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Enabling Productivity and Business Excellence in the 21st Century

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Closing the People Cloud: Adding Value in the and Process Gap in the Enterprise: Saba’s Next Generation SaaS Offerings Enabling Productivity and Business Joshua Greenbaum, Principal Excellence in the 21st Century Enterprise Applications Consulting EAC • 2303 Spaulding Avenue • Berkeley CA 94703 Joshua Greenbaum, Principal Fall 2010 Fall, 2015 tel 510.540.8655 • fax 510.540.7354 Enterprise Applications Consulting www.eaconsult.com josh@eaconsult.com • www.eaconsult.com


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    Table  of  Contents     Introduction:  Challenging  mediocrity  in  business  process  excellence  and  workforce  productivity    ........  1   Process  and  productivity:  The  state  of  business  today     ............................................................................  3   The  productivity  gap:  Technology  progress  and  human  progress    ...........................................................  5   Correlating  people  and  process  excellence:  Training  and  education  in  the  21st  century    ........................  8   Is  training  finally  getting  the  recognition  it  deserves?     ...........................................................................  10   Conclusion:  The  time  is  now    ..................................................................................................................  12          


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C l o s i n g   t h e   P e o p l e   a n d   P r o c e s s   G a p     Introduction:     Challenging  mediocrity  in  business  process  excellence   and  workforce  productivity     The  myriad  changes  in  technology,  business  processes,  and  the  workforce  have  made  managing  a  21st   century  enterprise  an  increasingly  complex  and  difficult  task.  This  blend  of  new  technologies,  globalized   business  processes,  and  a  major  generational  shift  in  the  workforce  has  resulted  in  a  complex  mix  of   opportunities  and  challenges  for  managers  and  executives.     While  business  leaders  have  struggled  to  stay  abreast  of  this  rapidly  changing  business  environment   across  the  globe,  the  reality  is  that  broad  indicators  of  business  progress  –  as  defined  by  looking  for   measurable  improvements  in  core  business  processes  and  worker  productivity  –  show  that  on  the   whole,  the  global  business  community  has  not  kept  pace  with  change.     Keeping  pace  is  possible,  particularly  since  the  advent  of  new  technologies  and  methods  that  can  close   the  gap.  Among  the  many  ways  to  close  the  gap,  one  has  surfaced  in  recent  years  as  perhaps  the  most   promising,  and  the  most  cost-­‐effective:  next  generation  employee  training  and  education.     For  many  companies,  the  lack  of  progress  towards  improved  business  processes  and  worker  productivity   has  been  the  result  of  not  being  willing  to  commit  enough  strategic  focus  and  capital  to  solve  the   problems.  As  long  as  revenue  and  profitability  targets  are  being  met,  even  if  they  are  sub-­‐optimal,  how  a   business  executes  its  core  processes,  how  it  deploys  its  human  capital,  and  whether  it  is  actively   optimizing  processes  and  people  all  too  often  takes  a  back  seat  to  the  tactical  job  of  meeting  short  term   financial  gains.  This  means  that  many  firms  yield  to  the  temptation  to  cut  costs  or  take  shortcuts  in   process  and  people  excellence  in  order  to  meet  their  short-­‐term  objectives,  ignoring  the  negative   implications  for  the  long  term.     The  problem  with  this  approach  is  clear:  papering  over  inefficiencies  can  be  a  marginally  successful   strategy  in  good  financial  times,  but  the  moment  markets  soften,  revenues  and  profits  fall,  and   competition  increases,  this  strategy  –  or,  more  accurately,  lack  of  strategy  –  becomes  an  anchor  that   prevents  a  company  from  sailing  to  safer  waters.  And  even  in  the  best  of  times,  a  more  strategic  focus   on  process  and  people  can  yield  important  results  that  further  both  short-­‐term  and  long-­‐term   objectives.  There  is  abundant  evidence  that  relatively  small  investments  in  optimizing  people,  and   somewhat  larger  investments  in  optimizing  process  can  yield  important  results  that  can  carry  a  company   to  new  competitive  and  fiscal  heights  while  mitigating  the  risks  that  come  with  market  downturns.     The  realization  that  this  process  and  people  gap  exists  is  not  lost  on  many  business  executives  and   managers.  What  is  lost  is  the  strong  correlation  between  the  two:  improving  either  one  without  taking   the  other  strongly  into  account  dooms  the  organization  to  further  mediocrity.  And  yet  the  knee-­‐jerk   reaction  of  many  business  executives  is  to  bring  on  new  technologies  –  by  buying  into  an  almost  30-­‐year   old  notion  that  more  technology  is  always  good  for  the  enterprise  –  without  accounting  for  how  that   new  technology  will  actually  be  used  to  improve  key  business  metrics  as  well  as  improve  worker   productivity.     © 2 0 1 5   E A C    1    


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C l o s i n g   t h e   P e o p l e   a n d   P r o c e s s   G a p     Clearly  new  technology  is  needed.  Many  enterprises  are  working  on  older  systems  that  are  unable  to   adapt  to  new  business  practices  and  new  business  realities.  The  fact  that  the  impact  of  new   technologies  on  the  workforce  is  ignored,  however,  combined  with  the  fact  that  the  role  that  the  rapidly   changing  workforce  will  have  on  how  new  technology  is  used  by  the  enterprise  is  also  ignored,  explains   why  investing  in  new  technology  doesn’t  solve  the  problems  it  is  intended  to  solve.   That  mistake  can  be  rectified,  and  the  time  to  do  so  is  now.  Closing  the  gaps  in  business  process   optimization  means  closing  the  gaps  in  workforce  optimization.  Without  the  people  part  of  the   equation,  acquiring  new  technology  in  order  to  improve  business  processes  and,  ultimately,  corporate   revenues  and  profitability,  cannot  succeed.  And  achieving  workforce  optimization  depends  squarely  on   one  simple,  until  recently  hard-­‐to-­‐achieve  requirement:  improve  training  and  education.     The  evidence  has  been  clear  for  decades  that  improvements  in  the  quality  and  quantity  of  employee   training  and  education  yield  strong,  measurable  results  in  productivity,  which  in  turn  impact  top  and   bottom  line  growth.  In  recent  years,  the  pace  of  change  has  been  accelerating  as  never  before,  requiring   new  business  processes,  new  technologies,  and  new  ways  to  engage  a  dynamic  workforce.  All  of  this   adds  up  to  an  even  greater  imperative  to  change  the  game  in  training  and  education  in  order  to  stay  in   the  game  –  and  hopefully  prosper  –  in  the  global  economy.     Another  factor  that  has  changed  is  the  availability  of  a  next-­‐generation  approach  to  training  and   education  based  on  online,  always-­‐on  accessibility,  peer-­‐led  instruction,  simulation,  and  highly   customizable  training  content.  In  this  regard,  SAP  SE  has  been  pioneering  the  availability  of  next-­‐ generation  approaches  to  training  and  education  that  fit  precisely  with  the  requirement  to  tackle  the   problems  of  process  and  workforce  optimization  in  a  highly  dynamic,  global  economy.  Services  such  as   SAP  Learning  Hub,  which  provides  hundreds  of  online  courses  for  training;  SAP  Learning  Rooms,  which   allow  collaborative,  peer-­‐led,  topic-­‐specific  learning  to  take  place  in  an  online  environment;  SAP   Workforce  Performance  Builder  software,  which  allows  training  professionals  and  others  to  build  highly   interactive  training  content  based  on  actual  enterprise  software  usage;  and  SAP  Live  Access,  which   allows  users  to  train  in  a  simulation  environment  based  on  their  company’s  actual  implementation,  are   all  part  of  SAP’s  strategy  of  closing  the  process  excellence  and  productivity  gaps  as  noted  in  this  report.1 It  is  via  the  new  capabilities  available  in  SAP  Learning  Hub,  SAP  Workforce  Performance  Builder,  SAP   Learning  Rooms,  and  SAP  Live  Access  that  businesses  can  now  deliver  what  is  needed  to  close  the   people  and  process  gap  and  address  the  changes  in  workforce  dynamics  and  the  technologies   companies  deploy.  All  that  is  needed  is  a  change  in  mindset  that  allows  companies  to  move  beyond  the   limitations  of  older  technologies,  processes,  human  resource  management,  and  other  impediments.                                                                                                                                 1  For  more  on  SAP’s  advanced  education  and  training  services,  see:  http://go.sap.com/training-certification.html   © 2 0 1 5   E A C    2    


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C l o s i n g   t h e   P e o p l e   a n d   P r o c e s s   G a p     Process  and  productivity:  The  state  of  business  today   While  much  has  been  made  of  the  impact  of  enterprise  software  on  individual  companies,  and  the   global  economy  as  a  whole,  the  fact  remains  that  there  are  still  significant  problems  to  solve  and  gains   to  be  made  by  the  application  of  new  enterprise  software  technology.  In  fact,  it’s  clear  that  new   problems  and  challenges  have  emerged  in  recent  years  that  are  pushing  up  against  the  limits  of  what   has  been  implemented  in  the  enterprise  to  date.  Research  from  a  broad  range  of  sources  points  to  a   leveling  off  in  the  21st  century  of  the  gains  in  process  effectiveness  that  were  made  towards  the  end  of   the  20th  century.     This  leveling  off  can  be  seen  in  a  number  of  key  metrics  that  measure  core  business  processes,  such  as   order  to  cash,  days’  sales  outstanding,  and  days’  inventory  outstanding,  among  others.  An  excellent   example  of  this  can  be  seen  in  the  results  of  a  global  survey  of  over  4,000  companies  conducted  by  the   management  consulting  firm  EY.  The  survey,  which  sought  to  understand  how  poor  cash  management   was  impacting  business  effectiveness,  looked  at  the  number  of  days  in  the  respondent  companies’  cash   to  cash  cycle  (C2C).  This  metric  is  a  key  indicator  of  overall  business  effectiveness  –  the  lower  the   number,  the  faster  a  company  can  locate  and  engage  customers,  deliver  products  or  services,  and   receive  payment.     The  findings  (see  Figure  1)  show  a  rapid  rate  of  decline  in  the  cash  to  cash  cycle  across  Europe  and  the   United  States  from  2002  until  2011,  at  which  point  Europe  continued  the  decline,  while  the  US  cash  to   cash  cycle  began  to  rise.  Both  regions  began  plateauing  in  2012,  and  continued  the  following  year.     Taken  by  itself,  EY’s  C2C  analysis  does  not  particularly  shed  light  on  why  this  plateauing  has  occurred,   and  if  it  is  even  indicative  of  a  trend,  or  is  an  anomaly  caused  more  by  external,  macro-­‐economic  factors   rather  than  internal  issues.  As  it  turns  out,  EY  is  not  alone  in  seeing  the  impact  of  these  phenomena.       Figure  1:  Cash  to  cash  levels  off  in  the  21st  century     Source:  All  Tied  Up.  Working  Capital  Management  Report  2014,  EY     © 2 0 1 5   E A C    3    


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C l o s i n g   t h e   P e o p l e   a n d   P r o c e s s   G a p     A  report  by  McKinsey  &  Co.,  which  also  looked  into  a  broad  set  of  companies’  C2C  cycles,  sheds  further   light  on  the  issue  (see  Figure  2).  The  McKinsey  report  compares  the  average  C2C  performance  of  the  top   performing  companies  (those  in  the  25th  percentile)  and  the  bottom  performers  (those  in  the  75th   percentile).  The  data  show  a  surprisingly  large  gap  in  C2C  performance  that,  as  it  is  the  result  of  an   aggregation  of  data  across  the  wide  range  of  companies  in  the  study,  points  to  a  systemic  process   execution  gap  between  companies  that  employ  best  practices  in  C2C  (the  25th  percentile)  and   companies  that  do  not.       Figure  2:  The  process  execution  gap  in  C2C     Source:  Uncovering  Cash  and  Insights  from  Working  Capital,  McKinsey  &  Co.  July,  2014     This  process  execution  gap  isn’t  only  evident  in  metrics  relating  to  financial  performance.  Other  key   metrics,  such  as  days’  inventory  outstanding,  also  suffer  from  a  process  execution  gap.  A  report  from  the   Performance  Measurement  Group  (see  Figure  3)  highlights  a  similar  gap  in  supply  chain  performance.   Companies  that  are  best  in  class  across  a  wide  range  of  industries  are  able  to  reduce  their  spend  on   supply  chain  management  as  a  percent  of  total  revenues  by  50  percent  or  more  relative  to  the  industry   average.         © 2 0 1 5   E A C    4    


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C l o s i n g   t h e   P e o p l e   a n d   P r o c e s s   G a p     Figure  3:  Supply  chain  management  spending  gap     Source:  PRTM,  The  Performance  Measurement  Group     What  these  and  other  data  show  us  is  that  there  are  wide  discrepancies  in  business  process  execution   across  companies,  regardless  of  whether  one  looks  at  them  across  different  geographies  or  industries.   The  common  denominator  in  all  these  data  is  the  fact  that  there  are  huge  gaps  in  performance  for  core   business  processes  that  are  well  known  and  understood,  and  for  which  there  has  been  a  large  body  of   software,  services,  and  best  practices  available.  This  begs  the  question:  Why,  if  the  global  economy   spends  hundreds  of  billions  of  dollars  on  enterprise  technology  and  software  to  improve  business   execution,  do  these  gaps  still  exist?  And  why,  assuming  the  plateauing  noted  in  the  EY  data  continue,  are   they  not  being  resolved?     The  productivity  gap:     Technology  progress  and  human  progress   In  considering  the  state  of  employee  productivity,  and  the  underlying  issues  relating  to  process   effectiveness,  it’s  important  to  consider  the  changes  in  both  human  capital  and  the  technology  available   to  employees  as  critical  factors  in  this  problem.  The  two  most  obvious  issues  impacting  the  enterprise  in   this  regard  are  the  rising  presence  of  the  millennial  generation  in  the  workforce,  and  the  rising   importance  of  the  digital  media  and  technology  that  these  new  workers  have  grown  up  with  and  are   bringing  to  the  job.     © 2 0 1 5   E A C    5    


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C l o s i n g   t h e   P e o p l e   a n d   P r o c e s s   G a p     A  study  by  investment  firm  Goldman  Sachs2  highlights  a  wide  range  of  important  characteristics  of  the   millennial  generation  in  the  United  States,  many  of  which  are  echoed  in  research  published  by  the   European  business  school  INSEAD.3  (An  important  difference:  millennials  in  Europe  are  not  slated  to   become  a  majority  of  the  population  anytime  soon;  the  50  and  older  cohort  remains  larger  than  the   millennial  generation,  whereas  in  the  United  States,  and  many  other  countries,  millennials  are  now  or   will  soon  constitute  the  majority  of  the  population.  However,  in  Europe,  millennials  will  quickly  become   a  majority  in  the  workforce  due  to  European  retirement  policies.  Millennials  already  have  this  distinction   in  the  US.)   Importantly  for  the  workforce,  one  of  the  main  characteristics  of  the  millennials  that  are  beginning  to   dominate  the  global  workforce  is  that  they  are  considered  to  be  “digital  natives,”  and  are  more  likely  to   use  social  media,  communicate  via  SMS/texting/chat,  seek  entertainment  online  as  opposed  to  via   broadcast  or  cable  television,  and  use  mobile  technology  in  work  and  play.     This  characteristic  in  turn  sets  up  an  important  set  of  criteria  for  millennials  in  the  workforce  that  impact   enterprise  process  effectiveness.  The  first  criterion  is  the  fact  that  millennials  expect  enterprise  software   functionality  and  user  experiences  to  be  in  line  with  a  mobile,  online,  touch-­‐based  user  experience,   something  that  much  of  today’s  enterprise  technology  cannot  provide.  The  second  is  that  millennials   expect  their  technology  to  be  intuitive,  requiring  a  minimum  of  training.  The  third  is  that  if  there  is  a   need  for  training  it  should  be  be  online,  highly  visual,  and  as  interactive  as  possible,  in  line  with  this   generation’s  technology  consumption  preferences.     These  three  criteria  dovetail  with  another  key  consideration  regarding  the  role  of  millennials  in  the   workforce.  Whereas  the  consumer  world  has  largely  made  the  shift  to  a  mobile-­‐first  user  experience,   the  enterprise  has  not.  This  means  that  there  remains  a  considerable  amount  of  legacy  software  and   business  processes  that  cannot  be  accessed  in  the  ways  that  digital  natives  would  like.  And  while  many   enterprise  software  products  have  made  the  shift  to  a  more  millennial-­‐friendly  user  experience,  the   underlying  business  processes  are  based  on  legacy  functionality  and  ways  of  doing  business.     This  means  that  despite  the  requirement  for  a  more  intuitive  learning  experience,  there  is  a   considerable  requirement  for  knowledge  transfer  to  the  millennial  workforce  from  the  previous   generation  of  workers,  particularly  around  legacy  processes  and  user  experiences.  Even  as  more  and   more  enterprise  software  moves  to  a  mobile-­‐first  UX,  it’s  clear  that  the  wholesale  replacement  of  older   technology  isn’t  going  to  happen  any  time  soon,  and  that  millennials  will  need  to  navigate  a  hybrid   world  of  new  and  old  technology  and  user  experiences,  and  be  shown  –  through  training  and  education   –  how  to  do  so.                                                                                                                                 2 3  http://www.goldmansachs.com/our-thinking/pages/millennials/index.html?cid=PS_02_18_07_00_02_15_01    http://universumglobal.com/millennials/   © 2 0 1 5   E A C    6    


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C l o s i n g   t h e   P e o p l e   a n d   P r o c e s s   G a p     The  Productivity/Technology  Gap   Against  the  backdrop  of  the  challenges  inherent  in  enabling  millennials  to  reach  their  full  potential  in  the   enterprise,  the  issue  of  relative  productivity  of  employees  adds  a  further  complication  to  workforce   empowerment  and  process  excellence.     A  report  by  the  Deloitte  Center  for  the  Edge,  From  exponential  technologies  to  exponential  innovation,4   reveals  an  important  truth  about  the  pace  of  innovation  in  technology:  while  technology  has  innovated   along  a  sharp,  upward  curve  since  the  beginning  of  the  century,  worker  productivity  has  largely   remained  stagnant.  (See  Figure  4.)     Figure  4:  Workforce  productivity  is  stable  even  in  the  face  of  massive   innovations  in  technology.     Source:  From  exponential  technologies  to  exponential  innovation,  Deloitte  Center  for  the  Edge                                                                                                                                   4  http://d2mtr37y39tpbu.cloudfront.net/wp-content/uploads/2013/10/DUP401_Exponential-Technology_vFINAL2.pdf     © 2 0 1 5   E A C    7    


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C l o s i n g   t h e   P e o p l e   a n d   P r o c e s s   G a p     This  stagnation  in  worker  productivity  in  the  21st  century  has  its  parallel  in  the  data  relating  to  process   excellence  cited  above.  Despite  the  best  efforts  of  vendors  to  build  and  deliver  the  latest  in  innovative   technologies,  and  despite  the  efforts  –  not  necessarily  best  efforts  –  of  companies  to  adopt  those  new   technologies,  there  remains  significant  gaps  across  the  board  in  core  processes  and  worker  productivity   that  desperately  need  attention.     Correlating  people  and  process  excellence:     Training  and  education  in  the  21st  century   While  it  would  be  overreaching  to  suppose  that  there  is  a  panacea  that  can  solve  this  problem,   enhancing  training  and  education  is  clearly  one  of  the  key  ways  in  which  the  problem  can  be  solved.  This   is  based  on  the  simple  fact  that  the  use  of  training  and  education  has  historically  been  highly  correlated   with  increased  productivity  and  process  excellence.  Indeed,  the  academic  literature  over  the  last  20   years  is  replete  with  studies  showing  this  correlation.  And  with  recent  improvements  in  training   technology  and  methodologies,  in  particular  SAP’s  recent  offerings,  this  correlation  is  slated  to  increase   significantly.   One  of  more  comprehensive  studies  on  this  correlation,  entitled  The  impact  of  human  capital  and   human  capital  investments  on  company  performance.  Evidence  from  literature  and  European  survey   results,5  published  by  the  European  Center  for  the  Development  of  Vocational  Training,  shows  a  wide   range  of  impacts  that  a  relatively  small  incremental  investment  in  training  can  have  on  a  company’s   productivity,  profitability,  innovation  capability,  service  quality,  and  stock  market  performance.       The  authors,  Bo  Hansson,  Ulf  Johanson,  and  Karl-­‐Heinz  Leitner,  analyzed  survey  data  on  private  sector   companies  conducted  under  the  auspices  of  the  Centre  for  European  Human  Resource  Management  at   the  Cranfield  School  of  Management  in  the  United  Kingdom.  The  survey  data  used  by  the  authors   included  results  from  over  8,000  companies.       The  results  showed  significant  differences  between  companies  that  were  in  the  top  10%  of  the  survey   population  in  terms  of  training  uptake,  versus  those  in  the  bottom  50%.  The  top  10%  had  on  average   9.21%  greater  profitability,  7.46%  greater  productivity,  and  a  9.8%  higher  rate  of  innovation  than  the   lower  50  percent.  Service  quality  in  the  top  10%  was  9.92%  higher,  and  overall  stock  market   performance  was  6.34%  higher.                                                                                                                             5  http://www.cedefop.europa.eu/files/BgR3_Hansson.pdf   © 2 0 1 5   E A C    8    


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C l o s i n g   t h e   P e o p l e   a n d   P r o c e s s   G a p     Figure  5:  Gains  for  companies  in  the  top  10%  of  their  markets  in  terms  of   training  uptake,  as  compared  with  companies  in  the  lower  50%,  and  average   increase  in  training  spend  (as  a  percent  of  wages).         Source:  The  impact  of  human  capital  and  human  capital  investments  on  company  performance.  Evidence  from   literature  and  European  survey  results,  the  European  Center  for  the  Development  of  Vocational  Training.     Perhaps  even  more  interesting  was  the  relative  difference  in  how  much  the  top  10%  spent  on  training  as   a  percent  of  wages  to  achieve  these  goals.  The  companies  with  higher  profitability  spent  on  average   0.6%  more,  the  ones  with  greater  productivity  spent  0.43%  more,  and  the  ones  with  higher  rates  of   innovation  spent  0.73%  more.  The  companies  that  performed  better  on  the  stock  market  spent  0.55%   more,  while  there  was  no  data  reported  for  the  percent  spent  achieving  higher  service  quality.  It’s  clear   from  this  study  that  a  relatively  small  investment  in  training  and  education  can  go  a  long  way  towards   meeting  a  wide  range  of  highly  strategic  corporate  objectives.     The  authors’  survey  of  several  dozen  studies  on  training  and  the  enterprise  showed  other  positive   results  as  well.  Lower  staff  turnover  and  improved  management/labor  relations  were  also  attributed  to   high  degrees  of  investment  in  training.  Other  studies,  such  as  the  one  published  in  2001  by  Alan  Barrett   and  Philip  O’Connell  of  the  Economic  Research  Institute  in  Dublin,  looked  at  whether  the  impact  of   training  at  a  company  in  a  given  year  (1993)  had  an  impact  on  not  just  productivity,  but  productivity   © 2 0 1 5   E A C    9    


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C l o s i n g   t h e   P e o p l e   a n d   P r o c e s s   G a p     growth  as  well.  By  looking  at  the  change  in  worker  productivity  between  1993  and  1995,  the  authors   were  able  to  show  training  “to  have  a  positive  and  significant  effect  on  productivity  growth.”6     These  and  other  studies  in  the  US  and  Europe  show  that  investments  in  training  can  have  positive   impacts  across  the  board  and  that  SAP’s  focus  on  providing  state-­‐of-­‐the-­‐art  training  and  education   services  comes  at  a  perfect  time.  Ironically,  the  availability  of  these  studies  has  had  little  impact  on  the   spending  for  and  prioritization  of  training,  particularly  in  the  early  years  of  the  century,  which,  as  has   already  been  demonstrated,  was  a  period  of  stagnation  for  both  process  excellence  and  worker   productivity.  Much  of  the  blame  for  this  lack  of  impact  can  be  laid  firmly  at  the  feet  of  the  providers  of   training  and  education  technology  and  services,  most  of  which  were  focused  on  a  classroom  model  that   required  trainees  to  travel  to  training  centers  and  spend  days  at  a  time  “learning”  in  an  outmoded   setting  based  on  general-­‐purpose  training  materials  that  often  had  little  or  nothing  to  do  with  the  actual   system  that  the  trainees  were  expected  to  master.  It’s  small  wonder  that  this  approach  yielded  limited   results.     The  question  that  remains  is  whether  those  who  have  a  stake  in  reversing  this  stagnation  –  and  who   understandably  were  put-­‐off  by  the  poor  state  of  the  art  in  training  and  education  –  understand  what   training  and  education  can  do  to  help  close  an  enormous  set  of  gaps  in  people,  process,  IT,  and  business.   Is  training  finally  getting  the  recognition  it   deserves?     A  ray  of  hope  that  these  issues  are  helping  to  alter  perceptions  can  be  seen  in  a  study  published  in  2014   by  Oxford  Economics  and  supported  by  SAP.  The  study,  Workforce  2020,  The  Looming  Talent  Crisis,7   surveyed  more  than  2,700  executives  and  an  equal  number  of  employees  in  27  countries  regarding  the   critical  issues  relating  to  workforce  issues  in  the  enterprise  of  today  and  tomorrow.     Two  key  results  are  worth  mentioning  in  the  context  of  this  report.  The  first  is  that  the  need  for   improvements  in  training  surfaced  as  a  key  critical  path  for  the  companies  and  employees  surveyed:   Fully  44%  of  respondents  signaled  that  increases  in  training  were  required  in  order  to  deal  with  changes   in  the  workforce  (see  Figure  6).                                                                                                                             6 7  http://ftp.iza.org/dp51.pdf    http://www.successfactors.com/en_us/download.html?a=/content/dam/successfactors/en_us/resources/white-papers/sapworkforce2020-research-report.pdf   © 2 0 1 5   E A C    10    


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C l o s i n g   t h e   P e o p l e   a n d   P r o c e s s   G a p     Figure  6.  Impact  of  the  changing  nature  of  work.   What  impact  is  the  changing  nature  of  employment  having  on  your  company?     Source:  Workforce  2020,  The  Looming  Talent  Crisis,  Oxford  Economics     Equally  important  was  the  relative  lack  of  progress  in  meeting  these  goals  (as  shown  in  Figure  7).  Barely   one  third  reported  that  their  companies  were  making  good  or  significant  progress  towards  the  goal  of   creating  the  workforce  they  need  to  meet  the  changes  in  business  requirements.  The  remaining  two-­‐ thirds  are  making  slight  or  moderate  progress,  which  signals  that  the  while  the  recognition  of  the   problems  is  high,  a  tremendous  amount  of  work  is  needed  to  complete  the  job.     Figure  7.  Progress  toward  goals  of  building  a  workforce  to  meet  future   business  objectives.  To  what  extent  have  you  made  progress  toward  your  goals   of  building  a  workforce  to  meet  future  business  objectives?     Source:  Workforce  2020,  The  Looming  Talent  Crisis,  Oxford  Economics     Can  education  and  training  solve  all  the  problems  of  process  and  workforce  productivity  stagnation?  Is   increasing  education  and  training  enough?  Should  this  be  the  only  measure  of  progress?  Clearly,  process   effectiveness  and  workforce  empowerment  depend  on  a  multitude  of  factors,  some  within   © 2 0 1 5   E A C    11    


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C l o s i n g   t h e   P e o p l e   a n d   P r o c e s s   G a p     management’s  purview,  and  some  relating  to  macro  and  micro  economic  factors  beyond  management’s   control.  It  seems  clear,  however,  that  in  looking  at  the  intersection  of  the  problems  engendered  by  a   changing  global  business  climate  –  i.e.  the  need  for  improved  process  execution  and  the  need  to  better   empower  a  changing  workforce  –  improving  training  and  education  must  be  relatively  high  on  the  short   list  of  solutions  available  to  the  enterprise.       Conclusion:  The  time  is  now   The  disconnect  between  process  excellence,  technology  uptake,  and  the  changing  workforce  is  at   present  a  slow-­‐moving  threat  that  will  only  build  over  time  as  the  imperative  to  meet  the  needs  of  a   changing  business  and  workforce  climate  run  into  the  relative  stagnation  in  process  excellence  and   workforce  productivity  that  has  characterized  the  21st  century.  The  need  to  enable  new  process   excellence  is  well  defined,  and  vendors  such  as  SAP  have  built  a  portfolio  of  products  and  services  that   help  to  enable  this  process  excellence.  Providing  the  environment  for  excellence  to  thrive,  however,   requires  better  engagement  with  a  changing  workforce,  which  in  turn  requires  significantly  different   modes  of  interaction  than  have  been  available  from  enterprise  software  in  the  past.  Simultaneously,  this   new  workforce  needs  to  understand  not  just  how  to  leverage  its  status  as  the  first  generation  of  digital   natives  in  the  quest  to  improve  business  excellence,  but  also  to  connect  to  the  past  by  understanding   how  to  use  the  legacy  systems  that  still  run  core  processes  in  the  enterprise  and  will  be  part  of  hybrid   business  process  environments  for  many  years  to  come.     Advanced  training  and  education  are  some  of  the  best  guarantees  for  success  in  managing  these   challenges.  As  the  data  in  this  report  show,  it  takes  a  relatively  small  incremental  change  in  spend  on   training  and  education  to  yield  significant  results.  And  advances  in  training  and  education  from  SAP  that   have  progressed  since  the  studies  cited  here  were  undertaken,  make  it  easy  to  believe  that  the   contributions  to  training  and  education  noted  in  the  research  would  potentially  be  even  greater  still.     Much  of  this  increased  value  comes  from  changes  that  SAP  has  helped  pioneer,  with  the  specific  goal  of   solving  the  problems  noted  in  this  report.  This  is  why  SAP  Learning  Hub,  SAP  Learning  Rooms,  SAP   Workforce  Performance  Builder,  and  SAP  Live  Access,  are  all  part  of  SAP’s  strategy  of  closing  the  process   excellence  and  productivity  gaps  noted  in  this  report.  SAP’s  training  and  education  services  –  which   were  recently  made  available  as  cloud  offerings  that  leverage  technology  like  SAP  HANA  Cloud  Platform   –  will  enable  companies  that  have  recognized  the  necessity  of  training  and  education  to  engage  and   empower  a  changing  workforce  using  the  tools  and  methods  that  make  the  most  sense  for  challenges  at   hand.       Regardless  of  industry  or  geography,  the  issues  surrounding  process  excellence,  worker  productivity,   and  the  emerging  millennial  generation  are  here  to  stay.  How  companies  respond  to  these  challenges   may  differ  dramatically  from  company  to  company,  but  there  is  one  constant  that  needs  to  inform  every   company’s  strategy:  moving  quickly  to  embrace  advanced  training  and  education  is  a  critical  success   factor  for  all.  The  stagnation  and  unfilled  promise  discussed  in  this  report  are  the  result  of  many  factors,   but  poor  training  and  education  are  by  far  the  most  important  common  denominators  in  all  of  them,   and  fixing  training  and  education  should  be  one  of  the  first  steps  towards  process  excellence  and   improved  productivity  that  a  company  should  take.  To  do  otherwise  is  to  repeat  the  mistakes  of  the   past,  and  in  today’s  business  climate,  that’s  a  luxury  no  company  can  afford.     © 2 0 1 5   E A C    12    


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