Learn about how SAP plays a role in the future of the digital economy in this presentation by Sven Denecken.

1. The Future of
the Digital Economy
and SAP’s Role
Sven Denecken, GVP Co-Innovation and Strategy, SAP S/4HANA
October 2015
@SDenecken

2. The Market
Perspective
@SDenecken

3. Macro perspective, the modern drivers of change
*Concept
Source:
Unboundary,
Inc.
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 3

4. Hyperconnectivity across people, business, and devices give
rise to a new digital economy powered by real-time data
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 4
75 billion connected devices
in the Internet of Things
Over 2.55 billion
social media users by 2020
U.S.$65 trillion in global trade
through connected businesses
Source: SAP Corporate Fact Sheet 1/2015Source: www.emarketer.comSource: Business Insider

5. © 2015 SAP SE or an SAP affiliate company. All rights reserved. 5
As five billion people reach middle class, new challenges arise in
customer expectations, workforce, and resource management
Dramatically Changing Workforce
82% customers
stop doing business
with a company due
to a poor experience
$5.6T savings through
connected vehicles
67% increase in crop yields
22% increase in supply
chain efficiency
Rising Customer Expectations
71% of business leaders
believe that customer
experience is the next
battleground
High employee
engagement: 3x higher
operating margin
72% of Millennials feel their
current organization is not
making full use of their skills
Pressure on Resources
Water 1.5x by 2030
Energy 1.5x by 2020
Food 1.5x by 2030
Metals 2x by 2030
Sources: Impact Report, Harris Interactive. Colin Shaw and John Ivens, 2010; Deloitte Millennial Study, 2015; Shell, 2014; WRI, 2014; SAP SE, 2014. Towers Watson, 2012

6. Major tech trends drastically change "art of the possible"
Augmented reality
Immersive
visualiza<on,
e.g.
showroom
experience,
maintenance/
assembly
instruc<ons
Internet of things/device
interaction
Intelligently
connect
smart
objects
to
link
material
and
informa<on
flows
Advanced robotics
Autonomous,
coopera<ng
industrial
robots
with
numerous
integrated
sensors
3D printing
Manufacture
tailored
products
in
smaller
lots,
more
distributed/
closer
to
point
of
sale/use
Big Data/Predictive analysis
Develop
deep
insights
into
supply
chains
&
beJer
forecast,
e.g.,
demand
and
capacity
Autonomous transportation
Intelligent,
autonomous
systems,
e.g.,
self-­‐driving
vehicles/trucks,
unmanned
areal
vehicles
(UAVs)
Shift to the cloud
Highly
scalable
soPware-­‐as-­‐a-­‐
service
apps
with
remote
storage
and
processing
power
Ubiquitous connectivity
"Always-­‐on"
access
to
content
and
communica<on
capabili<es
Social, local, mobile
On-­‐going
engagement
with
customers
and
communi<es
in
a
relevant
and
geo-­‐contextual
way
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 6

7. 10.2% or U.S.$237 billion of profits are lost by the top
200 global companies due to hidden costs of complexity
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 7
Business Network
Say it’s
decision making
75% 73%
60%
Believe it’s technology
Layers of legacy and interfaces make
it difficult to keep pace with change
Say it’s
business processes
Business processes built for
the Internet age, not the real-
time digital era, where insights
are connected to action
Difficult to collect the right
data, see from top level to
transactions, socialize
decisions, and connect
decisions to actions
Source: The Simplicity Index 2011, 2015 Wharton-SAP Run Simple Survey.

8. The Digital Core
@SDenecken

9. Internet
of
Things
Unit
of
One
Technology
induced
change
Digi<ze
The
Core
Service promise
Ability to deliver
End to end experience
The
end
to
end
digi0zed
enterprise
is
a
mandatory
consequence
[#/€]
<me
Digital
Economy
Number
of
items/lots
value/size
of
items/lots
Unit
of
One
Digital store as typical
fast market entry
Digital
Customer
Experience
Segment
of
ONE
New customer
expectations
Auto-replenishment/
Subscription
Personalized
Coupons
Plan Your Trip to
the Store
Personalized
Communication
Easy
Ordering
from app
Curated
Experience
In-Store
Navigation

10. The digital economy is a reality
*MIT
Digital
Change
Survey,
2013
Of
business
leaders
said
that
achieving
digital
transforma<on
will
become
cri<cal
to
their
organiza<ons
within
the
next
two
years.*
78%
Of
employees
in
companies
where
CEOs
have
shared
their
vision
for
digital
transforma<on
feel
that
it
is
the
right
thing
for
the
organiza<on.*
93%
All
lines
of
business
running
in
real
<me
on
a
digital
business
plaZorm
The
digital
value
chain
Suppliers
People
Resources
Omnicommerce
Deliver
excep<onal
experiences
to
your
customers
across
every
channel
of
interac<on
To
enable
the
workforce
of
the
future
–
employees
and
con<ngent
labor
Enable
fric<onless
commerce
by
managing
suppliers
beJer
Manage
materials,
assets,
money,
and
other
resources
beJer
Customers
Business
network
Social
Internet
of
Things
Other
unstructured/
structured
data
The
digital
value
chain
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 10

11. The business models of the future
Customer
centric
Operationally
excellent
Globally
networked
Rapidly
innovating
Agile
• Fast
adapta<on
of
business
strategies
• Fast
innova<on
• Highly
skilled,
empowered
people
in
cross
func<onal,
cross
organiza<onal
teams
• Driven
by
strong
vision
and
leadership
"Plug
and
play"
networks
• Global reach
• Scalable capacity
• "Pay as you go"
• Secure
• Actively managing risk
Segment
of
One
–
at
scale
• Personalized,
intelligent
products
and
services
• Rich,
real
<me
customer
interac<on
• Based
on
360°
customer
view
Next
genera0on
processes
• Highly automated
e.g. "touchless order"
• Embedded,
"real
<me"
decision
support
• Highly adaptive
Empowered
consumer /
customer
Science and
technology
progress
GlobalizationCompetitive and
regulatory
pressures
Powered
by
digital
technologies
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 11

12. • Definition of strategic digital objectives
• Agile approach to strategy
Digital
strategy
• Think and act like a VC
• Still: leverage existing asset base
• ...
Digital
disrup0on
Five main approaches towards digital transformation
Prioritized approache(s) are specific for each company
Create
value
from
data
• Business model based on data
• Digitally enhanced products
• Product-­‐related
services
based
on
sensor
data
• ...
Digi0ze
core
business
• Faster, simpler and further
automated processes
• Seamless integration across all value
chain processes
• Digital R&D, production, administration
• ...
Enhance
digital
capabili0es
• Analy<cs
capabili<es
• Agile
working
mode
• Agile
plaZorms,
con<nuous
delivery
• PlaZorm
TCO
Improve
customer
experience
• Relentless
customer
centric
focus
• Connected
touch
points
in
customer
journey
• Sales
channels
/
CRM
• Mobile customer engagement
Digital
transformation
Build digital ecosystem
• Posi<oning
in
relevant
ecosystem
• Consume
digital
services
• Partner
for
common
offerings
• ...
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 12

13. Plenty of digitization opportunities in core processes
Even though ERP processes seem to be unchanged at the top level
Automa<on
of
process
steps
Management
by
Excep<on
Insight
to
Ac<on
Process
Integra<on
Segment
of
One
Loca<on-­‐
and
context
aware
processes
Self
service
processes,
any<me
&
anywhere
Omni-­‐Channel
customer
engagement
Simplified
User
Experience
New
Devices
QR
Codes,
RFID,
Sensors
New
Technologies
New
Data
New
Services
Localiza<on
services
New
Tracking
Green
manufacturing,
CO2
tracking,
GRC
standards
Employee
Empowerment,
de-­‐
layering
Procure
to
Pay
Plan
to
Product
Order
to
Cash
Request
to
Service
Finance
Human
Resources
Process digitization opportunities
Process digitization drivers
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 13

14. Marketing in real time to the
Segment of ONE based on
individual customer activities
on all channels
Individualized advertise-ments,
discounts, product
configurations, product
recommendations, etc.
Mass
customiza0on
supported
by real time
• fulfillment monitoring
• processing of customer
change requests
• responses to unplanned
downtimes
• responses
to
changed
parts
availability
• etc.
Digitzation of core processes is critical to scale up
Example: Digital commerce – fulfillment example
Digital store is a typical MVP for fast
market entry
Digitized core is needed for consistent
customer experience
Digital
store
front
Batch
fulfillment
Digital shopper experience
• Mobile commerce
• In store navigation
• Easy ordering
• Peronalized coupons
• Curated expereince
Limited number of variants
Weekly or daily planning,
fulfillment and delivery tact
Low flexibility for order
changes and responses to
unplanned down time, supply
problems, etc.
Lot
size
one
✓Auto-replenishment/
Subscription
Personalized
Coupons
Plan Your Trip to
the Store
Personalized
Communication
Easy
Ordering
from app Curated
Experience
In-Store
Navigation
Auto-replenishment/
Subscription
Personalized
Coupons
Plan Your Trip to
the Store
Personalized
Communication
Easy
Ordering
from app Curated
Experience
In-Store
Navigation
Digital
store
front
Minimum Viable Product End to end digitized
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 14

15. SAP S/4HANA –
The Digital Core
@SDenecken

16. Understanding
the
new
value
levers
The
digi<zed
core
enables
transforma<on
Digital
economy
Mobile
Big
Data
Internet
of
things
Cloud
Subscrip0on
Digi0zed
core
Segment
of
one
Unit
of
one
Personalized
experience
Connected
manufacturing
Business
model
transi0on
Lot
size
one
Contextual
marke0ng
Digital
transforma<on

17. SAP S/4HANA Value Toolkit: digitize beyond the core,
embrace the digital economy
Internet
of
Things
Business
networks
Social
networks
Devices
Big
Data
People
Process
Enriched
Scalability
I
Real
<me
I
Predic<on
I
Simula<on
Live
Data
Granular
I
Responsive
I
Accurate
User
Empowered
Instant
insight
I
Contextual
informa<on
I
Personalized
experience
Segment
of
1
Lot
size
of
1
No
latency
Tradi<onal
core
value
play
SAP
S/4HANA
value
play
At
scale
Leading-­‐edge
processes
I
Integrated
system
Digital
transforma<on
of
business
models
Digital
Core
Digital
Economy
Digital
Transforma0on
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 17

18. Connect
to
the
world’s
largest
business
and
social
networks
and
lead
business
innova<on
with
IoT
• Instant
connec<vity
to
supplier,
customer
and
partner
networks
• 360
view
of
customers
with
access
to
all
interac<ons
• Real-­‐<me
connec<ons
to
sensors
embedded
into
products
and
assets
SAP S/4HANA's offers breakthrough capabilities for digital
transformation
Re-imagined business processes Advanced business analysis
Connections to IoT and Business NetworksImmediate
business
insight
Use
embedded
analysis,
predic<on
and
simula<on
to
an<cipate
future
business
outcomes
• Contextualized
analy<cs
at
the
point
of
decision
making
• Easy
to
use,
yet
sophis<cated
built
in
predica<ve
func<ons
• What
If
analysis
tools
to
make
more
informed
decisions
Get
live
and
personalized
business
insight
to
make
any
decision
from
anywhere
on
your
device
of
choice
• Single
source
of
truth
across
the
en<re
enterprise
data
• User
experience
tailored
to
individual
business
roles
• Interoperability
across
different
devices
and
OSs
Run
digi<zed
business
processes
across
your
enterprise
with
a
modern
core
designed
for
the
digital
economy
• Faster,
simpler
and
more
automated
business
processes
• Seamless
process
integra<on
across
the
en<re
value
chain
• Big
Data,
Cloud
and
Mobile
enabled
business
process
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 18

19. Exemplar Value Case: Digital transformation in Finance
and Logistics
Manufacturing
“In Sync” manufacturing
Ÿ Ensure physical reality in production and representation in IT system are
always in sync
Ÿ Drive more frequent Inventory updates in real time
Business outcome:
Ÿ Reduce costs with always correct inventory information, less exception
handling
Ÿ Improve product quality with early detection of master data errors
Key innovations:
Finance
Soft Close
Ÿ Improve management and control of operations anytime within period
Ÿ Allow immediate financial and business decisions (such as transaction-
based revenue recognition, calculation of overheads)
Business outcome:
Ÿ Revenue and margin increase through real-time profitability analysis
Ÿ Real-time revenue recognition for goods and services
Key innovations:
Process Enriched
Scalability I Real time I Prediction I
Simulation
Live Data
Granular I Responsive I
accurate
User Empowered
Instant insight I Contextual information I
Personalized experience
Digital
Core
Ÿ Universal journal Ÿ Intra-period reconciliation Ÿ Real-time inventory management Ÿ Inventory information at granular level
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 19

20. Connected
equipment.
Big
Data.
Industry
4.0
Internet
of
Things.
Connected
design:
Providing:
Complete
lifecycle
visibility
for
improved
design.
Business
outcome:
Lower
cost
and
higher
quality.
Serving
the
segment
of
one:
Providing:
BeJer
synchroniza<on
of
processes.
Business
outcome:
Higher
revenue
through
faster
<me
to
market.
Connected
manufacturing:
Providing:
Real
<me
informa<on
with
the
Internet
of
Things
.
Business
outcome:
Increased
cost
efficiency
&
asset
u<liza<on.
The Digital core
The manufacturing Digital transformation
Omni-­‐Channel
commerce.
Internet
of
Things.
Big
Data.
Insight-­‐driven
wholesale
distribu0on.
Omni-­‐Channel
service:
Providing:
Mul<
channel
customer
interac<on.
Business
outcome:
Increased
revenue
and
customer
loyalty.
Profitability
op0miza0on:
Providing:
Customer
Life<me
value
based
targe<ng.
Business
outcome:
Increased
margin
per
customer
segment.
Connected
vending
machine
sales:
Providing:
Meet
customer
demand,
any<me,
anywhere.
Business
outcome:
Increased
customer
loyalty.
The Wholesale Digital transformationThe Digital economy
in Wholesale:
The Digital economy
in Manufacturing:
+
real
<me,
in
memory
plaZorm
+
role
base
&
mobile
UX
+
flexible,
lowest
data
granularity
+
predic<ve
and
analy<cal
driven
+
digital
readiness
+
guided
configura<on
Exemplar Value Case: Digital transformation in Manufacturing
and Wholesale

21. How to Start
@SDenecken

22. The Digital Transformation lever is huge
Mobile
Cloud
Big
Data
IoT
Business
Networks
Internal
IT
as
service
broker
Hybrid
as
the
new
norm
End2End
process
chain
How
to
leverage
for
my
business
New
enterprise
architecture
Mobilize
services,
BYOD
Collabora<on
Web
2.0
New
value
chains
New
communica<on
mechanisms
Data-­‐driven
development
Real-­‐<me
analy<c
Data
as
new
economic
resource
Machine2Machine
communica<ons
Classic industry vs. digital
business
IT security, tracking
User
experience
Simplify
data
model
Flex
the
core
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 22

23. Right ambition level depends on both industry and company
specific drivers
Opportunis*c
adop*on
of
digital
technologies
Transforma*on
of
core
business
model
Systema*c
leverage
of
digital
for
performance
improvement
Leverage
digital
to
develop
new
compe**ve
advantage
Industry
specific
drivers:
• Development
of
new
business
models
• Reduc<on
of
entry
barriers
• Share
of
industry
revenue
pool
generated
by
digital
• Relevance
of
customer
behavior
Company
specific
drivers:
• Digital
as
add-­‐on
or
fundamental
transforma<on
• Poten<al
to
leverage
digital
to
mobilize
and
innovate
company
Source: BCG experience
What is the right aspiration for your company in Digital?
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 23

24. SAP helps simplifies your technology architecture, business
processes, and decision making
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 24
Applications Business Network
SAP HANA Platform
In-memory computing. Analytics. Services.
Every line of
business and
every industry
SAP S/4HANA
Customer engagement and commerce
Human capital management
Procurement
Inter-enterprise
commerce
and spend
Suppliers
Workforce
Travel and entertainment

25. With SAP, CEO’s can reimagine new business models to
take advantage of the opportunities in the Digital Economy
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 25
Zero latency
supply chains
Applications Business Network
Sales, Service,
Marketing
Human
Resources
Finance
Supply Chain
SAP HANA Platform
Capitalize on the power of real-time data to deliver
innovation to business without disruption
Anticipate
customer needs
Inspired and engaged
employees
Instant cash flow
visibility
Frictionless
commerce
Deliver across
channels
Fluid and scalable
workforce
Predictable and
optimized expense

26. Your journey to master simplicity and capture the Digital
Economy starts today – at the pace you choose
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 26
Design Thinking Co-Innovation
Choose business
processes
Choose decision
scenarios
Choose technology
platform
Architectural plan
Technical readiness
assessment
Data discovery workshop
Business strategy
Data mapping
Industry value engineering
Business scenario
recommendation

27. Run Simple.
Thank you.
@SDenecken
INTERNAL

28. Run
simple
with
the
next-­‐genera<on
business
suite
@
sven.denecken@sap.com
@SDenecken
https://www.linkedin.com/in/sdenecken
Sven Denecken, GVP Co-Innovation and Strategy S/4HANA
SAP SE