THE BLOG
11/16/2014 11:44 am ET Updated Dec 06, 2017

The Next Business Frontier: Networks of Record

Systems of Record, Systems of Engagement, and Networks of Record - so many systems that describe how we work, who we work with, and where we work, facilitating the interconnection of business processes, people and communities. Organizations have invested heavily in Systems of Record, like CRM or ERP, for the past 40 years, but according to Sameer Patel, who is the Senior Vice President for the Collaboration and Network Software Business at SAP, and one of the smartest digital business and enterprise software innovation experts in the world, they leave a big piece missing, which is collaboration technology. This is where Systems of Engagement come to the rescue, and when done in the context of the business process, they allow organizations to fill in the white spaces of transactional systems to allow them to get the best out of the brains that are hidden inside their cubicles. Patel is a prolific social media collaborator and a must follow on Twitter (@SameerPatel).

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Sameer Patel (Twitter: @SameerPatel) - SVP at SAP

Patel believes that Systems of Engagement are the early phase of the next frontier of the enterprise which is Networks of Record. Patel says that Networks of Record are the definitive marketplace where we will engage and transact in focus-driven networks around the different activities that we perform in different parts of our life. Networks of Record are here - Uber is the Network of Record for Personal Transportation, Tripit is the Network of Record for Business Travel and SAP Jam is the Network of Record for Business Collaboration.

But while Networks of Record may at the nucleus of this massive digital transformation that entire industries are going through, before organizations jump in feet first, Patel says they need to start at the end - the intended customer experience. Patel shares with us the four forces that he feels will become the baseline of doing business as companies begin to truly transform beyond the mere digitalization of their business into the next frontier of the enterprise - Networks of Record.

Four Forces to Digitally Transform to Networks of Record

1. Experience - Patel advises that when undertaking digital transformation, it is important to start with the intended customer experience and then work backwards to figure out what people, data processes and content you need to wrap around that experience. "You're not starting off with how to build features, you start with the end, the intended customer experience and you look at the advances in technology today that can feed into that," says Patel. The intended experience is about more than how good the look and feel is, but how a company is using data at a fundamental level of analytics to be able to do everything from change the experience to experimenting with new things. "I think it is it is starting to understand from the foundation what analytics mean and asking how it will help me drive pricing and customer experience and then building products from the ground up. I think that is a fundamentally different approach to building not just online products, but physical products as well," says Patel.

2. Agility - Agility is tied to experience because of this ability to make changes in real time. Transformative companies like Uber can try new things, such as a new pricing model or new product or category of service and if it doesn't work, they can pull it back in seconds. It is hard to imagine a traditional business having that kind of fluidity. "The example of where Tesla can change the acceleration sequence on a car by sending a software update to the car - that to me is transformative," says Patel.

In-memory platforms, such as SAP's HANA cloud platform, can allow organizations to have real-time data. Patel says the idea is that your foundation is built off of an in-memory base that gives you the ability to react as fast as we have seen in some of the aforementioned examples. Patel says the beauty of it is that nothing is hard-coded. Because there is no playbook at the start, the only thing you can have is agility; giving companies the ability to turn left, turn right and block and tackle as needed.

3. Industry differentiation - Up until now, Patel says that he has not been that interested in cloud-based technology platforms, which he calls a "technology infrastructure concession" because for all the benefits of cloud technology, one of the problems is that cloud technology is sort of one size fits all. Therefore, he asserts that when we are all done putting cloud technology in place, we are all going to look the same and there will be no differentiation left to be had from technology. However, going forward, he says that the power of "platforms 2.0" is going to give organizations another shot at building their true software platform that will enable cloud technology to be an area for differentiation by allowing companies to tweak cloud-based technology to drive differentiation in their areas of core competency.

4. Network effects - Networks of Record center on very contextual engagement that can drive industry transformation, be it new data-driven operating models or even new products altogether. According to Patel, "I think when you start to look at the value of these networks that are very purpose-built around core activities that you and I perform, this distinction of building separate systems where I record data and where I engage is just completely artificial."

There are many examples which point to the fact that highly contextual engagement models drive tangible results, for instance in the Consumer Electronics industry, fully engaged shoppers make 44% more visits per year to their preferred retailer than do actively disengaged shoppers and SAP Jam has enabled 10x growth on their subscriber base in just nine quarters, connecting over 15 million employees, partners and customers at leading organizations around core business activities. Having the tools and networks where organizations can actually engage the individuals who might be buyers around the certain context in a more effective way, gives organizations the first right to do commerce and transact with them.

"Because you are going to drive experiences and you are going to create sticky market places like you never had before, to me network and analytics are the core of everything," says Patel. The analytics behind these data-driven networks create a definitive marketplace that makes it convenient for consumers to interact and transact with businesses, so Networks of Record have the ability to start to move buying purchase power just because of the convenience built around them.

You can watch the full interview with Sameer Patel here. Please join me and Michael Krigsman every Friday at 3PM EST as we host CXOTalk - connecting with thought leaders and innovative executives who are pushing the boundaries within their companies and their fields.