Thanks to the cloud and the digital economy, today’s CIOs now have a strong strategic leadership role to play. Savvy CIOs realize the cloud is here to stay, and they focus on preparing their business for an ever-changing digital future while delivering rock-solid results today. As innovators, CIOs have transitioned out of the traditional role of implementation managers. They are now advising how their organizations can use technology to unlock innovation, enable new types of engagement, and spark disruptive business models.
Technology topics are now part of the mainstream. While IT was previously seen as a support function, it is now becoming a key component of business strategy. And this is where it should rightfully belong.
There are three key aspects driving this change:
- Cloud solutions are comparatively easy and fast to deploy, allowing businesses to spend less time and resources on implementation and more on improving business results
- Cloud solutions remove complexity around maintenance and updates by engaging solutions from vendors specialized in the area, allowing companies to focus on their core business
- The digital economy means business is evolving at a pace and speed never before imagined
When I talk to other CIOs, they tell me that they have a strong need for enterprise software that’s easy to use and compatible with personal devices. My message is that, as CIOs, we are in the lead and are the ones who are driving our organization’s cloud strategy, always in close collaboration with the leaders on the business side. Only by collaborating we ensure that our IT platform provides the high performance, secure transactions, and reliable connectivity needed for sustained business success – both today and in the future.
CIO as integrator and innovator
The role of the CIO already requires us to be both the integrator and the innovator who brings together all key aspects of the business in a more effective and efficient way than before. And in today’s digital economy, that means enabling collaboration not only within our own enterprises but extending it to our partners, suppliers, external agents, and customers. As technology experts, CIOs are destined to spearhead this.
Businesses across industries today are continually challenged to do more with less and expected to disrupt the status quo. If they don’t, their competitors will. According to McKinsey, more than 60% of CEOs expect up to 50% of their earnings growth in the next five years to come from technology-enabled business innovations. Similarly, IDC says, 57% of CIOs expect to be defined in terms of delivering business innovation to increase revenue, margins, and new products. The question then is, how can they innovate?
Driving innovation through business networks
One answer lies in business networks. By connecting business networks with your backend systems on one side and your trading partners on the other, CIOs can open up tremendous opportunities to innovate key business processes and drive efficiency. Not only do business networks make connecting and collaborating with a global network of partners easier than ever, they enable new processes that enable companies to drive innovation across their operations. Take purchase orders and invoices, which are issued automatically, or self-service supplier catalogs that are executed electronically. Processes like dynamic discounting allow companies to secure discounts that can be reinvested in research and development and funding to expand the business. Collaborative supply chain solutions increase inventory and forecasting visibility, and instantly generated audit trails ensure tax, legal and security compliance.
Adoption of business networks is expected to grow by 40% over the next two years, says Ardent Partners, which is no surprise given that networked enterprises – according to McKinsey – are 50% more likely than their peers to have higher sales and profit margins, gain market share, and be a market leader. If you want to build a modern IT platform, you must consider business networks.
Implementing a business network
At SAP, we knew that in order to continue providing high-quality service and mitigating risk across our supply chain, we needed to have a simpler and more standardized source-to-settle process. That’s why we decided to adopt a leading business network. Our objectives were to increase invoice automation and reduce paper; achieve rapid, high-quality, and transparent sourcing through knowledge sharing; improve usability of sourcing tools for buyers and suppliers, and self-service requisitioning for employees; and ensure supplier compliance and minimize supplier risk. We now have a platform that’s secure, reliable, and high-performing, and we have delivered the procurement function with 20% increased productivity and 42% lower cost.
Effective collaboration was absolutely key to this successful transformation. From the beginning, we worked closely with our CPO and CFO, our product teams, and our suppliers to identify needs, set expectations, and align on our approach. Understanding our technology options and advising our Purchasing and Finance units on the most effective rollout contributed to our source-to-pay organization achieving significant benefits in record-time. And the value we’re getting from using a business network is growing all the time as more of our suppliers get on-boarded and we manage more of our resources through the platform. It’s really a great example for SAP’s Run Simple mantra.
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