Digitization - SAP Best Practices for Chemicals 2016

I had the opportunity to attend and participate on the executive panel at the recent SAP Best Practices for Chemicals Event in The Woodlands, TX this past week.  In his keynote, Peter Maier presented a challenge to the attendees to "re-imagine everything."  SAP is focusing on digital transformation with S/4HANA being the enabling platform and is calling this transformation “Digitization.”

After highlighting the importance of the chemical industry to the overall economy, he highlighted three dominant pressures the chemical industry faces. He led with the volatility of commodity prices and demand which leads to uncertainty in revenues.  Geopolitical pressures create uncertainty by either creating opportunities or destroying them. Lastly, ever changing technology enables new methods for getting business done.

To respond to these pressures, Peter recommend blurring the industrial boundaries, focusing on outcomes, and digital transformation.  Blurring the boundaries means looking outside and being willing to pull in best practices from other industries as well as transforming related customer and supplier value chains. Changing to an outcome focus is a call for companies to rethink the value chain from a customer's point of view; "How can my company help my customer achieve his goals?" Digitization is a call to rethink how a company leverages technology to the fullest; "Do we change our business model? Can we improve our business processes?"

Several examples were sited, one of which came from ag-chem, highlighting these three things.  In this example, the company focused on the farmers' desired outcome - a good crop. Then they pulled in different aspects of the value chain, including things like soil measurements and weather data.  This collaboration enabled better decisions as to when to plant, when to fertilize, what yield to expect, etc.  In doing this, the ag-chem company changed the value it provided its customers by thinking beyond its product.

Technology provides tremendous opportunity to make us better, but it may take us changing to fully leverage the possibilities.  I like using the term "transformation" as a way to communicate this dynamic. When we consider the impact of technology on our enterprises and the speed at which it changes, we need to be cognizant of the speed of potential competition as business processes become more tightly coupled to technology.