Category Archives: Cloud Readiness

Digital Disruption in Automotive

As part of our work with the Future of Cars special edition of Coffee Break with Game-Changers, I sat down with host Bonnie D. Graham and gave my point of view on who were the disruptors and who were being disrupted at the recent Best Practices for Automotive (#BP4Auto) event September 18-20 in Detroit.  Listen to the full cast below, with transcript follows.  For more event reviews, listen to my series re-cap for 2017 live, Tuesday October 10, 2017 at 10AM ET / 7AM PT or on demand here.

Bonnie: Welcome to SAP’s 3rd Annual Best Practices for Automotive Conference. We are bringing together hundreds of professionals in the automotive industry. They’re senior leaders, they’re decision-makers, analysts, super-users, support teams, solution providers, business process owners, we may even have some press and some students and educators there. Why? SAP is sponsoring and hosting a one-of-a-kind experiential event built around  three wonderful factors: learning, innovation, and peer collaboration. Does it get any better than this?

Hello, I’m Bonnie D. Graham, the producer and host of The Future of Cars with Game-Changers radio, presented by SAP. And on the other side of the microphone is, I can say, my good friend, and he has been many times on our radio series. He is now taking over as the owner of the Editorial Calendar for the Future of Cars—It’s William, I’m allowed to call him Bill, Bill Newman, Strategic Industry Advisor, North American Automotive at SAP.

Hi Bill, how are you today?

Bill: I’m good, Bonnie. How are you doing this afternoon?

Bonnie: I am well. I wish I was there with you in Detroit. I heard from David Parrish and Pradeep Amladi and everybody says it’s a great conference. I hear there’s some amazing cars here on the show floor. You want to tell me just for a second what you’ve seen before I get you my questions?

Bill: Yeah, sure. I mean, it’s a great event. We’ve got close to 400 people and we’re all here in Detroit, the hub of the car industry here in North America. We’ve got, I think, over 20 countries represented.

We’ve got a packed house full of great partners and vendors that are with us today, and we had a nice opening earlier today who is Stefan Krauss, who is our Global Head of our Automotive Industry here in Detroit. It’s just been really great to come together.

We were actually walking through the lunch line and I bumped into an old colleague from Volkswagen and we were joking about how this is a bit of a homecoming. Everyone kind of moves around in automotive and really, nobody leaves. It’s a nice intimate environment given so many people so I think everybody’s really got a nice vibe going on today.

Bonnie: That’s a really nice perspective, Bill. Thank you—I wasn’t planning to ask you that but I know that you’re a good on-your-feet talker, if you will. So I really appreciate that. I love the idea that it’s a homecoming of sorts and at the very end of the interview, in a few minutes, I’m going to ask you a question about why people who are listening to us but not there this year should be there next year. So maybe we can drop that word on them once again.

Bill Newman, our listeners are from all overall the world. You know, you’ve been on Game-Changers with me many times. We have a global audience and they’re wondering, what does SAP see as the top trends and/or the top challenges facing the automotive industry today? What’s your POV? What do you see, Bill?

Bill: I think in terms of a digital disruption, everybody’s trying to do it. There’s not an emerging standard or business model that all of the, let’s say, automakers and of course, their suppliers are moving, too. So they’re trying to understand, first of all, what is it that they’re trying to move to? We looked at autonomous shared electrified vehicles. What does that mean for a particular company and everybody’s trying to figure that out. And then as an aggregate, how is the industry going to move there?

You and I spoke very recently on our Future of Cars with Game-Changers show and we were talking about some of the new federal regulations that are going to allow a certain number, I think a couple thousand a hundred thousand vehicles, level three, level four autonomous vehicles over the next five years operate on the road.

Everybody’s trying to figure out, how do we digitize, so that’s operationally, and then how do we monetize? So if you look at some of the work that McKinsey and Roland-Burger and IHS, some of the other auto think tanks that have thought about—they’ve actually suggested that the big upside isn’t the car that you buy and we park it at our garage and it sits there for 70-80% of the time or more when we’re not using it but it’s really the digital services and the consumerization of the automotive is really another device.

Everybody’s trying to figure out where they play in that space and that, according to McKenzie, is going to be a $1.5 trillion dollar marketplace by 2030. So that’s huge. And you’re seeing some of the companies begin to make moves to put their bets on that. Maybe it’s the case of GM pulling out of Europe and selling their operations to Peugeot, PSA, and you’ve got winding down some operations that weren’t really performing particularly well in India and making their bets on high growth, BRAC markets, or the new digital space.

That’s just one example, but again, everybody’s trying to figure out what that means for them and arguably, if I can return to the GM example, that was a big thing. They have been working to become profitable in Europe for decades and finally, arguably achieved that to a point where they decided that they felt comfortable then, carving that out and putting those assets on other bets.

So, you don’t need to be the largest revenue car-producing company, but we want to get a share of the higher margin automotive services, vehicle space, next generation vehicle. Obviously, that’s a big bet that takes a lot of capital investment, so each automaker is sorting that out right now. That’s a really big deal in the industry.

Bonnie: Thank you, Bill. You answered my next question in advance. Let me just read the question. You covered it, but I have a part two to the question. I was going to ask you which of the top trends you’re seeing will spawn or spark, I should say, the most significant new business models in automotive? I think you just talked about that, so let me move to part two, which is, where is SAP in being able to be positioned to help companies realize the value, the benefit, the profitability of those models?

Bill: Well, I’ll go back to part one and tell you where the biggest barrier is right now, which is a question you weren’t going to ask me, so let’s go there. That’s talent management.

Bonnie: Really?

Bill: Absolutely. We’ve got all of these—you keep hearing about it—if you’ve got kids or friends with kids in school and they’re talking about STEM (science, technology, engineering, and math), they’re just not enough of those graduates to go around.

Now, SAP, in conjunction with many of their user groups, both in North America and throughout the world, have excellent qualification and certification programs ready. Graduates coming out of university and four-year colleges [are ready] to take on those positions, but they’re very competitive and other industries outside of automotive are vying for the same talent pool and resource.

Even in engineering and manufacturing practices, we see the lack of talent in those practices actually equating to—and this is the Center of Automotive Research – so this isn’t just something we’re pulling out [of the air] – a 6% capacity gap. Meaning that the whole industry could be operating at a 6% higher volume level rate right now if we had the talent available to do all of the things that we wanted to do, to make cars and to move to digital. So, that’s a pretty big gap. So what’s SAP doing? Certainly, we’ve got a number of functional expertise areas across.

So for example, to address talent management, to address procurement for digital leaders in finance and manufacturing, I think the exciting thing in automotive and in particular, is that we’re addressing three very specific needs in automotive.

The big data, with our large HANA platform and memory platform that’s been in production. We’ve got thousands of consumers, whether it’s analytics or running ERP or moving to a new S/4 platform that are being able to take advantage of that.

I think the second is business networks, so being able to monetize the purchasing power through our Ariba products, to look at time and expenses through Concur that tie back into finance. We’ve got these broad multi-million individual and company networks.

The third area, which I think is the most exciting, is SAP vehicle networks where we are creating apps that actually go into the on-board services of vehicles that our customers are making. And in this way, we truly are an automotive supplier now.

We are putting content and applications, whether it’s figuring out where you’re going to park next to where you can route and then bill your expense report or whether we can do some promotions or some consumer driven services, where you might go out to dinner.

All of those things are being developed now with our great customers and partners and they’re being targeted for use in both the commercial and light passenger vehicle market space. Truly, we can stand up and we can make our claim that SAP is truly an automotive supplier in that sense. I think that’s really exciting.

Bonnie: It’s very exciting. I wasn’t aware of that level of positioning, Bill. I’m still reeling over your comment that there’s a talent challenge, getting kids through the STEM programs and into the automotive industry to bring brilliance, not only in technical skills but probably in the way they think and the visionary qualities of how they approach—

Bill: Indeed.

Bonnie: Yeah, that’s where you cannot have a shortage, especially right now. You know what? This leads me—I think it’s a nice segue, Bill Newman, to my next question. Stefan Krauss, the opening keynote speaker at the conference today, asked the question of the audience, “Are you the disruptor or the disrupted?”

This goes back, I think, to your comment about the talent pool. How do you disrupt if you don’t have a talent pool that is helping you become the disruptor? Meaning you’re not the victim, but you’re on the leading edge. So let me ask you a question, Bill—what do you see at the event in terms of companies—on what end of the spectrum?

They might start out as disrupted and then move toward being the new disruptor and we know we’ve talked on Game-Changers radio that I’ve said, the industry is just layer upon layer of surprising disruptions. It just isn’t settling down anytime soon. Who’s attending? Are they disruptors? Disrupted? Or someone on that continuum?

Bill: Yeah, we’ve been able to see a few of the early breakouts and they’re just excellent, talking about everybody’s journey, whether it’s in people or talent or manufacturing or supply chain, it’s just really exciting. That’s what I like most about this program, in conjunction with our [friends at] Eventful Conferences and ASUG, which is our North American SAP user group. It’s really for SAP customers by SAP customers.

So you’re going to get a little of our teams and our positioning but really, it’s our stories that are coming from the field from colleagues—your own industry colleagues if you’re one of our customers, which I think is great. So I think we’re at a crossroads.

I think there are a lot of people here trying to understand and learn, which is wonderful, about what people are doing. And then you’ve got some digital leaders like Karma Automotive and others who have gone pretty deep into their digital journey with us at SAP. Arguably, Karma—I used to work at Volkswagen when we owned Bentley and Rolls Royce. We used to joke it was a vitamin business. You only had to sell one or two cars a day and everything was fine.

Arguably, Karma – the former Fisker Automotive – is a bit of that same uber-lux market. And they’ve literally invested talent—here we go, talent again—as well as capital assets into creating an uber-lux, not only buying experience for their customers, more of a concierge and thematic experience.

For example, if you feel like you’re fall and you want to go hiking, Karma will be happy to orient the interior the car to that theme, if you will. So it’s really the uber-lux experience. But also to the operations of the manufacturing of their new plant in Southern California. That’s very exciting and of course, it’s still a driver-powered vehicle, but digitized and electrified type of product. That’s really exciting to see.

And we do have some industry crossover, so Lockheed Martin spoke earlier this morning, giving a little bit of a story about what they see both from an aerospace as well as a contract vehicle manufacturing journey that they go through. Both very large and very small companies, and again, partners – we have such a fantastic partner ecosystem –  that are able to come in and play those specific roles to help our customers. It’s just really good to see. We’re going to see more over the next two days that we’re together.

Bonnie: Very exciting. You mentioned the word ‘electrified’. I was going to say what you’re telling me, Bill Newman, is electrifying. It’s very exciting. You mean seriously, uber-lux? You’re talking about customizing the interior of a vehicle for the experience you’re about to be taken to? What are you, talking about a wallpaper color or like the color of the floors? So what are you talking about?

Bill: Yeah. So, trims, maybe it’s the type of wood or the color scheme or the feel. Are you a rugged type of person or are you more of a plush person? That’s really the high-end experience. When you’re paying the low to mid six figures for a vehicle, you can begin to enjoy—

Bonnie: Anything you want.

Bill: Pretty much, right? And that’s the whole idea. It’s really a concierge experience and it’s all powered by SAP and our hybrid product suite as well as our S/4 enterprise and our operating environment for ERP. So it’s just really, really fantastic.

Bonnie: Well, that is really exciting. I was going to ask you a question we do at the end of all of our Game-Changers show. Look into the crystal ball and tell me what you predict will be the most dramatic game-changer for automotive between 2020 and 2025, but in my opinion, I think you just told me already. But do you have a different game-changer you want to predict, Bill?

Bill: Well, I think overall, everything is going to change. I think it was Mary Barra, CEO of GM, that said, we’re going to see more change in the next five to ten years in the auto industry than we have seen in the last 50. I think we’ve used this quote on your show before, but that was two years ago. It’s hard to really understand what the car as a vehicle will look like and express.

For those of you listeners who want to learn more, we’ve talked about trucks. We’ve talked about passenger cars. We’ve talked about taxis even most recently, and those shows are all on-demand. But I think it’s really going to be a question of how does the value chain look? So you could argue that the automakers currently, today, could end up being the fleet owners.

We all subscribe and you get a truck on the weekend and a nice passenger vehicle during the week and it rolls up to you and you drop it off or whatever. You buy subscriptions based on your miles and your vehicles come and go as you need them. Well, maybe the automakers don’t want to run that business. Maybe there will be emerging fleet companies.

Maybe the next generation, maybe the Uberized version of the car rental industry as we know it today, maybe they’re going to own the fleet. They’ll manage the maintenance. When you operate a vehicle at 80-90% or higher, there’s a whole different vehicle maintenance model that you have to think about. That’s a cost.

As we figure out how we monetize the vehicle today and into the vehicle tomorrow and we get to that tipping point where you’ve got more autonomous vehicles on the road than you do classic, traditional vehicles, that really becomes an interesting time. That’s the time where we get close to that. That’s when I think people are going to have to commit to certain business models and really take the plunge one way or the other.

So, I think that’s going to be—there are so many things changing that I think fundamentally, who owns the fleet is really going to be the big change that we’ll see over the next ten to twenty years.

Bonnie: Absolutely fascinating. Now I have one last question for you, Mr. Newman. I want you to just give me a one sentence answer because I know you want to get back to the event.

The event takeaway—there are people who are not among the 400 or so people who are there with you and Pradeep and David and Stefan right now. Why should our listeners who did not attend this year—why should they plan to attend next year? What’s the top reason to be there at Best Practices in Automotive in 2018? Bill Newman, one sentence.

Bill: I think it’s a homecoming and you learn so much from your peers. We mentioned it earlier—you just get to be with so many great people, people that we know, people that we work with, and you learn so much from those people and it’s not a pressure situation.

Everybody’s here to learn and engage and to have a good time. And take at least one thing away that they can put to work either in their plan or immediately into their business when they get back to the office. It’s a homecoming for those that want to learn and have fun.

I personally invite everybody to attend in 2018 back in Detroit and hope to see all of your listeners then.

Bonnie: Thank you. Bill Newman, it’s always such a pleasure and I must say, I learned so much from you during our brief time together today. This interview will be posted on our Future of Cars with Game-Changers radio landing page very soon.

I’m going to wish you a great rest of the event, Bill Newman. Can’t wait to hear what you have to say on our upcoming Future of Cars with Game-Changers radio shows. Have a great time and thanks for taking time out of a very busy schedule to meet with me, Bill. All the best.

And to our listeners, I’ll be back with more very soon. Bonnie D. Graham, signing off. Have a great day.

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Coffee Break with Game Changers 2014 Predictions Pt 3 – More on Convergence Forces

The popular internet radio talk show program hosted by Bonnie D. Graham returns for its third full season of predictions and trends which will impact business and technology. What will be the disruptive factors in the market in 20-14? I joined Bonnie and the panel during the fourth segment around 56:00 with my take on “convergence forces” to beg the question “can you fish in a tsunami?”

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My opening statement – besides my annual holiday Irish Cream recipe which you can find elsewhere on my blog – is summarized below. You can also find more on this blog and on my SCN page.

One of the big news stories in strategy, innovation and tech circles is the growth and convergence of four key trends from the past two years. These trends – social networking, mobile computing, cloud applications and big data – are not new.  In fact our firm covered these extensively in 2012 and continue to advise clients on how to leverage these trends strategically, both individually and collectively. What is occurring now as we move into 2014 is the cumulative effect of these trends into force directions of their own.  These so-called convergence forces – or what Gartner Group calls nexus of forces (NOF) – have a tendency to amplify and extend innovation in new and more powerful directions, much like strong winds, lunar position, and seismic disturbances can affect the behavior of ocean tides.  To put it another way, you might be able to plan to fish based on high tide but planning to fish during a tsunami is, well, a bit more complicated.

You can plan to fish in a high tide but fishing in a tsunami is a bit more complicated.

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Convergence Forces – The Coming Ethics Debate on Predictive Analytics and Location Based Services

One of the big news stories in strategy, innovation and tech circles is the growth and convergence of four key trends from the past two years. These trends – social networking, mobile computing, cloud applications and big data – are not new.  In fact our firm covered these extensively in 2012 and continue to advise clients on how to leverage these trends strategically, both  individually and collectively. What is occurring now as we move into 2014 is the cumulative effect of these trends into force directions of their own.  These so-called convergence forces – or what Gartner Group calls nexus of forces (NOF) – have a tendency to amplify and extend innovation in new and more powerful directions, much like strong winds, lunar position, and seismic disturbances can affect the behavior of ocean tides.

Photo credit, Cisco Systems.

One of the areas where we are seeing this play out is in the business to consumer pricing strategies of in-store retail.  Location based services – either by way of opt-in applications or mobile browsing cookies – allow known customers to log-in to store applications and view special VIP promotions, to quickly locate where items may be found in the store, and to recommend products which based on sentiment analysis and buying pattern might be of interest to the customer.  Location based predictive analytics can also help retailers determine the best location in a particular store to position items based on customer traffic (using big data to monitor your path via GPS as you actually browse the store or predict where you will go based on history and profile) as well as to dynamically create promotions based on your position and buying status.

Creating special offers and promotions based on an existing relationship is not new in the business to business world.  Suppliers and customers alike receive special treatment and extended services and bundle pricing based on volume of sales, excellent quality, and other relationship management KPIs.  In fact in the world of wealth management and retail banking, customers may find that with particularly large financial institutions the first question they are asked after pleasantries may be “what is your current relationship with us?” While this is hardly endearing to the uninformed, it does grant status to those who may, have for example, several accounts, a loan, a trust and other financial products all aggregated under the same customer portfolio with a particular financial institution.

Where things may run amok in the future is when customers (a) receive deferential pricing based on relationship without permission and (b) when a relationship is implied based on socio-demographic profiling or  when facial recognition technologies are employed.  Let me give two very possible scenarios.  I have an account at a sports and recreation retailer and I walk into the store. As a member I have given them permission to my specific profile information (where I live, what I purchase via history, my demographics) in exchange for an annual dividend at no fee.  The retailer has the ability while I am in-store to make me aware of specific items I might want and key promotions going on at that store on that day.  What the retailer can do is also annotate the base price while I walk through the store.  Meaning that what price I may see before logging in and what price I see after I log-in may be different.  Imagine digital price tags changing and updating dynamically as I walk through the store.  Now in this scenario I am going to assume that the incentive I have to purchase items is a benefit versus a cost so I assume that the store is truly giving me a deal even if they don’t.

Another scenario gets more futuristic but again the convergence forces suggest all plausibility.  I walk into a store that I don’t actively have a relationship with nor have I given permission to share my profile and demographic information.  However due to advances in facial recognition technology (such as what is available in Facebook and other applications commercially), the store can tap into vast image databases and make a best estimate at who I am based on my movements in the store and camera images obtained while I move throughout the store.  This correlation of implied relationship and implied demographics can, under the proper scenario, suggest promotions and product recommendations not aligned to my actual relationship nor my actual demographic and in extreme cases improperly tweak dynamic pricing levels.

While this extreme case is just that, convergence forces already have the attention of retail strategists, ethics experts, media tech publications and even sparked political debate. Earlier this year, U.S. Senator Charles Schumer (D-NY) suggested that analytics companies engaging in such practices without customer knowledge would be “intrusive and unsettling.” prompting the Senator to issue a statement with eight of the key location analytics companies in this space to a new code of conduct which would discourage such practices. Other industry segments have also begun to weigh in on the legitimate and ethical use of predictive analytics including higher education, which can use the technology as a early warning system for right-tracking student performance through degree programs.

Convergence forces in this area have already begun and the debate is reaching the mainstream.  What are your thoughts? And – outside of leaving your phone in the car or forgoing permission to give your profile information to any customer loyalty system or social media site – how do we as consumers protect ourselves from retail profiling when we don’t want it?

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Day 2 #SAPTechEd Live Blog

Here at SAP TechEd I’ll be mixing up a few blog posts with the streams from the day’s events as they occur and as announcements made. Follow me here and on Twitter (@william_newman).

Yesterday’s flurry of announcements around the new and open capabilities started strong in the morning and continued into the evening with a 10-year birthday celebration of the SAP Community Network.  Congratulations to Chip Rodgers and his team for a vibrant knowledge exchange!

A summary of key announcements, with links to be added as and when they become available:

  • Integration of the Hana Enterprise Cloud Platform with Hadoop, SaaS, with scalable sizing with multiple on-ramps for companies of all sizes depending how they would like to amortize their IT assets (or not).
  • SAP Mobile Platform 3.0 releases this week.  Lots of clean up and deeper extensions for mobile processes.  SMP 3.0 is the first release where mobile processes do not need to explicitly connect to back end business suite applications, since they are able to update the table directly.  Don’t have that process in business suite? It’s okay as long as you have good mobile data governance.  (Addresses the classic joke scenario: hey doctor, when my arm heals can I play the violin…. good because I wasn’t able to before … Now SAP customers can build apps to handle processes not found in their Business Suite environment, unencumbered by other enterprise architectural constraints I outlined in one of my earlier articles.) Also better control of renegade or so-called “zombie apps,” forgotten mobile apps from old BYOD and other development efforts still running and still consuming data.
  • Netweaver Gateway’s new release leveraging Open Data (oData) protocols allows for a fresh look at Microsoft integration.  With the new NWG Productivity Accelerator for Microsoft (called Gateway “PAM”) services can be delivered directly to Microsoft applications without the need of a server broker on the Microsoft side.  Lower TCO with higher accessibility to SAP operational data through Microsoft product environments, including a near-term SP1 release to connect Excel.  Plug-in friendly.
  • Cloud convergence became clearer.  Sven Denecken presented an update to the cloud roadmap and it is clear the SuccessFactors underlying architecture which is LOB-driven will be primary with modules reflecting Business Suite applications in ByDesign (ByD) will build on that architecture.  SAP has determined that its cloud EA footprint doesn’t need to be an either/or proposition.  This is good news for current and future SAP customers looking to migrate some business processes or entire operations to the cloud.

More information updated here as and when it becomes available.

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What to Look for: Microsoft Accelerator to be announced at SAP TechEd

Having just cleaned out my gear bag from this year’s Detroit International Half Marathon in the D, I am with keyboard in hand providing a few snapshots of what to look for next week at SAP Tech Ed.

First there will be more on Hybris and omnichannel marketing.  A lot more.  Since the announcement earlier this year a number of partners have come forward to address key scenarios.  This came up in my recent SAP Radio spot in a conversation around purposeful millennial consumers and how companies can weave corporate responsibility into their consumer facing strategies.

More cloud competition and predictive analytics, specifically around the kxen acquisition.  The acquisition is scheduled to be completed this month and since we are in the quiet period we haven’t heard much about roadmaps or strategies.  This could change at TechEd if the “all clear” is given to consummate the deal.  Could be newsworthy.

The clever folks in the NetWeaver Gateway team are releasing a new Productivity Accelerator for Microsoft (PAM).  Why the buzz?  Unlike other joint ventures with our friends at Microsoft, the NW Gateway PAM is a bi-directional environment with plug-ins and add-ins to Microsoft Office leveraging open data (oData) protocols.  This allows direct connectivity with Microsoft platforms, without “double conversion” via a Microsoft system. Accelerators much like “starter kits” in other SAP products means developers have pre-built handles unlike other previous approaches.  SAP hopes to tap into the estimated 65% of the SAP customer employees who currently use Microsoft products but currently don’t access SAP enterprise data in their day to day tasks.

A number of sessions including a customer small group discussion with Dr. Pepper Snapple are planned for the NetWeaver Gateway and Duet Enterprise teams.  You can see a full schedule at their SCN post.

Follow me on Twitter (@William_Newman) for more updates throughout the week.

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SAP Acquisition of KXEN Proxy War in the Cloud, Predictive Analytics Space

This week at the SAP Business Objects User Group Conference (SBOUC), Steven Lucas (President of Platform Solutions at SAP) announced the acquisition of predictive analytics and cloud-based solution platform KXEN.  This was position in response to SAP customer demand around greater workflow and process integrations with analytics in a cloud-based offering.  While the intent to acquire KXEN by SAP is not a done deal, the wheels are firmly on the track and the train is moving ahead to an October, 2013 close based on an analyst call hosted by both companies this morning.

The KXEN acquisition is definitely a good response to SAP customer demands in both the cloud and predictive analytics offerings.  At SAPPHIRE 2011, in private meetings with the analytics solution team, the direction of the solution roadmap for SAP in the space of predictive analytics was on the forward horizon view of many solution management team members.  As part of the product portfolio, SAP has a long-standing product development gate strategy with rigorous decision points on “make or buy” approaches to new product development. Acquiring KXEN is an acknowledgement that SAP – in at least this space of the predictive analytics field – needed to get in front of the customer based more rapidly than the organic product development cycles would allow.

The acquisition also speaks to a growing proxy war quietly playing out between SAP and Salesforce.com, arguably one of the leaders of the cloud-based sales force automation and marketing who has been cherry-picking talent recently from SAP’s Palo Alto and SuccessFactors Bay Area campuses.  Lucas came from Salesforce.com a few years ago to lead the SAP analytics and cloud platform efforts and in his current role targeting good partners (and the talent and products that come with them) to bring formally into the SAP ecosystem.  KXEN also has development solutions such as its Cloud Prediction which it launched at DreamForce 2102, and as such to direction of this and other product offerings on the Force.com platform is in question (this was directly asked during the analyst briefing at which point there was a “no change in direction” reply statement while at the same time acknowledging this and other products would enhance the HANA cloud offerings).  As the acquisition formalizes it is hard to understand how KXEN’s relationship with SalesForce.com, in short the buy appears to be away to poach and divert the product lines from Force.com to HANA while also getting a good look at the Force.com “wiring” as a part of the process.

As SAP makes more moves to shore-up its cloud and analytics strategy to support the HANA cloud offering, KXEN could be the first of several spot acquisitions in this field as SAP accelerates its product introduction cycles.

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Snowden Case Illustrates Gaps in Governance Policy

While the world watches Edward Snowden and his serendipitous travels and possible end game as he faces charges of US espionage at home, the security world has been asking the same question since the Guardian made its bombshell disclosures: How did this happen?

Photograph: The Guardian/AFP/Getty Images

Indeed despite any personal views on whether Snowden is a whistle-blower, a spy, or a confused young man one thing is certain.  With a relatively low analyst role inside of the National Security Agency (NSA), Snowden had access to large data piles of sensitive information – both metadata as well as content data – on the US surveillance programs.  While the deep content data was under the auspices of US government efforts to get a handle on thwarting terrorist attacks and cyber espionage from commercial and political entities, it illustrates what can happen when large organization do not pay attention to those able to come and go from their own systems and what information they can see.

Commercial organizations have been dealing with this problem for the past two decades.  In the outsourcing shift of the late 1990s and early 2000s, American and other Western-based companies looked to offshore security, network administration, and call center services to countries with lower wage knowledge workers.  Countries like Brazil, India and China began to sprout data centers and call centers creating huge demand for trained and skilled tech workers.  While many of these workers used their positions to eventually emigrate to developed nations, many remained close to families and absorbed good-wage, local jobs with very exciting large, multinational corporations.

And that’s when the fun stopped.  Once in, unless you have multi-tiered governance and access models over all systems users, these third party offshore providers found there were ways to increase their value by siphoning off intellectual property (IP) for use with related home country industries.  Granted the vast majority of offshore information technology providers were of good repute and legitimate in their contracts and task execution.  However while working for a government contractor – a large multi-national subject to ITAR and other commercial export and technology transfer laws – the candy store was discovered not only open but unlocked.

It seems in their haste and desire to spin-0ff a large offshore company that had been created for the purpose of taking care of their systems in a joint venture, headquarters personnel of this multinational corporation became aware of unusual logs in the use and view of certain key data files.  These files related to the design and manufacture of product governed by commercial and government controls, and did not have anything to do with the core systems management processes the offshore company was now contracted to provide and maintain.  In short, network administrators had such broad access based on the definition of their user profile they could essentially view, edit, delete and copy any product related files.  This led to a large discussion and renegotiation of the service level agreement between the multinational and offshore provider. Eventually a domestic systems management services provider was contracted to take on the network care over product and manufacturing data.

There will always be the Edward Snowden’s of the world, who feel they must act on what they see or re-purpose information that is available to them.  However with greater governance and controls of information policy we can limit the availability of future Snowden’s to have full visibility of information that is not on a need-to-know basis.  We have the tools and methods available to put these governance policies in place.  In both government and commercial sectors, responsible management is needed to do so.

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