Carl Lewis interviews Luis Margules, Senior Vice President at SAP. In his role as the SVP responsible for sales of SAP Business One and SAP Business by Design, Luis Margules observes many small and medium businesses endeavor to become “intelligent enterprises.” Listeners on the way to this lofty goal will appreciate this podcast discussion.
Carl Lewis: Welcome to the Connected Enterprise Podcast, where our guests tell us how they stay connected. I'm your host Carl Lewis from Vision33, and my guest today is Luis Margules, Senior Vice-President from SAP. Luis, please tell the audience a little bit about yourself and your role at SAP.
Luis Margules: Hey, thank you for inviting me, Carl. I run what I believe is the most exciting part of the SAP portfolio: Business One and Business by Design. Those are the two premier ARPs that SAP uses to address the needs of small and medium businesses with less than 100 employees. And to give an idea of why I feel so excited, it’s because we’re the number one contributor of new customers. The reason is that we continue to expand market share and market reach just because of what we do with Business One and Business by Design.
Carl Lewis: That’s very exciting, and you know I've been in that area a long time too, and the tremendous growth and the number of customers have been an exciting thing to be part of. Luis, there are a lot of buzzwords around artificial intelligence, machine learning, the internet of things, and the cloud, but I wonder, from your vantage point in the industry, when you look at automation today, what are other people talking about? What are they doing?
Luis Margules: I think the big buzzword these days is something like ‘intelligent enterprise.’
Carl Lewis: Okay.
Luis Margules: We can do a long story about machine learning, RUT, artificial intelligence, and so forth and they would be true because those are the technologies powering the intelligence enterprise revolution. From my point of view, the intelligent enterprise is about two things. One is about the employees and allowing them to shift from repetitive low-value activities to high-value impactful activities. And the second is about the customer experience. The ability to create an environment for customers to interact with customers and feel a thrill in doing so. Compare that with the reality of an employee doing accounts, payment, accounts receivable, payment reconciliation, and going through invoice after invoice – the tedious work. Imagine what it takes today to talk to a customer service agent of an insurance company. So, imagine that we can reinvent the customer experience and how employees do their daily work by increasing the value of what employees do and completely changing the way customers interact with the company.
Carl Lewis: Interesting. The intelligence enterprise. So, small businesses, medium businesses, all businesses want to be intelligence enterprises, but what do you see as the biggest challenges as businesses try to get there?
Luis Margules: Thank you for bringing up the concept of intelligence enterprise and small businesses because it’s common for a small business owner to think “Oh no, this is something for a big bank or a large automobile company.” But the reality is that this affects everybody. Let's think about all these companies we love, like Uber and Airbnb – they all started as SMBs, so the reality is that intelligent enterprise will thrive and most will happen with small businesses.
Luis Margules: Now, small businesses have two major challenges. Number one is limited experience, because it's unlikely that a small enterprise will have anyone who knows about machine learning and algorithms.
Luis Margules: The second one, which is even more concerning and will be the most difficult, is daily execution. Daily activity and so much is going on, and it's difficult for a small business owner to take a time out, look at what’s possible, and work on creating a new reality.
Carl Lewis: Yes. Very good. So, what can we tell our listeners about how SMB businesses can make these technologies work consistently? Because like you said, the owner of the business or the others engaged because of their resources, if they come in and out of these types of projects to become an intelligent enterprise, they won't get there. What's the magic that gets them from point A to point B?
Luis Margules: Believe it or not, this challenge isn’t limited to a small business owner – the same thing happens even for us in large companies. And my proposal would be what we did at SAP. We created something called an SMB Innovation Lab, and it's a small team of highly intelligent and creative people who are toying with these newer technologies and bringing up ideas we can incorporate into our products and the things we do as the core of the business. My proposal for any small business owner is ‘just make the investment.’ It takes only one person, and it doesn't have to be a full- time expensive data scientist or Ph.D. person, it could be a student. Just take a student from the computer science department at a local university, explain how you run your business, and let them play for three months, going in the direction of businesses creating a better customer experience and making their employees’ jobs more rewarding. That's what's coming earlier – the major obstacle comes from the addition of daily execution.
Carl Lewis: It's like doing a little research on an ongoing basis and making that consistent; it gives you the best ideas for how to put technology to work in your own company. I like that idea.
Carl Lewis: One thing I think small and large businesses are struggling with is an overload of communication. It just seems like there's a lot of channels where the stuff is coming to us because of social media and mobility; we're never away from it. How do you see most business communication happening today and how do you see it changing in the future?
Luis Margules: Carl, in many things I consider myself very progressive, like [inaudible 00:08:00] creating innovation last, bring students, do experiments with drones with open-source image-view recognition. I love this stuff, but the communication stuff, believe it or not, I’m very old-school. I love paper, and I always carry a pen and a piece of paper with me, and I believe the most effective way to communicate is with one-to-one conversations. We need to leverage the scalable tools, like email, conference calls, Hangouts meetings, and especially social media to push general information. For example, when I make an important announcement, I might do it on Twitter and eventually people will get an email. But despite all that happens today in terms of technology innovation, I truly believe the most effective way to communicate is blocking time to have meaningful conversations with people, and it's something I believe technology is distracting us from that’s an important part of being human.
Carl Lewis: That touches on my next question, which is about this rich information we have in the world today. We have so much at our disposal. I sense that there are challenges out there, and I wonder about how, in your daily work, that creates challenges with communicating with people effectively?
Luis Margules: Definitely, but it's interesting. I believe in three principles, and I believe a lot of these principles can interact on how we interact with the relationship we have with family, friends, business associates, and even people outside the company. The three principles are simple and very much common sense. I believe that in every relationship, regardless whether it’s a family or a strategic large company relationship, it's all about number one, always focusing on what there is in common, on whatever the two parties want to achieve together. That's number one.
Luis Margules: The other one, which is harder to execute, is to acknowledge and accept the different ports of use, different incentives, different ideas. The fact that the other party has different intentions and different goals is important to bring to the table and acknowledge. We don’t need to solve anything because we know our common goals and that we’ll achieve them if we work together, but we must acknowledge and accept this context in which we operate in different realities and have different incentives and goals.
Luis Margules: The third one is never to take anybody for granted. This happens mostly in family relationships but also in the business world. How many companies have a partner ecosystem and because the partner produces business every quarter, they assume that they’ll continue producing that every quarter? There's a great quote from Jeff Bezos; he tells his employees every day is “Day One” at Amazon, and I believe this applies even more to relationships, I believe that in every relationship we must treat every day as if it is the first day.
Carl Lewis: Very good principles to live by in a lot of areas. We're all trying to automate things. Do you think as we move toward the future, we’ll say how automation can help us pull the important information from all these different sources together and make it easier to sift through the noise out there?
Luis Margules: Definitely, and I have a few examples. In our part of the business, we’ve automated the complex order processing data entry into our systems. Our partners place the orders directly on top of our systems, on our e-store. We do over a thousand transactions every month, and every transaction has a very complex build of material, so any small error will have a ripple effect and cause a significant impact on the customer project and the customer success with our products. The ability to process this large volume of very complex transactions with a minimal amount of errors is good. So, we’re pleased, and we’re benchmarked inside of SAP on how to effectively do that in a scalable way.
Carl Lewis: Are you measuring and tracking those systems?
Luis Margules: Definitely. We track the number of errors; they say to have a quality initiative you must track the number of errors and the number of issues we must rework to make right.
Carl Lewis: Excellent, excellent.
Luis Margules: I think the next generation of automation is when we integrate the customer experience data with these transactional systems. That's what we really want to work on now, instead of SAP, which is acquiring a company called Qualtrix. They’re the leader in tracking and measuring employee and customer experience and investing what it would take to incorporate all this technology into our transactional systems. Imagine if a business wants a partner. Every time they interact with SAP – be it a phone call, an email, our website, the partner relationship managing website – the interaction ends with an automated system asking, “Would you answer questions about this interaction?”
Luis Margules: The questions would be, “Next time you interact with SAP, would you like to interact with the same person?” Or if I use PRM, you must address the question, “Would you like to use the system or email? Are you happy with that?” So, imagine suddenly, instead of running on a yearly employee's obey, imagine if we can get what our customers and partners are experiencing with us in real time. That will allow us to change processes and people in real time; we don't have to wait until the end and give this obey and have a meeting to have a dynamic way to run the business. I'm very sorry about what we were doing in terms of automating transactions, but I think the most interesting things here to come [inaudible 00:15:39] to bring the experience tape that into our transaction systems. A very exciting future for both of us.
Carl Lewis: Yes, so glad to hear you answer that, because I had a bonus question, and you gave me the answer before I could ask the question. It was about Qualtrix and if you think we’ll see that integrated into the various ERP applications that have come to us from SAP, and you said yes. I dream about it as well. Listen, my friend, I appreciate you participating in our podcast today and sharing some of your insights and experiences. I'm positive others will find it helpful and beneficial. It's easy to make these podcasts very long, and to me, that’s wrong – I intend to stay short and to the point. Until next time, I hope everyone stays connected.