Why A Digital Core Is Your Secret Path To Digital Transformation Success

Great article by Thorsten Haas from SAP around the Digital Core and why organisations need one. 

Digital transformation is happening everywhere. Our customers are demanding more individualism and immediacy. The people we hire are not the full-time workforce we’ve been accustomed to manage. And even our data is exploding in volume, flooding our systems – and our minds – with information.

Becoming a truly digital business means more than just adopting new technology to address these changes. It’s about knowing how to take advantage of waves of transformation happening all around us. It’s about seeing how these changes impact your workplace culture, business strategy, and operations. It’s about driving agility, connectivity, analytics, and collaboration to increase productivity and streamline operating models. More important, it’s about running a Live Business.

While most CEOs agree that digital transformation is critical, 70% of relevant initiatives will fail, according to McKinsey. The problem is not their people, processes, and tools. Instead, they are missing a critical piece to the overall digital puzzle: A performance infrastructure that supports the people, processes, and tools enabling and sustaining digital transformation.

What’s needed is a digital core – a core for a 21st-century enterprise.

The digital core: Connectivity, real-time action, and insight-driven decisions

During his SAPPHIRE NOW presentation “Design Your Strategy for Digital Transformation with SAP S/4HANA,” Wieland Schreiner, executive vice president of SAP S/4HANA at SAP, observed, “Nowadays, the consumer and end user are driving the business. It’s no longer a market for business-to-business and business-to-consumer models – it’s consumer to business. This is shrinking the value of transactions while exponentially growing the volume of transactions.” For SAP, the answer to this shift toward the end consumer and segment of one is SAP S/4HANA, the next-generation business suite. Creating the digital core, the suite provides immediate insights, intelligence beyond automation, integration between and across departments, and prediction and simulation capabilities.

This new reality is forcing companies to reassess and reform three critical areas: what they need to do, how they do it, and who they need to succeed. Take Kaeser Kompressoren, for example.

One of the leading innovators in air systems technology is repositioning its business model to seize untapped service revenue while raising its brand reputation. By using predictive models for machine learning and closed-loop integration, the company can trigger corrective actions in their products to help their customers avoid unplanned downtime. This added ability to anticipate events, customers’ use patterns, and operating needed is not just increasing machine efficiency and performance, but also giving its customers peace of mind.

By using a digital core to overcome complexity in its IT infrastructure, Kaeser Kompressoren now has real-time visibility into all critical processes that affect its customers, suppliers, workforce, data management, and devices enabling the Internet of Things. Decision makers can predict, simulate, plan and even anticipate future events with unprecedented accuracy.

What is it about the digital core that allows such a transformation to happen? According to Schreiner, “With the support of in-memory computing, businesses can support consumer and end-user decision making and learn from those experiences. The digital core then turns the system of record into a system of advice, accelerating the business’ pace based on real-time, informed decision support.”