From Islands to Virtuous Circle: Choosing an Agile Foundation for Innovation Success

The events of the last few years, months, and weeks have touched every aspect of our lives, and each day seems to reveal new challenges, new consequences, and new opportunities arising in the wake of massive global disruption – from pandemics, to inflation, to stock market volatility, even to hostile invasions.  As organizations across every sector adapt to the new reality of a business landscape that is constantly in flux, innovation is king, and the pace of digital transformation has increased exponentially—what once might have evolved over the course of a year or two is being accomplished at breakneck speed over the space of a few weeks or months.

With the pressure to innovate at an all-time high and climbing, many companies have adopted a piecemeal approach, where each innovation project is self-contained, often employing different tools from different vendors. Robert Parker, Senior VP at IDC, calls this approach, tailored for the urgency of the moment, “islands of innovation.” While it can yield short-term benefit in the narrow sector of business targeted by the innovation island, seeking digital transformation on a project-by-project basis is not sustainable in the long term. As companies seek to expand and build upon their islands of innovation, they will run into stubborn and costly data, integration and user experience issues when their digital landscape becomes a hodgepodge of application customizations and scattered vendors, instead of the seamless architecture required to build a strong, flexible foundation for future innovation.

Thankfully, islands of innovation can be avoided altogether. As organizations continue their digital transformations, they can choose to shift away from islands and instead implement a common platform-based approach, establishing the architectural innovation platform that will, as Parker explains, “unify the diverse set of applications and technologies within the typical [enterprise] landscape.”   This platform approach becomes a virtuous circle of innovation because each new innovation project builds on and integrates with all the other previous innovations.  

With the common business processes inherent in a platform like SAP’s Business Technology Platform (BTP), existing islands can be absorbed into the common architecture, enabling applications to communicate with each other and new applications to be seamlessly implemented and integrated into the whole. A common platform considers data sources and semantics, process workflows, analytics and decision models as a unified whole, all with a common UX and options for delivery (mobile, desktop, web). With a platform approach, the innovation cycle timeline will accelerate with each new project added to the platform, and technical debt is minimized due to the common architectural approach.  This is the virtuous circle in action.  With the islands approach, on the other hand, each new innovation project has to reinvent the wheel, and technical debt can be significant.

Robert Parker reminds us that innovation alone is not enough. It must be delivered while “ensuring security, maintaining service levels, and optimizing costs. And, by the way, it must be delivered at scale.” To this end, countless customers have benefited from SAP’s decades of experience ensuring security, optimizing costs, and delivering at scale and found sustainable success through platform-driven innovation.   Robert Parker’s article can be found here

One notable example is ASR Group, the world’s largest refiner and marketer of cane sugar, who used their BTP architecture to transform the work of their global logistics team in response to pandemic-era challenges around freight-rate volatility – and create a virtuous circle of innovation.   They first utilized one platform component to consolidate internal and industry data to better predict freight costs 6 months out for their customers and sales reps.  This innovation provides 95% accuracy on their upcoming trucking costs.  They then took this predictive information and combined it with descriptive information to visualize and share logistics information across the enterprise using another platform component.  This combined external and internal data for a comprehensive 12 month view of their logistics systems.   Finally, a third platform component enables ASR to use machine learning to provide what-if predictive analysis for the company’s data scientists.  They can now create more than 2200 forecasts in just seconds for what-if scenarios.  This virtuous circle of innovation was possible because ASR used a common, agile platform – SAP BTP.  This would have been a much more difficult set of projects with an islands of innovation approach.  The ASR SAP Innovation Award story with BTP can be found here

Change has always been one of the only constants, but this truth is more visible now than ever, with business landscapes evolving at head-spinning rates. A virtuous circle of innovation approach, supported by a rock-solid platform foundation, is the optimal way to address the next set of business challenges for corporations large and small.  You can learn more about SAP BTP here.