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Author's profile photo Sven Denecken

How Companies Overcome the 3 Key Challenges, and the Power of XO

With the accelerated pace of market and consumer behaviour change, companies are exposed. This is especially depicted by the explosion of alternative product offerings for today´s consumers, the changing consumer behavior fueled by social networks and the resulting erosion of brand loyalty.

The new normal for businesses is persistent and increased customer value focus, up or out. We all need to continuously improve products and services, cater to new business models – all the time – and aspire for differentiation thru flawless execution.

We need to constantly convert customers into brand advocates (like Kotler 4.0) – ultimately, to win, engage, and retain buyers, we need to stand out from competition. Companies today need to become sticky by making every touchpoint valuable and memorable – the true power of XO. But more on that later.

As many of us will meet very soon at SAPPHIRE NOW in Orlando and have multiple discussions on customer experience and how to enable business to get more intelligent – let me lay out in this blog the challenges and first lessons learned by many, many, many interactions in co-innovation with clients and partners, thanks here for all the valuable interactions and trust.

Today´s challenges for becoming or staying a best-run business or How do you achieve best-run?

Essentially by transforming your company to a well-oiled agile execution machine, where each action and resource is optimized towards customer value delivery and strategy execution. Every member of the team needs to be interconnected and is engaged in purposeful activity, knows their customers, their preferences, their history of interactions, and expectations and be able to evaluate the optimal path of action in all planned and unplanned circumstances and provides direct or indirect value at every point of action.

So far so good?

Well… this means that company processes are not only optimized for standardization and efficiency – which essentially means perfecting operations for repeatability of “normal business“- but can at the same time, deal with rapid change of markets, demands, business models, customer preferences and out-of-bounds events.

We need to introduce now a new mass-customization and agility for the new customer centricity, aka experience, likewise ensure automated execution leverages machine learning (ML) and other AI-technologies to eliminate manual efforts – and allow robotic process automation (RPA) and innovations drive the processes.

Finally, each “left hand“ knows what “each right hand” does, even when the pace accelerates or the situation has not been planned for. A key challenge in hard wired organizations, thus competition arises in segments where agility is key. While interconnected organizations need to find out fast how data, technology and capabilities can be leveraged best – focused on the outcome for the clients they serve.

How to address these challenges?

Let‘s first remember that we‘re not new to this way of thinking at all. As the inventors of ERP, we can build on our rich experience in helping our customers manage their enterprises in an experience-data-driven and collaborative manner. Signal-to-action has been a driving force always, the amount and variability of signals has changed dramatically though.

So, what have we learned, changed and where are we constantly adapting to the new challenges? Where are we helping our clients to do so?

To address the challenges for modern businesses mentioned before, we must first however introduce a number of innovationsand adjustments – lets focus on three:

  1. Relieve users from any task that can be automated, focus on value-adding decisions and increase ease of value
  • As the “system of record” for most businesses in the world, ERP already contains the data foundation of digitalization. Through Machine Learning we leverage it to identify patterns in historic data that can then be applied to new data, predicting outcomes without human intervention
  • RPA allows users to easily automate basic tasks across multiple applications, just as human workers in a team would do. This further reduces the burden of repetitive, manual tasks on employees, and enables business users to automate even more complex tasks, integrating and orchestrating data from heterogeneous systems.
  • With intelligent Situation Handling, end users are directed to business situations requiring their attention, provided with rich context via the same user interface and presented with alternative action options to support fast and informed decision-making. Furthermore, tracking the users’ handling of situations results in data useful for analytical insights, incremental improvements as well as an excellent foundation for machine learning and rule-based automation, thereby moving towards autonomous execution with little or no human intervention over time
  • Conversational User Interface: NLI and digital assistants allow users to query the system using natural language for a hands-free experience. Combined with Machine Learning algorithms, the system will be able to cover more complex interaction. e.g. in procurement evaluate purchasing practices to spot similar purchases and suggest the creation of new catalog items, drastically reducing manual processing efforts and related errors.
  1. At a business level evolve ERP to real-time steering across the value chain
  • Beyond improving the individual end-user experience thru technical means, we need to take any opportunity to ask: What are today’s information needs to run a digital business for individual roles and across teams and value streams?
  • Here we evolve traditional ERP functionality towards more deeply integrated and agile scenarios, e.g. moving beyond the classic focus on supply / demand matching and profitability towards:
    • Ongoing business optimization via simulation of scenarios and embedded valuation
    • Focus on customer experience along the entire value chain
    • Management exploiting strategic opportunities through organizational agility
  • We expose this richer and more task-focused set of information at each point of action via embedded intelligence. This we do via leveraging embedded analytics and simulation capabilities to deliver optimal decision support for roles across their activities and enhanced functionality: removal of existing process gaps and renovation of processes, mainly via automation.
  • We foster collaborative execution across the enterprise with Realtime Steering: Whereas in traditional ERP, businesses are managed in cycles of forecasting, execution and reporting, with relatively slow response to changed circumstances, the speed dynamics and competitive pressures on today’s enterprises requires that companies manage the business as a collaborative effort of a highly interactive and fully informed team across all business areas

We see the result already today with thousands of companies moving to leverage the most modern ERP in the marketplace – SAP S/4HANA – so we can truly measure what they want and what they DO achieve. Let me share some of the findings from this projects and co-innovation engagements:

So why are customers moving?

First of all, we all need to change from traditional business models to digitized, modern business models. Examples? Many changes we need to do! Take for example changes from mass market products to personalized ´smart ‘products and services, from traditional retailer or reseller to consumer direct connection, from point2point to multiple enterprise orchestration, from reactive processes and systems to thinking processes and systems, from agility to resiliency and of course from needs to experiences.

Today of course we can measure this, and many customers have achieved impressive results. Hear the customers and partners in Orlando – it speaks for itself.


The last point in regard to the change from needs to experiences brings us to:

  1. The power of XO

The experience economy has changed the way businesses compete. Today, organizations must continuously listen to the beliefs, emotions, and intentions of customers, employees, suppliers, partners, and all other stakeholders – at every touchpoint. This type of data is called experience data, or X-data.

Businesses must have the ability to interpret and analyze large amounts of X-data and understand its relationship to the operational data of the business, or O-data. To achieve breakthrough results, businesses need to move beyond systems of record to new systems of inter-action, specifically designed to intelligently use both X, and O-data to manage and improve the four core experiences of business––customer, employee, product, and brand.

Experience Management as you will see now is the combination of X (Qualtrics) and O (SAP) data providing insights into what (O) happened and why (X), that drive actions that have impact to customers and to the bottom line. More on this as well in Orlando at CX live.

O-data comes as we know from enterprise applications like sales, finance, supply chain and HR systems. It tells you inventory turnover, cart abandonment, days sales outstanding, employee attrition–– all really important stuff. O-data is critical to managing the business. Thus we need to adapt constantly as laid out above in #1 and #2.

X-data, on the other hand, is fundamentally different than O-data. X-data is the human factor data: the beliefs, emotions, and intentions that tell you why things are happening, and what to do about it. X-data comes from things like customer feedback, Net Promoter Score, product reviews, brand sentiment, and employee engagement.

But more on this when we hopefully see you in Orlando! In case you cannot join in person – join online.

Follow us via @SAP and #S4HANA, or myself via @SDenecken

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      Author's profile photo Faisal Iqbal
      Faisal Iqbal

      Well-articulated reference to help businesses with understanding how the latest SAP Solutions meet the current needs and trends. In a continuously evolving market, the technology and software giants and leaders have to keep their products up-to-date to standout, thus helping businesses with running from better to best. Thanks Sven Denecken for the guide 🙂