Why do people buy cars? To get around. There may be other reasons, but in the end, what people want is mobility.
Car ownership, however, comes with associated trappings. You’ll need a license and insurance. You may also need financing. And don’t forget, if you want to protect your investment, you’re on the hook for maintenance and repairs.
Or so it is with an ownership-based business model where a manufacturer makes a product (the car) and you (the customer) take it away. The rest is up to you.
Give them mobility
Today, however, there’s another model – one that is driven by data and technology. Call it the outcome-based model. If what customers want is mobility, then give them mobility as a service.
This is the model followed by Care by Volvo, a mobility subscription service. In the era of the “experience economy,” Volvo recognizes that at least a certain segment of its customers care less about the product and more about the overall experience of mobility. These customers don’t want to sweat the details and responsibilities of owning a car. Instead, they pay a steady monthly price in exchange for a car – upgradable every 12 months – that also includes insurance and road-side assistance.
Care by Volvo is only one example of one company in one industry moving to outcome-based models. The fact is, organizations everywhere seek to deliver better customer experiences by crossing traditional industry lines. In the case of Care by Volvo, one line crossed is the line between auto manufacturing and insurance. Now Volvo is generating value by partnering with insurance companies to make life easier for its customers. The insight here is that customers want experiences rather than products. Companies that deliver these experiences are winning the experience economy.
What does it take for a company to cross industry lines? Increasingly, it takes modern technology, flexible data management, and highly agile processes. By orchestrating these, companies are running on new business models that connect an ecosystem of partners together in an end-to-end value chain that makes life easier for customers.
Adjacent capabilities are ripe for the picking – but companies should take a broad view on what may or may not be adjacent. For Care by Volvo, offering insurance seems obvious enough, but what about other possibilities? A few years back, Volvo announced its plans for a driverless car – one that envisioned a partnership with Netflix (so that you can watch videos while the car drives itself) and Ericsson (so that you’ll have a reliable signal for streaming). The flexibility to quickly collaborate with new partners helps accelerate innovation.
Stories of companies like Airbnb, Uber, and Netflix disrupting industries with transformative business models are by now a decade old. In their place are countless stories of established companies catching on and learning how to drive market change on their own terms (as evidenced by Volvo).
What it takes to move forward is, first and foremost, an understanding of how customer expectations have changed. If the experience now takes precedence over the product, then companies have clear remit to make life easier for their customers.
Yet, while the primacy of the customer experience underpins how companies should pursue transformation, the practical considerations on how to make it all happen remains. This is where data, technology, and processes come into play.
SAP and the customer experience
At SAP we understand the need for data visibility, intelligent technologies, and agile processes. In fact, we’ve built them all into our next-generation ERP offering, SAP S/4HANA.
- Data visibility: With a simplified data model that streamlines data access and management, SAP S/4HANA enables you to seize new opportunities faster. Now you have the agility required to string together new or existing business processes and plug into larger value chains. Subscription-based services, predictive maintenance, integrated financing – whatever the business model, SAP S/4HANA supports a single source of truth that gives you the visibility to understand your customers and serve them better.
- Intelligent technologies: Internet of Things (IoT) technology can be used to capture important usage data from cars, industrial machines, coffee makers, and much more. Machine learning can then be used to compare this data against historical data in real time to identify patterns that yield insight about customer behavior. Blockchain technology can be used for virtually irrefutable transaction transparency while 3D printing can help speed manufacturing and move production closer to the end customer. SAP S/4HANA is designed to work flexibly with all of these technologies and more.
- Agile processes: SAP S/4HANA supports standardized processes in 25 industries. Plugging into these processes can help you break through industry boundaries and collaborate with diverse partners to deliver the value customers seek. More recently, SAP has added customer experience data to the mix with the acquisition of Qualtrics. Today, SAP can combine now combine immensely rich stores of operational data with real-time metrics on the customer experience to help you serve your customers better.
And some help from SAP Transformation Navigator
If you’re implementing SAP S/4HANA, of even if you’re running it, SAP Transformation Navigator is a good place to start for blurring industry boundaries. This tool starts with your as-is environment and allows you to map out your transformation as you see fit.
Let’s say you’re a pharmacy, traditionally seen as a subset of retail. Now let’s say, you want to move toward markets in the insurance and healthcare industries. For whatever business you want to go after, you can use SAP Transformation Navigator to explore healthcare and insurance capabilities, and then import them to your retail road map.
Industry templates, meanwhile, provide a good opportunity to dive into exactly the kinds of processes your cross-industry competitors already run. SAP Transformation Navigator also supports higher-level value maps that instantly resonate with industry audiences with a “showcase view” that highlights the most relevant and recommended capabilities. For this reason, they help engage stakeholders, facilitate buy-in, and drive transformation forward.
With SAP S/4HANA, and SAP Transformation Navigator to help guide the way, SAP customers everywhere are moving forward with digital transformation projects designed to seize new markets and blur industry boundaries. For more info on how your company can do the same, visit us at www.sap.com/roadmaps.