On the road to SAPPHIRE NOW – Part 1

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Transcript : 

Karl Culley: 00:01 Hello. My name is Karl Culley, your host for this very special edition of Driving the Future on the Road to Sapphire Now, where we’ll be previewing this huge event, Sapphire Now. Always a huge event. It’s the largest global business technology event, hosted by SAP and ASUG, and it’s going to be taking place in Florida between May the 7th and May the 9th. So it’s my great pleasure to be joined by guests Josean Mendez and Christian Huber and we’ll be talking about what they’re most looking forward to. Will it be the Lady Gaga concert, I wonder?

Thank you very much for joining us, gentlemen. Could you introduce yourselves and your roles? Maybe we’ll start with Josean.

Josean Mendez: 00:43 Absolutely. Hello, good afternoon, good morning, good evening depending on wherever you are. My name is Josean Mendez. I work in Capgemini. I work in the global partners organization. I have a privilege to be working on a very strategic project for Capgemini and, actually, for SAP, and we are going to talk about that in a moment. So, it’s about auto suppliers, so we should know what we’re bringing to market…with SAP. I also work with American partners in startups and new companies that will drive innovation into the ecosystem. So nice to meet you all.
Karl Culley: 01:27 Thank you very much, Josean. And Christian?
Christian Huber: 01:31 Also hello, everybody, from my side. My name is Christian Huber. I’m leading the Center of Excellence at SAP in Germany and I’m doing SAP for the last 18 years. And within Germany, I’m also responsible for all SAP-related business to our OEM partners and clients. I’m looking forward to this podcast and hope you enjoy it.
Karl Culley: 01:57 Great. Thank you very much. Well, we’ll start with this being a sort of automotive podcast focusing on the Sapphire Now event. Could you tell me what you think, perhaps we’ll start with Josean again, what you think the people from the automotive industry who are coming to the event are looking to achieve?
Josean Mendez: 02:18 Well, I think that first of all, Sapphire has always been an event where many people from different backgrounds, different industries can connect and exchange ideas about what is going on in the market. And right now, there is a lot of innovation these days that is driving companies to adopt and to reconsider, reimagine the way that they have been working in their companies. Specifically, in the auto industry, there are a number of forces that are in the market right now that are making all these companies reconsider, re-evaluate the way that they’re moving forward. Of course, there is consolidation in the space so many companies are trying to consolidate their systems into one umbrella.

They also are trying to have this ability, end-to-end, more than what they have in the past. So we go from where they’re building the parts until they can deliver, and the sourcing part of course, and also very important is driving new customer experiences. So I will say that the companies in this space will be looking to see, what are the innovations? What are the things that are available that they can use, in order for them to deal with some of these issues?

Karl Culley: 03:33 Many of those issues … I suppose, due to this tremendous flux in the automotive industry at the moment, the advent of the mobility system and so forth. Christian, would you like to add something?
Christian Huber: 03:48 Yes, thank you. So I think right now, we have a really, really interesting time for all companies who are dealing in the automotive area. If it’s an OEM or if it’s an automotive supplier. So, when it comes to OEMs, from my point of view, most of them, or maybe also all of them, are facing a change of their current business. So from car manufacturing to a more service-oriented company. So what services will be requested or needed in the future by customers, by persons who will drive a car? Will it move to more rental-oriented business that maybe persons or customers won’t buy cars anymore? They will just rent it. And then when they rent it, do they need any service that a car could provide?

So for instance, when it’s summertime, why do I need heating when I’m just driving from my … The whole industry is in a change, and [inaudible 00:04:54]. All the companies have the possibility to exchange their point of views, and also to get new thoughts. And I think SAP, SAP software, and especially Capgemini with our strong expertise in automotive, can really support the companies by the change of the business.

Karl Culley: 05:18 Great, great. Yeah, and it really is a huge event. I was wondering if you guys … Well, you must’ve. What are you impressions of the event, overall? Is it something you look forward to?
Josean Mendez: 05:30 Every year. I’m not keeping count, but I know that I’ve been there probably more than ten times. And it’s always a place for innovation. It’s always a place for exchange. It’s always a place where in the industry, people that are working in the SAP space, they always have something to tell customers. So, we drive a number of internal initiatives in preparation for Sapphire, so we can tell customers. And from the other side, I know that customers are waiting to hear about news from all the SAP partners in the entire ecosystem, because more or less, everybody gets almost in sync and now something around Sapphire or around that timeframe. For companies like us, we also are waiting to hear the innovations coming from the SAP side, because SAP is driving this industry forward. So SAP also does a number of announcements every year. So it’s an interesting time, to be quite honest, for everybody that is attending this on multiple levels. Sapphire has multiple audiences on the business side, on the technical side, so it’s a very comprehensive, very massive event.

Christian, you and I have met there a couple of times. What is your view?

Christian Huber: 06:50 I’m really looking forward to take the chance to meet all the different colleagues from Capgemini, on the one-hand side. It’s a really good point to connect to each other. But besides this, as we have all the management team from Capgemini on our board, and also all our customers, we will have a really strong possibility to connect to each other and to discuss current market trends. And of course, we have some really interesting use cases also at our booth where we can show our customers what we have done in the last couple of months, when it comes to intelligent enterprise. What use cases we were able to set up in our system, is it for artificial intelligence, machine learning, blockchain, IOT, or maybe also a mixture of them?

And also, as I said before and also what Josean has already mentioned, take advantage of [inaudible 00:07:51] that we have the right people at the right time at the right place, and to be connected to each other.

Karl Culley: 07:56 Great. And of course, we would encourage people to seek us out, seek our booth out to the event and come and have a chat. So I wonder if, Josean, you could talk a little bit about the great potential of S/4HANA and meeting the challenges faced by auto suppliers at the moment.
Josean Mendez: 08:13 Sure. Let’s talk about the S/4 and what it means for some of the companies, as you mentioned. Come back to what Christian mentioned about the need to move from manufacturers into providing a service, going back to some of the things that I mentioned during the introduction about some of the challenges that these companies are doing. First of all, let’s consider where many of them are. They have deployed systems, the system was deployed a few years ago. They’re running, maybe, with all their systems. But in order for them to really think about a new company, in order for them to conform their companies to a business model, they need for the systems to be supporting what they are trying to do, not in the way. What they’re thinking is, “How can I have a new system that will drive innovation forward?” Meaning that, whenever I think about a new business idea, I can put it in place as fast as possible.

S/4, for them, [inaudible 00:09:17] that promise. So if you go back to why SAP created S/4 and some of the problems they are trying to fix, S/4 is that system that is in the core, that is flexible enough through different innovations around that, increase the [inaudible 00:09:35] of those IOT, blockchain, [inaudible 00:09:38] SAP has, that will allow companies to embrace these innovations without actually disrupting what they already have in place.

So I will say, the first step that many companies are thinking is, okay, let’s move from my legacy, from the system that I already have in place, into a new core. And that core is S/4. And then once I’m there, then I can enjoy the innovations. And getting an enterprise is, I will say, at the core of the promise of leveraging data that is in the systems, processes that are in place all working together in an orchestration so companies can start innovating on top of that and moving their core and business model into the new ones. For example, providing these accessories. So S/4 is that.

Karl Culley: 10:28 I see, I see. And you talk about the core. You mentioned this word, ‘core,’ a few times. Is that pertaining particularly to the digital core priority offer of SAP?
Josean Mendez: 10:38 That is correct. In this case, the core refers to that backbone that runs your company. At the end of the day, if you consider a company, if you go very, very high level, there are certain processes that any manufacturer will do, any auto manufacturer will do. And that’s not the place where you actually innovate. That is the place of … That’s what you need to do. So if you can standardize processes, you can then dedicate time in the area that actually is new. It will put your company to an advantage, as opposed if you’re spending 70, 80% of your workforce dealing with things that are truly just there, you are then not utilizing your resources very well.

So when I mention here, the core, is that let’s make sure that we have a very stable core. Let’s make sure that we have the system in place and then we can dedicate our resources into the new area.

Karl Culley: 11:34 Christian, my next question would be, on Thursday, May the 9th at Sapphire Now, Stefan Krauss, the General Manager of SAP Manufacturing, Mining, and Mobility Industries, will be speaking. And speaking about this pressing need to change in this new reality for the automotive companies, could you talk a little bit about smart mobility and smart cities? The advent of these things.
Christian Huber: 12:05 Yeah, so they’re really interesting questions. So when it comes to all these, let’s say, smart dot, dot, dot, topics … smart cities, smart [victories 00:12:14], smart vehicles. So in the end, I think in a few years in the future, everything will be connected. And just assume that the vehicle is connected to the traffic light system and you would like to run smoothly through the traffic, try to use a kind of a green wave. Then the car will automatically reduce, or maybe increase and decrease the speed, that you don’t have to stop at a red light.

So just for instance, this could be one scenario where smart cities and smart vehicles, or smart cars, could be connected and all customers could leverage off of such news.

Karl Culley: 13:01 With the Internet of Things and the smart mobility, there’s going to be a vast amount of data to interpret. I wonder what your thoughts on that and how can S/4HANA help in that? It’s big data, I suppose, and huge analytics capabilities are needed.
Josean Mendez: 13:19 Data is at the center of, I will say, everything. Data, right now, is the new currency. You probably have heard that. Christian mentioned about everything being connected. Having a connected car, of course, will drive an experience that is better, but also, you think about automakers, auto manufacturers, OEMs… they will need this information in order to start making better decisions in their business. So at the center of all this, you will have massive data lake. In the case of SAP and its S/4, actually what they have mentioned a couple of times in the past is that you don’t need to export the data outside of the S/4 system in order to analyze the data. What SAP is saying is that, for clients that are already transacting on SAP, the data is on SAP and you have their capabilities with HANA, for example, that will allow you to analyze the data and make decisions.

So the intelligent enterprise is around this topic. It’s around the topic of, let’s gather this data in one place, let’s analyze the data where it is … we don’t need to export the data out, and at the end of the day, let’s make your core, let’s make your business more intelligent because now we have this data that will allow you to make better decisions moving forward.

VI was looking into the past with its insights. And AI, artificial intelligence, is looking into the future. And of course, you use your past in order to produce your future. But for that, you need data. So no data or bad data, then you cannot make good predictions or you cannot make better decisions. But that’s why it is so important.

Karl Culley: 15:12 Correct. So, for Christian, on Tuesday, the 7th at Sapphire Now the keynote from Geoff Scott and Mark LeClair of ASUG, will present their visions for the future and make announcements on breakthrough innovations. What are your particular predictions for where the automotive industry is headed? Or do we even know, it’s so fast moving?
Christian Huber: 15:38 Yeah, good questions, actually. I’m also looking forward to these keynotes. I think, so what I had mentioned before and also what Josean had said, that data is the new oil and we need to enable all companies, automotive of course but also other companies, to release the people to perform more analysis on this data and to do a prediction. So for this, it must be ensured that we can standardize more processes and machines have to do more, especially in the production mine. And also maybe, to develop more in robotics, also in finance departments, that we can really release people to do more important work on this data analysis. And with this, the whole business will change. And as I said before, all the OEMs have to think about new business models and how they can leverage or change the business to be more service oriented.

And for this, I think there will be a heart change, but it will not last very long. So I think in two or three years, we will already see the change in the market, especially in the automotive market. And when I could do a wish, it would be really great to have a really end-to-end view from the automotive supplier to the OEM, and then to the dealer, and finally to the customer about each movement and that we can collect data and that we can really do kind of a prediction and serve our customers very well.

Karl Culley: 17:21 Great. And Josean, what are your predictions for the future? And the automotive companies absolutely need to be ready for change.
Josean Mendez: 17:28 So Christian mentioned, for example, from a customer perspective, imagine that you’re already in your car … In the case of where people are still buying cars, then you want to get your car really fast, you want to make sure that you get your car. And then ultimately, it’s the experience after. You will be then driving that car every day and imagining that you have an interconnected system. So it means that there is a combination of, now hardware, but also software. So for example, there are some new manufactures and you think about their cars. Software is driving many parts of the system. The beauty about software is that you can deploy any framework, you can deploy any new update to a car that you already have. So imagine that, from one day to the next day, you have new capabilities in your car that you didn’t have before.

So I imagine a few years from now … again, assuming that people are still buying cars, because I think another trend will be people just simply consuming a car as a service, but let’s stay for the moment with the idea that people are still buying cars … you will then get a very sophisticated, almost computer where you’re riding … every time you go up, you go down, every day you use these as your transportation system and then you can have this for your company. I didn’t say car. I said a transportation system. Why? Because everything that you have today will be in the car. So maybe you have your mobile office there, you have your computer with your choices, who knows? We’re talking about ten years into the future. And when you are going in the mornings to the office, if the car, for example, is almost driving by itself or at least assisted driving, at least there are some parts where you can start doing some other kind of things that you cannot do in the car today.

Karl Culley: 19:26 Right.
Josean Mendez: 19:26 That’s a very, I will say, sophisticated view into the future. People will probably get this is a service, so you can literally change from any type of car that you need at any point in time. If today I’m going to work, then just give me the cheapest ride that can get me there. Or maybe I’m going over the weekend to take a road trip with my family, I want something large where I have a lot of room for my whole family. So I just simply want to pay a service. I want to receive a service, a transportation system that can take me from here to there. And I don’t care exactly what it is because what I only care is that I get the type of transportation vehicle that I need for the activity that I’m going to do. And in terms of the maintenance and all of that, that will be fully automated so the manufacturers, the entire suppliers chain, all this … we’ll take care about all that. I don’t need to worry about that. Even the insurance, even the maintenance, all that is done for me.
Karl Culley: 20:29 Okay, so we’re coming to the end of the podcast and thank you so much for joining us and thank you to the listeners. Are you looking forward to attending the Lady Gaga concert?
Josean Mendez: 20:46 You know, it will be interesting. I have never been in a Lady Gaga concert, so looking forward for sure.
Karl Culley: 20:48 And you, Christian?
Christian Huber: 20:48 Yeah, when it comes to Lady Gaga, I also haven’t been at any concert yet, so I’m looking forward to it. The final concert is always definitely on my to-do list. And, yeah, I will stay until Friday and then fly back to Germany.
Karl Culley: 21:04 Great, well, I hope it will be a fascinating and entertaining time. So that concludes this preview of Sapphire Now. Thank you very much for listening and thank you again to my guests, Josean Mendez and Christian Huber. Watch out for a post, Sapphire Now Podcast, coming to you shortly and some time after May the 9th, we will be talking about what my guests most enjoyed, the insights, and the highlight. Thank you very much.