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Dana Gardner: Hello, and welcome to a special BriefingsDirect
podcast, coming to you from the 2017 SAP Ariba LIVE conference in Las Vegas.
 |
| Gardner |
I’m Dana
Gardner, Principal Analyst at Interarbor
Solutions, your host the week of March 20 as we explore the
latest in collaborative commerce and learn how innovative companies are
leveraging the networked economy.
Our next digital business thought
leadership panel discussion focuses on how artificial intelligence (AI), the Internet of things (IoT), machine learning (ML), and blockchain
will shake up procurement and supply chain optimization. Stay with us now as we
develop a new vision for how today's cutting-edge technologies will usher in
tomorrow's most powerful business tools and processes.
To learn more about the
data-driven, predictive analytics, and augmented intelligence approach to
supply chain management and procurement, please join me in welcoming our guests,
Dinesh Shahane, Chief Technology Officer at SAP Ariba. Welcome, Dinesh.
Gardner:
We are here with Sudhir Bhojwani, Senior Vice President of the Product
Suite at SAP Ariba. Welcome, Sudhir.
Sudhir Bhojwani: Thanks, Dana. It’s nice talking to you.
Gardner: And we are here with Sanjay Almeida, Senior Vice President and Chief Product
Officer of Network Solutions at SAP Ariba. Welcome, Sanjay.
Sanjay Almeida: Thank you, Dana. I’m very excited about being here.
Gardner: Dinesh,
it seems like only yesterday we were confident to have a single view of a
customer, or clean data, or maybe a single business process end–to-end value. But now,
we are poised to leapfrog the status quo by using words like predictive and proactive
for many business functions.
Why are AI and ML such
disrupters to how we've been doing business processes?
Shahane: If
you look back, some of the technological impact in our private lives, is impacting our public
life. Think about the amount of data and signals that we are gathering; we call
it big data.
We not only do transactions
in our personal life, we also have a lot of content that gets pushed at us. Our
phone records, our location as we move, so we are wired and we are
hyper-connected.
Similar things are happening
to businesses. Since we are so connected, a lot of data is created. Having all
that big data – and it could be a problem from the privacy perspective -- gives
you an opportunity to harness that data, to optimize it and make your processes
much more efficient, much more engaged.
If you think about dealing
with big data, you try and find patterns in that data, instead of looking at just
the raw data. Finding those patterns collectively as a discipline is called machine learning. There are various techniques, and you can find a regression pattern, or you can find a recommendation pattern -- you can find all kinds of
patterns that will optimize things, and make your experience a lot more
engaging.
If you combine all these machine
learning techniques with tools such as natural language processing (NLP),
higher-level tools such as inference engines, and text-to-speech processing -- you
get things like Siri
and Alexa.
It was created for the consumer space, but the same thing could be available
for your businesses, and you can train that for your business processes.
Overall, these improve efficiency, give delight, and provide a very engaging
user experience.
Gardner:
Sanjay, from the network perspective it seems like we are able to take
advantage of really advanced cloud services, put that into a user experience
that could be conversational, like we do with our personal consumer devices.
What is it about the cloud
services in the network, however, that are game-changers when it comes to
applying AI and ML to just good old business processes?
Multiple intelligence recommended
 |
| Almeida |
From the enterprise and
business networks perspective, we have a lot of data; a lot of business data
about the purchases, the behaviors, the commodities. We can use that data to
make the business processes a lot more efficient, using some of the models that
Dinesh talked about.
How do we actually do a
recommendation so that we move away from traditional search, and take action on
rows and columns, and drive that through a voice interface? How do we bring that
intelligence together, and recommend the next actions or the next business
process? How do we use the data that we have and make it a more recommended-based
interaction versus the traditional forms-based interaction?
Gardner: Sudhir, when we go out to the marketplace with these
technologies, and people begin to use them for making better decisions, what
will that bring to procurement and supply chain activities? Are we really
talking about letting the machines make the decisions? Where does the best of
what machines do and the best of what people do meet?
 |
| Bhojwani |
I think human intelligence
is still here to stay. I believe, personally, it can be augmented. Let's take a
concrete example to see what it means. At SAP Ariba, we are working
on a product called product sourcing. Essentially this product takes a bill of material (BOM), and it tells you the impact. So what is so cool about it?
One of our customers has a BOM,
which is an eight-level deep tree with 10 million nodes in it. In this 10 million-node
commodity tree, or BOM, a person is responsible for managing all the items. But
how does he or she know what is the impact of a delay on the entire tree? How
do you visualize that?
I think humans are very poor
at visualizing a 10-million node tree; machines are really good at it. Well,
where the human is still going to be required is that eventually you have to
make a decision. Are we comfortable that the machine alone makes a decision? Only
time will tell. I continue to think that this kind of augmented intelligence is
what we are looking for, not some machine making complete decisions on our
behalf.
Gardner: Dinesh, in order to make this more than what we get
in our personal consumer space, which in some cases is nice to have, it doesn't
really change the game. But we are looking for a higher productivity in
business. The C-Suite
is looking for increased margins; they are looking for big efficiencies. What
is it from a business point of view that these technologies can bring? Is this
going to be just a lipstick on a pig, so to speak, or do we really get to
change how business productivity comes about?
Humans and machines working together
Shahane: I truly believe it will change the productivity. The
whole intelligence advantage -- if you look at it from a highest perspective like
enhanced user experience -- provides an ability to help you make your
decisions.
When you make decisions
having this augmented assistant helping you along the way -- and at the same
time dealing with large amount of data combined in a business benefit -- I
think it will make a huge impact.
Let me give you an example.
Think about supplier risk. Today, at first you look at risk as the people on
the network, and how you are directly doing business with them. You want to know
everything about them, their profile, and you care about them being a good
business partner to you.
But think about the second, third
and fourth years, and some things become not so interesting for your business.
All that information for those next years is not directly available on the
network; that is distant. But if those signals can be captured and somehow
surface in your decision-making, it can really reduce risk.
Reducing risk means more
productivity, more benefits to your businesses. So that is one advantage I
could see, but there will be a number of advantages. I think we'll run out of
time if we start talking about all of those.
Gardner:
Sanjay, help us better understand. When we take these technologies and apply
them to procurement, what does that mean for the procurement people themselves?
Almeida: There
are two inputs that you need to make strategic decisions, and one is the data.
You look at that data and you try to make sense out of it. As Sudhir mentioned,
there is a limit to human beings in terms of how much data processing that they
can do -- and that's where some of these technologies will help quite a bit to
make better decisions.
The other part is personal
biases, and eliminating personal biases by using the data. It will improve the
accuracy of your strategic decisions. A combination of those two will help make
better decisions, faster decisions, and procurement groups can focus on the
right stuff, versus being busy with the day-to-day tasks.
Using these technologies, the
data, and the power of the data from computational excellence -- that's taking
the personal biases out of making decisions. That combination will really help
them make better strategic decisions.
Bhojwani: Let me add something to what Sanjay said. One of the
biggest things we're seeing now in procurement, especially in enterprise
software in general, is people's expectations have clearly gone up based on
their personal experience outside. I mean, 10 years back I could not have
imagined that I would never go to a store to buy shoes. I thought, who buys
shoes online? Now, I never go to stores. I don't know when was the last time I
bought shoes anywhere but online? It's been few years, in fact. Now, think
about that expectation on procurement software.
Currently procurement has
been looked upon as a gatekeeper; they ensure that nobody does anything wrong. The
problem with that approach is it is a “stick” model, there is no “carrot”
behind it. What users want is, “Hey, show me the benefit and I will follow the
rules.” We can't punish the entire company because of a couple of bad apples.
By and large, most people
want to follow the rules. They just don't know what the rules are; they don't
have a platform that makes that decision-making easy, that enables them to get
the job done sooner, faster, better. And that happens when the user experience
is acceptable and where procurement is no longer looked down upon as a
gatekeeper. That is the fundamental shift that has to happen, procurement has
to start thinking about themselves as an enabler, not a gatekeeper. That's the fundamental
shift.
Gardner: Here
at SAP Ariba LIVE 2017, we're hearing about new products and services. Are
there any of the new products and services that we could point to that say,
aha, this is a harbinger of things to come?
In blockchain we trust
Shahane: The
conversational interfaces and bots, they are a fairly easy technology for
anyone to adopt nowadays, especially because some of these algorithms are
available so easily. But -- from my perspective -- I think one of the
technologies that will have a huge impact on our life will be advent of IoT
devices, 3D printing, and blockchain.
To me, blockchain is themost exciting one. That will have huge impact on the way people look at the business
network. Some people think about blockchain as a complementary idea to the
network. Other people think that it is contradictory to the network. We believe
it is complementary to the network.
Blockchain reaches out to the
boundary of your network, to faraway places that we are not even connected to,
and brings that into a governance model where all of your processes and all
your transactions are captured in the central network.
I believe that a trusted
transactional model combined with other innovations like IoT, where a machine
could order by itself … My favorite example is when a washing machine starts
working when the energy is cheaper … it’s a pretty exciting use-case.
This is a combination of open
platforms and IoT combining with blockchain-based energy-rate brokering. These
are the kind of use cases that will become possible in the future. I see a platform
sitting in the center of all these innovations.
Gardner: Sanjay,
let’s look at blockchain from your perspective. How do you see that ability of
a distributed network authority fitting into business processes? Maybe people
hadn't quite put those two together.
Almeida: The
core concept of blockchain is distributed trust and transparency. When we look
at business networks, we obviously have the largest network in the world. We
have more than 2.5 million buyers and suppliers transacting on the SAP Ariba Network
-- but there are hundreds of millions of others who are not on the network. Obviously
we would like to get them.
If you use the blockchain
technology to bring that trust together, it’s a federated trust model. Then our
supply chain would be lot more efficient, a lot more trustworthy. It will
improve the efficiency, and all the risk that’s associated with managing suppliers
will be managed better by using that technology.
Gardner: So
this isn’t a “maybe,” or an “if.” It’s “definitely,” blockchain will be a
significant technology for advancing productivity in business processes and
business platforms?
Almeida: Absolutely.
And you have to have the scale of an SAP Ariba, have the scale from the number
of suppliers, the amount of business that happens on the network. So you have
to have a scale and technology together to make that happen. We want to be a
center of a blockchain, we want to be a blockchain provider, and so that other
third-party ecosystem partners can be part of this trusted network and make this
process a lot more efficient.
Gardner: Sudhir,
for those who are listening and reading this information and are interested in
taking advantage of ML and better data, of what the IoT will bring, and AI where
it makes sense -- what in your estimation should they be doing now in order to
prepare themselves as an organization to best take advantage of these? What would
you advise them to be doing now in order to better take advantage of these
technologies and the services that folks like SAP Ariba can provide so that
they can stand out in their industry?
Bhojwani:
That’s a very good question, and that's one of our central themes. At the core
of it, I fundamentally believe the tool cannot solve the problem completely on
its own, you have to change as well. If the companies continue to want to stick
to the old processes -- but try to apply the new technology -- it doesn’t solve
the problem. We have seen that movie played before. People get our tool, they
say, hey, we were sold very good visions, so we bought the SAP Ariba tool. We
tried to implement it and it didn’t work for us.
When you question that,
generally the answer is, we just tried to use the tool -- tried to change the
tool to fit our model, to fit our process. We didn’t try to change the processes.
As for blockchain, enterprises are not used to being for track and trace, they are not really
exposing that kind of information in any shape or form – or they are very
secretive about it.
So for them to suddenly
participate in this requires a change on their side. It requires seeing what is
the benefit for me, what is the value that it offers me? Slowly but surely that
value is starting to become very, very clear. You hear more companies -- especially
on the payment side -- starting to participate in blockchain. A general ledger
will be available on blockchain some day. This is one of the big ideas for SAP.
If you think about SAP, they
run more general ledgers in the world than any other company. They are probably
the biggest general ledger company that connects all of that. Those things are
possible, but it’s still a technology only until the companies want to say, “Hey,
this is the value … but I have to change myself as well.”
This changing yourself part,
even though it sounds so simple, is what we are seeing in the consumer world.
There, change happens a little bit faster than in the enterprise world. But,
even that is actually changing, because of the demands that the end-user, the Millennials, when they come into the
workforce; the force that they have and the expectations that they have. Enterprises,
if they continue to resist, won’t be sustainable.
They will be forced to
change. So I personally believe in next three to five years when there are more-and-more
Millennials in the workforce, you will see people adopting blockchain and new
ledgers at a much faster pace.
A change on both sides
A change on both sides
Shahane: I
think Sudhir put it very nicely. I think enterprises need to be open to change.
You can achieve transformation if the value is clearly articulated. One of the
big changes for procurement is you need to transition yourself from being a
spend controller into a value creator. There is a lot of technology that will
benefit you, and some of the technology vendors like us, we cannot just throw a
major change at our users. We have to do it gradually. For example, with AI it
will start as augmented first, before it starts making algorithmic decisions.
So it is a change on both
sides, and once that happens -- and once we trust each other on the system -- nice
things will happen.
Almeida: One
thing I would add to that is organizations need to think about what they want
to achieve in the future and adopt the tool and technology and business
processes for their future business goals. It’s not about living in the past
because the past is going to be gone. So how do you differentiate yourself,
your business with the rest of the competition that you have?
The past business processes
and people and technology many not necessarily get you over there. So how do
you leverage the technology that companies like SAP and Ariba provide? Think
about what should be your future business processes. The people that you will have,
as Sudhir mentioned, the Millennials, they have different expectations and they
won’t accept the status quo.
Gardner: I
am afraid we will have to leave it there. We have been talking about how AI,
IoT, ML, and blockchain are poised to shake up procurement and supply chain
optimization. And we’ve learned how
today’s cutting edge technologies will soon be ushering in tomorrow’s most
powerful business tools and processes.
So a big thank you to our
guests, Dinesh Shahane, Chief Technology Officer at SAP Ariba; Sudhir Bhojwani,
Senior Vice President of Product Suite at SAP Ariba, and Sanjay Almeida, Senior
Vice President and Chief Product Officer of Network Solutions at SAP Ariba.
And a big thank you as well
to our audience for joining this special podcast coming to you from the 2017SAP Ariba LIVE conference in Las Vegas. I’m Dana Gardner, Principal Analyst at
Interarbor Solutions, your host throughout this series of SAP Ariba-sponsored
BriefingsDirect Digital Business Insights Discussions. Thanks again for listening,
and do come back next time.
Listen to the podcast. Find
it on iTunes. Get
the mobile
app. Download the
transcript. Sponsor: SAP Ariba.
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