Where to go for more information on Digital Transformation: Blog series on Digital Transformation http://scn.sap.com/community/cloud/blog/2015/01/17/digital-transformation-series-the-wrap openSAP MOOC course on Digital Transformation https://open.sap.com/courses/dit1 Blog series on Digital Transformation use cases with S/4HANA http://scn.sap.com/community/s4hana/blog/2015/07/13/s4hana--the-use-case-series--intro openSAP MOOC course on use cases S/4HANA https://open.sap.com/courses/s4h3

1. Digital Transformation
Sven Denecken, GVP Co-Innovation and Strategy, SAP S/4HANA
Rome, 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. © 2015 SAP SE or an SAP affiliate company. All rights reserved. 4
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

5. 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. 5
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.

6. The Digital
Transformation
@SDenecken

7. The digital economy is a reality
*MIT
Digital
Change
Survey,
2013
Of
business
leaders
said
that
achieving
digital
transformaFon
will
become
criFcal
to
their
organizaFons
within
the
next
two
years.*
78%
Of
employees
in
companies
where
CEOs
have
shared
their
vision
for
digital
transformaFon
feel
that
it
is
the
right
thing
for
the
organizaFon.*
93%
All
lines
of
business
running
in
real
Fme
on
a
digital
business
plaMorm
The
digital
value
chain
Suppliers
People
Resources
Omnicommerce
Deliver
excepFonal
experiences
to
your
customers
across
every
channel
of
interacFon
To
enable
the
workforce
of
the
future
–
employees
and
conFngent
labor
Enable
fricFonless
commerce
by
managing
suppliers
bePer
Manage
materials,
assets,
money,
and
other
resources
bePer
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. 7

8. Understanding the new value levers
The
digiFzed
core
enables
transformaFon
Digital
economy
Mobile
Big
Data
Internet
of
things
Cloud
SubscripCon
DigiCzed
core
Segment
of
one
Unit
of
one
Personalized
experience
Connected
manufacturing
Business
model
transiCon
Lot
size
one
Contextual
markeCng
Digital
transformaFon

9. Internet
of
Things
Unit
of
One
Technology
induced
change
Why Digitize The Core?
Service promise
Ability to deliver
End to end experience
The
end
to
end
digiCzed
enterprise
is
a
mandatory
consequence
[#/€]
Fme
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
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 9

10. 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
customizaCon
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. 10

11. The business models of the future
Customer
centric
Operationally
excellent
Globally
networked
Rapidly
innovating
Agile
• Fast
adaptaFon
of
business
strategies
• Fast
innovaFon
• Highly
skilled,
empowered
people
in
cross
funcFonal,
cross
organizaFonal
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
Fme
customer
interacFon
• Based
on
360°
customer
view
Next
generaCon
processes
• Highly automated
e.g. "touchless order"
• Embedded,
"real
Fme"
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. How to Start
@SDenecken

13. The Digital Transformation lever is huge
Mobile
Cloud
Big
Data
IoT
Business
Networks
Core
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
CollaboraFon
Web
2.0
New
value
chains
New
communicaFon
mechanisms
Data-­‐driven
development
Real-­‐Fme
analyFc
Data
as
new
economic
resource
Machine2Machine
communicaFons
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. 13
Mobile

14. 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
• ReducFon
of
entry
barriers
• Share
of
industry
revenue
pool
generated
by
digital
• Relevance
of
customer
behavior
Company
specific
drivers:
• Digital
as
add-­‐on
or
fundamental
transformaFon
• PotenFal
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. 14

15. Simplify your technology architecture, business processes,
and decision making
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 15
Applications Business Network
SAP HANA Platform
In-memory computing. Analytics. Services.
Every line of
business and
every industry
Customer engagement and commerce
Human capital management
Procurement
Inter-enterprise
commerce
and spend
Suppliers
Workforce
Travel and entertainment

16. 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. 16
Zero latency
supply chains
Applications Business Network
Sales, Service,
Marketing
Human
Resources
Finance
Supply Chain
In Memory 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

17. 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. 17
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

18. Run Simple.
Thank you.
@SDenecken

19. Where to go for more information on Digital Transformation
Blog
series
on
Digital
TransformaCon
ü hPp://scn.sap.com/community/cloud/blog/2015/01/17/digital-­‐transformaFon-­‐series-­‐the-­‐wrap
openSAP
MOOC
course
on
Digital
TransformaFon
ü hPps://open.sap.com/courses/dit1
Blog
series
on
Digital
TransformaFon
use
cases
with
S/4HANA
ü hPp://scn.sap.com/community/s4hana/blog/2015/07/13/s4hana-­‐-­‐the-­‐use-­‐case-­‐series-­‐-­‐intro
openSAP
MOOC
course
on
use
cases
S/4HANA
ü hPps://open.sap.com/courses/s4h3
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 19

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