Digital Enterprise Transformation - 360° Journal

OVERVIEWDRIVERSMETHODOLOGY | RESEARCH46 Near Field CommunicationNo doubt, NFC will transform the retailpayment value chain. To what extentwill be analyzed in this article.Stephen Wood, Tim Teinzer,Tomas Falk, Alexander Mrozek16 Blue EconomyLearn how principles adopted fromnature allow companies to achieveeconomic prosperity and environmentalprotection at the same time.Axel Uhl, Oliver Hanslik22 Enterprise Architecture andBusiness TransformationHow big is the synergy potentialbetween these two managementmethods?Robert Winter, Simon Townson,Axel Uhl, Nils Labusch, Joerg Noack32 Digital Enterprise –Next Generation IT StrategyThe future of IT looks “smart”,“cloudy”, and “social”. What does thismean for companies?Lars Gollenia, Axel Uhl,Claudio Giovanoli

OVERVIEWCASE STUDYCOMMUNITY50 Allianz SalesTransformationFind out how more than 9,000 insurancesales agencies are transformedto be more customer-oriented.Axel Uhl, Oliver Hanslik62 HR Transformation atTri-DivisionalA multi-national company withlittle previous transformation experiencestarted an HR transformation.They share their ten key learnings.Brent Furneaux, Robert Günther3 Editorial72 Portraitsof the BTA membersMichael Rosemann, Paul Stratil,Jörg Staff74 Book Review“Economics of Good and Evil”reviewed by Werner Wagner75 EventsUpcoming and past BTA eventsand training courses579 NewsNews from BTA Hubs and partners82 Publication Details

DRIVERS6AbstractContactless payment via Near Field Communication (NFC) is currently causing a stir and arousing alot of interest in the business world. In the USA, Google has launched Google Wallet as a pioneer ofNFC based payment solutions. Visa and MasterCard are currently promoting their payment solutions“Paywave” and “PayPass” and major retailers, restaurants, and gas stations, such as ExxonMobil, havebegun to implement this new method of payment. However, there are still many open questions aboutthe extent to which NFC payment will transform the retail value chain.In this article, we first explore how the mainstream adoption of NFC reshapes the retail value chain, andthen how it could fundamentally transform the role played by financial service providers such as Visaand MasterCard. We will consider how the BTM 2 framework can be applied to this evolving retail valuechain to clarify the transformation drivers, and what impact they could have on the payment businessmodel. Ultimately, we will use the BTM 2 framework to answer the question: “What strategic positionshould financial service providers adopt in the NFC space?”

DRIVERSNFC CONTACTLESSPAYMENTIdentifying the Transformational Opportunitiesfor the Retail Value ChainWith the advent of swipe-free payment approaches, the nirvana of a cashless economyhas come another step closer to becoming a reality. Whilst technologists fixateon the mass adoption of functionally rich Near Field Communication (NFC) enabledmobile handsets, behind the scenes NFC payment offers an opportunity for playerswithin the retail payment chain to gain significant competitive advantage. But whostands to benefit the most from the inevitable mass adoption of NFC?7by Stephen Wood, Tim Teinzer, Tomas Falk and Alexander MrozekNear Field Communication (NFC), a closecousin of Radio Frequency Identification(RFID), enables customers to swipe paymentcards, or use NFC enabled mobilephones to exchange data. This primarilyrelates to payment data. However, thereis the potential of swiping and exchangingricher data that enable NFC to transformspecific links in the retail value chain.Evolving Business OpportunitiesTraditionally, the value of NFC paymenthas been seen as increasing the easeand speed of high volume low valuetransactions. Good examples of thismodel include the London UndergroundOyster Card, or Hong Kong’s OctopusCard, both contactless smartcards forstoring credits and conducting payment.Now the technology is rapidly moving intothe mass market, spurred on by two factors:growing consumer acceptance, themost important driver of diffusion, and increasingavailability of NFC devices, asthe basis for diffusion.With regard to consumer acceptance,recent research by the EBS BusinessSchool shows that 68 percent of consumersapprove of NFC-based payment,although only a fraction alreadyhad a chance to test it (Falk and Mrozek2011). The research showed that consumersunderstood the benefits of NFCpayment in terms of speed and simplifyingpurchasing. Additionally, consumersindicated that the benefits of NFCwere up to ten times more important forthem than the increased risk of fraud orhigher costs. The EBS study also showsthat consumers are willing to use NFCto purchase significantly higher priceditems, rather than low-priced commoditygoods. If consumers now view NFC asan acceptable way to make higher valuepurchases, its potential to influence andassure consumer spending should notbe ignored by businesses.In parallel with the increasing consumeracceptance of NFC, the growing numberof NFC devices on the market reinforc-Handsets Evolution + Consumer Behavior Shift = Business Opportunity?

DRIVERSRetailers (Merchants)Mobile OperatorsFinancial ServiceProvidersExamples Tesco; Walmart T-Mobile; Vodafone Visa; MasterCardStrengths►►►►►►Direct customer contactand influenceBrand recognitionSome experience inproviding direct financialservices►►►►►►Large customer baseExisting flexible billingenginesApplication hosting experience►►►►►►►►Customer baseBrand reputationAccess to capitalAdoption of NFC cardbased system10Weaknesses►►NFC requires high pointof sale (POS) technologyinvestment►►►►Frequent mobile churn detersconsumers to transactthrough single operatorsNeed for banking licensesif credit is to be extendedto consumers►►Lack of downstreaminformation flowOpportunities►►►►Enhanced efficiencyConvenience of paymentprocess►►Consumers no longer havephysical cards to remember,etc.►►Increased volume of paymentswhere cards areusedThreats►►►►Decreased interactionwith customersLack of customer acceptanceof new paymentmethods►►►►Threat of counter strike byother players in the valuechainNFC does not need amobile network (e.g. iPodwith NFC for payment haspotential to substitute amobile device)►►Mobile operators takeover control of customerbaseConclusion►►No direct opportunitieswithout collaboration►►Ability to extend billing toinclude payment for thirdparty transactions►►►►Direct opportunity as theshare of cashless paymentscan be increasedEnhanced informationon customer purchasepatternsTable 1: Theopportunities ofthe NFC valuechain stakeholders,grouped byrelevance(source: Ownrepresentation)check-out. The payment could be easilyprocessed by a firm other than a traditionalfinancial service provider, suchas Apple through their iTunes platformor a mobile operator. Both Apple and amobile operator like Vodafone alreadyhave existing payment relationships withcustomers – the monthly credit card billwould simply be replaced by the monthlyphone bill or directly settled via iTunes.In either case, the financial service providerswould lose their role as an integralpart of the payment value chain, whichprocesses payment streams betweenretailers and customers. In this model,the credit card issuer is marginalizedand commoditized.From a short term perspective, the probabilityof this scenario being realized islow, as the installed base of card issuer

DRIVERS12providers the opportunity to transformtheir value proposition. By bundling frontoffice applications that provide real-timeoffer management, loyalty managementor promotion management with their traditionalpayment handling service, cardissuers have the potential to grow anddiversify their revenue streams.From a technical perspective, financialservice providers have a history of successfullyoperating large data centersand billing retailers on a per transactionbasis. It is no great conceptual leapto see how this infrastructure may beadapted to host multi-tenanted CustomerRelationship Management (CRM)applications, delivered on demand, or tosee how partnering with a cloud applicationprovider could deliver equivalentfunctionality. The only key change thatcard issuers should be mindful of is thecriticality of high volume real-time dataprovision. Processing speeds and thequality of the stores’ internet connectionmight be limiting factors.In summary, we can see that the adventof NFC as a payment mechanism will facefew barriers regarding consumer adoption,but has the potential to substantiallytransform the payment value chain.While retailers must bear the costs ofinstalling new infrastructure to reap thebenefits associated with a smoother andeasier payment procedure, new playerslike mobile operators will see their nichein the value chain evolve and traditionalfinancial service providers will face newchallenges. From a short term perspective,mobile operators are least likely tobenefit from this development, but inthe long term their existing customerdatabase and experience with paymentprocessing could lead to the integrationof the monthly credit card bill intothe monthly phone bill. However, it is upto financial service providers to counterthis unfavorable development by findingattractive solutions to utilize their currentpayment infrastructure and provide retailerswith a new incentive: informationabout customer shopping behavior.BTM 2 : Key to Successful Transformationfor Card Payment CompaniesIf card issuers are to realize the potentialthat NFC offers, they will need to managea strategic step change. We canconsider this transformation in terms ofthe seven key questions (see fig. 2) of theBusiness Transformation ManagementMethodology (BTM 2 ).1) Impact of Transformation DriversWe have already shown that consumeracceptance and device ubiquity are twokey factors that will drive NFC adoption,and we understand that the adoption ofNFC creates the ability to achieve moreat the point of sale than just exchangecash for goods. Given this, financial serviceproviders need to offer an addedvalue to retain their prevalent position inthe payment value chain, or face relegationto the commodity back office of paymentclearing.2) Vision and PositioningThe most promising strategic option forfinancial service providers is to offer value-addedservices and diversify their offeringbeyond the transactional paymenthandling. They should capitalize on their“big data” assets, such as consumer purchasingbehavior data, and bundle themas an extended portfolio of merchantservices. In this situation the service providers’strategic positioning is to becomean intermediary between merchants andconsumers, not only in a financial sense,but also as a link for exchanging informationbetween both groups. Consequently,a new role of financial service providerswould help bringing both groups – thebuyer and the seller – closer together byanticipating customer demand and helpingretailers fulfill these demands. Thisunique intermediary role in combinationwith a reputation as a trustworthy partyshould define their strategic positioningin the market.3) Value ChainToday, it is typically the larger retailersthat have the most detailed data about

DRIVERS14Key Learnings►►►►►►►►Near Field Communication (NFC) is becoming ubiquitouswith NFC devices becoming mainstream.Customers view NFC as safe and convenient and arewilling to swipe and pay.Players in the retail value chain need to look beyond NFCas a payment method and identify how NFC enablesricher interactions with customers.Changes in the retail payment value chain will enablefinancial service providers to offer small and medium sizecustomers a range of applications as hosted solutions togrow revenue and retain customers.Mobile network operators will initiallytry to position themselves in the mobileand contactless payment market, for example,as already mentioned, the ISIScollaboration in the USA and mpass inGermany. However, it is unclear whetheroperators can carve out a new, profitableniche beyond mere data transmission.NFC payment via mobile devices willintroduce a number of new technologycompanies into the traditional retail valuechain. These will include device manufacturers,operating systems and applicationsvendors (e.g. Google with Androidand GoogleWallet) as well as technologycompanies that offer a complete mobiletechnology solution (e.g. Apple withiPhone/iPad as device, iOS as operatingsystem and iTunes as software and paymentplatform). From a traditional financialservice provider’s perspective, suchas Visa or MasterCard, these companiesoffer potential for partnerships to provideapplications to merchants, or embedtheir payment and clearing systems intothe offerings of software providers.6) TechnologyOn the one hand, NFC and adequatedata transition technologies are the keyto enabling card issuers to transformtheir position in the retail value chain. Onthe other hand, other technologies, suchas the QR code (Quick Response code)could substitute NFC in a limited way.Furthermore, evolving mobile phonestandards and mobile internet connectionsare available, but these will havelittle material impact when comparedwith the increasing adoption of NFC.7) RiskPreviously, the major risk regarding theability of NFC to transform the role of cardissuers in the retail value chain has beenseen in the user acceptance. The successof micro payment via NFC systemsand the findings of the above mentionedcurrent research counter this position.However, we should not underestimatean additional risk: the threat that mobileoperators, who are actively promotingmobile applications to business customers,could compete for retailer’s spend inthe location-based CRM market as well.GPS positioning could locate a high-rollerin a store without the need for swipinga card. However, the intrusive BigBrother connotations of the GPS basedscenario should not be underestimatedand will provide a competitive barrierwhen compared with the more “opt in”NFC approach, in which customers actively“swipe in” to provide their locationto retailers.Having considered the impact of NFCadoption we can conclude that the technologyhas the ability to dramatically enhancethe role played by financial serviceproviders within the retail value chain.However, these companies will only realizethe benefit of this shift if they committo develop their value proposition tocustomers. Those who supplement theircommodity payment and clearing serviceswith new NFC related customer managementofferings will retain customersand gain market share, whilst companiesthat do not embrace this opportunity fortransformation will miss out on new revenuestreams.

DRIVERSServiceAUTHORSStephen Wood has worked as a consultant in the customer management area for over15 years and has written two books about innovative technologies and how these canimprove both front office operations and the customer experience. He has deliveredCRM optimization projects for international blue chip organizations in the banking sectorand beyond. Stephen holds an MA from Keele University.stephen.wood[at]sap.comTim Teinzer joined SAP in 2000 and currently leads the Value Partnership CompetenceCenter. Previously he worked as a consultant in the field of CRM with a focus on businesstransformation and value management. Tim completed his MBA studies in Würzburg,Boston and Florida. He studied Business Informatics at the Cooperative StateUniversity Mannheim where he also teaches as external lecturer.tim.teinzer[at]sap.comProf. Dr. Tomas Falk is a fulltime professor of marketing and holds the ConCardis Chairfor Consumer Behavior at EBS Business School. He received his PhD in 2007 and hishabilitation in May 2011 from the University of Mannheim. His main fields of researchinclude consumer behavior, service management and multichannel management. TomasFalk co-authored publications in renowned journals such as Journal of Marketing,Journal of the Academy of Marketing Science, and Journal of Service Research.tomas.falk[at]ebs.edu15Alexander Mrozek is a research assistant and PhD student at the ConCardis Chair forConsumer Behavior at EBS Business School. Alexander Mrozek earned his Diploma(Dipl.-Kfm) at the University of Mannheim, with majors in Marketing and Finance. Hismain research interests lie in the field of pricing and payment methods and he haspresented his work at major marketing conferences such as the American MarketingAssociation Summer Conference and the European Marketing Academy Conference.alexander.mrozek[at]ebs.eduBIBLIOGRAPHYCrook, J. (2011). RIM Introduces NFC-Powered BlackBerry Tag. TechCrunch, 10.10.2011. Availablefrom: http://techcrunch.com/2011/10/10/rim-introduces-nfc-powered-blackberry-tag/ [Accessed24.07.2012].►►►►►►►►►►►►Falk, T., Mrozek, A. (2011). “Mythos versus Empirie, Verbraucher sind bereit für die Bezahlverfahrender Zukunft”. Bankinformation, Issue 4, April 2012, p. 66-67.Kjos, A. (2007). The Merchant-Acquiring Side of the Payment Card Industry: Structure, Operations,and Challenges. Federal Reserve Bank of Philadelphia. Available from: http://www.phil.frb.org/consumer-credit-and-payments/payment-cards-center/publications/discussion-papers/2007/D2007OctoberMerchantAcquiring.pdf[Accessed 10.08.2012].Nokia (2012). Tap into something new with NFC. What can I do with NFC? Nokia. Available from:http://www.nokia.com/gb-en/phones-with-nfc/ [Accessed 24.07.2012].Uhl, A., Gollenia, L.A. (eds.) (2012). A Handbook of Business Transformation Management Methodology.Farnham, UK: Gower Publishing, forthcoming.Wilcox, H. (2011). “Press Release: 1 in 5 Smartphones will have NFC by 2014, Spurred by RecentBreakthroughs: New Juniper Research Report”. Juniper Research. Available from: http://www.juniperresearch.com/viewpressrelease.php?pr=239[Accessed 25.07.2012].

© chrionny / pixelio.deDRIVERS16AbstractSustainability means meeting the basic needs of allpeople and those of future generations. The BlueEconomy concept takes up this idea and expandson it with the premises of avoiding waste, utilizingphysical and biological mechanisms, and usingonly regional resources. Consequently, the BlueEconomy is following the analogy of ecosystems,which create neither waste nor emissions and supplythemselves with local resources only.This article presents four hypotheses about theBlue Economy approach and illustrates what opportunitiesand benefits companies could profitfrom by applying the principles of the Blue Economy.Using a range of examples, it becomes evidentthat the first innovative business models to followthe principles of the Blue Economy are alreadyhaving a lasting effect today.

DRIVERSTHE BLUE ECONOMYInnovations for a New Level of CompetitionThis article aims at demonstrating that sustainability and economic viability neednot conflict with each other. The systematic avoidance or reuse of waste materialsand emissions can give rise to new, innovative, and competitive business models.With the help of numerous examples, we will illustrate this concept.by Axel Uhl and Oliver HanslikInnovation is a prerequisite for the continuedexistence of an affluent societyand its survival in a competitive economicenvironment. 1 Yet in a world inwhich product life cycles are becomingever shorter and innovation increasinglycapital-intensive, new schools ofthought are required. Following this path,the Blue Economy approach promisesa combination of sustainability, innovation,and competitiveness. The basicidea revolves around rediscovering traditionalbusiness models and processesunder the premise of using sustainableresources. Existing principles from thefields of physics and chemistry are combinedin such a way that new businessmodels ensue and, at the same time, asignificant contribution is made to protectingthe environment. 2In the past, many seemingly sustainablebusiness models have amounted tonothing more than simply shifting a problemfrom one place to another (“greenwashing”).One such example is the useof corn as base material for biofuels andbioplastic, which resulted in the price ofcorn increasing, thereby jeopardizing thenutrition of millions of people who rely oncorn as a source of food. Another exampleis the use of palm oil in biodegradablesoap, which involved the decimation ofentire forests and habitats to satisfy thedemand for palm oil. And it was a similarsituation when it became fashionable toeat shiitake mushrooms as a substitutefor animal protein, which led to vast areasof oak trees being felled to enablesufficient numbers of logs to be used asfertile soil for the fungus. 3 These greenwashingstrategies do not contribute tosustainability; frequently, they even leadto serious new problems.According to Gunter Pauli, the founder ofthe Blue Economy concept, if companiessystematically adopted the principles ofthe Blue Economy, genuinely innovativeand sustainable business models couldbe developed and additional jobs created,solving the commonly conflictingaims of sustainability and economic viability.There is no unusable waste innatural ecosystems.In this article, we will examine the followingfour hypotheses:1. Waste materials can be used as a resourcefor new products and services(in a similar way to a natural ecosystem).2. Biological and physical mechanisms,even mathematics, can be used to reduceenergy needs.3. The use of waste materials in the industrialsector gives companies acompetitive edge.4. By using local resources, costs can besaved and long-term jobs created.17

DRIVERSThe Blue Economy also offers new opportunitiesfor cellphones. The FraunhoferInstitute has developed a process thathelps to do without rechargeable batteries.8 First, a heat exchanger that isintegrated in the telephone provides sufficientenergy for the stand-by mode, asthe difference in temperature betweenthe body and its environment is sufficientto produce electricity. Second, the pressurethat is created by the voice whilespeaking can be used to provide thephone with energy. 9 To achieve this, ametallic strip inside a magnetic field isset in motion, thereby creating electricalenergy. 10The wireless industry itself has beeninvestigating how to make smaller andmore powerful antennas with a reduceddead spot while improving transmissionspeed. They found the solution in mathematics.In 1997 Johan Gielis generalizedthe “Lamé curves” through a newmathematical formula known today asthe “Super Formula”. 11 This mathematicalbreakthrough offers one single equationto calculate any two- or three-dimensionalshapes. The myriad of imaginarygeometrical forms, which are impossibleto calculate and design with traditionalmathematics, are now within reach workingwith only six parameters. Gielis realizedthat the Super Formula permits thedesign of a new class of super shaped antennasthat can be produced at very lowcost (one eurocent a piece) while operatingin an ultra wide band characteristics.These antennas can be produced basedon recycled plastics, thus eliminating thereliance on metals, especially rare earthmetals. Not only does the Super Formulalead to the construction of more efficientantennas, but it also allows an increaseof the speed of computing as the underlyingalgorithms can be dramaticallysimplified using Gielisʼ equation. Whenthe visual presentations are moving towards3D, the translation of a compleximage into a binary code through the SuperFormula can reduce the bandwidthrequired by a factor 100 or even 1,000.This means that the mere change of thealgorithm frees tremendous amountsof computer power. For the first time amathematical formula permits a multifoldimprovement in performance and energyefficiency without requiring any innovationin materials.Surviving In the GlobalCompetitionHypothesis 3: The use of waste materialsin the industrial sector gives companiesa competitive edge.By making use of waste materials, savingspotentials can also be exploited inindustrial manufacturing processes. Atthe German chemical company BASF,a “Verbund” system enables environmentalprotection and economic viabilityto be achieved in equal measure. Thissystem ensures that raw materials andcommonly resulting by-products of reactionsare instantly brought to the rightplace for further processing. The resultingheat of exothermic reactions is usedThe mere change of the algorithmfrees tremendous amounts ofcomputer power.to create steam, which, in turn, servesas a source of energy at other stages ofproduction. At the main BASF locationin Ludwigshafen, this has resulted in almostno waste materials being producedthat cannot be further processed. Thesystem has allowed BASF to reduce energydemand by 31%, while productionitself has increased by 36%. 12 Hence,this “Verbund” system has not only enhancedthe competitiveness, but also thesustainability of BASF. 13Sustainability and StaffingHypothesis 4: By using local resources,costs can be saved and long-term jobscreated.Of particular interest is a pilot project inthe Kingdom of Bhutan which puts simultaneouslymany of the Blue Economy approachesinto practice. The aim here is19

DRIVERS20Key Learnings►►►►►►►►Every by-product can form the base material for a newproduct.Nature is the best example of how to create efficient processes.Goals like cost reduction and the creation of new lines ofbusiness as well as of additional jobs can be achieved byusing local resources.By following the concept of the Blue Economy, every companycan considerably increase its competitiveness andplay a part in safeguarding a sustainable future.to satisfy all long-term basic needs of theBhutanese people, preserve their culture,and avoid any further rural depopulation.Innovation is the instrument topromote competitiveness, which should,in turn, diversify existing business models.In an initial step, Bhutan has bannedconventional plastics from general use;now only bioplastic is allowed (based onagricultural organic waste) which decomposeson compost heaps once it reachesthe end of its useful life.The country is also resolutely determinedto replace all fossil fuels, not to becomejust carbon-neutral, but carbon-negative.72% of Bhutan is woodland, 40% ofThe country is resolutely determinednot to become just carbon-neutral,but carbon-negative.which are pine trees. Hence, pine treeresin is being tapped and the turpentineused as fuel. Bhutan uses vertical windturbines to produce electricity, whichnow allows for a nationwide supply sincethe turbines can be installed locally. Waterrecovery also plays an important role,and by adopting the principle of vortices,the water is treated without the need forchemical additives. With that and othersimilar initiatives, around 40,000 newjobs are to be created in the future. 2 TheBhutan example clearly illustrates thatusing local resources not only savescosts, but also preserves nature andcontributes to the creation of jobs.The examples presented here permit usto draw the following conclusions:1. Waste materials can be an importantresource for products and/or services.2. Utilizing the laws of physics and biologicalprocesses, and even mathematics,can considerably reduce theuse of energy and chemicals.3. By considering manufacturing processesmore holistically, especially interms of their inputs and outputs, it ispossible to diminish the consumptionof energy and resources while reducingthe production of waste.4. A political will to return to the use oflocal resources and to implement sustainableworking practices can createnew business models and jobs, decreasethe dependency on other countries,and reduce emissions.What Are the Benefits ForCompanies?As illustrated above, the Blue Economyprinciples provide innovations that promotegenuine sustainability and at thesame time enable new business models.All this is possible by making use ofexisting resources – instead of throwingthem away – and with a mind-set whichis comprised of ecological and economicsystem thinking.To put it in concrete terms, a companycould start with creating full transparencyby taking stock of all waste materials,and in a second step consider how itwould be possible to either avoid creatingwaste in the first place or find out howto use the waste as a resource in anotherprocess. This may reveal potential alternativesto the previous manufacturingprocess, which could not only result inefficiency improvements and cost reductionsbut also satisfy the ever-increasingimperative for sustainable businesspractices.

DRIVERSServiceAUTHORSProf. Dr. Axel Uhl is head of the Business Transformation Academy at SAP. He hasbeen a professor at the University of Applied Sciences and Arts Northwestern Switzerland(FHNW) since 2009. Axel Uhl received his doctorate in economics and hismaster in business information systems. He started his career at Allianz and workedfor DaimlerChrysler IT Services, KPMG, and Novartis. His main areas of research aresustainability and IT, leadership, and business transformation management.a.uhl[at]sap.comDipl. Kfm. Oliver Hanslik is a PhD-Student and an associate of the Business TransformationAcademy (SAP). He studied business administration in Mannheim (Germany),Leuven (Belgium), and Seoul (South Korea). Former to SAP, Oliver Hanslikworked for Audi, TRW, and AFS GmbH. His areas of interest are sustainability, mobility,quality and marketing management.oliver.hanslik[at]sap.comREFERENCES1 Berger, R. (2006). Beschäftigung und Wohlstand. In: Schweickart, N., Töpfer, A., eds., WertorientiertesManagement – Innovation als Grundlage des Wachstums von Wirtschaft. Heidelberg:Springer, 139-156.2 Dohmen, C. (2011). Der Blau-Ökonom. Süddeutsche Zeitung, No. 94, 24.3 Pauli, G. (2010). The Blue Economy. In: Our planet, page 24-27. Available from: http://www.unep.org/pdf/OP_Feb/EN/OP-2010-02-EN-FULLVERSION.pdf [Accessed 05.12.2011].4 Pauli, G. (2011). Coffee: From Pulp to Protein. Available from: http://www.blueeconomy.eu/m/news/view/Coffee-from-Pulp-to-Protein [Accessed 05.12.2011].5 Pauli, G. (2010). The Blue Economy – 10 Years, 100 Innovations, 100 Million Jobs. New Mexico:Paradigm, 171-178.6 Pauli, G. (2011). The Vortex: The Power of Gravity. Available from: http://www.blueeconomy.eu/m/news/view/The-Vortex-The-Power-of-Gravity [Accessed 05.12.2011].7 Pauli, G. (2010). The Blue Economy – 10 Years, 100 Innovations, 100 Million Jobs. New Mexico:Paradigm, 167-170.8 Fraunhofer Institut (2011). Energy Harvesting. Available from: http://www.iis.fraunhofer.de/bf/ec/em/eh/ [Accessed 05.12.2011].9 Klaussner, B. (2011). Fette Beute durch Mikroenergie. Available from: http://www.wissen.unifreiburg.de/forschungsmagazin/uniwissen/fette-beute-durch-mikroenergie,6.htm[Accessed05.12.2011].10 Zeug, K. (2011). Kraftwerk im Kleinformat. Available from: http://www.zeit.de/2007/39/T-Wackelmotor[Accessed 05.12.2011].11 Pauli, G. (2012). The Super Formula and Super Antennas. Available from http://www.blueeconomy.eu/m/news/view/Using-the-Super-Formula-for-building-Super-Antennas [Accessed 25.07.2012].12 BASF (2011). “Business case: Production Verbund”. Available from: http://www.basf.com/group/corporate/en/sustainability/economy/production-verbund [Accessed 05.12.2011].13 Eglau, H.O. (1998). Erfolg gegen alle Moden. Available from: http://www.zeit.de/1998/46/Erfolg_gegen_alle_Moden/seite-1 [Accessed 05.12.2011].21INTERESTING LINKS►►Blue Economy: http://www.blueeconomy.eu►►Zero Emissions Research and Initiatives (ZERI): http://www.zeri.org

METHODOLOGY | RESEARCHENTERPRISEARCHITECTURE ANDTRANSFORMATIONThe Differences and the Synergy Potentialof Enterprise Architecture and BusinessTransformation ManagementHave you ever wondered about the relationship between Enterprise ArchitectureManagement (EAM) and Business Transformation Management (BTM)? Both aremanagement methods with many commonalities, but also with important differences.This article aims at providing insights about the relationship of EAM and BTM,as well as their respective methods.23by Robert Winter, Simon Townson, Axel Uhl, Nils Labusch and Joerg NoackWhen discussing the subject with practitioners,consultants and academics,we noticed that confusion existed aboutwhat the differences and similarities ofEnterprise Architecture Management(as a well-established discipline) andBusiness Transformation Management(as a rather new topic in research andpractice) really are. We conducted ten interviewswith experts from science, consultingand industry practice in order tobase the article on a solid foundation. Wediscussed the results within the group ofauthors and integrated further feedbackprovided by a notable board of severalSAP experts and managers.Since the understanding of BusinessTransformation Management (BTM) asmuch as Enterprise Architecture Management(EAM) differs in several availablemethods or frameworks, we neededto assume a certain mainstream definitionfor both (see table 1). The key ques-tions we will discuss in this article are:What are the actual differences, and isthere any synergy potential? Thus, wewill look at who the key stakeholders are,discuss problems that are addressed asmuch as goals that are pursued. We willfurther investigate the benefits and valuethat is added, capabilities and competencieswhich are needed and how EAMand BTM are evolving.Who Are the Stakeholders?With regard to the stakeholders of EAMand BTM, one of our interviewees stated:“Enterprise Architecture Management isapplied when there is a lack of satisfactionwith IT, when the CEO is telling theCIO that he is not happy, and when theCIO’s job is at stake; whereas BTM isapplied when the CEO needs to reactto external markets, change the operatingmodel, and save the business as theCEO’s job is at stake.”

METHODOLOGY | RESEARCH24Enterprise Architecture (EA)EA models the fundamental (i.e. no details) structureof an organization concerning►►the business (strategy & organization)►►information systems (IS)►►information technology (IT).In addition to modeling the components and dependenciesof that structure, EA also deals withguidelines and principles that govern the structure’sdesign process and evolution.Enterprise Architecture Management (EAM)EAM provides support for decisions regardingthe design and further development of EA andinvolves a wide set of stakeholders in businessand IT.Examples of EAM goals are: enhancing the transparency,consistency, simplification, flexibility, oragility of the organization. In many practice settings,EAM is designated “EA governance”.In addition to offering decision support, EAM alwaysneeds to have a holistic perspective, i.e. itnot only covers the entire business-to-IT relation,but also spans a complete business unit, companyor corporation. This positioning distinguishesEA from functional architecture management disciplines(IT architecture, business architecture)as well as partial architectures (project view, departmentview).One of the well-known EA frameworks is “TheOpen Group Architecture Framework” (TOGAF)(The Open Group 2011).Further summarized reading about EAM is alsoavailable in Aier et al. (2009).Business Transformation (BT)A BT is a fundamental change of the way a companyoperates, be it e.g. by moving into a newmarket or by overhauling its internal processes.This fundamental change aims to meet long-termobjectives. BT affects many functional areas ofa company, including organization, human resources,IT or financials. BT is closely related toa company’s strategy, its value, and its risks. Inorder to be effective, BT needs to align changesin people, processes, and technology.Business Transformation Management (BTM)BTM encompasses the planning, implementation,and control of BT as well as the support fordecisions related to the design and developmentof business transformations. BTM involves a wideset of stakeholders in business and IT.Examples of BTM goals are: strategy change(e.g. re-focus, diversification), technology-driveninnovation, increased agility, or cultural change(e.g. customer orientation).BTM should always follow a holistic and interdisciplinaryperspective, i.e. not only focus on financialsor IT, but also consider skills, strategy, value,risk, or project management. BTM is applied tolarge transformation projects or transformationprograms that usually affect significant parts ofa company.Theoretical foundation for business transformationsis available in e.g. Rouse (2005).An example for a BTM framework is BTM 2 (Uhland Gollenia, eds., 2012).Table 1:Definitionof EnterpriseArchitecture andBusinessTransformation(Management)Although Enterprise Architecture (EA)includes many business aspects, its keystakeholders are always somehow involvedin IT – be it directly (supply side)or indirectly (demand side). Thus, thepeople who benefit most from EA aretypically the CIO and the CIO’s subordinatelevel. In comparison to BTM, EA isa more technical, engineered approach.Further stakeholders from the demandside of IT are enterprise and solutionarchitects, portfolio managers, servicemanagers, line or business heads. Incontrast, the typical key Business Transformation(BT) stakeholders are boardmembers, the C-level management,business unit managers, program andproject managers, including many ofthe EA stakeholders. In other words,BTM focuses on the business side, withrather limited consideration of IT issues.Although stakeholder management is a

METHODOLOGY | RESEARCHformal part of EA frameworks such asTOGAF (The Open Group ArchitectureFramework; cf. The Open Group 2011),the stakeholders are often not involveddirectly in EAM, but instead collaboratewith enterprise architects to define andreview the main enterprise componentsand roadmap. In contrast,in BTM it is essential that stakeholdersare involved on all hierarchical levels aspart of the transformation. As a consequence,active stakeholder managementis a fundamental pillar of the Meta Managementlayer of BTM (Stiles and Uhl2012).Which Problems Are Addressed?EAM addresses huge and small changes– whether in business processes, ITsystems, or data. Despite ongoing effortsto further develop its business focus,the main value proposition of EAM is tobetter align IT solutions with businessneeds. As a consequence, EAM wouldnot be used to assess how much transformationan organization needs due toexternal market changes, or whether politicalpowers in an organization supportor inhibit a certain transformation, just toname two examples.In contrast, BTM is intended to supportthe business in defining and implementingsignificant business transformation.Thus, BTM would not be used to managesmall, incremental changes. Furthermore,BTM is based on the businessstrategy and might challenge it, whileEAM rather tends to adopt the strategywithout being in the position to change it.Another differentiator is the focal objectof interest: While EAM’s primary objectsare states – more precisely “to-be” and“as-is” states –, also plans and roadmapsare developed and maintained.On the other side, BTM’s primary objectsare improvement and innovationprocesses, while the implied (input andoutput) states are objects of secondaryinterest.This contrast between an often incrementaland “state-focused” view versus amostly fundamental “transition-focused”perspective explains differences, butalso reveals potential synergies betweenEAM and BTM:“EAM is applied when thereis a lack of satisfaction with IT,when the CEO is telling the CIO thathe is not happy, and when theCIO’s job is at stake...”First, EAM might create important inputsfor BTM, in particular in the context ofcomplex, enterprise wide transformationprograms. Examples typically found inorganizations are:−−EAM deals with key technology risksat an enterprise level and providesthe associated insights to the StrategyManagement process in BTM.−−EAM deals with existing pain points,solution gaps as well as enablers;these are key inputs to the Valuemanagement process in BTM.−−EAM also deals with high level solutionarchitecture, gap analysis, andIT roadmaps; these are key inputsto the IT Transformation process inBTM.“... whereas BTM is applied whenthe CEO needs to react to externalmarkets, change the operatingmodel, and save the business as theCEO’s job is at stake.”Second, BTM results might create importantinputs for EAM, in particular forunderstanding business needs and fordecomposing fundamental changes intoincremental changes.25

METHODOLOGY | RESEARCHPermanent BTM ac-vi-es, e.g. maintain change capability Transforma-on program Transforma-on program Permanent EAM ac-vi-es, e.g. maintain EA models 26Fig. 1: Majorprocesses anditerationsIncremental change Incremental change Incremental change Incremental change Incremental change Incremental change = Itera-ons Typical examples are:−−Previous unsuccessful or failed transformationinitiatives provide strongguidance to future roadmap decisions.−−BTM (Process and OrganizationChange Management) provides keyinputs to the “to-be” state of business,application and technology architecturephases in EAM to ensure thatlessons from the past are taken intoconsideration.−−BTM (Strategy Management) provideskey input to the “to-be” BusinessModel used in the developmentof “to-be” states in EAM.Figure 1 shows that both EAM and BTMconsist of a permanent process part (darklong arrows) and of temporary activitieswhich they provide within single transformationprograms or incremental changes(bright small arrows). For EAM, the permanentprocess is of larger importancebecause it includes the maintenance of“as-is” and “to-be” EA models and principlesas the main focus of enterprise architects.For BTM, the permanent task isthe maintenance of sustainable transformationcapabilities, which is regarded tobe more lightweight, while the dominantpart is the support of actual transformationprograms and projects.But even with the best plans, in reality itis impossible to get everything right fromthe beginning and in one go. Experienceshows that both methods ought to be appliedby means of fulfilling small packagesand following iterative cycles (illustratedby the round arrows in figure 1). Moreprecisely, there are three major reasonsfor these iterations:1. Stakeholders might lose focus ormight be hard to convince that the farawaytransformation success will beachieved. Showing early benefits fromfulfilling small packages and the firstiterations helps to convince and motivatethe stakeholders and to keep thetransformation running.2. Since many changes happen simultaneously,long-range planning needs tobe flexible in order to adapt to a changingcontext like new legislation or customerdemands.3. Occurring problems during the implementationof the transformation can behandled at short notice and the solutionscan be used as input for the followingiterations, improving organizationallearning.From the comparison of focus areas,problems, and processes we move on toexamining the goals of EAM and BTM.

METHODOLOGY | RESEARCHCross DisciplinaryKnowledgeEAMBTMAnalyticalIntelligenceSharedSkills*Knowledgeabout CulturePoliticalIntelligence* Shared Skills are:- Stakeholder management- Communication- Demand and requirementsmanagement- Good general business andIT knowledge- Program and project management- Good domain knowledge- Vision and thought leadershiparound what is possible28Fig. 3: Skillsneeded for EAMand BTMWhat Are Benefits and Value Added?Due to its more incremental nature,the added value of EAM activities canbe precisely defined in dimensions likespeed or quality and measured by KPIslike created synergies, reduced redundancies,better alignment, or increasedtransparency in the organization. Valueis created “bottom-up” and focused onbusiness efficiency (doing things right).Efficiency matrices or special balancedscorecards can be used to measure thebenefits. Even if monetary measuringand business case definition for EAM isdifficult, tangible measures for EA exist,e.g. increased project success, reducednumber of applications and interfaces,as well as a reduced diversity and complexityof the information systems landscape(Townson 2008).In contrast, added value of BTM is created“top-down”, long-term, and is focusedon business effectiveness (doingthe right things). Value is created bysuccessfully achieving a fundamentalchange and by then operating in this newway. As a consequence, transformationseems to be easier to measure by aggregatequantitative measures (economicvalue added, ROI, market capitalization).Further examples could be faster hiringcycles or shorter process change cycles.Since changes are fundamental, effectsand measures cannot be matched withsingle projects easily.Nevertheless, both concepts are dependenton projects that deliver the actualbenefits. The reason for this is that benefitsare always achieved within operativeprojects and not on the strategic level.What Capabilities and CompetenciesAre Needed?There is a huge overlap in terms of skillsrequired for both BTM and EAM. Yet,there are differences regarding whichones need to be prioritized.In communication, many enterprise architectsuse a language that is closeto that used by IT experts. BT experts,whilst, use business language in order toexplain their concerns.On top of a solid basis of IT and analyticalskills as well as cross-departmentalknowledge, enterprise architects needstrong social skills in order to undertaketheir holistic analysis, offer transformationsupport, and fulfill their communicationrole. Political and emotional intelligencehelp to excel when architectsreach the most senior levels.For BT experts, IT know-how, analyticalskills, and knowledge of various domainsare less essential. What counts is a solid

METHODOLOGY | RESEARCHbasis of “soft” know-how about leadershipand culture, competencies like strategicthinking, as well as emotional andpolitical intelligence. IT knowledge andanalytical skills are a beneficial additionalqualification for senior levels.Figure 3 compares the skill profilesneeded in EAM and BTM.How Are EAM and BTM Evolving?Due to its character as a holistic supportfor business transformation, BTM needsto deal with a large set of disciplines (forexample value management, processmanagement, project management). Asa consequence, BTM operates at a highaggregation level – because otherwisethe diversity of the subject-matter couldnot be handled effectively anymore.In contrast, EAM covers all business aspectsthat are important to understand inorder to provide appropriate IT support.All non-IT related business matters aswell as most non-tangible aspects of anorganization do not necessarily need tobe covered. Due to the fact that EAMis “narrower” in this regard, all aspectscan be addressed on a more detailedlevel. However, when examining thetopics presented at recent EAM Conferences(e.g. Aier et al. 2011), in ResearchAgendas, and in EAM Communities,one discovers that the scope of EAMmay broaden towards the coverage ofmore business-related aspects (valuemanagement, business process management)while remaining restricted torather stable aspects (e.g. stakeholdermanagement).A detailed task list (or step-by-stepmethod) is usually only helpful in a stableenvironment (thus one that is not undergoinga fundamental change). This ispossible with EAM, as the approachesare well understood and defined by usingcommon meta-models and processessuch as modeling and gap analysis.Thus, EAM frameworks like TOGAF providewell-specified extensions that canbe added or removed as needed.However, during a business transformationsuch a stable environment is usuallynot a given – this is already implied bythe definition of transformation as fundamentalchange. Since every transformationis different, e.g. in terms of industry,project portfolio, or people involved, a lotdepends on the interests of stakeholders– there are not necessarily suitable bestpractices for BTM available. A frameworkis therefore better suited for BTMas it gives enough flexibility for adaptionand still provides sufficient consistencyand guidance.Several discussions occurred in our interviewsabout the future developmentof BTM as such, and especially of BTM 2as an example for a concrete framework(Uhl and Gollenia, eds., 2012). Some expertsin the interviews and professionalswho are working with it on a day-to-daybasis raise the question whether it shouldbe expanded in order to incorporate detailedtechniques from the covered disciplines(e.g. business process management,value management). Based onthe statements of our interviewees, wehowever believe that BTM 2 is intendedto be an umbrella framework that amalgamatesexisting methods which allfocus on a specific sub-aspect of busi-Key Learnings►►►►►►►►►►EAM and BTM should be regarded as different managementapproaches, and should not be merged into oneapproach.Being able to successfully handle both EAM and BTM isthe key to long-term success.The skills that are needed for EAM and BTM are verysimilar, but their prioritization is different.Both approaches differ in their primary focal objects.EAM’s primary objects are “to-be” and “as-is” states.While the “state” views dominate, also plans and roadmapsare developed and maintained. BTM’s primaryobjects are improvement and innovation processes ofbusiness transformation.The “to-be” designs and change project roadmaps ofEAM need to be seen as an integrated implementationcomponent of business transformation, and the transparencyand analyses created by EAM are an invaluableinput for BTM. BTM outputs constitute important inputs forEAM.29

METHODOLOGY | RESEARCH30ness transformation – and not a “megamethodology” that is bound to fail whentrying to be broad and deep at the sametime. Therefore, we understand BTM 2 asa framework rather than a method.Being able to successfully handleboth EAM and BTM is the key tolong-term success.ConclusionAs mentioned above, there are someopinions present which propose to combineEAM with BTM characteristics. Whyis that the case?EAM and BTM have much in common.Enterprise Architects and BT expertsshare many important skills, deal withmany similar matters, use many comparabletechniques and tools, havesome common stakeholders, are bothconcerned with transformation, and areboth involved in change projects. Bothapproaches need continuous investment– for EAM the continuous effort ofmaintaining the architecture landscapeis comparably high, for BTM the investmentsin the single transformation programsare necessary. Current developmentsin EAM (e.g. positioning it as amore business-oriented approach andfocusing less on the IT side) might reinforcetheir commonalities.While the goals, outputs, organization,processes, tools, and management ofboth approaches might be somewhatdifferent, interfaces and shared activitiesneed to be created and preserved. As aconsequence, this article should not bemisunderstood as an attempt to positiontwo approaches against each other thatinstead should work hand-in-hand. Whilethe transparency and analyses createdby EAM are an invaluable input for BTM,and the “to-be” designs and change projectroadmaps of EAM need to be seenas an integrated implementation componentof BT, BTM outputs constitute themost important inputs for EAM.Due to the illustrated differences instakeholders, goals, value creation logic,control, width, depth, mandatory skills,and organization, EAM and BTM shouldbe regarded as different managementapproaches. That would help to fostera clear further development and focusof both approaches: Be it the supportof business and IT alignment in case ofEAM, or the focused support of transformationsin the case of BTM. Being ableto successfully handle both, EAM andBTM, from our point of view is the key tolong-term success of a company.BIBLIOGRAPHY►►►►Aier, S., Gleichauf, B., Winter, R. (2011). Understanding Enterprise Architecture ManagementDesign – An Empirical Analysis. In: Bernstein, A., Schwabe, G. (eds.). The 10th InternationalConference on Wirtschaftsinformatik WI 2011, 16.02.2011. Zurich. 645–654.Aier, S., Kurpjuweit, S., Saat, J., Winter, R. (2009). Business Engineering Navigator – A “Business toIT” Approach to Enterprise Architecture Management. In: Bernard, S., Doucet, G., Gøtze, J., Saha,P. (eds.). Coherency Management – Architecting the Enterprise for Alignment, Agility, andAssurance. Bloomington: Author House.►►Rouse, W. B. (2005). A Theory of Enterprise Transformation. Systems Engineering, 8, 279-295.►►Stiles, P., Uhl, A. (2012). Meta Management: Connecting the Parts of Business Transformation.360° – the Business Transformation Journal, issue no. 3, February 2012, 24-29.►►The Open Group (2011). The Open Group Architecture Framework (TOGAF) Version 9.1,The Open Group.►►Townson, S. (2008). Why does Enterprise Architecture Matter? San Francisco, The Open Group.►►Uhl, A., Gollenia, L.A. (eds.) (2012). A Handbook of Business Transformation ManagementMethodology. Farnham, UK: Gower Publishing, forthcoming.

METHODOLOGY | RESEARCHServiceAUTHORSProf. Dr. Robert Winter is a fulltime professor of business & information systems engineeringat the University of St.Gallen (HSG) and director of the Institute of InformationManagement. In addition to research in situational method engineering, he is responsiblefor projects and publications (over 150 journal articles and books) in areas likeenterprise architecture and transformation management.robert.winter[at]unisg.chSimon Townson is a Chief Enterprise Architect, and Business Transformation Principalat SAP. For the last 18 years, he has worked as a lead IT consultant with a variety ofindustry sectors to help transform their organizations. Simon was one of the contributorsto SAP’s Enterprise Architecture Framework that was incorporated into TOGAF.He works as a trusted client advisor with the CTO and strategy functions of large SAPenterprise customers.simon.townson[at]sap.com31Prof. Dr. Axel Uhl is head of the Business Transformation Academy at SAP. He hasbeen a professor at the University of Applied Sciences and Arts Northwestern Switzerland(FHNW) since 2009. Axel Uhl received his doctorate in economics and hismaster in business information systems. He started his career at Allianz and workedfor DaimlerChrysler IT Services, KPMG, and Novartis. His main areas of research aresustainability and IT, leadership, and business transformation management.a.uhl[at]sap.comNils Labusch is a research assistant and PhD student at the University of St.Gallen(HSG). After graduate studies and work in Münster and New Jersey he joined the groupof Prof. Winter at the Institute of Information Management in 2011. His current researchtopics are related to the support of business transformations and the related decisions.nils.labusch[at]unisg.chJoerg Noack is SAP Chief Solution Architect at SAP America Inc., with over 18 yearsof experience in the IT industry. He is certified as SAP Global Business TransformationManager and engages as trusted advisor for international enterprises to masterimplementation of SAP Business Suite components on a global scale.joerg.noack[at]sap.com

METHODOLOGY | RESEARCHNEXT GENERATIONIT STRATEGYApproaching the Digital EnterpriseSeveral trends, relating for example to technologies and society, lead to the democratizationof companies. This article shows how IT strategies – if built upon theconvergence of those trends – enable a company to become a Digital Enterpriseand to develop strong competitive advantages.32by Lars Gollenia, Axel Uhl and Claudio GiovanoliIn the beginning the question arises howan Information Technology (IT) strategyshould be developed. – While IT strategiesbasically regulate the longer termdeployment of information and communicationsystems of a company, it is difficultto define general rules for formulatingthem. In earlier times, companiesusually followed a top-down approach:The organization strategy was derivedfrom the corporate strategy, finally leadingto a suitable IT strategy. Ever sincethe e-Business euphoria emerged at theturn of the millennium, we have learnedthat it could also be the other way round:IT as a catalyst that sparks extensivechanges in corporate strategy. Inspiredby such experiences, the authors of thisarticle developed the vision of the “DigitalEnterprise”; this term designates acompany – irrespective of its history orits industry – whose IT plays a dominantrole in the corporate strategy, i.e. whereIT is used in internal and external operationsto create a competitive advantage.Therefore the IT strategy is the pivotalpoint in a Digital Enterprise and also inthe transformation to becoming one.The aim of this article is to identify theopportunities for transforming businessesby taking advantage of new technolo-gies like mobile connectivity, cloud computing,social media, and big data. First,we will outline the definition of strategiesand the conditions under which IT strategieshave previously been developed –and what future developments could looklike. Then we will examine and illustratethe four above-mentioned technologiesand highlight their potential for transformationalinnovation. This includesintroducing the new “Digital CapabilityFramework” and a corresponding maturitymodel, which enable managersto identify the potential for optimizationand to derive indications for the possibleuse of technology trends. We will thenillustrate the technological possibilitiesfor innovating business models andprocesses with examples from variousindustries. Finally, we will present an exampleof a methodology for developingthe “next-generation IT strategy”.Three Approaches for Developing ITStrategiesA “strategy” generally indicates theoverall direction in which a company willmove within approximately five years.This guideline should leverage and enhancethe strengths of a company toensure the organization’s long-term sur-

METHODOLOGY | RESEARCHDeveloping a strategy provides answers to theDeveloping following questions: a strategy provides answers to the following questions:Industry Drivers- What • What are are current and future industry and and technological technological drivers? drivers?- How • How do do they they affect the existing business business model? model?Business ModelOrganization &Business ProcessesTechnology- What • What is the is the vision for the digital enterprise? enterprise?- How • How should it it position itself?• What does the future IT strategy look like, and what are the action plans?- What does the future IT strategy look like, and what are the action plans?- What• Whatarearethetheorganizationalorganizational consequences?consequences?- What • What does does the the project portfolio look look like? like?- What • What does the cost cost / benefit / benefit analysis analysis and the and financial financial plan look plan like? look like?- What • What are are the the technological requirements for the for future the business future business model? model?- What • What are are the the weaknesses and opportunities of the of existing the existing technology technology infrastructure?infrastructure?- What • What adjustments need to to be be made? made?© 2012 SAP AG. All rights reserved. 1vival. Figure 1 lists the questions that astrategy in general should provide answersfor (Hammer 1988, 59-60). Thisalso applies to IT strategy planning. Itspurpose is to provide the applications aswell as the information and communicationstructures required to support thecompany’s business model in the bestpossible way. For this reason, the tasksof strategic IT management include enterprisearchitecture planning (containingapplication and data integration),long-term change management, projectportfolio planning, and implementationplanning.Figure 2 presents three possible approachesfor aligning IT and businessstrategies. As mentioned above, theclassic procedure for developing an ITstrategy is to derive it from the corporatestrategy and business organization.This is also referred to as “IT followsbusiness”. However, if the technologicaldrivers are used as enablers to definea new business model and/or to enternew markets, the approach is called“IT as strategic enabler”. The businessstrategy and the business organizationcan then be derived from the IT strategyin an iterative process. An example ofthis is the e-Commerce company Amazonwhich was founded and organized in1994 based on the strategy of using theinternet as their distribution channel forbooks. “Innovate the IT” is the third approach.It usually involves replacing anexisting technology with a more modernone that is extra powerful in the senseof improved integration, higher performance,or greater security. One exampleis the replacement of host-basedlegacy systems in the banking sectorwith modern client/server architectures.Although the “Innovate the IT” approachgenerally has no or little impact on thebusiness model, it must be coordinatedFig. 1: Developinga strategyprovides answersto the essentialquestions (source:Adapted fromHammer 1988,59-60)33AbstractEnterprises are strongly influenced by new trends like social media, cloud computing, mobile connectivity,and big data. Thus, beside business and IT issues, IT governance has to cope with theneeds and requirements of stakeholders like customers and employees in order to establish competitiveadvantages through information technology. This article introduces a Digital CapabilityFramework to assess the potential for improvement and the readiness for transforming into a DigitalEnterprise based on such trends, and it shows how to make most use of those opportunities.

METHODOLOGY | RESEARCHText of approach 2AU/RS 06.09.20121 IT follows business 2 IT as strategic enablerThe classical approach to the IT strategydevelopment is to derive it from the businessstrategy and business organization.However, IT can also be a strategic enabler for defining newbusiness models. The business strategy and the businessorganization can then be derived from the IT strategy in an iterativeprocess.3Innovate ITExisting technology is replaced by a more powerful andmodern one in terms of improved integration, higherperformance, and future security.34Fig. 2: Threeapproaches foraligning IT strategywith businessFig. 3: Thetechnologicaldriver benefitmatrix (source:Based on Wardand Daniel 2006)closely with the business departments interms of risks, change management, etc.These three approaches ultimately representIT’s contribution to innovation ina company. The innovation potential isgenerally bigger with the second approach,“IT as a strategic enabler”, whichis why it is also referred to as “Innovatethe business” (Brenner and Witte 2011,45).Beyond the innovation potential, thebenefit potential is clearly another interestingperspective. While the thirdapproach, “Innovate IT”, leads predominantlyto efficiency gains in IT, the othertwo approaches lead to benefits primarilyin terms of business. The second approachcalled “IT as a strategic enabler”is expected to have the largest businessbenefit potential. In this case, IT is caus-The Transformation Program Portfolio MatrixImportance to future businessImportance to current businessally responsible for the business benefitsgenerated, such as increased revenuewith a new business model.According to Ward and Daniel (2006,88f.), the expected benefits can be furthercategorized using a portfolio method(see fig. 3). The authors suggest assessingIT projects by comparing their importancefor the current business withtheir relevance for future business. Thiscomparison results in four categories ofinformation system investments:−−Strategic: Investments which are crucialto the success of the future businessmodel.−−High potential: Investments whichcould possibly be relevant in the future.−−Key operational: Investments onwhich the organization relies in itsday-to-day operations.−−Support: Investments which are notcritical, neither now nor in the future.A well-conceived structuring helps acompany to plan the focal points for futureIT investments according to their anticipatedbusiness benefits; for details onthe expected benefits see also the article“The Transformational CIO” in issue 2 ofthis journal, page 28.© 2012 SAP AG. All rights reserved. 2The Evolution of IT ArchitecturesThe development of any strategy, includingan IT strategy, must of course takeinto account what is happening in the externalenvironment in order not to miss© 2012 SAP AG. All rights reserved. 3

METHODOLOGY | RESEARCHBeschriftung rechte vertikale Achse wegAxel RS 17.09.20121980-90‘s 2000 2005 2012Local integrationClient-ServerArchitectureGlobalHarmonizationERP roll-outBusiness ProcessManagement (BPM)and Service OrientedArchitecture (SOA)Next Generation IT,becoming a DigitalEnterpriseFig. 4: Evolutionof IT architecturestowards aDigital Enterprise(source: SAP)35opportunities and possible threats. Thisincludes new technologies, managementtrends, industry drivers, and whatthe competitors do. A retrospective viewover the last decades shows that the ITstrategies chosen by companies seemto have followed three general strategictendencies (see fig. 4).In the 1980s and 1990s, the main priorityfor companies was to integrate businessprocesses, for example by implementingEnterprise Resource Planning (ERP)software for finance and controlling, logistics,production, and human resources.Achieving this integration by implementingintegrated systems was hugelybeneficial. The projects were mostly localimplementations, though, followingthe decentralized make-up of companieswhich allowed their international subsidiariesto operate more or less independently.As globalization increased, the attentionshifted to efficiency improvements. Thedecentralized structures were suddenlyperceived as “road blockers” and as obstructingcontrol and reporting processesand as limiting transparency. Thus,companies started developing strategieswhich put emphasis on centralization.For IT, this meant developing consolida-tion strategies, i.e. to achieve global harmonizationof processes, data, and systems.From a technological perspective,the Internet offered an excellent basefor the global harmonization projects,but they turned out to be complex, timeconsumingand they cost a lot of money.The resulting IT systems on the one handcould ensure global transparency and acommon quality standard in all countries.On the other hand, it was more difficult totake into account heterogeneous marketrequirements and different levels of marketand organization maturity. Now everyfurther system enhancement endeavorhad to follow global processes and wastherefore somewhat inflexible and cumbersome.From a business perspective,IT was increasingly perceived as impedingthe necessary adaptation to marketdynamics and, consequently, as jeopardizingthe success of a business. This resultedin an ever-dwindling acceptanceof many IT departments.In around 2005, a new paradigm emergedwhich promised to be the savior in the dilemmaof global standardization versusdynamic adaptation: “service-orientedarchitecture” (SOA). Using predefinedWeb services, this architecture aimed atachieving the necessary flexibility and© 2012 SAP AG. All rights reserved. 4

METHODOLOGY | RESEARCH36adaptability on the basis of the ERP systemas the robust kernel. However, disillusionmentsoon followed the hype. Service-orientedarchitecture was simply notable to meet the inflated expectations:While simple Web services could quicklybe integrated with ERP, offering some ofthe required flexibility, major changes tobusiness scenarios were too complex fora Web services solution.Nowadays, while service-oriented architecturestays a relevant architecturecomponent, a discernible trend awayfrom centralized standards, and backto peripheral control, is emerging. Thequestion arises: What paradigm comesnext?The Next Generation IT StrategyIn addition to the tendency back to decentralization,new technological developmentsand sociopolitical trendsemerged, such as the individual need forfreedom of expression. These developmentsand trends can be described asdemocratization, where stakeholdersgain more influence on business and IT.The interests of customers, business,and employees must be respected andtaken into account more than before. Inshort, the technological and sociopoliticaltrends influence the way the nextgeneration of IT strategies should bebuilt. In the following paragraphs we willtherefore take up and briefly define thefour technological developments mobileconnectivity, cloud computing, social media,and big data management; we willalso show what opportunities and challengesthey present to IT.“Mobile connectivity” is related to theusage of mobile devices and communicationtechnologies, like smartphones,notebooks, and mobile internet. Apartfrom opening up new channels to do businesswith customers, these technologiesalso enable employees to work fromeverywhere with a device. “Bring yourown device” is another catch phrase inthis context. Being accustomed to usingtrendy smartphones and tablets in theirprivate lives, modern employees alsowant to use their devices in the professionalcontext. Despite concerns aboutdata security and the sometimes difficultintegration into existing IT infrastructures(tablets and smartphones), as well as thelaborious maintenance of many differentdevice types, IT managers can no longerremain resistant to such wishes of theiremployees. If those wishes are not met,employees might become less productiveor move to a more open-minded employer.Mobile connectivity also has theimpact that IT and business are losingsome control over hardware and data.Especially IT has to cope with a lossof authority concerning the selection ofhardware, e.g. notebooks and mobilephones, to use within the company.“Cloud computing” recently became thenew way of delivering and charging forservices and functionality. In principle,cloud computing can be defined as theapplication and use of IT products andservices which are provided and maintainedthrough a network, for example,an intranet and/or the Internet. Insteadof a completely internally driven IT environment,services will be provided by anexternal “cloud service provider”. Everythingfrom e-mail, content storage, andapplications (e.g. SAP SuccessFactors)to more complex computing and developmentplatforms can now be accessedthrough a simple Web browser and deliveredthrough the cloud, eliminating theneed for a local installation of end-userapplications and high-powered clientcomputers. For internal IT this meansto give away some control over serviceareas, as it will no longer be providedthrough the IT department. For the businessside cloud computing offers a higherflexibility, as services can be orderedand delivered on shorter notice and paidas variable costs.While there is no formal definition, “socialmedia” can generally be understood asInternet-based applications that manageconsumer-generated content. The social

Evolution of IT-GovernanceMETHODOLOGY | RESEARCHDigital Enterprise als 4. TitelAxel RS 17.09.2012Local BusinessIntegration throughERP, CRMGlobalIT StandardizationIT AgilityDigital EnterpriseLocal ERP, SCM, CRM, etc Global Systems SOA & BPMStrong IT GovernanceBusiness EngineeringBalanced Governance:IT – Business –Employees – CustomerCustomerCCCCITITIT-GovernanceIT-GovernanceBBusinessITIT-GovernanceBITBITIT-GovernanceBEEmployeeLegend:BPM: Business Process ManagementECRM: Customer Relationship ManagementERP: Enterprise Resource PlanningESCM: Supply Chain ManagementSOA: Service Oriented ArchitectureE37© 2012 SAP AG. All rights reserved. 5media contents include a variety of newsources of online information that arecreated, initiated, circulated, and used byconsumers with the intent of educatingone another about products, brands, services,and issues (Blackshaw and Nazzaro2006). Blackshaw (2006) describesthe principle as “media impressions createdby consumers, typically informedby relevant experience, and archived orshared online for easy access by otherimpressionable consumers”. The socialmedia landscape includes a variety of applicationsin the technical sense, such associal networking (e.g. LinkedIn), microblogging(e.g. Twitter), blogs, Wikis, andcollaboration portals (e.g. MindMeister),which allow consumers to “post”, “tag”,“dig”, “blog”, and so on, on the Internet.For the most part, social media are outsidethe sphere of influence of an IT departmentbut the business can use themto improve various processes. Socialmedia open up the possibility of settingup new ways of corporate communicationswith employees, customers andperhaps even suppliers. But it also offersthe individual a chance to interact with allaspects of life in one place – from fam-ily, friends and neighbors to colleaguesand customers – thus it diminishes thebarriers between the employees’ workinglives and their private lives.The term “big data” denotes the handlingand analyzing of large amounts of data,i.e. exceeding one terabyte. Processingand analyzing it means to derive informationand new knowledge from it. Technologieswhich facilitate the management ofbig data reinforce the role of IT becauseexisting data analyses can be performedmuch more quickly, which, in turn, helpsthe business side perform by offering innovationpotential for the business modelor processes. For example Business Intelligence(BI) reports can be enrichedwith an additional data layer to recognizehidden patterns – which can be usede.g. to create additional customer centricsales activities.The Digital Capability Frameworkand Maturity ModelOver time, the distribution of influenceof the key stakeholders on IT architectureschanged repeatedly (see fig. 5): Inthe phase of local business integration,Fig. 5: Evolutionof IT governanceand the influenceof the four stakeholders

METHODOLOGY | RESEARCH38Fig. 6: The DigitalCapability Framework(DCF)IT and business had a similar share ofinfluence; afterwards, in the centralizationand standardization phase, IT grewstronger; then IT was forced by businessto become more agile, i.e. to quicklyadapt to new business requirements.Nowadays, new technologies and trendsare driving IT towards a more holisticway of governing. To govern IT meansto take into account the requirements ofnewly important stakeholders like customersand employees.To embrace these changes in the governanceof IT strategies, SAP BusinessTransformation Services and theBusiness Transformation Academyjointly developed the “Digital CapabilityFramework” (DCF) which is visualizedin figure 6. The aim of this frameworkis to help company managers analyzethe potential of their company in orderto leverage technical innovations andto reach their stakeholders. The term“Digital Transformation” used in the DCFmeans the transformation towards becominga Digital Enterprise by improvingone’s digital capabilities. The “DigitalCapability Framework” consists of sixDigital Enterprise Capability Modeldimensions: Two “Digital TransformationEnabler” dimensions and four “DigitalTransformation Goal” dimensions.We will start by outlining the “DigitalTransformation Goals”:−−Customer Centricity: This goal includesa strong focus on customervalue and the best possible customerinteraction with the business, forexample, through digital marketingand intuitive “from-where-you-are”access to important information orprocesses.−−Effective Knowledge Worker: This involves,for example, cross-functionaland cross-country cooperation, acommon culture with accepted valuesand effective knowledge sharing,mutual learning, high employeeproductivity as well as decentralizeddecision-making processes.−−Operational Excellence: This meansbringing business processes to anindustrialized level, avoiding interfacesor integration gaps whereverpossible, and having full transparencyregarding key service performance.Text of It DE involves collaboration notAU/RS 06.09.20120 1 2 3 41. Transformation Capability0 1 2 3 42. Innovation CapabilityDigital Transformation ENABLERS0 1 2 3 43. Customer Centricity0 1 2 3 44. Effective Knowledge Worker0 1 2 3 45. Operational Excellence0 1 2 3 46. IT ExcellenceDigital Transformation GOALSDIGITAL ENTERPRISE• Forward-looking,customer-centric• High speed oftransactions andservice• Short time-to-market,anticipating fastchanges• Innovative and agile• High support fordecision-makingDigital Enterprise MODEL© 2012 SAP AG. All rights reserved. 6

Digital Capability Maturity ConceptsCustomer CentricityMETHODOLOGY | RESEARCHSystemsCustomerRelationshipAdvertising/ MarketingLevel 4Level 3Level 2Level 0Level 1Deficient Basic Defined Advanced Optimized• New platforms and • Customer relationship • Real-time analyticscollection systems systems• Silo based• Mature, unconnectedsystems, e.g. collectionand billing• Example: Visa,MasterCard, Mortgage• Product focused• Departmental costreduction• Customer relationshipmanagers are identifiedand interact on a formalbasis• Product metrics• Shared Services• Risk-based operations• Customer relationshipmanagement• Customer InteractionCenter• Online campaigns• Profitability focus onsegments• Channel integration• Customer segmentation• Work with customer tosolve immediate andlong term issues• Systematic customerexperience collection• Intuitive on the goaccess• Customer profiling• Personalized offeringand pricing• Optimal balancebetween complexityand individuality• Mobile apps andadvertising• Intuitive on the goaccess• Customer co-innovation• Digital marketing• Customer profiling• Bundles combiningproducts, services, andknowledge39© 2012 SAP AG. All rights reserved. 8only within the company but alsowith external partners and suppliers.−−IT Excellence: Breakthrough technologieswhich enhance the IT excellenceinclude real-time insightinto important company data, stability,digital security, agility, and dynamicplug-and-play functionality.The framework’s two “Digital TransformationEnabler” dimensions representthe underlying capabilities which haveto reach a certain level before it makessense to tackle a Digital Transformation.−−Transformation Capability: This isknown as “Business TransformationManagement”. It means the ability ofan organization to constantly reinventitself and successfully turn innovativeideas into reality.−−Innovation Capability: Successfullyachieving continuous and long-terminnovation presupposes certain conditions,including an effective innovationprocess, involving customersor thought leaders into the process,an open-minded company culture aswell as an appropriate working environment.An initial assessment of the “as-is” situationof a company in each of the six dimensionshelps:−−to provide support when defining thebest IT strategy approach (see fig. 2)Fig. 7: TheDigital CapabilityMaturity Model includingan excerptof the maturitylevel definitionsof the dimensionCustomer Centricity(at the top)

Convergence of Four Key Technology DriverMETHODOLOGY | RESEARCHConnectivity/MobilityCloudSocial MediaBig Data/HANA• Smartphonesoutsell PCs• By 2013, mobiledevices will be theprimary method ofinternet accessworldwide• Any access, anyworkload anywhere• ~80% of new softwarein 2011 was availableas cloud services• Hybrid cloud solutionsdrive Total Cost ofOperations (TCO) andintegration• There will be 1.43billion social networkusers in 2012• In 2012, 63.2% ofinternet users will visita social network atleast once a month• Data volume forenterpriseapplications isdoubling every 18months• HANA - in-memorydatabase technology40Fig. 8: The fourkey technologytrends (source:SAP)−−to derive measures for optimizing theIT strategy−−to develop a road map for implementingthe IT strategy−−to monitor the progress of implementingthe IT strategy−−to provide internal and externalbenchmarking.To support such an initial evaluation, theauthors present the “Digital CapabilityMaturity Model” (see fig. 7) which complementsthe “Digital Capability Framework”.A manager can determine the “asis”-,but also the “to-be” state (which canbe achieved by using a new technology)on a scale of 0 to 4 with the help of this“Digital Capability Maturity Model”.To sum it up, the “Digital CapabilityFramework” and the associated “MaturityLevel Analysis” are instruments to analyzethe situation and potential in orderto transform a company stepwise into aDigital Enterprise. In order to find appropriatetransformation measures, a clearunderstanding of the driver technologiesand the related optimizing potential fora future business model or individualprocesses is needed. In the followingchapters, the four above-mentioned keytechnologies for future IT strategies (seefig. 8) are explained and illustrated inmore detail with use cases, along withtheir potential to contribute to the fourdigital transformation goals and to innovation.© 2012 SAP AG. All rights reserved. 9Mobile ConnectivityIn the employee context, connectivitymeans the ability to have flexible accessto the company or external data necessaryfor productivity. In the past, datacould usually only be accessed from withinthe company premises (“internal access”).With the increasing prevalence ofWeb technologies, employees now haveaccess to company data via the Internet(“anywhere”), which facilitates e.g. workfrom home or at a customer’s site. Smartmobile devices offer further opportunitiesto optimize many business processes(“any service, anywhere, anyhow”). Theenormous popularity growth of smartphonesis unparalleled. For example, theIDC forecast for 2010 underestimatedthe actual sales figures by approximately50% (IDC 2008). Even now, in 2012, apparentlymore smartphones are sold thanPCs. Mobile connectivity is undoubtedlybecoming an important building block inany Digital Enterprise. The following examplesfrom different industries illustratepossible mobile business processes:

METHODOLOGY | RESEARCHTwo years ago, a pilot project waslaunched at Basel University Hospitalwhich made it possible to take picturesof patients’ injuries using mobile devicesand store them directly in the patient’selectronic medical records. If required,these images could be sent immediatelyto the senior physician’s smartphone, enablinghim to comment on them remotelyor discuss them with the colleagues ofthe admissions ward. This reduces thelegwork of specialists, the responsetimes, and the consumption of paper, andthe images are available for convenientviewing on mobile devices during subsequentward rounds.The Charité hospital in Berlin took thingsone step further. In a project with SAP,an “Electronical Medical Report Platform”was established to push the hospital’smobile strategy and to enhance efficiency.The platform ensures a securedata access to the internal IT systemand the delivery of information to mobiledevices. Thus, a doctor can do his wardround with a tablet PC; while visitingeach patient, the physician can accessthe individual medical record includinginformation about vital signs, allergies,the medical history, surgery documents,X-Ray pictures, or medication plans. Thismakes the interaction with other medicalemployees easier, too, as all informationand documents are available wheneverneeded. Furthermore, the platform alsomanages mobile devices, apps, and theassociated contracts.Also the retail industry relies heavily onmobile connectivity. Examples are mobilepayment processes in combinationwith near field communication (see alsoarticle on page 6), or the area of customerrelationship management. One scenariocould be as follows: Shoppers record theitems with scanners on the shopping trolley;the data is then transmitted wirelesslyto the cash desk. The cash desk transfersthe data to the customer’s mobile deviceand debits the amount. Also marketinginformation from ERP systems, such asspecial offers, could be sent to customersany time via a mobile app.Customers sometimes use a neutralmobile app to compare prices of differentretailers before deciding where toshop. Another potential, which has notyet been implemented, would involvemanaging customer loyalty programscompletely via mobile apps instead ofregularly shipping physical membershipcards and account status updates bypost.An impressive example is the innovationmade by the “Tokio Marine Insurance”.This financial services companydeveloped a platform to offer locationbasedproducts to its travelling customers:As soon as the mobile app on thecustomer’s mobile device detects thatthe owner has reached a location wherespecial insurance offers could be provided(e.g. ski slopes, airport, golf course),the client automatically receives a suitableinsurance offer. A first promotion ofthe new app resulted in a 300% salesincrease; mainly customers in their 30sand 40s decided to procure insurance onthe same day – or in the evening of theday before – of the risky activity. Fromthese examples it can be concluded thatwe are still far from appreciating the fullpotential of mobile apps.Cloud ComputingAs mentioned earlier, cloud computingis currently a popular way of provisioningIT services. The cloud provider updates,manages, and maintains the services,so no additional financial or personnelresources of the client are needed,since only costs which are determinedby the effective use are charged (“payas-you-go”).To be more precise, the useof cloud services forms a paradigm shiftfrom fixed to variable costs. High initialor investment costs are not required asno additional infrastructure – for examplehardware, software, networks, andso on – has to be set up and maintained.In financial terms: The switch from Capitalexpenditure (CAPEX) to Operationalexpenditure (OPEX) has a positive influenceon the financial resources andliquidity of a company; Capital expendi-41

METHODOLOGY | RESEARCH42Key Learnings►►►►►►►►tures are funds used by a company toacquire or upgrade assets like IT equipment.In contrast, OPEX occur as a resultof executing daily business operations.Next to the benefits, there are of coursealso drawbacks. Data security is a frequentlymentioned risk in the context ofcloud services. As the data is no longerphysically stored in and controlled bythe company’s own data center, misuse,and loss of data have to be consideredalready when evaluating the service.Outsourcing data to a cloud is also amatter of trust. And it certainly comeswith a certain political dimension, wherepolitical stability and data protectionregulations are relevant. For examplea country like Switzerland is in an excellentposition to offer attractive cloudservices in the future, perhaps soon assuminga role similar to the one in thebanking sector.An interesting example of cloud servicesis the use of finance and controlling systemsin combination with a wide rangeof services. Suppliers of tax consultingand auditing services might provide financesystems via cloud, meaning thatthe client enters bookings directly into thetax consultant’s or auditor’s own system.This simplifies the tax consulting or auditingprocesses and saves the client theexpense of installing relevant software.A further example is associated with theNew technologies like big data, social media, cloudcomputing, or the ubiquity of mobile devices are rapidlyincreasing the requirements and influence of customersand employees concerning business IT.Strong transformation and innovation capabilities arecrucial for becoming a Digital Enterprise.The Digital Capability Framework and its correspondinginstrument Digital Capability Maturity Model are powerfultools to support management in analyzing the potential oftechnical innovations for their company.A six-step approach is recommended to create a transformationplan towards a Digital Enterprise.usage of Business Intelligence (BI) softwareand tools. If a company does nothave a permanent need for using BI, itcan obtain the needed service on demandfrom a cloud, use it, and terminateit afterwards. This can save a lot of costsbecause no maintenance and CPU runtimeis needed. The BI services are onlyrunning when needed.Social MediaSocial media platforms and technologies,like Facebook, LinkedIn, and Twitter,play a huge role in further influencingcompanies. Besides socializing, socialnetworks enable people, consumers,even activists, to join forces and exertconsiderable influence on the image andsuccess of brands and companies. Consequently,IT strategies must now takeinto account those stakeholder groupsand the relevant social media much morethan they had to previously.Social media offer new and innovativeways to pro-actively communicate withvarious stakeholders, including employees,suppliers, partners, and customers,even across industry borders. Manycompanies have long since been activeon social networks like Facebook orLinkedIn in order to disseminate informationabout the company or its products,using all available media, such as videostreams, blogs, and discussion forums.Some companies even use social mediainteractively for innovation processes,involving the customers (perhaps alsothought leaders) more in the developmentof new products and services. Asan example of such “co-creation”, theinsurance company Direct Line set upan “Ideas lab” to engage existing andpotential customers in the developmentof a new app. During a four-week campaignusing a new iPhone app, theyasked Facebook users to pick featuresand choose the layout in order to determinethe best features and functionality.Several hundred users participated. Theresult was a new “On the Road” app, includinga route planner and a “Help foraccidents and claims” tool.

METHODOLOGY | RESEARCHBusiness FunctionProduct development / InnovationSupply Relationship Management(SRM)Service deliveryCustomer Relationship Management(CRM)Human ResourcesApplication of Social Networks►►►►►►►►►►►►►►►►►►►►►►►►►►►►►►Solicit ideas, opinions, and feedback to adapt existing and/or develop new products and services.Add a social layer to supply chain managementHire “virtual” contractorsBuild purchasing coalitionsEnhance collaboration on projects and service engagementsCo-create and share knowledgeCollaborate on documentationListen to customer concernsTransfer support tasks to communitySpread best practicesSupport and solve problemsPromote company among potential employeesGather information on job candidatesTrain employeesTap into pool of “passive” job seekers through professionalsocial networks43Besides evaluating design or product alternatives,social networks can also beused for trend research. In the fashionbusiness so-called “trend scouts” usesocial media platforms like Facebookor Twitter streams in order to spot newtrends. The most promising trends arethen taken up, produced, and offered asnew and stylish fashion in the shops.The finance sector in particular uses socialnetworks in an attempt to regain lostconfidence. Transparent and easy-to-understandfinancial service products arepresented and explained on social platforms.At the same time, consumers canprovide ratings and add their own comments,which sometimes unveil risks thatthe company had not thought of.Some companies even develop entirelynew business models based on socialnetworks: Friendsurance, in co-operationwith Facebook, developed cheapinsurance products relating to liability,legal protection, and smartphones. Inthe event of damage, minor claims aresettled within the network itself (“sharedrisk”); the insurer is liable only for largerclaims. The insurance premium is determineddepending on the actual damageincurred. This model is based on thesharing of risk between the customergroup and the insurer. As a result, a noticeabledrop in insurance fraud, a positiverisk selection, as well as lower marketingand administration costs could bereported.Throughout the world consumersjoin forces with the help of social networks,gaining immense power to eitherstrengthen or destroy a company’sbrand and image. This situation pushescertain companies to pro-actively managetheir image, like e.g. Lufthansa andDeutsche Bahn. The two companies analyzesocial media streams like Twitterin order to find out how customers reactin the case of transportation delays andto derive proper response actions. Theyaim at avoiding comments which couldhave a negative impact on their imageand at improving the communication towardscustomers.Table 1 gives an overview of differentsocial media applications across differentbusiness functions.Big DataAs one can easily recognize from thechapters on social media and cloud, thegrowth in the volume of data in termsTable 1: Theperceived valueof social networksalong the valuechain (source:Adapted fromCisco 2012)

METHODOLOGY | RESEARCH46Fig. 9: Exampleof how the fourtechnologies canbe mapped to theDigital TransformationGoalslogic or the experience of experts. Onepossible application example would belimousine services in major cities; thanksto growing transportation demand, this isan attractive business model, but so farit has been limited by the availability ofqualified dispatchers for the control centers.These coordinators decide whichdriver is to be sent on which assignment,based on clearly defined decision parameters.They take into account informationlike the limousines’ locations (providedby the Global Positioning System, GPS),the collection and drop-off points, trafficbottlenecks, and other pending assignments.Thanks to big data analysis technology,all of this information can now beevaluated in real time and the assignmentsmanaged automatically.Further possible applications for thecombination of Artificial Intelligence andreal-time data can be found in the bankingsector when trading currencies or securities,or in the health sector in optimizingpatient care.The Convergence of TechnologicalDriversAfter the discussion of key use cases associatedwith the four key technologies,figure 9 and table 2 give an overviewof how these technologies can help improvethe capabilities concerning the fourDigital Transformation Goals CustomerCentricity, Effective Knowledge Worker,Operational and IT Excellence. Nonetheless,it is not the individual application ofeach technology that opens up the mostinteresting possibilities for companies,but their convergence. The combinationof the first two, resulting in the “mobilecloud”, is already a reality when mobileapplications access and display centralizedcloud data on a mobile device, suchas the iPhone downloading e-mails fromthe iCloud. Further services already accessiblevia Web browser or lightweightapplication are social networks, onlineshopping, online gaming, and video conferencing.Other mobile cloud serviceswill follow, and social networks will, nodoubt, play a significant opinion-formingrole in electing the best and most successfulservices. The volume of generateddata will continue to increase globally.Big data management with real-timeanalytic tools will help to use this data todevelop new and customized productsand services or entirely new “real-time”services.There is no way around it. The future of ITdefinitely looks “smart”, “cloudy”, “social”,and “real”. To stay competitive, a companyought to set to work on becoming aDigital Enterprise, starting now with elaboratingthe suitable modern IT strategy.To properly plan the use of such new approaches,technologies, and their combination,a few things have to be takeninto account. The opportunities andrisks have to be identified and assessed.Furthermore, enterprises should checktheir internal possibilities, feasibilities,strengths, and weaknesses; e.g. is theMobile Connectivity CustomerMobile Connectivity CustomerCentricityCentricityOperational OperationalExcellence Excellence4433221100Cloud ComputingCloud ComputingEffective Effective Operational OperationalKnowledge Knowledge Excellence ExcellenceWorker WorkerCustomerCustomerCentricityCentricity4433221100Effective EffectiveKnowledge KnowledgeWorker WorkerIT ITExcellence ExcellenceIT ITExcellence ExcellenceSocial Media Social Media Customer CustomerCentricity CentricityBig Data Big DataCustomer CustomerCentricity Centricity

METHODOLOGY | RESEARCHThe Six Steps to a Digital Enterprise Transformation PlanStep 1: Digital Capability Assessment Step 2: Use Cases and mapping to DCM Step 3: Benefit AnalysisStep 4: Business Priority Assessment Step 5: Strategic Roadmap Step 6: Business Case Development47company ready for the implementationof such technologies, and which effortshave to be made to ensure readiness anda reasonable return on investment?The next and last part of this article willshow how to integrate the Digital CapabilityMobile Framework Connectivity and the maturity CustomeranalysisCentricityinto a possible approach towards 4 establishinga Digital Enterprise Strategy.3strategy in order to become a Digital Enterprise.The key elements of this strategyare as follows:1. The Digital Capability Maturity Model2. The Cloud Use Computing Case DevelopmentCustomer3. The Benefit AnalysisCentricity44. The Assessment of Transformation ef-3fort and Business Priority225. The Development of the Strategic11Six Steps Towards a DigitalEffective RoadmapOperationalOperational00EnterpriseKnowledgeExcellence6. The Business Excellence Case DevelopmentWorkerSAP BTS and the BTA jointly devised astructured six-step approach (see fig.10) As a first step, the company’s capabilitieswith regard to becoming a DigitalITITExcellenceto developing a company-specific ITExcellenceFig. 10: Overviewof the six steps forthe transformationtowards a DigitalEnterpriseEffectiveKnowledgeWorkerSocial MediaCustomerCentricity4Big DataCustomerCentricity43322OperationalExcellence10EffectiveKnowledgeWorkerOperationalExcellence10EffectiveKnowledgeWorkerITExcellenceITExcellence

METHODOLOGY | RESEARCH48Enterprise need to be evaluated alongthe DCF (see also fig. 6). In the four goaldimensions, the current maturity levelmust be assessed, and possible “improvementareas” identified. At the sametime, the company’s ability to innovateand transform, i.e. the Digital Transformationenablers, are analyzed by carryingout structured interviews with the responsiblemanagers of the business andIT departments.Based on these results, digital use casesfor the new technologies and for selectedprocess areas are developed (step 2 infigure 10). This usually results in a largenumber of possible optimizations.The further steps number 3 to 6 (seefig. 10) resemble well-known managementmethods: In order to evaluate thealternatives, one performs a benefit analysis(step 3; see also fig. 3). The seconddimension to check pertains to the estimatedtransformation efforts and costsrelated to each use case. Based on thetwo estimates, a portfolio can be drawn(step 4). The most promising cases areobviously the ones that are easy to implementwhile creating strategic benefits.To implement the top-priority projects,a strategic road map is then developed(step 5) while especially bearing thecompany’s current ability to transformin mind. BTM 2 is recommended as theimplementation method.As sixth and last step, a business caseneeds to be drafted in order to justify theinvestments. This includes calculatingone-time and ongoing costs, describingthe benefits and associated risks aswell as the input of technical and humanchange. The results are then visualizedusing a business benefit network.SummaryAs we have seen, technology is becominga very important key driver for transformation.Mobile connectivity, cloud computing,social networks, and big data willcontinue to change the way we work andlive. Key stakeholders – customers, employees,suppliers, and business requirements– are increasingly challenging andinfluencing IT. Companies have to seizethe opportunities and combine the hugepotential of such technologies in orderto start creating competitive advantagesand become a Digital Enterprise.For the transformation path it is importantto understand the innovation potential ofthese drivers and to assess and improvethe company’s initial ability to transformand innovate. To support these tasks, weintroduced the Digital Capability Frameworkas the starting point of a six-stepprocedure. Based on this, companyspecificuse cases must be developed.A benefit analysis, priority assessments,roadmaps and business cases light managersthe way to creating a competitiveadvantage and to ensuring a successfulbusiness transformation. Overall,becoming a Digital Enterprise not onlymeans to use fancy technologies, but itrather describes the successful handlingof technological possibilities and how touse them strategically to reach a powerfulcompetitive position.

METHODOLOGY | RESEARCHServiceAUTHORSLars Gollenia is head of Business Transformation Services (BTS), the global managementconsultancy organization of SAP. Previously, Lars held various managementpositions in the management consulting sector. Prior to his current role he wasresponsible for Business Consulting for EMEA. Lars has a graduate degree in BusinessAdministration from the Friedrich-Schiller University of Jena, Germany, and hestudied strategic and international management at the Harvard University, Boston.lars.gollenia[at]sap.comProf. Dr. Axel Uhl is head of the Business Transformation Academy at SAP. He hasbeen a professor at the University of Applied Sciences and Arts Northwestern Switzerland(FHNW) since 2009. Axel Uhl received his doctorate in economics and hismaster in business information systems. He started his career at Allianz and workedfor DaimlerChrysler IT Services, KPMG, and Novartis. His main areas of research aresustainability and IT, leadership, and business transformation management.a.uhl[at]sap.comClaudio Giovanoli is research assistant at the Competence Center for Cloud Computingat the University of Applied Sciences and Arts Northwestern Switzerland(FHNW). Previously Claudio was working as Project Manager for IBM Switzerland.His interests are mainly the applicability of cloud computing and its workload areas,but also technology management. Claudio holds a Bachelor of Science in Business ITand a Master of Science in Business Information Systems.claudio.giovanoli[at]fhnw.ch49BIBLIOGRAPHY►►►►►►►►►►►►►►►►Blackshaw, P. (2006). The consumer-generated surveillance culture. Available from: http://www.clickz.com/clickz/column/1706163/the-consumer-controlled-surveillance-culture [Accessed20.03.2012].Blackshaw, P., Nazzaro, M. (2006). Word-of-Mouth in the Age of the Web-Fortified Consumer.Consumer Generated Media 101, BuzzMetrics. Available from: http://www.nielsen-online.com/downloads/us/buzz/nbzm_wp_CGM101.pdf[Accessed 20.03.2012].Brenner, W., Witte, C. (2011). Business Innovation: CIOs im Wettbewerb der Ideen, Frankfurt amMain: Frankfurter Allgemeine Buch.Cisco (2010). Social Media Cultivate Collaboration and Innovation. White Paper. Available from:http://www.cisco.com/en/US/services/ps2961/ps2664/CiscoServicesSocialMediaWhitePaper.pdf[Accessed 01.07.2012].Hammer, R. (1988). Strategische Planung und Frühaufklärung. München/Wien: Oldenbourg.Ortega, I. (2012). Big Data: Wissen als Wettbewerbsvorteil. Computerworld.ch. Available from:http://www.computerworld.ch/businesspraxis/artikel/big-data-wissen-als-wettbewerbsvorteil-60002/[Accessed 20.06.2012].Uhl, A., Gollenia, L.A., Muench, U. (2012). The Transformational CIO. 360 degrees – the BusinessTransformation Journal, no. 2, Oct 2011, 28-35. Available from: http://www.360-bt.com/issue2/flipviewerxpress.html [Accessed 20.06.2012].Ward, J., Daniel, E. (2006). Benefits Management: Delivering Value from IS and IT Investments.Chichester: Wiley & Sons, 88f.

CASE STUDY50AbstractAllianz SE is the largest insurance group in Germany. To keep its leading position, Allianz Germanyhas committed to Pro3, a program which will bring customer-oriented consulting to a new level. Thereasons for this step are the ever changing circumstances, new media and technologies, as well asincreasingly discerning, responsible, and highly involved customers in a saturated market. Those customerswant financial service providers who are genuine, unassuming, and down-to-earth, but whoalso align their services entirely on the ideas, visions, and aspirations of the clients. The transformationof the biggest German sales organization has just recently begun.

CASE STUDYPRO3 AT ALLIANZA New Dimension of Customer CentricityWhat can a successful market leader do to further strengthen its customerrelationship? At Allianz, top management decided to implement Pro3, atransformational program to reach a new level of customer centricity.by Axel Uhl and Oliver HanslikMartin Künzel is constantly on the road.He is the rollout manager of an importanttransformation at the Allianz BeratungsundVertriebs-AG, the consulting andsales organization of Allianz DeutschlandAG. As a manager with many years ofsales experience at Allianz, he is usedto travelling, but the sheer number of kilometershe is covering at present is takingon a whole new dimension, even forhim. Each week – sometimes on a dailybasis – he commutes between Leipzig,Munich, and Hamburg, and never tires ofexplaining the objectives and motivationbehind the Pro3 program in order to expediteits implementation.A new dimension is also the transformationproject itself, as it involves nothingless than changing the largest field salesorganization in Germany. More than9,000 mostly already successful and independentgeneral and main agents, another3,500 employed salesmen, as wellas some 5,000 office staff in the variousagencies need to be convinced and enthusedabout this new sales concept. Theprogram is called Pro3 and it representsa partly shift in Allianz’s sales strategy –from “good salesmanship” towards morecustomer-oriented consulting services.There has often been talk of consultingin the past as well, but still the focus wasrather on the successful salesperson andnot as much on the customer-orientedconsultant. This time, however, Allianz isserious about it.“The future of our profession and alsothat of the Allianz Deutschland salesmodel, with its general and main agents,will be sustainably changed through thisproject”, says Martin Künzel. To this end,he willingly accepts the burden that thisinvolves; it will take another one or twoyears until the change will be effectivelyimplemented. That is a long time, especiallyin sales, where you are measuredin terms of your latest figures and whereis little room for patience. But this time,Allianz will have the necessary persistence– Künzel is sure of that.Allianz SEAllianz SE is the world’s second largestinsurance group in terms of sales revenue1 and has its headquarters in Munich,Germany. The company was founded in1890 by supervisory board members ofMunich RE, a large reinsurance company.To this day, Allianz and Munich REmaintain very close contact.Allianz SE has several business units(see fig. 1) 2 and serves some 78 millioncustomers in 70 countries. In 2011, about142,000 employees generated €103.651

CASE STUDY52billion of revenue and achieved profitsof €7.9 billion (see fig. 2). 3 In Germany,Allianz is the market leader in the insurancesector, with numerous holdings inwell-known major corporations such asBMW, E.ON, and Siemens. In the publiceye, the Group’s activities tend to berather unobtrusive and reserved, and Allianzhas so far been spared any scandalssuch as the one recently suffered by itscompetitor ERGO Insurance Group 4 .Allianz Deutschland AG, as whollyownedsubsidiary of Allianz SE, providesinsurance services in the areas of life insurance,health insurance, and propertyinsurance. Additionally, banking productsare sold through the Allianz Bank. AllianzDeutschland AG relies on independentagents (in accordance with section 84 ofthe German Commercial Code, HGB) tosell its insurance products and services.The strongest sales branch belongs tothe Allianz Beratungs- und Vertriebs AG.As a result of this independence, Allianzhas only limited authority over its morethan 9,000 agencies.Customer Orientation – for GoodReasonThere are important reasons for the evolutionof the Allianz Deutschland salesorganization. Insurance sales agents ingeneral have always been a thorn in theside of consumerists. In the public opinion,insurance agents are usually said toput their own interests first when it comesto concluding insurance services.An insurance policy is a complex productthat is supposed to both protect the customeragainst risks and also to accumulatehis assets. However, it is difficult forconsumers to deal with the multitude oftariffs, the increasingly long-term commitment,and the diversity of products.These circumstances, according to consumerists,are repeatedly used by insuranceagents to intentionally provideconsumers with advice that fails to meettheir needs. Insurance and investmentproducts are trust-based products – butwho can you still trust these days? 5Banks, especially those in the field ofretail banking, operate in a similar settingand face the same problems. Theapparent integrity of banks, which hadlong since been their competitive edgecompared to the seemingly less reputableinsurance companies, has sufferedenormously since the financial crisis.The former were therefore recently legallyobliged to draw up reports of allconsultations and have them signed bytheir customers. The coercive measuresimposed by the state to ensure greaterconsulting integrity, though, have resultedin an immense amount of administrationwork.Fig. 1: Allianz SEand shareholdings(source: Allianz) 2Allianz SE100%Allianz Deutschland AG100% 100% 100%ca. 89%100%AllianzVersicherungs-AGAllianzLebensversicherungs-AGAllianz PrivateKrankenversicherungs-AGOldenburgischeLandesbank AGAllianz BeratungsundVertriebs-AG

The Allianz Group is a global financial services provider. Approximately 78 million retail and corporate clientsin more than 70 countries rely on our knowledge, global presence, financial strength and solidity. In fiscalyear 2011 around 142,000 employees worldwide achieved total revenues of 103.6 billion euros and CASE STUDYan operating profit of 7.9 billion euros. Allianz SE, the parent company, is headquartered in Munich, Germany.Revenues Allianz Group 2011: EUR 103.6 bnby segmentsby regionsProperty/Casualty 43%Life/Health 51%Asset Management 5%Corporate, Other 1%Germany 28%Western Europe 33%Anglo Markets 19%Specialty Insurance 1 8%Asia-Pacific 5%Central-/Eastern Europe 4%Latin America 2%Africa/Middle East 1%Operating profit Allianz Group 2011: EUR 7.9 bnby segments by regions 2Property/Casualty 47%Life/Health 27%Asset Management 26%Germany 20%Western Europe 33%Anglo Markets 29%Specialty Insurance 1 13%Central-/Eastern Europe 3%Latin America 2%53Operating ProfitDividend per shareShareholders‘ equityFurther state regulations regarding the must be fully aware of those needs and Fig. 2: RevenuesEUR bnEUREUR bnsales of insurance policies are currently act accordingly. In the past, customers Allianz SE 2011viewed with skepticism at Allianz. “We were less likely to change their provider.47.8 (source: Allianz) 344.5 44.9have always invested a great deal of Today, besides high-quality service, close 40.110.3time and money in high-quality training 5.5033.7customer contact is a key factor for customerretention.”7.5 8.2and education”,7.07.9says Jens Grote, board4.10 4.50 4.503.50This situation has alsomember at Allianz Beratungs- und VetriebsAG. The education at Allianz is intivetrend in customer satisfaction ratingsbeen reflected in the industry-wide nega-1,75deed 2007 considered 2008 2009 exemplary 2010 2011 throughout 2007 for 2008 years. 2009The 2010 most 2011 important indicator2007 2008 2009 2010 2011the industry. “We do not allow any agent here is the number of people willing toto Financial have statements contact with on the customers basis of IFRS. without Fiscal year recommend 01.01.2011 - their 31.12.2011. insurance provider tothe relevant specialist skills. For furtherimproving our consulting expertise, based products, customers will only rec-others. As insurance products are trust-however, we rely more on a proactive, ommend their provider e.g. to relatives ifcustomer-oriented management than on there is an appropriate trusting relationshipwith the insurance provider.state regulation.”“After all, it is our customers who are increasinglylooking for more support and Like the industry as a whole, the marketorientation, which is shown in the feedbacksfrom the meetings with our clients”, ther recommendation rates. This trend isleader Allianz also suffers from low fur-says Martin Künzel. “Private pension arrangementsare becoming increasingly younger generations lead their lives.accompanied by a transition in the wayimportant, while the financial market has “With smartphones and the establishmentof e-business sales channels, webecome riskier. This leads to rising customerexpectations regarding our consultingexpertise. The local salesperson talization of the single stages of life.find ourselves right in the middle of a digi-With1) Allianz Global Corporate & Specialty, ART, Euler Hermes, Allianz Global Assistance2) Relation of positive parts of 2011 operating profit

CASE STUDYDrivers for changeShaken anddiminishingtrust infinancialserviceprovidersRiskyfinancialmarkets andneed fororientation54Fig. 3: Drivers forchangeMuchcompetitionand easyaccess ofinformation© 2012 SAP AG. All rights reserved. 2this comes faster access to the latestinformation, which leads to a previouslyunknown level of customer responsibilityand hence to an increased consultingdemand”, explains Jens Grote.The Internet as the pivotal medium of the21st century, and with it social media, enablescompanies to maintain a constantdialog with its customers and therebyactively involve them in the design ofproducts. The Internet is therefore muchmore than just a quick and inexpensivedistribution and communication channel.“These days, it is much easier for everybodyto get any required information. Butthe rapid dissemination of information e.g.via Facebook, Twitter, and comparisonportals can have both positive and negativeconsequences”, says Martin Künzel.“The Internet is interactive and principallydemocratic, and it enables faster productinnovations and individually designedservices. With the increased presence ofdirect insurers and comparison portals,a hybrid shopping behavior has established,of which insurance companies areonly too aware”, sums up Erich Rochlitz,Sales Director at Allianz responsible forNorthern Bavaria. “Although an insurancecontract is mostly still concludedin an agency, most offers are obtainedfrom the Web. For this reason, contactingNewcommunicationchannelsand quickspread ofwordcustomers via new media – in addition toclassic means of communication – is becomingincreasingly popular. There areapproximately 800 Allianz agencies thatactively use Facebook to contact customersthese days.”Dr. Jürgen Schüler, Branch Manager inLeipzig (Germany), sees a further reasonbehind Pro3 in the amendable innovationactivity at Allianz regarding the developmentof new products. Too little innovationleads to a loss in attractiveness forcustomers. “This is primarily reflected inthe fact that, although customers likedthe products, we noticed decreasingenthusiasm”, underscores Dr. Schüler.“Only delighted customers recommendus to others.” With the introduction ofnew products such as “myCar” or thenew home contents insurance product,Allianz is able to enthuse customersagain.Changing economic conditions, new media,and higher customer expectations inthe German market are decisive factorsthat lead to a new way of thinking at Allianz(see fig. 3). The customers wantfinancial service providers who are authentic,modest, and down-to-earth, butwho also align their services entirely withthe ideas, visions, and aspirations of the

Objective of Pro3 – Customer CentricityCASE STUDYCustomercentricinsuranceconsultancyCustomercontactmanagement(usage of newmedia)Newmanagementculture andefficientagencyprocessesLong-termcustomerrelationshipTrust andrecommendationcustomers. In order to deal with the anonymityand abundance of offerings on theInternet and to meet the increased needfor trust and information, customer proximityand an intact customer relationshipare the most important prerequisites toensure competitiveness. 6Pro3 – Customers, Employees, andthe CompanyPro3 introduces a positive change forcustomers, employees, and Allianz asa company. The integral parts of thePro3 program are a structured, holisticapproach to consulting, significant improvementsin customer contact management,the analysis of internal agencyprocesses, and the introduction of a newmanagement culture. Allianz wants touse these measures to achieve a newlevel of customer centricity, which willlead to long-term customer relationships,increased trust and higher recommendation(see fig. 4).The central component of the programis its focus on holistic insurance consulting.“Above all, it is about actively involvingcustomers in the consulting processand, together with them, analyzing theircircumstances, plans, and needs, jointlyprioritizing them, and finding the right solutions”,emphasizes Rochlitz.At first, this does not appear to be particularlynew – but it is. For many salesmenin the industry, holistic consulting necessitatesa new way of thinking and a correspondingchange in behavior. Today,insurance salespeople often approachcustomers with certain products in mindand then attempt to convince them bye.g. pointing out specific risks or benefits.In other cases, they start by analyzing therisk situation, but as soon as the first gapopens up, the product sales process begins.This “sales mentality” is deeply entrenchedin the industry. Insurance policieshave successfully been sold this wayfor over 100 years; many of the agentshave been doing this for decades, and ithas served them well. Those who closemost deals are deemed successful andaccepted, and those who complete themost customer appointments in the leasttime are regarded as efficient. However,customer-oriented consulting primarilymeans asking questions, listening, andreaching a common understanding aboutthe client’s needs. This requires patienceand time – two factors that are rarely encounteredin sales. But yet, the long-termbenefits of customer-oriented consultingare obvious. Salespeople get to knowtheir customers and their priorities, whilecustomers feel better understood and© 2012 SAP AG. All rights reserved. 1Fig. 4: Objectiveof Pro3 – CustomerCentricity55

CASE STUDYcesses varies considerably, with highlyefficient, high-quality administration processesin some agencies, and completelythe opposite in others. There have beenno uniform agency standards in the past,and it was up to the individual agents andtheir office staff to define their administrationprocesses. A lack of transparency inprocedures, long processing times, andan unclear role allocation are just some ofthe problems that were observed in someagencies. Inefficient agency processesresult in agents loosing too much timethrough administrative tasks – time whichcould be used more effectively in customerconsultations. Furthermore, ineffectiveagency processes can decrease customersatisfaction, or even create risks, suchas a lack of the customer’s insuranceprotection. This re-organization effort ofprocesses must not be underestimated.Some procedures, which have becomeentrenched over many years, need to becompletely reorganized. In addition, process-orientedthinking is a competencywhich is barely present in many part-timeemployees working in agency administration.However, the by far most important successfactor is a change in managementbehavior. In the past, insurance agentshave been viewed more as a huge organizationof salespeople who, it was felt,operated with military precision and weretreated with a rather autocratic style ofmanagement. This management culturewas increasingly met with opposition byindependent and experienced agents,and Allianz has since taken measuresto change the situation. Pro3 envisionsmanagers who develop from result focusedcontrollers into trustworthy companions,taking on more of a coachingrole. The managers interviewed by ushave a management philosophy that isin line with the objectives of Pro3. Theybase their management style on trustand have weekly coordination meetingswith the agents. Those managers havemoved away from results orientation towardsan activity-based style of improvingsales processes.For the Allianz managers, this initiallymeans an increased burden on their timeresources because, as coaches, theymust examine the work approach of theirsales personnel in much greater detail.Instead of “one-size-fits-all” advice, individualanalyses and optimizations needto be carried out, and, together with thesales staff, they discuss how individualsuccess rates can be improved.To sum it up, many of the desired changestake place at the attitude or behavior level,and are therefore particularly difficultto achieve. In addition to that, the sheersize of the organization further increasesthe complexity of change processes. So,to bring about this change, all hierarchicallevels of the Allianz organization areinvolved (see fig. 5).From Concept to ImplementationPro3 is based on the voluntary participationof agents and directly affects a majorityof the more than 9,000 independentagency owners, approximately 3,500sales employees, the agency office staff,and the sales managers.With this huge number of personnel affected,the implementation phase becomesparticularly important. “In previousprojects, we usually adopted a ‘wateringcan’ type of approach”, says Martin Künzel.“This means that we tried to reachthe entire organization at once and to implementchanges quickly. But that didn’twork. We are too big, and you cannot getindependent agents to make behavioralchanges by simply commanding it.”For this reason, Pro3 is being rolled out inseveral waves. The first wave started with2,200 salespeople in April 2012 and hasalready been completed. The remainingroll-out waves are planned to begin earlyOctober 2012, and then April 2013. Bymid-2013, more than 50% of sales personnelshould be familiar with and workaccording to the new approach. “We wantto convince our self-employed agencyowners of the advantages and thus furtherdevelop the majority of agencieswith Pro3 in the long-run”, underlinesMartin Künzel.57

CASE STUDY58ACKNOWLEDGMENTSThe authors would like to thank the following people forsharing their thoughts and experiences:►►►►►►►►►►Martin Künzel, Leiter Rollout Pro3Jens Grote, Vorstand der Allianz Beratungs- undVertriebs-AGErich Rochlitz, VertriebsdirektorDr. Jürgen Schüler, GeschäftsstellenleiterMike Westhoff, VertriebsbereichsleiterA comprehensive training concept wasdeveloped in order to optimize the consultingprocess, which will be put intopractice by the Allianz field sales academy.More than 100 trainers will carryout the training program over the nextfew months. Participants have to followa five-month training plan. This planbegins with four days of in-house training,during which agency managers andsalespeople are familiarized with Pro3.The agencies are subsequently providedwith continuous support, which is called“sales coaching” and which is executedby the managers. Allianz will be backedby additional coaches to assist the managerson site and provide them with feedbackon their management style.The holistic consulting approach is supportedby a discussion guideline for clientconsultation in traditional paper form andas an IT-supported solution. The IT solutionenables the agents to create consultationdocuments quickly. With its structuredapproach to carrying out customermeetings, Allianz ensures to provide aconsistently high standard of consultingquality across all participating agencies.“We have supplied our agents and juniorsales staff with an electronic and physicalaid that enables them to enter into agenuine dialog with their customers. Theconsultant can use it to better assessthe needs and wishes of customers and,ultimately, gather customized solutions”,explains Martin Künzel.IT plays a further important role for thesuccess of Pro3. Additional and intensivecustomer consultations result in considerablymore data being collected; this isimportant on the one hand for followingup on consultations, and on the otherhand it is of considerable relevance forthe development of new products. Also,the new IT-supported consulting processshould speed up the identification of thebest possible solution for the customer.For this reason, a new HTML 5-basedconsulting tool was created, which canincorporate existing customer data fromavailable systems and restore it thereagain. Optimizing agency processes followsbest-practices. “In larger organizations,the various outlets do not devisetheir own processes individually, but usestandardized and efficient processes.After all, the tasks in our agencies areusually the same everywhere”, saysMartin Künzel. A process template thatdescribes model working procedures,tasks, and responsibilities as well asprovides checklists is used as the basisfor standardizing processes. Sales managerMike Westhoff illustrates it with thefollowing practical example: “Each morning,the agency owner conducts a checkinconversation with his office managerand discusses the tasks for the day. Thisis something that rarely happened in thepast. In the beginning this conversationis also coached. It is furthermore examinedwho takes over which tasks in theagency. If the telephone rings, while anoffice employee, the office manager, andan agent are in the agency, and all threeof them pick it up, something is not right.The tasks should be clearly allocated.”However, the most important driver ofthe change program is the involvementof executives – the so called “leaderledprinciple”. The Pro3 objectives canonly be achieved if the managers maketheir contribution, and for this reason,the approximately 350 managers aregiven particularly intensive training. Theimportance of management support inthe transformation process is explainedby Jens Grote: “In the past, we did notalways get close to the sales processes

CASE STUDYand, consequently, the way in which theagents were managed. We rather concentratedon the results. This time, it isdifferent. The main distinction comparedto earlier initiatives is probably not theappealing consulting process itself, butthe secret lies in the new sustainablemanagement process, with the managersbeing the key to success. You canhave the best processes available, butwithout management support, the fullbenefits cannot be exploited. And that isthe reason for my optimism. We accompanyPro3 throughout the organization,from board level to the sales departmentmanager. It is less about ‘how much’,and more about ‘how it was achieved’.Of course, numbers will continue to playa major part, but they will no longer bethe sole criterion. We are coaching thesalespeople to get them on the righttrack. We are not leaving those involvedin the sales process to their own devices.”Driving the Change – Initial Resultsand Lessons LearnedWhen Pro3 was initiated, AllianzDeutschland was not in a perceptiblecrisis – quite the contrary: 2011 was thebest fiscal year since the Allianz Beratungs-und Vertriebs-AG had been established.Naturally, the management wasaware that, without changes, a crisis wassimply a matter of time, as competitorswould catch up. Implementing a programsuch as Pro3 early on during good timeshas several benefits: The necessary investmentsare economically feasible,you have sufficient time for systematicplanning and implementation, and themanagement enjoys the confidence ofimportant stakeholders and employees.It is important to have a clear understandingof the expected benefits andto know how those can be measured.Allianz wants the investment to pay offboth in financial and qualitative terms.An increase in productivity should beachieved by improved processes andtailored consulting. Other qualitative improvementsinclude more frequent andmore intensive customer consultations,increased customer retention, greatersecurity regarding existing business,a more contact-oriented managementstyle with a great deal of reflection, andcollectively defined next steps.The principle of free choice plays a fundamentalrole in implementing Pro3. Asustainable behavioral change can onlybe achieved if the change is acceptedand supported by each person individually.“Without a basic readiness tochange of the people involved, it wouldbe a lengthy and presumably unsuccessfulprocess, which is why we started withthe agencies that had indicated a strongwillingness to change. The success ofPro3 originates from the base and canonly be multiplied there”, explains MikeWesthoff.The Pro3 communication concept isalso having a positive effect. As earlyas September 2011, the whole organiza-Key Learnings►►►►►►►►►►►►►►►►The most important driver of the change program is theinvolvement of executives, the so called “leader-led principle".Since insurance products are trust-based products, customerswill only recommend their provider to their peers ifthere is an appropriate trusting relationship.To ensure an intact customer relationship, it is key toinvolve the customers in the consulting process and tojointly prioritize the individual circumstances and plans.Holistic consulting necessitates patience and time in orderto learn more about the customers, to make them feelunderstood and find best matched solutions.Effective customer contact management helps to createconsiderable potential for accompanying the customerduring his life changes.A new management philosophy supports the altered focusat Allianz: Managers are moving away from results orientationtowards being activity-centric, trustworthy coaches.Efficient business processes will help agents to providemore effective consultations and will lead to increasedcustomer satisfaction.Sustainable change can only be achieved if the change issupported by each person individually.59

CASE STUDY60tion was informed about what to expect.All questions that arose were discussedopenly, and the importance and necessityof implementing Pro3 were explained.There was also sufficient time availablefor preparation before the first wave ofPro3 got underway, which has ultimatelyled to considerable dynamism and speedwhen currently implementing Pro3. Thechange was acted out throughout theentire management pyramid (see fig. 5).The executive board explained the aims,contents, and necessity of the change tothe next lower level, the sales directorsexplained it to the branch managers, andthe latter explained it to the sales managers.This way, all management levelswere involved in the implementation,ensuring the necessary understandingand increasing the acceptance of theprogram.The project enjoys the support of the topmanagement. In the management boardmeetings half of the time is dedicated toaddressing issues relating to the Pro3transformation. Top management engagesin discussing best practice processesor change management challenges,and actively helps to find solutions. Inother words: The top management haschanged from control mode to solutionmode. Jens Grote: “I consider myself asan element of this process and as a rolemodel for Pro3. This means that I mustbe familiar with the processes and notjust demand them from my employees.Part of my role as a sales director is to bevisibly present in the sales department.I will regularly spend a day in an agencyand participate in the office activities andsales processes there. In addition to that,I conduct management discussions withdirectors and hold regular meetings withthe sales personnel. Sometimes you getto hear about problems that you thoughtwould not even exist.”An important step in the transformationprocess was the setup of model agenciesin different regions for referencepurposes. Those agency managers wereasked to make themselves available foran exchange of ideas, best practices,and opinions to find possibilities for optimizationfor other agencies in a realisticsetting.Next to the communication of the agencymanagers and their personnel, a regularcommunication between the agencyowner and his Allianz manager is particularlyimportant. They meet once a weekto assess the progress of the implementationand to discuss the next steps.They usually identify key focus areas towork on, such as optimizing agency processesand customer contact management,and cultivating the new approachto consulting.The coaching at all levels of managementhas proved favorable so far. Forexample, coaches accompany branchmanagers during their monthly meetingswith sales managers and as well theagent area managers, when conductingtheir weekly discussions at the agencies.In the next step, the sales managers willcoach the agency owners.OutlookAlthough the measurable success in financialterms will only become apparentover time, Allianz’s experiences ofthe first few months of the Pro3 programhave been very good. The fact is that firstpositive tendencies with regards to customerreactions can already be observedand Allianz works hard to further improvethis. It is also evident that the feeling oftrust between the managers and theagents has deepened. The reasons forthis are the weekly conversations andthe assurance that common aims arebeing pursued. It was also possible toascertain a reduction in the rate of cancellationsat the participating agencies,and there is almost zero fluctuation in thesales personnel.“At any rate, the customers are impressedby the new quality of consultations providedby Allianz”, says Martin Künzel– before getting into his car to drive tothe next meeting at the other end of thecountry.

CASE STUDY62AbstractUndertaking organizational transformation presents a wide range of challenges even for highly experiencedorganizations. These challenges are far greater in organizations that have never before carriedout such initiatives. In addition to the many difficulties associated with developing and implementingradical business innovation, inexperienced organizations are also faced with the need to rapidlyacquire the competencies necessary to successfully execute transformation initiatives. This articlepresents some of the key lessons learned by a large, diversified organization that is in the early stagesof developing its transformative capacity while undertaking a transformation of its human resourcesfunction.

CASE STUDYLEARNINGTRANSFORMATIONAT TRI-DIVISIONAL10 key lessons for organizations looking to build their transformationalcapabilities.by Brent Furneaux and Robert Günther63Organizational transformation initiativespresent managers with a seemingly endlessarray of complex, demanding challenges(Whittington et al. 2006). Transformation,by its very nature, requires thatan organization fundamentally changesthe way it operates while simultaneouslyfostering the cultural shifts needed tosupport this new way of operating (Kotter2007). Confronting and addressingthe associated challenges can test thevery limits of organizational competenceand agility. This is especially true for organizationswith limited prior experiencewith transformational initiatives. In additionto executing a difficult undertaking,these organizations must also acquirethe competencies necessary to succeed.Most transformation managers have,however, been offered relatively limitedinsight into the journey from transformationnovice to expert. The following discussionexamines the early stages in thetransformation of the human resourcesfunction at Tri-Divisional (the real nameof the company has been changed forreasons of anonymity). Recognizing itselfas a relative transformation novice,Tri-Divisional sought to monitor and evaluateits transformation efforts. In doingso, it identified some key lessons learnedthat are of potential value to other organizationsseeking to develop or improvetheir transformation competencies.Tri-Divisional is a mid-sized multinationalorganization headquartered in WesternEurope. Founded more than 150 yearsago, the organization has grown to encompassthree independent lines ofbusiness with 150 independent companies,operating in three very distinct industries.In broad terms, Tri-Divisional’scorporate office operates as a strategicallyoriented holding company that relieson a small team to provide overalldirection to its Casting, Industrial Products,and LaserTech divisions. In additionto financial reporting and controlfunctions, the parent company overseescorporate development efforts and facilitatescompany-wide initiatives. The parentcompany does not, however, bearsignificant responsibility for the marketingor operation of its individual businessunits. Rather, it provides each lineof business with high level financial andproduct-oriented goals. Business unitmanagers are then given considerablelatitude to achieve these targets in anyway that they see fit.

CASE STUDY64As a result of their considerable independence,each line of business hashistorically been responsible for its ownHR data and for the processes used toacquire and manage this data. This ledto significant variation in data availabilityand quality, even among those operatingcompanies controlled by a single lineof business. The lack of structured dataand uniform procedures resulted in complex,inconsistent reporting, error-proneHR processes, and needless costs forthe organization. Recognizing that thesituation was not compatible with itslong term objectives, the corporate parentproposed a multi-stage, inter-divisionalproject aimed at harmonizing andimproving HR processes and thereby increasingeffectiveness across all threelines of business and their independentoperating companies. Since Tri-Divisionalhistorically placed considerableemphasis on exploiting and improvingits existing competencies (March 1991),this effort was regarded as the ideal vehiclefor identifying existing transformationcompetencies and compiling importantlessons regarding how these mightbe improved.Key Lessons in LearningTransformationA decentralized, independently orientedmanagement culture is somewhat contraryto the unified vision and effortscharacteristic of successful transformation.Hence, the first phase of thetransformation at Tri-Divisional soughtto establish a strong precedent for collaborationacross the organization’slines of business and functional areas.Establishing such a precedent was seenas having significant implications for theultimate success of the long term transformationprogram and led to the decisionto initiate the implementation of anorganization-wide solution to a specificissue being faced by HR. This initial ef-

CASE STUDYPhase OneSubsequent PhasesStep 1HR DatabaseStep 2LearningManagementHR Process ConsolidationAnd and Transformationfort was intended to foster the developmentof a shared vision and provide asolid foundation for subsequent phasesof the HR transformation program.AlignmentAt the time that the HR transformationwas proposed, Tri-Divisional’s three divisionswere at different stages of developingand implementing local solutionsto some of the issues that the corporatetransformation initiative sought to address.Among the three divisions, transformationefforts at the Casting divisionwere at the earliest stages. Hence, theplans of the Casting division were essentiallymerged with corporate plans.As a result, the first stage of the transformationwas regarded more as a divisionalproject than a corporate undertaking.The perceived success of phase one ofthe project was therefore highest amongstakeholders within the Casting division.In contrast, Industrial Products had alreadyselected and implemented a solutionthat was not compatible with longtermcorporate plans. As a result, thetransformation project team made thedecision to replace this solution with asolution that was better aligned with thelong term objectives of the overall HRtransformation. This decision triggeredsome resentment within the IndustrialProducts division. Nonetheless, it waswithin the LaserTech division where thedivergence between the goals of thecorporate transformation project andthe divisional interests was most evident.Although it was not a priority ofthe transformation project, LaserTechbelieved that improving its payroll functionoffered the greatest opportunity forcost savings. As work on the divisionalpayroll initiative was interrupted by the2008 economic crisis, the divisionalstaff found themselves working on acorporate transformation initiative thatseemed to be offering them little value.Lesson 1: Although it is unrealistic toexpect perfect alignment of goals in abusiness transformation initiative, particularlysignificant sources of misalignmentshould be actively identified andmonitored. Failure to do so can evokeunexpected resistance and undermineproject progress in the face of changinginternal and external circumstances.Business ValueFor technical reasons, the first phase ofthe transformation was divided into twosteps. The first step focused primarily onthe implementation of foundational infrastructurewhile the second step aimedat implementing learning managementcapabilities based on this infrastructure(see fig. 1). Although the quantifiablebenefits of step one were estimated at$160,000 per year, the real value wasgenerally considered to lay in the foundationthat it provided for the wider HRFig. 1: Earlyproject phasingObtaining and sustaining vital managementsupport necessitates clear,consistent focus on business objectivesand the value proposition thatunderlies a transformation.65

CASE STUDY66transformation program. As a result,step one was frequently referred to asthe technical foundation upon whichsubsequent efforts depended. However,this characterization presented notablechallenges for the project team as theyattempted to convey the value of theirwork. The connection between the technicalpart of the project and the businessbenefits of the overall transformationwere not always clear at the executivelevel. This missing awareness tendedto undermine the perceived importanceof the project in the eyes of corporatestakeholders and it threatened resourceavailability when the 2008 economic crisisforced the organization to rapidly reduceexpenditures.Transformation projects requirecontinued commitment of significantorganizational resources.Lesson 2: While technical infrastructureis often essential to transformation initiatives,implementing such infrastructureshould not be portrayed as a key objective.Rather, obtaining and sustainingvital management support necessitatesclear, consistent focus on business objectivesand the value proposition thatunderlies a transformation. Failure toshow business value in the early stagesof a transformation program risks generatingsignificant discontentment and willlikely undermine long term prospectsshould discontentment lead to resourcecuts.Foundational KnowledgeThe HR transformation at Tri-Divisionalrelied heavily on leveraging internalcompetencies by using software solutionsoffered by its existing EnterpriseResource Planning (ERP) vendor. Thedecision to rely on these solutions wasreinforced by the fact that Tri-Divisionalpossessed particular expertise withrespect to this vendor’s HR solutions.Consolidating and extending the existingERP infrastructure was also preferred inlight of a prior experience with the implementationof a stand-alone solution toaddress one aspect of the transformationprogram. This solution proved to bequite limited in its ability to support thebroader goal of transforming the entireHR function.Despite the familiarity of Tri-Divisional’sIT personnel with the solutions offeredby their ERP vendor, it was often necessaryto offer extensive explanationsto management and staff concerningthe fundamental character and potentialof modern information systems.This indicated that some areas of theorganization lacked the degree of technologicalreadiness needed to undertakethe transformation (Parasuraman2000). The need for greater readinessextended beyond technology readiness.Given their independence, the threelines of business and their associatedoperating companies exhibited differentdegrees of maturity in their HR practices.In particular, significant differencesexisted in the extent to which currentbusiness practices and technical infrastructurewere aligned with the desiredend-state envisioned by the transformationinitiative. The Casting divisionwas, for example, relatively advanced inthe formalization of HR processes andwas already operating two HR sharedservices centers to support three of itsoperating companies (Levin 2009). Inaddition, all of the operating companiesat the Casting division already workedwith a version of the software that wasbeing implemented during phase one ofthe transformation. As a result, this divisionwas able to better understand thevalue of the project and see its long termpotential even when difficulties arose.Lesson 3: Do not underestimate the importanceof prerequisites. Ensuring thatsufficient foundational knowledge is ei-

CASE STUDY67ther present or provided prior to startinga transformation initiative helps to maintainenthusiasm when difficulties arise.Foundational knowledge also makes itfar easier to convey the value and importanceof a transformation to key stakeholders.Intra-Organizational DifferencesIn addition to variations in the foundationalknowledge of stakeholders, thecomplexity of the challenges faced variedconsiderably throughout the organization.The Industrial Products divisionwas overseeing the operation of morethan 60 individual companies presenton almost every continent. In contrast,the Casting division mainly producedat only ten sites located in Europe andAsia. As a result, assembling the initialdata necessary to populate the HRdatabase proved especially difficult forthe Industrial Products division. Doingso required the expertise of local HRrepresentatives at each of the division’sgeographically distributed operatingcompanies. Drawing on this expertisewas further impeded by the impositionof travel restrictions in response totough economic circumstances. Thisled to more than 75% of the divisionaldata required by the system not beingentered until after the first phase hadbeen scheduled for completion. Thelack of data limited the pace at whichbroader corporate objectives could beachieved.Lesson 4: The complexity of a transformationalinitiative is directly relatedto the complexity of existing operations.Make plans that adequately account forintra-organizational variations in complexityand be prepared to provide extraresources to support those who faceparticularly challenging circumstances.Tangible ResultsAn important benefit of the first step ofthe transformation at Tri-Divisional wasits ability to demonstrate the value of acentral data storage. Once the final so-

CASE STUDY68lution went online, users began to fullyappreciate its value, raising questionsand making suggestions related to otherpotential uses.However, transformation projects requirecontinued commitment of significant organizationalresources. This conflictedsomewhat with Tri-Divisional’s cultureof exploiting and improving existingcompetencies. Corporate and divisionalSuccess requires ongoing sensitivityand responsiveness to context.management held a strong preferencefor projects that delivered clear businessbenefits within a one year time frame. Inaddition, there was a deeply rooted tendencyto regard IT as a cost center ratherthan a business enabler. Hence, earlysuccess was met with greater pressureto demonstrate the value of the transformationinitiative more clearly before subsequentphases were approved.Organizational transformationinitiatives present managers with aseemingly endless array ofcomplex, demanding challenges.Lesson 5: Demonstrate business valueto executive level stakeholders by deliveringtangible results early and regularly.This helps to attract attention andinterest at the board level while ensuringavailability of the time and financial resourcesneeded to keep work on track inthe face of crisis and disruption.Stakeholder InterestsThe Casting division’s IT representativefor the first phase of the transformationwas a former employee of the ERPvendor of the software solution and hewas an enthusiastic champion of theirtechnology. He had also emphasizedthe importance of step one to achievingthe broader project objectives andwas acting as a project manager for thecorporate side of the transformation. Inaddition, the Casting division’s local HRrepresentative held responsibility forproviding the data that the system wasintended to produce. The local HR representativewas therefore in a position tosteer the project in a direction that supportedthe business needs of his division.In contrast, the IT representative of theIndustrial Products division was considerablyless enthusiastic regardingthe organization’s ERP vendor. He hadworked hard to implement an alternativesolution that had been abandonedduring the early stages of the corporateinitiative. As a result, there was somereluctance to drive the corporate initiativeforward in the Industrial Productsdivision, particularly since it seemed toinvolve repeating what had already beenaccomplished.Lesson 6: While key stakeholders cansignificantly impact the success of atransformation project, the influence ofthese stakeholders depends on boththeir relative power and their individualposition. Tip the balance in your favor bymoving powerful stakeholders toward amore favorable view on the transformation.Also, remember that the cumulativeimpact of less powerful stakeholders isnot inconsequential and effort shouldtherefore be directed toward ensuringthat this cumulative impact remainspositive.Stakeholder CommitmentAs phase one of the transformation initiativeapproached its completion, therewas an unexpected need to identify areplacement for the head of corporatehuman resources. This resulted in thehead of HR at the Casting division tak-

CASE STUDYing over the corporate role and the appointmentof a new HR head within theCasting division. In addition, a new HRhead was appointed within the Laser-Tech division and one of the transformationproject’s key executive sponsorsretired shortly after the completion ofphase one. In aggregate, these transitionsgenerated considerable changewithin a group of stakeholders that wasof high importance to the ultimate successof the transformation. The cumulativeimpact of these changes was theemergence of an attitude that appearedto be far less favorable to the project.Lesson 7: Recognize that attitudes canbe influenced both positively and negativelythrough internal and external forcesover the entire course of a transformation.Attitudes can also shift throughneglect. It is therefore essential to regularlyverify that key stakeholders remaincommitted to the transformation andrespond promptly to role changes thatmight lead to the emergence of unfavorableattitudes. Attention should also begiven to maximizing the value of positivechanges in attitudes that result from unanticipateddynamics.Decision MechanismsA notable challenge for the LaserTechdivision was its lack of IT representationon the project team during the early stagesof the transformation. This limited theability of the divisional team to make decisionsrequiring IT expertise. Further tothis, a number of the decisions requiredover the course of the first phase of thetransformation were strategic in natureor involved significant changes regardinghow the divisions would operate.Thus, these decisions could not alwaysbe made by those directly involved inthe transformation project. This sloweddown the project decision-making process,bringing it into direct conflict withtime and budget constraints. As a result,it became necessary to rely on top-downrather than consensus-oriented decision-making.The shift from consensusorienteddecision-making was, however,seen as problematic. Since some of thetop-down decisions that were madecalled for a direction that was regardedas conflicting with divisional needs, thegoals of the project and the divisions beganto diverge over time.Lesson 8: Building consensus is importantbut it is also important to establishmechanisms that permit rapiddecision-making when required. Thesemechanisms should ensure that the requisitedecision authority will be accessible,when needed, for the duration ofthe transformation initiative. Decisionmechanisms must also aim to maintainthe continued commitment of key participants.No matter the level of transformationalcompetence, an organizationshould always be prepared to learn.ResourcesIn structuring the transformation, considerableattention was paid to ensuringthat representation was obtained fromboth the IT and HR functions at each ofTri-Divisional’s three lines of business.However, given that no one within theorganization had time allocated entirelyto the project, employees at each of thedivisions were under considerable pressureas they tried to complete projectwork while fulfilling their usual responsibilities.Consequently, there was somereluctance to take on additional projectwork. Such work was generally seen asan addition to routine responsibilitiesrather than as an undertaking of its own.This impeded the organization’s effortsto attract talented project team membersand to maintain their enthusiasm.69

CASE STUDY70Lesson 9: Transformation initiatives arenot part-time efforts. The scope of theirimpact requires the full-time attentionof key participants. Dedicating full-timeresources to a transformation initiativealso signals the commitment of executivesponsors to the success of the effort.Transformation, by its very nature,requires that an organization fundamentallychanges the way it operateswhile simultaneously fostering thecultural shifts needed to support thisnew way of operating.ContextThe LaserTech division was the result ofa merger between two fierce competitorsthat, although under the control ofthe parent company for 15 years, werenot formally merged until quite recently.Of the three lines of business, LaserTechwas the smallest, most complex divisionand the one that was hit the hardest bythe 2008 economic crisis. The especiallysevere impact of this crisis led to the stoppageof a consolidation project that hadbeen underway within the division. As aresult, HR personnel at LaserTech wereforced to continue maintaining three independent,largely redundant systems.This additional constraint on resourcesled to the transformation project beingincreasingly regarded as a burden withinthe division. While the need to undertakeprojects that benefit the wider organizationwas readily understood, continuedexpenditure of effort on such projects becamedifficult given the challenges thatthe division was facing. Furthermore, thegeographic distance between the headquartersof the LaserTech division andcorporate headquarters as well as thepresence of some language differencesstrained the situation. The result was animpression that the corporate organizationdid not fully appreciate the problemsthat LaserTech had to face.Lesson 10: Transformation initiatives areexecuted within a broader organizationalcontext and are significantly impacted bythis context. Success requires ongoingsensitivity and responsiveness to context.It can be all too easy to overlook theways in which organizational dynamicsand incentive structures undermine thechances of success. Efforts should thusbe made to be responsive to the uniquecharacteristics that surround a transformationinitiative.ConclusionPlans are now underway to build on thefoundations established in phase onethrough the introduction of transformationalcapabilities. In addition to implementinga basis for the transformationof HR processes, the first step of thisproject was intended to introduce a newway of working that involves cross-groupcollaboration and interdisciplinary representationfrom both the IT group andpersonnel from other functional areas.Some signs of success can be observedin a recent cross-divisional effort to consolidateTri-Divisional’s websites. It is,however, essential that the HR transformationcontinues to build on what hasbeen accomplished so far and to demonstrateclear value going forward if itis to maintain sponsorship for the moresignificant changes that lie ahead. Whenthinking about the future, it is important tounderstand what has been learned fromthe transformation efforts so far and toconsider how these lessons can be appliedto improving the success of subsequentsteps. Hence, the most importantlesson is to recognize that, no matter itslevel of transformational competence, anorganization should always be preparedto learn.

CASE STUDYServiceAUTHORSDr. Brent Furneaux is an Assistant Professor at Maastricht University’s School of Businessand Economics where he is involved in both regular and executive education programs.His research encompasses numerous topics related to technology innovation andtransformation. This work has been published in various conference proceedings, bookchapters, and journals. Brent has also worked for a number of years within the pharmaceuticalindustry.b.furneaux[at]maastrichtuniversity.nlRobert Günther is a Managing Principal at SAP and leading the Center of Expertise forTransformation Management with a focus on Organizational Change. Prior to SAP hewas a Manager at IDS Scheer AG in Business and Process Consulting where he supervisednumerous IT Transformation projects in the Automotive, Consumer Products, andManufacturing industry. He has considerable international experience from working withmajor clients in the US, Middle East, and Japan.robert.guenther[at]sap.com71BIBLIOGRAPHY►►Holmqvist, M. (2004). Experiential Learning Processes of Exploitation and Exploration Within andBetween Organizations: An Empirical Study of Product Development. Organization Science, 15(1),70-81.►►Kotter, J.P. (2007). Leading Change. Harvard Business Review, 85(1), 96-103.►►Levin, B. (2009). Transforming HR through a Multitiered Approach to the Delivery of HR Services.►►►►►►Employment Relations Today, 36(1), 9-16.March, J.G. (1991). Exploration and Exploitation in Organizational Learning. Organization Science,2(1), 71-87.Parasuraman, A. (2000). Technology Readiness Index (TRI): A Multiple-Item Scale to MeasureReadiness to Embrace New Technologies. Journal of Service Research, 2(4), 307-320.Whittington, R., Molloy, E., Mayer, M., Smith, A. (2006). Practices of Strategising/Organising: BroadeningStrategy Work and Skills. Long Range Planning, 39(6), 615-629.

COMMUNITYPortraits of Three BTA MembersMichael RosemannProfessor and Head of the InformationSystems School, Science and EngineeringFaculty, Queensland University ofTechnology, Brisbane, Australia72“I try to see something positive in everysituation, and I acknowledge that we canonly change the future, not our history.”Click here to download PDFInterview and BiographyPaul StratilHead of Corporate IT,SAS Automotive Systems GmbH“Pushing through your own position regardless of individuals,teams, or the organization, is not sustainableand does not work in the long run. I see this every dayin politics, business, and daily life.”Click here to download PDFInterview and Biography

COMMUNITYJörg StaffChief Operating Officer Human Resources (HR),SAP AG“I always strive to strengthen my own leadershipstyle and to train my business skills as well asmy personal coaching skills to support my owncareer plan.”73Click here to download PDFInterview and BiographyInterview Questions1. What did you aspire to become when you were a child?2. What is/are the highlight(s) of your current role?3. In which role do you think you work best?4. What was your biggest transformation? What did you learn?5. Which countries have you worked in and in which country would you like to work? Why?6. What do you think are the three most important factors for being successful in life?7. From which failure have you learned the most? What were the key learnings?8. What are the three most important virtues of a superior?9. What qualities do you appreciate most in your employees?10. In which area did you train yourself recently?11. What annoys you most in your daily role? And what do you do about it?12. How do you balance between work and life?13. What do you consider your biggest virtue? And your biggest vice?14. Which personal goals would you still like to achieve?

BOOK REVIEWMarkets, Myths, and MoralBook Review by Werner WagnerEconomics of Good and Evil:The Quest for Economic Meaning from Gilgamesh to Wall StreetTomáš SedláčekHardcover – 384 PagesOxford University Press, 201174Our thanks go to Donald Rumsfeld. At least in part.In 2003, the former US Secretary of Defense revivedthe term “Old Europe”. This grouchy politicianwanted his wording to be perceived as dismissive.He felt that some European states’ refusal to participatein the Second Gulf War for ethical reasons wasworth all the contempt. However, those on the receivingend of his condemnation embraced his neologismwith enthusiasm, since it has served themas positive identification of all the achievements oftheir continent in the fields of ethics and morality.Tomáš Sedláček, an economics graduate and universitylecturer in Prague, is transferring this attitudeof mind into our current understanding of economics.In his international bestseller “Economics ofGood and Evil” he reveals the fact that the questionof good and evil in economics is an almost eternaltopic – it has been around for the last 4.000 years.Building on that, the 35-year-old states that our contemporaryeconomic doctrine of a neutral, sterilescience is a special case and prevents us from solvingmany of today’s problems and challenges. Thedebt problems of the USA and Europe as well as theideology of growth are only two significant examplesfor him. For this reason, the reader should notexpect an intellectual extravaganza to solve theseissues. The book’s merit lies in Sedláček’s courageto present an uncompromising and unfashionablereview of what gave rise to the situation in whichwe currently find ourselves. And how to deal withit in a better way, rather than developing yet morecomplex models or theories.The first two thirds of his work lay the foundations.In doing so, Sedláček focuses specifically on thelegacy of his spiritual home, the Occident. In doublequick time, he covers the Epic of Gilgamesh, the Oldand New Testament (also the Jewish Talmud), half adozen antique Greek philosophers, and St. Thomasof Aquin, subsequently arriving at such importantrepresentatives of the modern age as Descartes,Adam Smith, Wittgenstein, and the epic movie “TheMatrix”. What awaits you is a collection of sharpsightedand yet entertaining conclusions from aneconomic and moral perspective – an amalgamthat was a matter of course for our ancestors, butwhich we have completely lost sight of today. ForSedláček, economics is a branch of social scienceswith high ethical relevance and not a specializedarea of mathematics or any other exact science. Atlast, somebody puts it on the table.The final third of the book is entitled “BlasphemousThoughts”. Tomáš Sedláček entirely dismantles theidea of a rational, self-serving “homo oeconomicus”who is constantly seeking to derive his own benefit.He deftly banishes the mathematical hocus-pocusthat surrounds demand and supply into the land ofmake believe. Future economists should be morelike prophets of a new era, who manage to reconcilereason and emotion, Sedláček’s synonyms forgood and evil. The divine rationale and the “animalspirits” combined are exchanging the imperialism oftheoretical models for a more beneficial “methodologicalDadaism”. Economists should dare to climbover their models and equations and let inspirationand the sensitivities of our spirit come in. This honestyversus the ambivalence of our human nature isworth being discovered and revisited.Our sincere thanks go to Tomáš Sedláček for hisrefreshing thoughts. And in no small part.Werner Wagner is a director at SAP’s BusinessTransformation Services and in charge of the industry-specificmanagement consulting within theEMEA region.werner.wagner[at]sap.com

COMMUNITYUpcoming: SAP Business TransformationSummit 2012 in BudapestAfter the successful “Global BusinessTransformation Summit 2011” in Barcelona,we are looking forward to the 2012edition of this annual event. It will be heldon October 11–12 in the beautiful CorinthiaHotel located in the heart of charmingBudapest, Hungary.We are excited to bring together onceagain a stellar group of senior executives,leading academics, and seasonedbusiness transformation experts. Everyparticipant will have the opportunity toexchange knowledge and best practicesin how to transform today’s organizations,create sustainable value, andmaster the challenges in the competitivemarketplace of the future. In short: Howto optimize your business performancethrough effective Business Transformationin an ever-changing environment.−−Dr. Michael von der Horst, ManagingDirector at Cisco, will illustratethe topic “Digital Enterprise Transformation”with the pioneering caseof Cisco.−−Prof. Dr. Philip Stiles from the Universityof Cambridge will enter intothe question: “How does Human Resourcestoday and in the future establishleadership key competencesto enable enterprises to culturallyand organizationally transform?”−−Nik Kafka, CEO and Founder of the“Teach a Man to Fish” initiative, willshare his thoughts about “TransformingEducation through Enterprise”.−−Devin Fidler, representing the Institutefor the Future in Palo Alto, willname the “Leadership Skills for aChanging World”.75You might be wondering who will be inspiringthe audience? We proudly announcesome of the invited speakers:−−Prof. Dr. Tomáš Sedláček, ChiefEconomist at the Czechoslovak TradeBank, will talk about the “Good andBad Economy” (see also the reviewof his book on the opposite page).−−Freddie Geier, Former Head of AppleGermany, will give an insider view onApple’s and Steve Jobs’s fascinatingsecrets of success.If you are interested in attending the conferencebut have not received an invitationyet, please follow these steps:1. Find more details and the registrationform on: www.sap.com/btsummit.2. Send your registration form till 21 Septo valuepartnership[at]sap.com3. You will receive detailed informationvia e-mail.We are looking forward to seeing you inBudapest!View of BudaCastle and theDanube river withthe Chain Bridge,connecting Budaand Pest, as seenfrom Gellert Hill

COMMUNITYPost-Merger Integration in the VineyardsA Summary of the European Business Transformation ConferenceWhich instrument offers the opportunity to combine economies of scale, economiesof scope, increased revenue and market share, cross-selling opportunities,and the potential for synergies? It is Mergers & Acquisitions (M&A). This topicwas the focus of this year’s European BTA Event, which took place from May 10thto 11th, 2012 in Wiesbaden (Germany).by Oliver Hanslik and Janine Jäger76In the past, the number of M&As hasbeen constantly increasing. But in orderto make a merger successful youneed to focus intensely on post-mergerintegration, since it is both one of themost important as well as most difficultparts before the benefits of the mergercan be reaped. At the European BusinessTransformation Conference in May2012, leading experts from differentcompanies and institutions gave insightinto lessons learned from an academicand a practical point of view.“Looking on a central topic fromdifferent angles is a great approachfor a thought leadership discussion.”A conference delegateChances are high that a corporate topmanager is faced with the challengeof a post-merger integration at leastonce in his career. Furthermore, empiricalstudies indicate that one out oftwo post-merger integrations performspoorly. History shows that mergers andacquisitions have been a common businesspractice for almost a century andthat professionalism in corporate M&Aefforts has grown over the last decade:Almost every transaction is evaluatedwith due diligence, with increasing involvementof external specialists suchas lawyers, auditors, tax consultants,and investment bankers. Yet challengeswith post-merger integration remainhigh and often result in negative impactson a company’s performance. Its topicalityand relevance was the reason forchoosing “post-merger integration” asthe main theme for this European BusinessTransformation Conference.The audience of the conference consistedof members of the Thought LeadershipNetwork – the integral part ofthe Business Transformation Academy(BTA) – as well as practitioners and academicsfrom various backgrounds. Theevent started on Thursday evening, May10th, with a tour through the vineyardsand wine cellar of “Schloss Johannisberg”(in the famous German wine regionRheingau). A wine tasting kicked-off thisspecial event, followed by a dinner onthe venue’s patio where the participantshad the chance to start networking andengage in interesting conversations.The nearly 70 attendees represented20 industries from Europe and otherregions such as Israel. Networking andmutual learning were crucial elements ofthe two-day agenda.On Friday morning, Prof. Dr. Axel Uhl,Head of the Business TransformationAcademy, welcomed the audience onthe campus of the European Business

COMMUNITYSchool (EBS) and gave an update on therecent activities and future direction ofthe BTA. He then introduced the audienceto the topic of post-merger integrationand subsequently led through theconference and its keynotes.The first presentation was held by Dr.Michael Eyett – Senior Vice PresidentCorporate Development at the internationalsteel company voestalpineAG – who focused on the preparationphase of a merger. He explained how tochoose the right strategic approach andwhat preconditions must be met in orderto make a merger a success that generatesvalue.integration and proves very difficult aslong as there is no clear picture of thefuture business model.Dinner at SchlossJohannisbergNext, Hans-Jürgen Seeger – Director forRegional Finance Europe at the chemicalgiant BASF – shared insights into howBASF integrated acquired companieswith a functional approach and elaboratedon critical factors. He emphasizedthe importance of change managementfor the transformation process, the impactof those changes for the whole organizationas well as external interestgroups, and presented the BASF “templateapproach” to transformation.After a delicious lunch in the EBS winecellar, Prof. Dr. Andreas Bohrer – Headof Transactions Legal at the multinationalpharmaceutical company Novartis – enteredthe stage. Based on practical experiencesfrom multinational integrationcases, he highlighted the importanceand inevitability of legal considerationsfor mergers, since they are driving thetiming and structuring of a post-mergerintegration.Dr. Hartwig Faber – former Director of ITInfrastructure and Operations at DaimlerITM – complemented the perspectiveswith an IT-view on post-merger integration.In particular, he shared experiencesfrom one of the biggest mergersin the automotive industry: the Daimler-Chrysler merger. He showed that IT integrationgoes hand in hand with businessLast but not least, the integration of theFrench software company BusinessObjectsinto SAP, which started in 2007,was introduced by Nicolas Schobinger,Senior Vice President and Head of Strategy& Business Development at SAPServices. Two corporate cultures hadto be merged, which was a major effortdue to the business size. Mr. Schobingerfocused on the alignment of services,which also included the coordination ofthe entire go-to-market strategy.For further information and pictures ofthe conference, please visit our homepage:www.360-online.comKey Learnings►►►►►►►►►►►►Post-merger integration is individual for each companyand each case.Legal risks can arise for each step of the M&A process,but mitigation planning is possible.IT integration should build on the defined future businessmodel and should be part of the whole transformationprocess.Involve people from the acquired company in the process.Identify intersections, combine all perspectives, andshare knowledge.If necessary, go back to a previous process step andstart again.77

COMMUNITYGlobal Business Transformation Manager (GBTM)Master Certification 2012In our last journal we have already presented youthis unique certification program – the world-widefirst master level training dedicated to the topic ofbusiness transformation management. It will takeplace from October 29th to November 9th in Potsdam(near Berlin), Germany. This open class trainingis targeted at top talents (from IT, HR, Finance,etc.), business transformation managers, as well asupper and senior management and is globally availableto 25 people.The purpose of the training is to further developyour transformational skills by sharing insights andknowledge about business transformation management.In order to act as a designer, advisor, andleader for business transformation, the participantswill learn about subjects like business transformationstrategies, the business transformation methodology,client and team management, as well asdesign thinking from this year’s exceptional trainersfrom various backgrounds.78Our trainers:Peter Szabó is the founder of SolutionSurfersInternational, the largestcoaching school in Switzerland. Heteaches post graduate courses incoaching at different universities andholds workshops on solution-focusedcoaching worldwide.Prof. Ulrich WeinbergUlrich Weinberg is the head of theHPI-School of Design Thinking. Heis a professor for computer animationat the Film & Television Academy Babelsberg(HFF) and a Visiting Professorat Communication University ofChina (CUC), Beijing.Manfred Winterheller is a successfulcoach and lecturer with an honoraryprofessorship at the University of Klagenfurtas well as a bestseller authorin the field of personal development,communication, and business planning.Guido Wokurka is director at SAPand heading Business TransformationServices in Western Europe with anindustry focus on telecommunicationsand the energy sector, with customersfrom e.g. UK, Scandinavia, Switzerland,Spain, and Germany.Andrew Kakabadse is professor ofInternational Management Developmentat Cranfield School of Managementand is currently embarked on amajor world study of boardroom effectivenessand governance practice.Michael Wenk is the Executive Directorof the Galli European Office. He is incharge of the development of projectsand events as well as the design andconduction of coaching for leaders ofnational and international companies.John Ward was professor of StrategicInformation Systems at CranfieldSchool of Management and now actsas a consultant to major internationaland public sector organizations.Further information:For a detailed description of the program and theapplication process, please check our website:www.bta-online.com/what-we-do/training/globalbusiness-transformation-manager-gbtm/

COMMUNITYNEWS FROM BTA GLOBAL NETWORK80The BTM 2 Handbook Will Be Available Soon!After a thorough process of revising, layouting, indexing,and finalizing, the handbook is going to be published inOctober 2012. It will be available at our Global Summit inBudapest on October 11-12, 2012. After that, you will beable to purchase it on our BTA website or via regular pressdistribution channels such as Amazon.In this handbook a wide range of theories will be discussedto help understand the phenomenon of transformation,with new content on key elements of transformation managementand new insights from various case studies. It isintended for C-level executives, reflective managers andconsultants, and those with an academic interest in changeand transformation.New Strategic BTA Partnership with HOLMBTA is proud to announce a new strategic partner: The House of Logistics &Mobility (HOLM) in Frankfurt am Main, Germany. HOLM represents a new generationof research and knowledge center all about logistics, mobility and associateddisciplines. It is a neutral platform for interdisciplinary collaboration,where new ideas are developed and projects with a variety of focal points aswell as different scopes and durations are realized. The spatial structure (20,000square meters under construction) provides optimal working environments andoffers a platform where universities and companies unite.For more information please visit: www.frankfurt-holm.comSAP Milestones! - The Multimedia Web Magazine40 years of innovation: “SAP Milestones” is the title of the dynamic web magazinewith which SAP brings its exciting history to life and enables contemporarywitnesses to tell their stories. The magazine reports about SAP’s influence onbusiness and information technology, deals with how people apply softwaretoday, and provides a glimpse into the future of IT. With videos and interactivegraphics, “SAP Milestones” offers its readers completely new possibilities to getto know SAP and provides insight into how the company developed from a fivemanstart-up to a global player with about 60,000 employees.Find out more about the SAP evolution: www.sap-milestones.com

COMMUNITYThe SAP LEAD ProgramIn order to further integrate business and IT and establish a new and effective relationship betweenthem, it is crucial that the two worlds understand each other and communicate in a language that bothunderstand. Bringing these two viewpoints together in a coherent and structured way is the most demandingchallenge an Enterprise Architect has to master.With the SAP Lead Enterprise Architect Development (LEAD) Program you will be able to build upnew competencies within your IT organization, enabling IT to become a strategic business partner.You will learn how to use Enterprise Architecture as a catalyst for transformation of the IT department,to integrate IT into the business and create a strong foundation for innovation and business modeltransformation. Applying Enterprise Architecture according to the SAP LEAD approach helps you todevelop a more agile approach to ongoing business changes.The SAP LEAD Program is a competency-based training program. It is about translating, enabling,designing, and implementing strategic objectives into operations. It focuses on hands-on knowledgedevelopment and measurable results. Because you have to apply your knowledge in a personal casestudy, you will also become familiar with the latest SAP methods and tools helping you to optimizeyour SAP landscape in order to extend it into a broad SAP platform as a change enabler for yourbusiness. The SAP LEAD Program is a powerful and unique combination of Enterprise Architectureand Business Transformation Management Methodology (BTM 2 ) combined as Enterprise ArchitectureTransformation.The next program starts on 31 October 2012 with several certification tracks. For further informationplease visit: www.sap.nl/lead81BTA Hub Singapore: Upcoming Research and "Centerof Attachment"In many countries, the growing global demand for transportationcannot be met. Based on the previous research ofthe Logistics Institute Asia Pacific, which involved resourcepooling, a System Dynamics simulation framework, and aCity logistics Cloud, the BTA Hub Singapore is planningfurther research:1. Exploring how maturing technologies, like mobile connectivity,cloud computing, and real-time analytics, canbe employed to design a transformative logistics businessmodel.2. Investigating the customers’ view on and acceptance ofsuch a model.3. Proof of concept for the attention of the administration onhow the model is going to work.The BTA Hub is also in discussion with the Infocomm DevelopmentAuthority of Singapore to nominate SAP as the“Center of Attachment” to train top talented people in theBTM 2 Methodology who will then prepare case studies.

PUBLICATION DETAILS OF360° – THE BUSINESS TRANSFORMATION JOURNALPUBLISHERBusiness Transformation Academy (BTA)c/o University of Applied Sciences and Arts Northwestern Switzerland (FHNW)School of Business (HSW), Institute for Information Systems (IWI)Peter Merian-Strasse 86CH-4002 Baselinfo[at]bta-online.comwww.bta-online.comwww.360-bt.comThe Business Transformation Academy (BTA) is a joint research project of the University of Applied Sciencesand Arts Northwestern Switzerland (FHNW) and SAP AG.The BTA is a Swiss non-profit association; it is registered with the Commercial Register of the Canton of Basel-Stadt under the name “Business Transformation Academy” and under the number CH-270.6.000.679-0 (legalnature: association).Authorized representatives: Prof. Dr. Axel Uhl, Lars Alexander Gollenia, Prof. Dr. Rolf Dornberger, Nicolas Steib,Prof. Dr. Jan vom Brocke, Paul Stratil.Disclaimer: Within reason the BTA strives to provide correct and complete information in this journal. However,the BTA does not accept any responsibility for topicality, correctness, and completeness of the informationprovided in this journal. The BTA does not accept any responsibility or liability for the content on external links towhich this journal refers to directly or indirectly and which is beyond the control of BTA.The materials contained in this journal are the copyright works of the BTA and the authors. Copying or disseminatingcontent from this journal requires the prior written consent of the BTA and of the authors.Legal venue is Basel, Switzerland.Note to the reader: The opinions expressed in the articles in this journal do not necessarily reflect the views ofthe BTA.Picture Credits: Cover background by violetkaipa/Shutterstock.com, cover pictures clockwise: by seewhatmitchsee,Fernando Madeira, Tom Wang, bloomua, and Tyler Olson at www.Shutterstock.com, and by SAP AG,montage by Sibylle Frutiger; Tom Wang/Shutterstock.com (cover, page 2); wongwean/Shutterstock.com(pages 4/5); Tyler Olson/Shutterstock.com (cover, 6); © chrionny/www.pixelio.de (16); courtesy ofwww.chidos.org (18); SAP AG (cover, 22, 40); courtesy of Allianz SE (50); www.Shutterstock.com (62); AdamGregor/Shutterstock.com (64); Dmitriy Shironosov/Shutterstock.com (67); by permission of Oxford UniversityPress, Inc, www.oup.com (74); courtesy of Christian Mehlführer (75); Janine Jäger/BTA (77); Jezper/Shutterstock.com(80/81); seewhatmitchsee/Shutterstock.com (cover, 82).Layout: Sibylle FrutigerPublished four times a year in electronic format.EDITORIAL OFFICEFor inquiries about the journal please contact: info[at]360-bt.com.Subscriptions: If you want to be notified when new issues are published, subscribe onhttps://www.bta-online.com/newsletter/ and tick the box labeled “360° Journal News”.