes. Now, CIOs and IT departments are tasked with driving business innovation. To stay competitive in a digital economy, it is no longer sufficient to have a system landscape whose primary role is to keep records.
Most organizations invest a great deal to maintain and customise their IT landscapes to meet their unique business needs. Today, nearly every organisation has some level of cloud presence, typically for customer relationship management (CRM), human capital management (HCM), or procurement. The question we hear most often from customers is not how to make their first foray into the cloud, but rather how to design a comprehensive enterprise cloud strategy that:
- Protects existing investments
- Accelerates innovation
- Keeps an organization’s unique business processes intact
Moving to the cloud does not mean breaking off some parts of the business in a piecemeal fashion or taking a rip-and-replace approach.
Cloud is one of the key drivers of digital transformation. Cloud has disrupted the traditional IT model by drastically reducing time to market and TCO for innovative solutions. With its ease of use and ubiquitous access, cloud has democratised the decisions about software purchasing, access, and usage.
Cloud computing offers immense opportunity for companies to improve their business operations, regardless of sector. Modern cloud offerings reduce IT infrastructure complexity and free up resources that can be better applied to driving innovation. And with security topping the list of concerns among business and IT leaders, cloud providers today invest talent and energy into ensuring their offerings are able to meet even the most stringent security requirements.
According to the IDC, cloud spending is expected to surge by 25% to reach more than $100bn, with cloud data centres expected to double in number. In a separate study, analysts found that an astonishing $237bn in profits were lost by the top 200 global companies alone, mainly due to the hidden costs of complexity.
Despite these clear signs, cloud migration of key business applications is still met with reservations and, often, resistance. IT leaders list concerns such as possible downtime, security, potential loss of control over key business processes, and cost.
Managing increasing complexity
As technologies like artificial intelligence, predictive analytics, AR, VR, and the Internet of Things become mainstream, enterprise IT systems and the digital processes they drive are getting more complex every day. Companies need to find new ways to reduce complexity while ensuring that their IT systems are flexible enough to adapt to the requirements of a shifting technology and business landscape.
Many organizations choose to migrate some or all their mission critical applications to the cloud to increase flexibility. To do this efficiently, it is critical to understand some of the key success factors for a cloud model. The high ground in any mission-critical application cloud solution comes down to four promises:
- A comprehensive, end-to-end SLA approach that avoids unproductive time-wasting by disparate service providers.
- Integration across your application landscape.
- Access to industry and engineering experts and best practices to support ad hoc and ongoing needs.
- Ability to leverage new skills and resources across infrastructure, technical management and cross vendor application management.
SAP’s cloud offerings provide companies with the global expertise and local knowledge needed to free up internal resources and shift focus away from IT management – i.e. ensuring systems are up and running – and to innovation, the driving force of all successful businesses in today’s digital economy. The benefits of this are clear:
The cost benefit of cloud
Running business applications in the cloud means less maintenance, especially in comparison to on-premise solutions, as many subscription models include company-specific maintenance and support in addition to hosting. Investments to replace outdated hardware are also no longer necessary, as these are already included in the monthly fees and service agreements.
Using managed cloud services allows companies to scale the scope of applications they pay for to what they really need. While existing on-premise solutions might have numerous functionalities that companies pay for (although they are often unnecessary), companies in the cloud only pay for what they really need and for what they use. When business requirements change, companies can flexibly adapt their services and applications in the cloud as required.
Unlocking business value
By partnering with a leading cloud provider such as SAP, companies can accelerate business processes that were previously limited by the performance of their on-premise systems. In addition, they can swiftly replace outdated applications with new ones and make sure that different company locations with previously diverging software releases are all upgraded at the same time, reducing the overall complexity of their IT landscape.
Support is similarly simplified: by moving insulated business applications to the cloud, companies are able to work with a single provider that assumes total responsibility. With a comprehensive, managed cloud offering such as the SAP HANA Enterprise Cloud, organisations can further optimise their IT landscape to future-proof their business. This allows them to focus on the functional and business layer of their stack – driving innovation, business value, and growth – while handing off the technical aspects of system and application management to a reputable cloud partner such as SAP.
With 125 million cloud subscribers and 44 state-of-the-art data centres in 27 locations around the world, isn’t it time you spoke to SAP about how the cloud can fit into your company’s digital transformation journey?
IoT at starting gate
South Africa is already past the Internet of Things (IoT) hype cycle and well into the mainstream, writes MARK WALKER, associate vice president of Sub-Saharan Africa at International Data Corporation (IDC).
Projects and pilots are already becoming a commercial reality, tying neatly into the 2017 IDC prediction that 2018 would be the year when the local market took IoT mainstream. Over the next 12-18 months, it is anticipated that IoT implementations will continue to rise in both scope and popularity. Already 23% are in full deployment with 39% in the pilot phase. The value of IoT has been systematically proven and yet its reputation remains tenuous – more than 5% of companies are reluctant to put their money where the trend is – thanks to the shifting sands of IoT perception and success rate.
There are several reasons behind why IoT implementations are failing. The biggest is that organisations don’t know where to start. They know that IoT is something they can harness today and that it can be used to shift outdated modalities and operations. They are aware of the benefits and the case studies. What they don’t know is how to apply this knowledge to their own journey so their IoT story isn’t one of overbearing complexity and rising costs.
Another stumbling block is perception. Yes, there is the futuristic potential with the talking fridge and intelligent desk, but this is not where the real value lies. Organisations are overlooking the challenges that can be solved by realistic IoT, the banal and the boring solutions that leverage systems to deliver on business priorities. IoT’s potential sits within its ability to get the best out of assets and production efficiencies, solving problems in automation, security, and environment.
In addition to this, there is a lack of clarity around return on investment, uncertainty around the benefits, a lack of executive leadership, and concerns around security and the complexities of regulation. Because IoT is an emerging technology there remains a limited awareness of the true extent of its value proposition and yet 66% of organisations are confident that this value exists.
This percentage poses both a problem and opportunity. On one hand, it showcases the local shift in thinking towards IoT as a technology worth investing into. On the other hand, many companies are seeing the competition invest and leaping blindly in the wrong direction. Stop. IoT is not the same for every business.
It is essential that every company makes its own case for IoT based on its needs and outcomes. Does agriculture have the same challenges as mining? Does one mining company have the same challenges as another? The answer is no. Organisations that want their IoT investment to succeed must reject the idea that they can pick up where another has left off. IoT must be relevant to the business outcome that it needs to achieve. While some use cases may apply to most industries based on specific circumstances, there are different realities and priorities that will demand a different approach and starting point.
Ask – what is the business problem right now and how can technology be leveraged to resolve it?
In the agriculture space, there is a need to improve crop yields and livestock management, improve farm productivity and implement environmental monitoring. In the construction and mining industry, safety and emergency response are a priority alongside workforce and production management. Education shifts the lens towards improving delivery and quality of education, access to advanced learning methods and reducing the costs of learning. Smart cities want to improve traffic and efficiently deliver public services and healthcare is focusing on wellness, reducing hospital admissions and the security of assets and inventory management.
The technology and solutions selected must speak to these specific challenges.
If there are no insights used to create an IoT solution, it’s the equivalent of having the fastest Ferrari on Rivonia Road in peak traffic. It makes a fantastic noise, but it isn’t going to move any faster than the broken-down sedan in the next lane. Everyone will be impressed with the Ferrari, but the amount of power and the size of the investment mean nothing. It’s in the wrong place.
What differentiates the IoT successes is how a company leverages data to deliver meaningful value-added predictions and actions for personalised efficiencies, convenience, and improved industry processes. To move forward the organisation needs to focus on the business outcomes and not just the technology. They need to localise and adapt by applying context to the problem that’s being solved and explore innovation through partnerships and experimentation.
ERP underpins food tracking
The food traceability market is expected to reach almost $20 billion by 2022 as increased consumer awareness, strict governance requirements, and advances in technology are resulting in growing standardisation of the segment, says STUART SCANLON, managing director of epic ERP
Just like any data-driven environment, one of the biggest enablers of this is integrated enterprise resource planning (ERP) solutions.
As the name suggests, traceability is the ability to track something through all stages of production, processing, and distribution. When it comes to the food industry, traceability must also enable stakeholders to identify the source of all food inputs that can include anything from raw materials, additives, ingredients, and packaging.
Considering the wealth of data that all these facets generate, it is hardly surprising that systems and processes need to be put in place to manage, analyse, and provide actionable insights. With traceability enabling corrective measures to be taken (think product recalls), having an efficient system is often the difference between life or death when it comes to public health risks.
Sceptics argue that traceability simply requires an extensive data warehouse to be done correctly, the reality is quite different. Yes, there are standard data records to be managed, but the real value lies in how all these components are tied together.
ERP provides the digital glue to enable this. With each stakeholder audience requiring different aspects of traceability (and compliance), it is essential for the producer, distributor, and every other organisation in the supply chain, to manage this effectively in a standardised manner.
With so many different companies involved in the food cycle, many using their own, proprietary systems, just consider the complexity of trying to manage traceability. Organisations must not only contend with local challenges, but global ones as well as the import and export of food are big business drivers.
So, even though traceability is vital to keep track of everything in this complex cycle, it is also imperative to monitor the ingredients and factories where items are produced. Having expansive solutions that must track the entire process from ‘cradle to grave’ is an imperative. Not only is this vital from a safety perspective, but from cost and reputational management aspects as well. Just think of the recent listeriosis issue in South Africa and the impact it has had on all parties in that supply chain.
Thanks to the increasing digital transformation efforts by companies in the food industry, traceability becomes a more effective process. It is no longer a case of using on-premise solutions that can be compromised but having hosted ones that provide more effective fail-safes.
In a market segment that requires strict compliance and regulatory requirements to be met, cloud-based solutions can provide everyone in the supply chain with a more secure (and tamper-resistant) solution than many of the legacy approaches of old.
This is not to say ERP requires the one or the other. Instead, there needs to be a transition provided between the two scenarios that empowers those in the food supply chain to maximise the insights (and benefits) derived from traceability.
Now, more than ever, traceability is a business priority. Having the correct foundation through effective ERP is essential if a business can manage its growth and meet legislative requirements into the future.