Effective Personalization Means Lots Of Good Data

Branwell Moffat

Effective personalization undoubtedly improves a brand’s sales. If a brand understands who I am by showing me content and products relevant to me, I’m much more likely to transact with them than if I were shown generic content and products.

For years, websites have dabbled with personalization by simply displaying recommended products to users under the guise of ‘you may also like’ or ‘other customer’s bought,’ but how effective are they really? How much do these really increase a website’s conversion rate? We’ve all seen poor examples of this, and even Amazon isn’t perfect: after buying a Nintendo Wii game, they recommended that I buy the Wii console. You can see why that might happen, but it was certainly not a great recommendation.

Personalization can take many forms, from recommended products, personalized content, banners, product lists, emails, or offers and promotions. If implemented cleverly, users should not even realize they are being targeted with personalization. Used correctly, personalization can be a very powerful tool for commerce and can help drive sales across all channels. However, if implemented poorly, personalization can have the opposite effect. If the personalized content or products miss their target, it can actually reduce conversion rate.

So how do we get personalization right? How do we make sure that the content is actually what I, the customer, wants to see? It all starts with data, and lots of it.

Put simply: the more granular data you have on your users, the more likely your success at personalization will be. So how much data is enough? That’s a tricky question to answer, but you probably have much more of it than you think, and certainly enough to start adding some value.

Let’s take the scenario of a brand that’s had an e-commerce website for 5 years. They have not implemented any 3rd party behavior tracking tool, and have simply been capturing the basic order data at checkout. At the very least, they’ll have the following data on each of their customers:

  • Location
  • Gender
  • Products purchased
  • Order frequency
  • Average order value
  • Frequency of promotions used
  • Payment methods used

This is actually quite a bit of data to go on. It’s enough to start segmenting their customers into groups that they can start to target with personalized content. They know what types of products each person buys, how often, how much they like to spend, and whether they respond to promotions. At the very least, the brand can target specific customer segments with targeted banners or promotions based on the products they’ve previously purchased.

Personalization is really about segmenting customers based on their likes and behaviors, then providing relevant content targeted to those segments. A segment can be big, containing tens of thousands of users, or small, even containing a single user. The more you segment, the more targeted your personalization will be. The more data and attributes you have on a customer, the more accurate your segmentation will be.

The digital age requires omnichannel data

Traditionally, brands have focused on gathering user data in a very siloed way within each channel. They may understand their website customers, but don’t necessarily link that up with data gathered across other channels. The key to effective customer data management is understanding that customers are likely to interact with a brand across multiple touch-points, providing different clues to their behavior with each interaction. These channels include websites, mobile apps, in-store, multiple social media channels, live chats, or the telephone.

In this digital age, each of these touch-points provide a brand with a wealth of different data on the customer, but the trick is to bring it together. Once you combine the data, you can start to intelligently segment your customers based on very rich and accurate data set, allowing you to personalize your content effectively.

Let’s look at a scenario of a typical customer of a fashion brand who shops with that brand both online and in-store. The consumer may buy from the brand’s website a few times a year, which gives the brand a certain amount of data. The customer is reticent to buy more expensive items online, and therefore will go into store to purchase those. In addition, their customer is a frequent user of various social media channels, and often comments on Instagram and tweets regularly on fashion subjects, sometimes even mentioning the brand directly. Once or twice the consumer has called the brand’s customer service phone line and has used their live-chat service a handful of times to get style advice.

All of the above touch-points can provide the brand with vital data about that customer. Though some social media posts made by the customer don’t mention the brand directly, this data is still relevant to the brand. Each of the touch-points give the brand a certain view of the customer, but not a holistic view. Imagine how powerful personalization would be if all of this data were pulled together into one unified customer view.

Invest in the future

It’s at this point that the brand needs to invest in some clever technology. They need a CRM platform that gathers data from multiple channels and that has tools to allow the brand to segment users on any data point. They need a platform that can monitor social media channels and pick up on references to their brand or related terms and link those social media profiles up with their customers. They need to invest in technology that can help users interact digitally with the brand while they are in store.

The great news is that this technology is available now. CRM platforms like Hybris Marketing can help brands link their consumer data from across all platforms and allow them to powerfully segment their customers. In-store beacon technology can help identify users when they visit physical stores, while digital signage, in-store tablet, and kiosk technology can encourage an in-store customer to interact digitally with the brand, allowing them to gather more data on that customer.

This excellent (although slightly terrifying) presentation by SAP Hybris’s Moritz Zimmermann illustrates how Big Data and personalization has been used to devastating effect during key political events. Facebook is one of the biggest users of user profiling and personalization in the world. All advertising and promoted content you see on Facebook is highly personalized based on every single interaction you have with the platform. The power of this is not in the actual delivery of the personalized content, it is in how the company understands, profiles and segments each of their users.

Of course, once you have the data, you need to use it well, but how you do that is for another article on another day. The important thing to take away is that without good customer data to work from, personalization is likely to fail.

For more on this topic, see Customer Segmentation Basics Explained.

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Branwell Moffat

About Branwell Moffat

Branwell Moffat is the e-Commerce director of Envoy Digital, an award-winning SAP gold partner and systems integrator in London, UK. He’s a highly technical e-commerce solutions expert and business manager, with over 18 years experience helping companies grow their e-commerce and omni-commerce businesses to levels of individual revenues in excess of £100 million per year.

Why Online Retailers Enhance Their Offline Experiences

Matt Wilkinson

For centuries, retail was a single-channel experience. Our predecessors purchased their goods from a single brick and mortar store, and that served their needs.

As technology evolved, so did our needs. We needed more channels to access more goods at our convenience. This caused retail to become a multichannel experience. Right now, we are watching that multichannel model give way to the omnichannel experience.

As retailers integrate their channels, they are allowing their physical shopfronts to shut down at an alarming rate. In Australia alone, major brick and mortar outlets are closing while online sales are soaring.

But why should retailers abandon brick and mortar? If handled correctly, a physical storefront can enhance the online shopping experience. Below are three reasons why retailers should bring their offline experience into the age of Brick and Mortar 2.0.

Engagement

Human contact appeals to us on a basic level. Despite online retailers adopting conversational AI, this appeal can only be authentically provided through a brick-and-mortar outlet. Along with appealing to us on a basic level, brick-and-mortar staff can start conversations with customers. This can steer them towards online services and sign-ups. It can also keep them in the store long after they could have clicked another tab.

As well as engaging with other humans, physical stores allow us to engage with the products we’re interested in. After all, statistics show 85% of shoppers prefer to make purchases in person. This is thanks to the security of seeing merchandise up close before making a decision.

If online retailers cannot provide this sense of security through a physical storefront, they must provide a dependable return policy.

Organic discovery

As online shopping enters Industry 4.0, advanced business analytics ensure that shoppers are presented only with heavily filtered results. This can obstruct organic discovery, which enables customers to discover delightful new products they may not have found online.

With a shop-front in your customer’s own neighborhood, you can ensure your brand won’t be buried under filters and search rankings. Otherwise, you must optimize your SEO and search filtering with a smart content management system.

Data collection

Just as technology has enabled real-time customer profiling for online retailers, so too has it improved offline customer profiling. In fact, many leading retailers recognize that they can capture unique data in their brick-and-mortar stores. American homeware retailer Crate & Barrel found that in-store engagement alone increased their email signups by over 15%.

In addition, advances in facial recognition and machine learning can enable brands to track customer emotions in store. By combining customer emotions with the power of Predictive Analytics, the possibilities are endless.

While retailers must pay attention to their digital experience, it is important to augment their brand through offline spaces. After all, it is difficult to retain retail customers in an omnichannel world.

For more on this topic, see Unified Commerce Ends The Online Vs. Brick-And-Mortar War.

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Matt Wilkinson

About Matt Wilkinson

Matt Wilkinson is the General Manager, Consumer Industries for SAP ANZ. Having operational roles in consumer industries organisations combined with 20+ years of professional services in both delivery and sales roles with cloud and on premise solutions, provide him with a unique insight to help organisations achieve effective digital transformation.

Voxer Q&A: The “Social Graph” Is Changing The Way The World Works

Jennifer Horowitz

With the recent Congressional appearance of Facebook’s CEO Mark Zuckerberg, the question of liberating the social graph has never been more significant to social media platforms and users worldwide. In efforts to further limit public data in Facebook’s search tools, companies such as Voxer were among many major messaging communication app platforms cut off from Facebook’s Find Friends API. Voice-messaging app Voxer no longer has any access to the social graph because it qualified as a competing online messaging platform.

Voxer is a real-time, multimedia communication tool for groups or individuals with live push-to-talk audio and voice, text, photo, and location saved in a timeline. In addition, the Voxer Business app, optimized for businesses, comes with all the features of the free consumer app plus a web manager that allows users to create and manage their own Voxer network, view employees’ locations on a real-time map, and send and receive messages.

I recently interviewed Irv Remedios, CEO & head of product at Voxer, to learn more about his role and his insights on product and mobile.

Jennifer Horowitz: Hello Irv, could you tell us more about your role and your initiatives?

Irv Remedios: Voxer is used by millions of people to communicate with their colleagues and friends. I currently lead the product team at Voxer, which includes design, product management, and customer support. I have the opportunity to work with our customers and better understand their communication needs. Our team works to define and design solutions that help our customers communicate more quickly and effectively.

Jennifer: What key issues does Voxer address for its customers?

Irv: Imagine that you are walking down the street and need to get a message out to someone or a group. Texting is cumbersome. Phone calls or conference calls are clunky and impractical. With Voxer you take out your phone, hit a button, and start talking. The audio is streamed live to the recipients so they can start listening immediately. If the recipient is unavailable, the message is saved for them.

There is no dialing a number, waiting for a phone to ring, or the annoyance of retrieving voicemail that go along with regular phone calls. We also support texting, sending images, and location information. Ultimately, we make communication instant and efficient.

Voxer Business gives small and medium businesses complete control over their communication. For the first time, businesses can add or remove users in their account and set up teams for group conversations. Additionally, enterprise customers can easily onboard their employees using single-sign-on (SSO) and have access to configurable data retention policies and data APIs that fit with their business policies.

Jennifer: How does Voxer stand out when it comes to its competition?

Irv: Voxer combines the immediacy of live communication with the etiquette of a messaging app. If users are able to listen to a message immediately, they can hear it live and respond quickly. We stream audio to the recipient as the user is speaking into the phone so there is very low latency.

Alternatively, if the recipient is not able to listen immediately, the message is stored for them and they can listen to it later, just like a messaging app. Voxer works well across 2G/3G/4G networks or WiFi and across countries.

Liberating the social graph

In 2012, Voxer was one of the top messaging apps in the world. At one point, the company was even leading the charts.

Voxer successfully raised a $30 million round with its walkie-talkie business functionality and style. Facebook later went on to replicate Voxer in January 2013 by adding a voice messaging feature into its Messenger.

As Facebook restricts access to its social graph, users now question if the move has made the company anti-competitive. This has caused some to say there are valid reasons Facebook should consider lifting the ban from competitors such as Voxer.

Senator John Neely Kennedy asked Mark Zuckerberg during his Congressional hearing, “Are you willing to give me the right to take my data on Facebook and move it to another social media platform?”

Zuckerberg replied, “Senator, you can already do that. We have a Download Your Information tool where you can go get a file of all the content there, and then do whatever you want with it.”

Social media is no longer solely a marketing function. Find out How to Weave Social Media Into the Fabric of the Business.

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Jennifer Horowitz

About Jennifer Horowitz

Jennifer Horowitz is a journalist with over 15 years of experience working in the technology, financial, hospitality, real estate, healthcare, manufacturing, not for profit, and retail sectors. She specializes in the field of analytics, offering management consulting serving global clients from midsize to large-scale organizations. Within the field of analytics, she helps higher-level organizations define their metrics strategies, create concepts, define problems, conduct analysis, problem solve, and execute.

The Blockchain Solution

By Gil Perez, Tom Raftery, Hans Thalbauer, Dan Wellers, and Fawn Fitter

In 2013, several UK supermarket chains discovered that products they were selling as beef were actually made at least partly—and in some cases, entirely—from horsemeat. The resulting uproar led to a series of product recalls, prompted stricter food testing, and spurred the European food industry to take a closer look at how unlabeled or mislabeled ingredients were finding their way into the food chain.

By 2020, a scandal like this will be eminently preventable.

The separation between bovine and equine will become immutable with Internet of Things (IoT) sensors, which will track the provenance and identity of every animal from stall to store, adding the data to a blockchain that anyone can check but no one can alter.

Food processing companies will be able to use that blockchain to confirm and label the contents of their products accordingly—down to the specific farms and animals represented in every individual package. That level of detail may be too much information for shoppers, but they will at least be able to trust that their meatballs come from the appropriate species.

The Spine of Digitalization

Keeping food safer and more traceable is just the beginning, however. Improvements in the supply chain, which have been incremental for decades despite billions of dollars of technology investments, are about to go exponential. Emerging technologies are converging to transform the supply chain from tactical to strategic, from an easily replicable commodity to a new source of competitive differentiation.

You may already be thinking about how to take advantage of blockchain technology, which makes data and transactions immutable, transparent, and verifiable (see “What Is Blockchain and How Does It Work?”). That will be a powerful tool to boost supply chain speed and efficiency—always a worthy goal, but hardly a disruptive one.

However, if you think of blockchain as the spine of digitalization and technologies such as AI, the IoT, 3D printing, autonomous vehicles, and drones as the limbs, you have a powerful supply chain body that can leapfrog ahead of its competition.

What Is Blockchain and How Does It Work?

Here’s why blockchain technology is critical to transforming the supply chain.

Blockchain is essentially a sequential, distributed ledger of transactions that is constantly updated on a global network of computers. The ownership and history of a transaction is embedded in the blockchain at the transaction’s earliest stages and verified at every subsequent stage.

A blockchain network uses vast amounts of computing power to encrypt the ledger as it’s being written. This makes it possible for every computer in the network to verify the transactions safely and transparently. The more organizations that participate in the ledger, the more complex and secure the encryption becomes, making it increasingly tamperproof.

Why does blockchain matter for the supply chain?

  • It enables the safe exchange of value without a central verifying partner, which makes transactions faster and less expensive.
  • It dramatically simplifies recordkeeping by establishing a single, authoritative view of the truth across all parties.
  • It builds a secure, immutable history and chain of custody as different parties handle the items being shipped, and it updates the relevant documentation.
  • By doing these things, blockchain allows companies to create smart contracts based on programmable business logic, which can execute themselves autonomously and thereby save time and money by reducing friction and intermediaries.

Hints of the Future

In the mid-1990s, when the World Wide Web was in its infancy, we had no idea that the internet would become so large and pervasive, nor that we’d find a way to carry it all in our pockets on small slabs of glass.

But we could tell that it had vast potential.

Today, with the combination of emerging technologies that promise to turbocharge digital transformation, we’re just beginning to see how we might turn the supply chain into a source of competitive advantage (see “What’s the Magic Combination?”).

What’s the Magic Combination?

Those who focus on blockchain in isolation will miss out on a much bigger supply chain opportunity.

Many experts believe emerging technologies will work with blockchain to digitalize the supply chain and create new business models:

  • Blockchain will provide the foundation of automated trust for all parties in the supply chain.
  • The IoT will link objects—from tiny devices to large machines—and generate data about status, locations, and transactions that will be recorded on the blockchain.
  • 3D printing will extend the supply chain to the customer’s doorstep with hyperlocal manufacturing of parts and products with IoT sensors built into the items and/or their packaging. Every manufactured object will be smart, connected, and able to communicate so that it can be tracked and traced as needed.
  • Big Data management tools will process all the information streaming in around the clock from IoT sensors.
  • AI and machine learning will analyze this enormous amount of data to reveal patterns and enable true predictability in every area of the supply chain.

Combining these technologies with powerful analytics tools to predict trends will make lack of visibility into the supply chain a thing of the past. Organizations will be able to examine a single machine across its entire lifecycle and identify areas where they can improve performance and increase return on investment. They’ll be able to follow and monitor every component of a product, from design through delivery and service. They’ll be able to trigger and track automated actions between and among partners and customers to provide customized transactions in real time based on real data.

After decades of talk about markets of one, companies will finally have the power to create them—at scale and profitably.

Amazon, for example, is becoming as much a logistics company as a retailer. Its ordering and delivery systems are so streamlined that its customers can launch and complete a same-day transaction with a push of a single IP-enabled button or a word to its ever-attentive AI device, Alexa. And this level of experimentation and innovation is bubbling up across industries.

Consider manufacturing, where the IoT is transforming automation inside already highly automated factories. Machine-to-machine communication is enabling robots to set up, provision, and unload equipment quickly and accurately with minimal human intervention. Meanwhile, sensors across the factory floor are already capable of gathering such information as how often each machine needs maintenance or how much raw material to order given current production trends.

Once they harvest enough data, businesses will be able to feed it through machine learning algorithms to identify trends that forecast future outcomes. At that point, the supply chain will start to become both automated and predictive. We’ll begin to see business models that include proactively scheduling maintenance, replacing parts just before they’re likely to break, and automatically ordering materials and initiating customer shipments.

Italian train operator Trenitalia, for example, has put IoT sensors on its locomotives and passenger cars and is using analytics and in-memory computing to gauge the health of its trains in real time, according to an article in Computer Weekly. “It is now possible to affordably collect huge amounts of data from hundreds of sensors in a single train, analyse that data in real time and detect problems before they actually happen,” Trenitalia’s CIO Danilo Gismondi told Computer Weekly.

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials.

The project, which is scheduled to be completed in 2018, will change Trenitalia’s business model, allowing it to schedule more trips and make each one more profitable. The railway company will be able to better plan parts inventories and determine which lines are consistently performing poorly and need upgrades. The new system will save €100 million a year, according to ARC Advisory Group.

New business models continue to evolve as 3D printers become more sophisticated and affordable, making it possible to move the end of the supply chain closer to the customer. Companies can design parts and products in materials ranging from carbon fiber to chocolate and then print those items in their warehouse, at a conveniently located third-party vendor, or even on the client’s premises.

In addition to minimizing their shipping expenses and reducing fulfillment time, companies will be able to offer more personalized or customized items affordably in small quantities. For example, clothing retailer Ministry of Supply recently installed a 3D printer at its Boston store that enables it to make an article of clothing to a customer’s specifications in under 90 minutes, according to an article in Forbes.

This kind of highly distributed manufacturing has potential across many industries. It could even create a market for secure manufacturing for highly regulated sectors, allowing a manufacturer to transmit encrypted templates to printers in tightly protected locations, for example.

Meanwhile, organizations are investigating ways of using blockchain technology to authenticate, track and trace, automate, and otherwise manage transactions and interactions, both internally and within their vendor and customer networks. The ability to collect data, record it on the blockchain for immediate verification, and make that trustworthy data available for any application delivers indisputable value in any business context. The supply chain will be no exception.

Blockchain Is the Change Driver

The supply chain is configured as we know it today because it’s impossible to create a contract that accounts for every possible contingency. Consider cross-border financial transfers, which are so complex and must meet so many regulations that they require a tremendous number of intermediaries to plug the gaps: lawyers, accountants, customer service reps, warehouse operators, bankers, and more. By reducing that complexity, blockchain technology makes intermediaries less necessary—a transformation that is revolutionary even when measured only in cost savings.

“If you’re selling 100 items a minute, 24 hours a day, reducing the cost of the supply chain by just $1 per item saves you more than $52.5 million a year,” notes Dirk Lonser, SAP go-to-market leader at DXC Technology, an IT services company. “By replacing manual processes and multiple peer-to-peer connections through fax or e-mail with a single medium where everyone can exchange verified information instantaneously, blockchain will boost profit margins exponentially without raising prices or even increasing individual productivity.”

But the potential for blockchain extends far beyond cost cutting and streamlining, says Irfan Khan, CEO of supply chain management consulting and systems integration firm Bristlecone, a Mahindra Group company. It will give companies ways to differentiate.

“Blockchain will let enterprises more accurately trace faulty parts or products from end users back to factories for recalls,” Khan says. “It will streamline supplier onboarding, contracting, and management by creating an integrated platform that the company’s entire network can access in real time. It will give vendors secure, transparent visibility into inventory 24×7. And at a time when counterfeiting is a real concern in multiple industries, it will make it easy for both retailers and customers to check product authenticity.”

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials. Although the key parts of the process remain the same as in today’s analog supply chain, performing them electronically with blockchain technology shortens each stage from hours or days to seconds while eliminating reams of wasteful paperwork. With goods moving that quickly, companies have ample room for designing new business models around manufacturing, service, and delivery.

Challenges on the Path to Adoption

For all this to work, however, the data on the blockchain must be correct from the beginning. The pills, produce, or parts on the delivery truck need to be the same as the items listed on the manifest at the loading dock. Every use case assumes that the data is accurate—and that will only happen when everything that’s manufactured is smart, connected, and able to self-verify automatically with the help of machine learning tuned to detect errors and potential fraud.

Companies are already seeing the possibilities of applying this bundle of emerging technologies to the supply chain. IDC projects that by 2021, at least 25% of Forbes Global 2000 (G2000) companies will use blockchain services as a foundation for digital trust at scale; 30% of top global manufacturers and retailers will do so by 2020. IDC also predicts that by 2020, up to 10% of pilot and production blockchain-distributed ledgers will incorporate data from IoT sensors.

Despite IDC’s optimism, though, the biggest barrier to adoption is the early stage level of enterprise use cases, particularly around blockchain. Currently, the sole significant enterprise blockchain production system is the virtual currency Bitcoin, which has unfortunately been tainted by its associations with speculation, dubious financial transactions, and the so-called dark web.

The technology is still in a sufficiently early stage that there’s significant uncertainty about its ability to handle the massive amounts of data a global enterprise supply chain generates daily. Never mind that it’s completely unregulated, with no global standard. There’s also a critical global shortage of experts who can explain emerging technologies like blockchain, the IoT, and machine learning to nontechnology industries and educate organizations in how the technologies can improve their supply chain processes. Finally, there is concern about how blockchain’s complex algorithms gobble computing power—and electricity (see “Blockchain Blackouts”).

Blockchain Blackouts

Blockchain is a power glutton. Can technology mediate the issue?

A major concern today is the enormous carbon footprint of the networks creating and solving the algorithmic problems that keep blockchains secure. Although virtual currency enthusiasts claim the problem is overstated, Michael Reed, head of blockchain technology for Intel, has been widely quoted as saying that the energy demands of blockchains are a significant drain on the world’s electricity resources.

Indeed, Wired magazine has estimated that by July 2019, the Bitcoin network alone will require more energy than the entire United States currently uses and that by February 2020 it will use as much electricity as the entire world does today.

Still, computing power is becoming more energy efficient by the day and sticking with paperwork will become too slow, so experts—Intel’s Reed among them—consider this a solvable problem.

“We don’t know yet what the market will adopt. In a decade, it might be status quo or best practice, or it could be the next Betamax, a great technology for which there was no demand,” Lonser says. “Even highly regulated industries that need greater transparency in the entire supply chain are moving fairly slowly.”

Blockchain will require acceptance by a critical mass of companies, governments, and other organizations before it displaces paper documentation. It’s a chicken-and-egg issue: multiple companies need to adopt these technologies at the same time so they can build a blockchain to exchange information, yet getting multiple companies to do anything simultaneously is a challenge. Some early initiatives are already underway, though:

  • A London-based startup called Everledger is using blockchain and IoT technology to track the provenance, ownership, and lifecycles of valuable assets. The company began by tracking diamonds from mine to jewelry using roughly 200 different characteristics, with a goal of stopping both the demand for and the supply of “conflict diamonds”—diamonds mined in war zones and sold to finance insurgencies. It has since expanded to cover wine, artwork, and other high-value items to prevent fraud and verify authenticity.
  • In September 2017, SAP announced the creation of its SAP Leonardo Blockchain Co-Innovation program, a group of 27 enterprise customers interested in co-innovating around blockchain and creating business buy-in. The diverse group of participants includes management and technology services companies Capgemini and Deloitte, cosmetics company Natura Cosméticos S.A., and Moog Inc., a manufacturer of precision motion control systems.
  • Two of Europe’s largest shipping ports—Rotterdam and Antwerp—are working on blockchain projects to streamline interaction with port customers. The Antwerp terminal authority says eliminating paperwork could cut the costs of container transport by as much as 50%.
  • The Chinese online shopping behemoth Alibaba is experimenting with blockchain to verify the authenticity of food products and catch counterfeits before they endanger people’s health and lives.
  • Technology and transportation executives have teamed up to create the Blockchain in Transport Alliance (BiTA), a forum for developing blockchain standards and education for the freight industry.

It’s likely that the first blockchain-based enterprise supply chain use case will emerge in the next year among companies that see it as an opportunity to bolster their legal compliance and improve business processes. Once that happens, expect others to follow.

Customers Will Expect Change

It’s only a matter of time before the supply chain becomes a competitive driver. The question for today’s enterprises is how to prepare for the shift. Customers are going to expect constant, granular visibility into their transactions and faster, more customized service every step of the way. Organizations will need to be ready to meet those expectations.

If organizations have manual business processes that could never be automated before, now is the time to see if it’s possible. Organizations that have made initial investments in emerging technologies are looking at how their pilot projects are paying off and where they might extend to the supply chain. They are starting to think creatively about how to combine technologies to offer a product, service, or business model not possible before.

A manufacturer will load a self-driving truck with a 3D printer capable of creating a customer’s ordered item en route to delivering it. A vendor will capture the market for a socially responsible product by allowing its customers to track the product’s production and verify that none of its subcontractors use slave labor. And a supermarket chain will win over customers by persuading them that their choice of supermarket is also a choice between being certain of what’s in their food and simply hoping that what’s on the label matches what’s inside.

At that point, a smart supply chain won’t just be a competitive edge. It will become a competitive necessity. D!


About the Authors

Gil Perez is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Tom Raftery is Global Vice President, Futurist, and Internet of Things Evangelist, at SAP.

Hans Thalbauer is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Dan Wellers is Global Lead, Digital Futures, at SAP.

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

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.

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CEO Priorities And Challenges In The Digital World

Dr. Chakib Bouhdary

Digital transformation is here, and it is moving fast. Companies are starting to realize the enormous power of digital technologies like artificial intelligence (AI), Internet of things (IoT) and blockchain. These technologies will drive massive opportunities—and threats—for every company, and they will impact all aspects of business, including the business model. In fact, business velocity has never been this fast, yet it will never be this slow again.

To move quickly, companies need to be clear on what they want to achieve through digital transformation and understand the possible roadblocks. Based on my meetings with customer executives across regions and industries, I have learned that CEOs often have the same three priorities and face the same three challenges:

1. Customer experience – No longer defined by omnichannel and personalized marketing.

Not surprisingly, 92 percent of digital leaders focus on customer experience. However, this is no longer just about omnichannel and personalized marketing – it is about the total customer experience. Businesses are realizing that they need to reimagine their value proposition and orchestrate changes across the value chain – from the first point of interaction to manufacturing, to shipment, to service – and be able to deliver the total customer experience. In some cases, it will even be necessary to change the core product or service itself.

2. Step change in productivity – Transform productivity and cost structure through digital technologies.

Businesses have been using technology to achieve growth for decades, but by combining emerging technologies, they can now achieve a significant productivity boost and reduce costs. For this to happen, companies must first identify the scenarios that will drive significant change in productivity, prioritize them based on value, and then determine the right technologies and solutions. Both Mckinsey and Boston Consulting Group expect a 15 to 30 percent improvement in productivity through digital advancements – blowing the doors off business-as-usual and its incremental productivity growth of 1 to 2 percent.

3. Employee engagement – Fostering a culture of innovation should be at the core of any business.

Companies are looking to create an environment that encourages creativity and innovation. Leaders are attracting the needed talent and building the right skill sets. Additionally, they aim for ways to attract a diverse workforce, improve collaborations, and empower employees – because engaged employees are crucial in order to achieve the best results. This Gallup study reveals that approximately 85 percent of employees worldwide are performing below their potential due to engagement issues.

As CEOs work towards achieving these three desired outcomes, they face some critical challenges that they must address. I define the top three challenges as follows: run vs. innovate, corporate cholesterol, and digital transformation roadmap.

1. Run vs. innovate – To be successful you must prioritize the future.

The foremost challenge that CEOs are facing is how they can keep running current profitable businesses while investing in future innovations. Quite often these two conflict as most executives mistakenly prioritize the first and spend much less time on the latter. This must change. CEOs and their management teams need to spend more time thinking about what digital is for them, discuss new ideas, and reimagine the future. According to Gartner, approximately 50 percent of boards are pushing their CEOs to make progress on digital. Although this is a promising sign, digital must become a priority on every CEOs agenda.

2. Corporate cholesterol – Do not let company culture get in the way of change.

The older the company is, the more stuck it likely is with policies, procedures, layers of management, and risk averseness. When a company’s own processes get in the way of change, that is what I call “corporate cholesterol.” CEOs need to change the culture, encourage cross-team collaborations, and bring in more diverse thinking to reduce the cholesterol levels. In fact, both Mckinsey and Capgemini conclude that culture is the number-one obstacle to digital effectiveness.

3. Digital transformation roadmap – Digital transformation is a journey without a destination.

Many CEOs struggle with their digital roadmap. Questions like: Where do I start? Can a CDO or another executive run this innovation for me? What is my three- to five-year roadmap? often come up during the conversations. Most companies think that there is a set roadmap, or a silver bullet, for digital transformation, but that is not the case. Digital transformation is a journey without a destination, and each company must start small, acquire the necessary skills and knowledge, and continue to innovate.

It is time to face the digital reality and make it a priority. According to KPMG, 70 percent to 80 percent of CEOs believe that the next three years are more critical for their company than the last fifty. And there is good reason to worry, as 75 percent of S&P 500 companies from 2012 will be replaced by 2027 at the current disruption rate.

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Dr. Chakib Bouhdary

About Dr. Chakib Bouhdary

Dr. Chakib Bouhdary is the Digital Transformation Officer at SAP. Chakib spearheads thought leadership for the SAP digital strategy and advises on the SAP business model, having led its transformation in 2010. He also engages with strategic customers and prospects on digital strategy and chairs Executive Digital Exchange (EDX), which is a global community of digital innovation leaders. Follow Chakib on LinkedIn and Twitter