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Digital Means To Re-Imagine

Merijn Helle

In a recent article, McKinsey advocates the adoption of a two-speed IT environment to go digital. The authors state that “delivering an enriched customer experience requires a new digital architecture running alongside legacy systems.”

Yes, the article and its recommendations generally hit the mark: agile, scrum, small podular teams, and a modular approach to development in short iterative cycles with a beta-testing, fail-fast mindset. All the buzzwords from Eric Ries’ 2011 book The Lean Startup are represented. It’s a proven method, we know it works. We also know that not all enterprise systems – nor the people in the organization – can run at that clock-speed and some should maintain a slower cycle of change.

However, the fallacy of the statement lies in the use of the term legacy. The Oxford dictionary defines “legacy” in this context as “software or hardware that has been superseded but is difficult to replace because of its wide use.” It leads readers to believe that with a legacy core – say a mainframe patchwork or an ERP that hasn’t been upgraded in seven years – they can adopt a two-speed IT environment and tackle the digital age head on. This could not be further from the truth. That form of two-speed IT represents the fast track to high cost and short-term success coupled with a growing complexity that will increasingly thwart the very objective it portrays to achieve: speed to innovation.

In reality, the core supporting your business should never be considered legacy – it is the foundation upon which an organization operates. The operating model is embedded in it, and while that will change over time, it supports your business. The day you consider it legacy should be the day you start making plans to replace it.

All the focus in digital is on the customer experience, yet the digital economy mandates a broader shift in thinking than just digitizing the customer journey. It is naïve to think that a mobile experience coupled with some digital marketing and social initiatives define the digital enterprise. Digital needs to be woven into the fabric of the organization from sourcing and manufacturing to distribution and channel-agnostic but channel-aware services, looking through organizations and channels at the entire value chain.

Digital means to re-imagine

First, digital means re-imagining the business model – moving from selling products to selling services, from transactions to subscriptions, or shifting from wholesale to direct-to-consumer.

Second, it means re-imagining business processes – for example, taking back control of the promotional calendar pushed on retailers by fast-moving consumer brands (FMCBs) and ensuring offers that are aligned to the category strategy and are valued by the customer.

Third, it means re-imagining the customer experience – focused on presenting a seamless, consistent, authentic view of your brand.

A digital core

To facilitate and enable that, every organization needs a digital core.

Burberry has a digital core and, without it, they would never have been able to take back the licenses for Spain and Japan and restore their brand image. With it, they have been able to merge digital and physical and lead the way in re-imagining the associate and customer experience across all channels. With it, they are expanding into beauty and fragrance and embracing a completely new business model.

Decathlon/Oxylane also has a digital core. With over 850 stores in 27 countries across three continents and 70% of merchandise from its own labels, real-time visibility of the supply chain and inventory from sourcing location to store is crucial. This allows them to optimize allocation of stock from production runs at the source based on local current sell-through rates and the latest forecasts. They have now introduced SKU-level RFID on 80% of items, resulting in extensive benefits in the supply chain and as the foundation for a vastly enriched in-store experience.

Tommy Hilfiger Europe has a digital core. Tommy Hilfiger is launching digital showrooms across Europe in a bid to completely re-imagine the showroom environment where retailers come to buy collections for the upcoming season.

Jeanne Ross at MIT’s Center for Information Systems Research states: “In the 21st century no business can survive without a digital core.”

A true digital core supports the business in any direction it chooses to take, and does so without decelerating the momentum of change. The core also forms the bedrock for the innovation track of two-speed IT, and that is why collaboration between the two modes of IT is crucial to sustained change and innovation.

Perhaps McKinsey should heed Aesop’s Fable of the Tortoise and the Hare and, in a twist to the story, call for an environment of collaboration – it is bound to trump speed alone.

Companies must engage with broad networks and rethink their supply chains in order to remain relevant in today’s business landscape. Gain more insight in Our Digital Planet: The Democracy of Collaborative Networks.

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About Merijn Helle

Merijn Helle is the vice president of Retail and Fashion at SAP. He is responsible for strategy, business development, industry value engineering, and go-to-market for Retail in North America.

Amazing Digital Marketing Trends And Tips To Expand Your Business In 2015

Sunny Popali

Amazing Digital Marketing Trends & Tips To Expand Your Business In 2015The fast-paced world of digital marketing is changing too quickly for most companies to adapt. But staying up to date with the latest industry trends is imperative for anyone involved with expanding a business.

Here are five trends that have shaped the industry this year and that will become more important as we move forward:

  1. Email marketing will need to become smarter

Whether you like it or not, email is the most ubiquitous tool online. Everyone has it, and utilizing it properly can push your marketing ahead of your rivals. Because business use of email is still very widespread, you need to get smarter about email marketing in order to fully realize your business’s marketing strategy. Luckily, there are a number of tools that can help you market more effectively, such as Mailchimp.

  1. Content marketing will become integrated and more valuable

Content is king, and it seems to be getting more important every day. Google and other search engines are focusing more on the content you create as the potential of the online world as marketing tool becomes apparent. Now there seems to be a push for current, relevant content that you can use for your services and promote your business.

Staying fresh with the content you provide is almost as important as ensuring high-quality content. Customers will pay more attention if your content is relevant and timely.

  1. Mobile assets and paid social media are more important than ever

It’s no secret that mobile is key to your marketing efforts. More mobile devices are sold and more people are reading content on mobile screens than ever before, so it is crucial to your overall strategy to have mobile marketing expertise on your team. London-based Abacus Marketing agrees that mobile marketing could overtake desktop website marketing in just a few years.

  1. Big Data for personalization plays a key role

Marketers are increasingly using Big Data to get their brand message out to the public in a more personalized format. One obvious example is Google Trend analysis, a highly useful tool that marketing experts use to obtain the latest on what is trending around the world. You can — and should — use it in your business marketing efforts. Big Data will also let you offer specific content to buyers who are more likely to look for certain items, for example, and offer personalized deals to specific groups of within your customer base. Other tools, which until recently were the stuff of science fiction, are also available that let you do things like use predictive analysis to score leads.

  1. Visual media matters

A picture really is worth a thousand words, as the saying goes, and nobody can deny the effectiveness of a well-designed infographic. In fact, some studies suggest that Millennials are particularly attracted to content with great visuals. Animated gifs and colorful bar graphs have even found their way into heavy-duty financial reports, so why not give them a try in your business marketing efforts?

A few more tips:

  • Always keep your content relevant and current to attract the attention of your target audience.
  • Always keep all your social media and public accounts fresh. Don’t use old content or outdated pictures in any public forum.
  • Your reviews are a proxy for your online reputation, so pay careful attention to them.
  • Much online content is being consumed on mobile now, so focus specifically on the design and usability of your mobile apps.
  • Online marketing is essentially geared towards getting more traffic onto your site. The more people visit, the better your chances of increasing sales.

Want more insight on how digital marketing is evolving? See Shutterstock Report: The Face Of Marketing Is Changing — And It Doesn’t Include Vince Vaughn.

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About Sunny Popali

Sunny Popali is SEO Director at www.tempocreative.com. Tempo Creative is a Phoenix inbound marketing company that has served over 700 clients since 2001. Tempos team specializes in digital and internet marketing services including web design, SEO, social media and strategy.

Compelling Shopping Moments: 4 Creative Ways Stores Connect With Their Customers

Ralf Kern

compelling shopping momentsOn a recent morning, as I was going through my usual routine, my coffeemaker broke. I cannot live without coffee in the morning, so I immediately looked up my coffeemaker on Amazon and had it shipped Prime in one day. My problem was solved within minutes. My Amazon app, and my loyalty account with that company, was there for me when I needed it most.

It was in this moment that I realized the importance of digital presence for retailers. There is a chance that the store 10 minutes from my house carries this very same coffeemaker; I could have had it in one hour, instead of one day. But the need for immediate access to information pushed me to the online store. My local retailer was not able to be there for me digitally like Amazon.

Retail is still about reading the minds of your customers in order to know what they need and create a flawless experience. But the days of the unconnected shopper in a monochannel world are over. I am not alone in my digital-first mindset; according to a recent MasterCard report, 80% of consumers use technology during the shopping process. I, and consumers like me, use mobile devices as a guide to the physical world.

We don’t need to have an academic discussion about multichannel, omnichannel, and omnicommerce and their meanings, because what it really comes down to for your consumers, or fans, is shopping. And shopping has everything to do with moments in your customers’ lives: celebration moments, in-a-hurry moments, I-want-to-be-entertained moments, and more. Most companies only look for and measure very few moments along the shopping journey, like the moment of coupon download or the moment of sales.

Anticipating these moments was easier when mom and pop stores knew their customers by name. They knew how to be there for their shoppers when, where, and how they wanted it. And shoppers didn’t have any other options. Now it is crucial for companies to understand all of these moments and even anticipate or trigger the right moments for their customers.

In today’s digital economy the way to achieve customer connection is with simple, enjoyable, and personalized front ends that are supported by sophisticated, digital back ends. Then you can use that system to support your customer outreach.

Companies around the world are using creative and innovative methods to find their customers in various moments. Being there for customers comes in many different shapes and forms. Consider these examples:

Chilli Beans

A Brazilian maker of fashion sunglasses, glasses, and watches, Chilli Beans has a loyal following online and at over 700 locations around the world. Chilli Beans keeps its customers engaged by releasing 10 limited-edition styles each week. If customers like what they see, they have to buy fast or risk missing out.

Bonobos

Online men’s fashion retailer Bonobos reaches its customers with its Guide Shops. While they look like traditional retail outlets, the shops don’t actually sell any clothes. Customers come in for one-on-one appointments with the staff, and if they like anything that they try on, the staff member orders it for them online and it is shipped to their house. The 20 Guide Shops currently open have proven very successful for the company.

Peak Performance

Peak Performance, a European maker of outdoor clothing, has added a little magic to its customer experience. It has created virtual pop-up shops that customers can track on their smartphones through CatchMagicHour.com, and they are only available at sunrise and sunset at exact GPS locations. Customers who go to the location, be it at a lighthouse or on top of a mountain, are rewarded with the ability to select free clothing from the virtual shop that they have unlocked on their phones.

Shoes of Prey

The customer experience is completely custom at Shoes of Prey, a website where women can design custom shoes. From fabric to color, the customer picks every element, and then her custom creation is sent directly to her house. Shoes of Prey has even shifted its business model based on customer feedback. Its customers wanted to get inspiration and advice in a physical store. So Shoes of Prey made the move from online-only to omnicommerce and has started to open stores around the world.

While the customer experience for each of these connections is relatively simple – a website, a smartphone, an online design studio – the back end that powers them has to be powerful and nimble at the same time. These sophisticated back ends – powering simple, enjoyable, and personalized front ends – will completely change the game in retail. They will allow companies to engage their customers in ways we can’t even begin to imagine.

Technology will help you be there in the shopping moment. The best technology won’t annoy your customers with irrelevant promotions or pop-up messages. Instead, like a good friend, it will know how to engage with customers and when to leave them alone – how to truly connect with customers instead of manage them. Consequently, customer relationship management as we know it is an outdated technology in the economy of today – and tomorrow. Technologies that go beyond CRM will help retailers to differentiate. Aligning your organization and those technologies will be the Holy Grail to creating true and sustainable customer loyalty.

Learn more ways that business will never be the same again. Learn 99 Mind-Blowing Ways The Digital Economy Is Changing The Future Of Business.

Find out how SAP can help you go beyond CRM and support your retail business.

Ralf Kern is Global Vice President Retail for SAP and a retail ambassador for SAP. Interested in your feedback. You can also get in touch on Twitter or LinkedIn

This blog also appeared on SAP Customer Network.

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Ralf Kern

About Ralf Kern

Ralf Kern is the Global Vice President, Business Unit Retail, at SAP, responsible for the future direction of SAP’s solution and global Go-to-Market strategy for Omnicommerce Retail, leading them into today’s digital reality.

How Much Will Digital Cannibalization Eat into Your Business?

Fawn Fitter

Former Cisco CEO John Chambers predicts that 40% of companies will crumble when they fail to complete a successful digital transformation.

These legacy companies may be trying to keep up with insurgent companies that are introducing disruptive technologies, but they’re being held back by the ease of doing business the way they always have – or by how vehemently their customers object to change.

Most organizations today know that they have to embrace innovation. The question is whether they can put a digital business model in place without damaging their existing business so badly that they don’t survive the transition. We gathered a panel of experts to discuss the fine line between disruption and destruction.

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qa_qIn 2011, when Netflix hiked prices and tried to split its streaming and DVD-bymail services, it lost 3.25% of its customer base and 75% of its market capitalization.²︐³ What can we learn from that?

Scott Anthony: That debacle shows that sometimes you can get ahead of your customers. The key is to manage things at the pace of the market, not at your internal speed. You need to know what your customers are looking for and what they’re willing to tolerate. Sometimes companies forget what their customers want and care about, and they try to push things on them before they’re ready.

R. “Ray” Wang: You need to be able to split your traditional business and your growth business so that you can focus on big shifts instead of moving the needle 2%. Netflix was responding to its customers – by deciding not to define its brand too narrowly.

qa_qDoes disruption always involve cannibalizing your own business?

Wang: You can’t design new experiences in existing systems. But you have to make sure you manage the revenue stream on the way down in the old business model while managing the growth of the new one.

Merijn Helle: Traditional brick-and-mortar stores are putting a lot of capital into digital initiatives that aren’t paying enough back yet in the form of online sales, and they’re cannibalizing their profits so they can deliver a single authentic experience. Customers don’t see channels, they see brands; and they want to interact with brands seamlessly in real time, regardless of channel or format.

Lars Bastian: In manufacturing, new technologies aren’t about disrupting your business model as much as they are about expanding it. Think about predictive maintenance, the ability to warn customers when the product they’ve purchased will need service. You’re not going to lose customers by introducing new processes. You have to add these digitized services to remain competitive.

qa_qIs cannibalizing your own business better or worse than losing market share to a more innovative competitor?

Michael Liebhold: You have to create that digital business and mandate it to grow. If you cannibalize the existing business, that’s just the price you have to pay.

Wang: Companies that cannibalize their own businesses are the ones that survive. If you don’t do it, someone else will. What we’re really talking about is “Why do you exist? Why does anyone want to buy from you?”

Anthony: I’m not sure that’s the right question. The fundamental question is what you’re using disruption to do. How do you use it to strengthen what you’re doing today, and what new things does it enable? I think you can get so consumed with all the changes that reconfigure what you’re doing today that you do only that. And if you do only that, your business becomes smaller, less significant, and less interesting.

qa_qSo how should companies think about smart disruption?

Anthony: Leaders have to reconfigure today and imagine tomorrow at the same time. It’s not either/or. Every disruptive threat has an equal, if not greater, opportunity. When disruption strikes, it’s a mistake only to feel the threat to your legacy business. It’s an opportunity to expand into a different marke.

SAP_Disruption_QA_images2400x1600_4Liebhold: It starts at the top. You can’t ask a CEO for an eight-figure budget to upgrade a cloud analytics system if the C-suite doesn’t understand the power of integrating data from across all the legacy systems. So the first task is to educate the senior team so it can approve the budgets.

Scott Underwood: Some of the most interesting questions are internal organizational questions, keeping people from feeling that their livelihoods are in danger or introducing ways to keep them engaged.

Leon Segal: Absolutely. If you want to enter a new market or introduce a new product, there’s a whole chain of stakeholders – including your own employees and the distribution chain. Their experiences are also new. Once you start looking for things that affect their experience, you can’t help doing it. You walk around the office and say, “That doesn’t look right, they don’t look happy. Maybe we should change that around.”

Fawn Fitter is a freelance writer specializing in business and technology. 

To learn more about how to disrupt your business without destroying it, read the in-depth report Digital Disruption: When to Cook the Golden Goose.

Download the PDF (1.2MB)

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How To Answer The Question: “What Is Our Digital Strategy?”

Dany Ortchanian

Anxious boards around the world are asking their CEOs: “What exactly is our digital strategy?”

That has very quickly become the most relevant—and the most loaded—question you’ll hear in pretty much any board meeting. A minority are answering it well, but most are struggling.

All companies feel mounting pressure for a change of business model to keep the business from becoming redundant in the digital economy and to continue growth. They are trying to understand how to change that model in reaction to shifting macroeconomic trends, and unlock opportunities to increase profits, grow the customer base, and become more productive.

The question that perhaps is not being asked as often in boardrooms is: “Will this ever slow down?” In truth, no one knows, but the likelihood is that this constant change and forced business reinvention will continue on a path of relentless acceleration.

Microsoft’s acquisition of LinkedIn last week is a perfect example of the dizzying pace at which businesses are expected to make enormous decisions that will determine their future. Microsoft spent $26BN, a 50% premium, on a company some would argue is on the ropes after a weak Q1.

Microsoft is simply reacting to the pace of change by acting fast, thinking big, and trying to get ahead of the game. It might be comforting, or possibly anxiety-inducing, for boardrooms to know that even a cutting-edge company like Microsoft must to make huge decisions on-the-fly and constantly evolve its business model to keep growing.

The investment is certainly not guaranteed to pay off, but that’s the reality we face in today’s digital world, in which every industry feels the disruption.

Check out these InfoDocs about digital disruption in Canada (in English and French). They spell out, step-by-step, how any business can start tackling its digital strategy.

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Dany Ortchanian

About Dany Ortchanian

Dany Ortchanian is vice president, Eastern Region for SAP Canada. He provides executive support and guidance to enterprises across all industries in eastern Canada, devising strategies that help them get the best out of SAP solutions to achieve business success.

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