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Transforming Automakers Into Connected Platform Makers

William Newman

I love January. As the saying goes, “New Year, New You.” And new cars. Lots of new cars, announcements and demonstrations of how the car will evolve with new features, content, and systems.

This year the volley started early, with huge announcements in week 1 at the Computer Electronics Show in Las Vegas, and it will continue in weeks 2 and 3 the Automotive News World Congress and North American International Auto Show in Detroit. There are some megatrends emerging from these recent announcements and from research SAP has conducted over the past six months, which will become available through social channels over the course of 2016.

Economically, a number of factors are at work. With the fall of crude oil prices and other commodities, and North American volumes hitting pre-recession levels of 17.5M units in the passenger vehicle segment, growth is expected to continue. However, it will be a different kind of growth, based on the evolution of the value chain and the expectancy that global AGR levels will taper from 7.8% (from 2009 to 2015) to 2.8% (from 2016 to 2020) according to IHS, and the retention length of vehicles rising to over 12 years on average. OEM consolidation will also likely follow in the next decade to help keep growth moderate and remove industry structural costs.

The future of the car is changing as well. Cars are evolving from mostly mechanical, metal-based vehicles to a connected set of component platforms, plastics, and next-generation materials, essentially becoming a rolling data center providing safety and entertainment going from Point A to Point B.  Social acceptance of a fully autonomous vehicle – and the regulatory environment supporting that – is likely 5 to 10 years out based on current forecasts (OESA, CAR). However, a connected vehicle – depending on your definition of “connected” and which services that uses – is here today, both on the public highways and in prototype communities like M City.

What does all of this mean for automotive OEM and supplier customers? It means companies have significant choices in product design, value chain placement (and respective participation), and customer experience to define the organization for the next few years to come. Last year I asked executives, “Are you buyers or sellers?” This year I am more likely to ask, “Are you a platform maker or owner?” as makers and innovation will rule the ability of OEMs and suppliers to not only have the profit to make acquisitions but also determine the position of the portfolio in the value chain where they will drive content. Content is profit, and profit means growth. And growth means you survive and prosper in an ebbing business cycle.

Here are some disruptors coming out of this month’s automotive announcements.  As more become available during the month (or as forecasts change, which of course they will) I will update this post.

  1. Technology is not the long pole in the tent. Regulatory needs to catch up. The big database technology to manage petabytes (1,000 terabytes) of information such as music, images, maps, and consumer behavior is already here. How we use these – based on location-based privacy and social norms – and what we are able to implement in products – based on regulations – have only partially been defined. This is a real bummer to consumers and tech-savvy developers, who essentially are releasing only parts of consumable disruption based on business environments. Uber, for example, has taken its disruptive model to court in a number of cities and states, and won. Google has sent its driverless, autonomous vehicles to a number of cities with some relative success. Are we ready to give up control of our driving abilities? Not yet. In Michigan you can’t take a driver’s test at the Secretary of State office using a park assist vehicle to parallel park. Clearly, we aren’t there yet.
  1. The notion of a vehicle platform and how it scales and connects has changed. Typically a vehicle has a number of trim packages, platform sizes, power plants, and features. When a manufacturer builds to a variable platform, usually the platform itself is constant down an assembly line and the features and cosmetics adjust per spec of the vehicle. Faraday Future’s announcement at CES of the FFZero1 platform for variant configuration, where the platform itself can stretch and modularly accommodate different power plant designs (e.g. battery pack stacking), has the potential to change how vehicles are designed at the platform level. Also at CES, Delphi announced its vehicle to everything (V2E) platform, allowing vehicles to sense devices, social behaviors, and “things,” an example of how automotive suppliers are moving to become “connected platform makers.” Other suppliers such as Bosch are developing their own platform to connect devices, components, homes, and information. And GM announced a major $500M investment partnership with Lyft to enable fleet connected B2C vehicles. Being able to scale physical and information platforms using very large data sets with consumers is key to transformation success.
  1. The aftermarket segment will collapse, and everyone wants a share — and for you to love them. The bidding war over Pep Boys is likely the first of many acquisition plays and direct-to-consumer moves by auto parts suppliers to converge its OE and aftermarket businesses. With each stage of the aftermarket value chain adding a full price share of margin from one step to the next (usually 80-100% of margin per value chain step, according to the Automotive Aftermarket Supplier Association), it’s no wonder that auto part makers want drivers to access their products directly, to harvest margin otherwise flowing through more expensive OE dealer channels. Will drivers who hold vehicles longer buy directly? Most do already, through eBay, Amazon, NAPA, and AutoZone, to name just a few of the big players. Often this competes with OE interests to leverage their own proprietary dealer networks. How suppliers go after this high margin space, and how they communicate brand interest and customer experience to drivers who normally buy through dealers and distributors, will be key to success.

Platform makers OEMs as well as suppliers – will garner market share moving forward. Tesla, Google, Faraday, Bosch, and Delphi (among others) have stated their interest and staked their claim as disruptors owning a platform,  not necessarily as classic car companies. Companies that are unwilling to digitize their product portfolio along with their business operations and unleash new platform business models will be relegated to “seller” status as we move toward the 2020s.

Based on these and other mega-trends, automakers and suppliers must stake their claim now in order to build their financial assets and continue growth throughout this decade and beyond.

For more on what the future holds for the automotive industry, see Why This One Decision Will Make Or Break Automakers In 2016.

This blog originally appeared on the LinkedIn Pulse

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William Newman

About William Newman

William Newman serves as Industry Value Advisor for SAP’s Midwest Industry Value Engineering team with a focus on digital strategies and transformation in automotive and discrete manufacturing. He brings more than 30 years of experience in strategy, transformation planning, and value realization across multiple industry sectors including automotive, aerospace, industrial machinery and components, and high tech.

Why Your Current Car May Be The Last One You Drive Or Own

Gavin Mooney

Melbourne was recently yet again voted the world’s most livable city by the Economist Intelligence Unit. Apart from giving Melburnians the satisfaction of beating Sydney – again – the news was met with a mixed response by locals, who question which part of Melbourne was evaluated in the survey and what criteria were included (and left out) to allow Melbourne to take the top spot. While the Economist survey likely focused on the city center, the majority of Melbourne’s population lives in the sprawling suburbs, underserved by strained public transport and with ever increasing traffic congestion.

Traffic congestion is a huge problem all over the world. Attributing a cost to traffic congestion can be tricky, but in Australia alone it was estimated at $16 billion in 2015, set to climb to $37 billion by 2030. In the United States the cost of congestion is put at $160 billion. And with the UN estimating urbanization and population growth will add another 2.5 billion people to urban populations by 2050, the problem will only get worse.

Being stuck in a traffic jam is intensely frustrating and can be stressful. There is nothing the driver can do apart from ponder the lost time.  This is where autonomous vehicles come in. Luckily, most of the major car manufacturers and other companies agree that autonomous vehicles are the way of the future and are investing heavily in self-driving technology. The U.S. Department of Transportation is looking to invest $4 billion in vehicle automation.

Bonus: Learn more about the digital transformation in the automotive industry.

Google’s self-driving cars have been on the roads for years, already amassing more than 1.7 million miles. Tesla has a slightly different approach, taking advantage of its cars’ Internet connection to access sensor data and update the vehicles over the air. With so many Tesla cars on the roads, the company has accumulated 780 million miles against which to test its self-driving software. Tesla gets another million miles worth of data every 10 hours.

Apple, perhaps a little late on the scene, is apparently investing more than anyone else. A recent report from Morgan Stanley appeared to show Apple outspending the major car manufacturers 20:1 and even Tesla by 10:1, investing more in the Apple car and related services than it spent on the iPhone, iPad, and Apple Watch combined.

Tesla’s Elon Musk recently stated that “full autonomy is going to come a hell of a lot faster than anyone thinks.” Like much of what he says, he might just be right. Earlier this month, Ford announced it intends to mass produce a fully autonomous car without a steering wheel by 2021. And Uber, only three months after announcing it was testing its self-driving car in Pittsburgh, just announced its self-driving cars will start taking passengers this month.

Why self-driving cars?

There are numerous benefits to self-driving cars, and two major ones are:

1. Safety

The WHO estimates 1.25 million people died in road accidents in 2013. A U.S. Department of Transportation survey found human error was the cause in 94% of fatal car crashes. And then there are the non-fatal accidents to consider. Computers don’t get bored, drowsy, change the music, or send a text message. They are more reliable and can react much faster than a human driver.

2. Productivity

A 2007 study by Harvard Health Watch found the average American spends 101 minutes a day driving. Most of that time is unproductive. There is not a lot the driver can do apart from concentrate on the road and drive. Imagine if you could spend that time working, reading, napping, or doing anything else you wanted. It would change the whole philosophy behind the car journey, of trying to beat the rush hour traffic and repeatedly changing lanes in the hope of saving a few minutes.

Other benefits

There are several other benefits as well. Autonomous vehicles would give greater mobility to the elderly, disabled, or visually impaired. Urban space could be increased 15-20% through elimination of parking spaces, since autonomous vehicles could drop passengers off and then park elsewhere. There would be significant fuel savings through more efficient driving as well as the potential for reduced drag through “platooning” and lighter vehicles.

Roadways designed specifically for autonomous vehicles could look quite different. There would be no need for signage or lane markings. Lanes could be narrower and cars could drive closer together, increasing throughput. There could also be a social change, with less pressure to live close to city centers, as the journey is no longer perceived as lost time.

The future

We can go beyond not needing to drive. Researchers at MIT have come up with a slot-based system that eliminates the need for traffic lights at intersections, doubling traffic efficiency and cutting travel delay to almost zero. Airbus is working on a battery-powered autonomous flying taxi and plans real-world prototype testing by the end of 2017.

The next target will be car ownership. Depending on what you read, millennials may or may not care for car ownership. But with our cars parked 95% of the time, it just doesn’t make sense to own one outright. There will always be some people who want to own cars, but they will be a shrinking minority.

 

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Gavin Mooney

About Gavin Mooney

Gavin Mooney is a utilities industry solution specialist for SAP. From a background in Engineering and IT, Gavin has been working in the utilities industry with SAP products for nearly 15 years. He has had the privilege of working with a number of Electricity, Gas and Water Utilities across the globe to implement SAP’s Industry Solution for Utilities. He now works with utilities to help them identify the best way to run simple and run better with SAP's latest products. Gavin loves to network and build lasting business relationships and is passionate about cleantech and the fundamental transformation currently shaking up the utilities industry.

Is This The End Of Car Dealerships As We Know Them?

Danielle Beurteaux

Carvana might have first come to your attention thanks to the company’s car vending machine. Which is exactly what it sounds like. Sure, it’s a bit gimmicky, but the point is made: buying a car should be that easy. Almost as easy as satiating a craving for mid-afternoon Doritos.

The Phoenix-based company just added another funding round with a $160 million Series C. In 2013, it raised a $50 million Series A. Carvana wants to put more of its car vending machines around the country. The first was set up in Nashville at the end of last year.

People don’t like going to car dealerships. Really, really don’t like them. A survey by Accenture last year found that 75% of respondents would complete the entire car buying process online if they could. And while the car buying process hasn’t changed much since the first dealership opened – and has resisted change – the digital economy might, at last, be upsetting the car buying tradition.

Carvana works like this: Shoppers find a used car on the company’s website, take an online tour of the car, buy it online (they say it takes 20 minutes), and then have it delivered or pick it up – that’s where the vending machines come in (they also offer travel reimbursement if there’s no vending machine in the buyer’s area). Every new car owner gets a seven-day test period.

That’s a pretty straightforward online transaction, and it wouldn’t be shocking if we were talking about anything but car buying.

There are, unsurprisingly, other startups getting in on this market, too.

Beepi, started in 2013, has the same aim, but works on a different model. The company is more a matchmaking service for car sellers and buyers. Sellers register their car on the company’s website, and Beepi sends out an inspector to check it out. If it passes the inspection, it’s made available to other Beepi people. The company guarantees it’ll sell the vehicle within 30 days, or, if not, it will buy it. Buyers can also buy online, and the car is delivered to them (the car stays with the seller until it’s sold).

Vroom, in New York, was also founded in 2013 (do we sense a trend here?). Like its competitors, would-be buyers shop for a car on its site, arrange financing if they want, and their new auto is delivered to their door. They’ve got seven days to keep or reject. (The company also has an ad featuring John Leguizamo and Rachel Dratch riding an ostrich and a yak, respectively.) The company is planning on opening four virtual reality showrooms across Texas and Arizona as pilot projects, with plans to expand if they’re popular.

Roadster, only available in California at this point, is a bit different in that buyers can use its website to find the car they want, and then Roadster finds it at a dealer. It’s basically a middleman, but does remove the need for a trip to your local dealership strip. And then Roadster will deliver the car to the buyer’s home.

Not everyone is convinced that car buying will be successful online or that we’re seeing the beginning of the end of the brick-and-mortar dealership. Some companies are replicating the in-person dealership experience online, including the final price negotiation step. However, they’ll need to contend with a generation of buyers who grew up with online, one-click shopping, and perhaps don’t see the point in buying the average car in person. For those consumers, Carvana and its cohort could be a natural choice.

Carmakers, auto dealers, and any other brick-and-mortar business: take heed of these 4 Ways to Digitally Disrupt Your Business Without Destroying It.

Image: Norsk Elbilforening via Wikimedia Commons

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Customer Experience: OmniChannel. OmniNow. OmniWow.

Jamie Anderson, Volker Hildebrand, Lori Mitchell-Keller, and Stephanie Overby

The lines between the digital and physical customer experience today are largely artificial. Customers shop in retail stores with their devices at the ready. They expect online-like personalization and recommendations in the aisles. They’re looking for instant gratification and better sensory experiences from digital channels. It’s an omnichannel world and companies must figure out how to live in it: delivering a superior customer experience regardless of the entry point.

Luxury fashion brand Rebecca Minkoff, for example, opened its first three retail stores with the intent of taking customers’ best online experiences and bringing them to life. “In the past, you had this brick-and-mortar experience, and you had the online experience,” says company president Uri Minkoff. “There were such great advantages and efficiencies that emerged with shopping online. You could get recommendations, see how something should be styled, create wish lists, access user-generated content. In the store, it was still just you and the product, and maybe a sales associate. But [unlike online] you had all five of your senses.”

Rebecca Minkoff’s new stores still stimulate those senses while incorporating some of the intelligence that online channels typically bring to bear. Each store features a large interactive screen at the entrance, where customers can browse products or order a beverage. Shoppers can interact with salespeople or they can make purchases on a mobile app without ever talking to a soul. Inside a fitting room, RFID-tagged merchandise is displayed on an interactive mirror, where customers can request new sizes or the designer’s recommended coordinates (a real-life recommendation engine).

The company has found that 30% of women ask for additional items based on the recommendations. It has also sold three times more of its new ready-to-wear line than it anticipated. “We were an accessories-dominant brand,” says Minkoff. “But we’ve been able to build this direct relationship with our customers, helping them with outfit completers and also getting a better sense of what they want based on what’s actually happening in our fitting rooms.”

Each piece of technology adds to the experience while capturing the details. Rebecca Minkoff’s integrated systems can remember a customer’s previous visits and preferred colors and sizes, and can enable associates to set up a fitting room with appropriate garments. On the back end, the company gets the kind of visibility into in-store conversions once possible only in digital transactions. “The technology gives us the ability to create the kind of experience each customer wants. She can shop anonymously or be treated like a VIP,” says Minkoff.

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Build Around a Big Idea

Rebecca Minkoff’s approach is a bellwether. It’s not enough simply to provide continuity or consistency from one channel to another. Customers don’t think in terms of channels, and neither should companies. Rather, it’s about defining the overarching experience you want to deliver to customers and then building the appropriate offline and online elements to achieve that intended outcome.

As more goods and even services are commoditized, companies must compete on the experiences they create (see The ROI of Customer Experience). That means coming up with a big idea that drives the design of the customer experience. “Every great experience needs to have a theme,” says Joe Pine, consultant and coauthor of The Experience Economy and Infinite Possibility: Creating Customer Value on the Digital Frontier. “That’s the organizing principle of the experience. It’s how you decide what’s in and what’s out.”

For example, Rebecca Minkoff serves as an image consultant to its Millennial customers, who expect personalization, recognition, and tech innovation, using a mix of online and offline techniques. To stand apart, companies must come up with their own unifying idea and then integrate data and systems, rework organizational models, and rethink key strategic metrics and employee incentives in order to integrate the physical and digital worlds around that idea.

Here are some examples of companies that have created a theme-driven experience using online and offline elements.

Nespresso: Imparting a Sense of Luxury

At the most basic level, Nespresso is a manufacturer of coffee and coffee machines. But the company has successfully turned what it sells and how it sells it into a very specific type of experience. Nespresso strives to impart a feeling of quality, exclusivity, even luxury in a host of ways.

sap_Q316_digital_double_feature3_images2The company has created the Nespresso Club, which maintains direct relationships with thousands of customers. Its customer service centers are staffed by 1,000 highly trained coffee experts who don’t just push products but offer advice and guidance as a sommelier might do with wine. Its 450 retail stores (up from just one Parisian in 2000) are called boutiques; the largely inventory-free showrooms are built around tasting and learning.

Online, the focus is on efficiency and service. Customers who prefer digital interactions can order through the web site or mobile app, which offers the option of courier delivery within a two-hour window. The company also recently introduced a Bluetooth-enabled coffee machine, which when paired with a smartphone app, can track a customer’s usage, simplify machine maintenance, and as Wired pointed out, enable remote brewing.

Success didn’t happen overnight, but today Nespresso is one of Nestlé’s fastest growing and most profitable brands, according to Bloomberg.

QVC: Using Online to Complement the Experience

The theme that has driven television-shopping giant QVC’s customer experience for decades has been “inspiration and entertainment.” Traditionally that was delivered through the joy of spontaneous discovery while watching the channel.

Matching that experience online has been difficult, however. At a digital retail conference in 2015, QVC’s CEO explained that in the past the company had failed to deliver the same rich interactions online that it had developed with its TV audiences, according to Total Retail. So the company decided to rethink its use of digital tools to focus on complementing the experience it delivers through TV screens, according to RetailWire.

For example, after enticing TV viewers with products, QVC introduces the next step in the buying journey—“impulse to buy”—in which viewers are spurred on with televised countdown clocks or limited merchandise availability. Online, the company has been experimenting with second-screen content (for instance, recipes that compliment a cooking product being sold on TV) to further propel purchases. The QVC app features the same item that is on-air along with a prompt that reveals all the items featured on TV in recent hours. On Apple devices equipped with Touch ID, customers can check out in less than 10 seconds with the fingerprint-enabled “speed buy” button. The third phase—“purchase and receive”—is complemented by a simple and reliable online browsing and purchasing platform. The last stage—“own and enjoy”—is accompanied by follow-on e-mail communication with tips on how to use products.

Last year, the company reported that 44% of total QVC sales came from online channels (up from 40% in 2014), and nearly half of those were completed on a mobile device. In fact, QVC is currently the tenth largest mobile commerce retailer in the United States, according to Internet Retailer.

Domino’s: Focusing on Speed and Convenience

sap_Q316_digital_double_feature3_images3Domino’s Pizza built a fast-food empire not necessarily on the quality of its pies but instead on the experience of getting hot food delivered quickly. What started out as a promise to deliver a pizza within 30 minutes to customers who phoned in their order is now a themed experience of efficient food delivery that can be fulfilled a number of ways. Domino’s AnyWare project enables customers to order pizzas from their TV, their Twitter account, their smartwatch, or their connected car, for starters. The Domino’s app features zero-click ordering functionality: Domino’s will start fulfilling the usual order for customers who opt in 10 seconds after opening the app.

Domino’s Australian stores are piloting GPS tracking whereby employees begin working on an order only when the customer enters the “cook zone”—a dynamically updated area around a given store that results in the customer arriving to a just-prepared order. The tool builds upon previously developed GPS-based technology for tracking delivery drivers, according to ZDNet. And the company that came up with the corrugated pizza box and the Heatwave Bag to keep pies warm is now building the DXP—a delivery car with a built-in warming oven. All in the name of the fast- and hot-food delivery experience.

Mohawk Industries: Using Social to Streamline Customer Interactions

Mohawk Industries grew to become a US$8 billion flooring manufacturer by relying on customers to visit its dealers’ retail locations to see, touch, and feel the carpet, hardwood, laminate, or tile they planned to purchase.

sap_Q316_digital_double_feature3_images4Today, instead of waiting for customers to find Mohawk, it has redesigned its experience to find them. It has adopted new technology and reworked its sales processes to reflect that new focus. The company’s 1,200 sales representatives have access to a 360-degree view of each customer, complete with analytics and sales tools on their tablets, enabling them to capture and follow through on leads generated through social media engagement.

By analyzing online discussions in real time, representatives can jump into the conversation and help customers find the product they may be searching for and direct the consumer to a retailer to finish the sale. In one episode, a woman was posting about her interest in a particular leopard rug on Twitter. Mohawk’s team surfaced the tweet, passed it on to a channel partner who contacted the woman and closed the sale within two minutes. Today, the company boasts an 80% close rate on sales started and guided in social media and has made $8 million on 14,000 such social leads. Mohawk Industries expects an increase of $25 million in sales year-over-year, thanks to its new customer-centric approach.

Customer Experience Design: Where to Begin

Developing a unique, valuable, and relevant customer experience that combines the best of offline and online capabilities is a huge undertaking. All corporate functions, including marketing, customer service, sales, operations, finance, and HR as well as product or business lines—all of which typically have competing metrics and agendas—must buy into the experience and collaborate to make it happen. And the ideal mix of digital and physical components will vary by company. But there are some best practices to get companies started on their own journeys.

Start at the Top

Without leadership buy-in, changes will not happen. “Customer experience is not a feature, it’s not a shiny button. It’s a concept that sometimes is tough to grasp. But we believe that if done right, it will keep customers loyal. And so we put a lot of effort into it,” says Kevin Scanlon, director of total customer experience at tech company EMC. “That’s why having that top-down support is paramount. If you don’t have it, you’re spinning your wheels. It’s going to give you the resources, the focus, and the attention that you need to design that consistent experience.”

To demonstrate its commitment, every VP and above at EMC has a customer experience metric as part of their quarterly goal.

Begin with the End in Mind

Companies can take a page from the design-thinking approach to product development, starting with the experience they want customers to have with their company and then putting in place the people, processes, and systems to make that happen across various touchpoints. Uber didn’t start by buying 1,000 cars. It started with a completely new customer experience it wanted to deliver—straddling the digital and physical—and then built the organization around that. Uber ultimately leveraged people, process, and technology to bring that to life, but it started with a unique customer journey.

Design for the Customer, Not the Company

sap_Q316_digital_double_feature3_images5To date, most corporate processes have been designed for internal efficiency or cost savings with little consideration for the impact on the customer. Companies that want to design for consistent experiences have to reexamine those business processes from the customer perspective. In order to deliver a standout and consistent experience, enterprises must bring together an assortment of data from a variety of systems—including POS transactions, mobile purchases, call center activity, notes from sales calls, and social media.

The average retailer has customer data in more than a dozen different systems. But it’s not just the front-end customer-facing systems that need orchestrating; back office systems and processes, from your supply chain to fulfillment to customer service, must be designed to deliver the intended experience. For example, Nespresso has to orchestrate a number of back-end and front-end systems to offer customers premium courier delivery within two-hour windows.

Put Someone in Charge

Companies that are truly invested in creating integrated, standout customer experiences often create a centralized function that can bring together the people, processes, and technology to bring them to life. Sometimes there is a chief customer officer or head of customer experience. But unless these people are really empowered, they’re toothless.

EMC’s Scanlon is empowered. He heads up a function that has been transformed from focusing on product quality into a centralized customer experience center of excellence staffed with 60 full-time professionals. The center has translated into “more focus, more energy, more insight to our customers,” says Scanlon. “And we can deliver that insight to our internal stakeholders, which trickles down to our account teams and lets them have more meaningful conversations that benefit our customers—and benefit the company over time.”

Centralize Customer Data

Even if there is no central customer experience function, there needs to be a central data repository and analytics system: a digital foundation that everyone can use to improve their piece of that experience. EMC’s customer experience group has a data governance function that maintains a single source of customer truth. “They’re able to pull all relevant data sources into one location and get past the typical customer data challenges,” says Scanlon.

Invest in People

Companies that care about the customer experience invest in the people who deliver it. Human beings are the clearest signposts on the customer journey. Companies must hire the best, train for desired outcomes, and reward based on experience metrics: for being brand ambassadors and for going above and beyond on behalf of the customer.

sap_Q316_digital_double_feature3_images6Rethink Metrics and Incentives

One major bank was having trouble driving adoption of its online banking tools. The customers that used the tools loved them, but the tools weren’t getting traction. The problem? The branch managers had no interest in promoting digital banking. They wanted to drive as much traffic as possible to their physical branches because this was one of their key performance metrics.

The solution was to change the compensation approach in order to reward employees for the entire customer experience, including online banking adoption. Branch managers were measured on online and offline customer behavior in their regions. That became a single and critical KPI, and it boosted the desired behaviors and improved overall customer satisfaction.

Create a Single View of the Company

For years, companies have talked about the importance of understanding the customer. And that remains true, particularly when it comes to delivering a valuable customer experience online and off. But successful customer experience design is just as much about giving customers a clear understanding of the company through coordinated experiences that deliver on the brand’s theme and bring it to life in various ways in bricks and mortar, through devices, in online interactions, and everywhere in between. D!

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

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Is The Internet Of Things And Wearable Technology The New Black?

Fred Isbell

The Internet of Things (IoT) is a classic hype cycle phenomenon. Besides forecasts of high growth, it is capturing a large share of interest and overall mindshare.

One thing is clear: The elements of the IoT are here to stay. Once we get past the definition of IoT, which is commonly referred as sensor-based devices and machine-to-machine communications, businesses can open themselves to enormous potential.

When trying to understand new things, I prefer to embrace them as a part of my daily life. When tablets first emerged, I didn’t go anywhere without my trusted iPad. In fact, I sometimes leave my laptop home knowing that I can do most of what I need on this device. And based on that experience, I took my own advice when it came to wearable technology recently – and the results were eye-opening.  I’m now onto my second-generation wearable device, showcasing just how quickly this is all changing.wearable-1

But first let’s jump into the time-travel machine back to February 2015. I was attending the MIT/Sloan School Sports and Analytics conference in Boston, and it seemed that everyone was mentioning wearable technology. The buzz was verified weeks later when I attended the IDC Directions Annual conference, where wearables made the short list of technology ubiquity. A year later, I returned to the MIT/Sloan School Sports and Analytics conference in Boston a little bit wiser. At that point, I invested in a Fitbit and started tracking my own personal statistics for exercise, sleep, and more. Needless to say, the geek in me was in full force as I wore both a Fitbit and a sports watch at the same time. I didn’t want to miss anything, and my middle-aged eyes appreciated the help.

One of the benefits of working for a tech company is the opportunity to adopt new technology in every aspect of my life. My employer, SAP, kicked off a new wellness program, incorporating wearables in how its employees track their health and wellness. I took advantage of this opportunity, replacing my sports watch with a second-generation Fitbit and consolidating two devices into one.

My wearable journey is certainly not complete yet, but it’s become integrated into my life in a very nonintrusive way. Just as my tablet has become an extension of me, so has the wearable device. I even exchange screen shots of my results – such as when I rode my first charity JDRF bike ride over the summer – to friends so we celebrate our achievements.

Very soon, our interactions with the IoT and wearable will become the norm, and we won’t think twice about it. But at the same time, it’s becoming a big business. Market watcher CCS Insight sees this as a US$14 billion market growing to over US$40 billion by 2020. All of these devices will generate even more data, making Big Data bigger than anyone could have predicted.

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All of that data will generate increased demand for applications – especially analytics – to understand, interpret, and use this information. And if you think about it, my Fitbit app on my phone is really a personal business intelligence tool and the ultimate example of the consumerization of IT.

Not surprisingly, tech leaders such as SAP talk about the fusion of business-to-business (B2B) and business- to-consumer (B2B) into what some call “business-to-business-to-consumer” (B2B2C). The proliferation of wearable technology is a great example of this. The market for applications and solutions will increase exponentially – supported by cloud-based delivery and unprecedented demand for the infrastructure to deliver real-time intelligence and much more.

Wearables are indeed the new black as it becomes mainstream and part of society. I’ll come back shortly with a further discussion of how we can apply this technology in sports and analytics. In the interim, I need to head to the gym to get my 10,000 steps and the fitness equivalent to make my Fitbit – and me – happy!

For more on the impact of connected devices, see How Tech Changes Up Health In The Workplace.

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Fred Isbell

About Fred Isbell

Fred Isbell is the Senior Director of SAP Digital Business Services Marketing at SAP. He is an experienced, results- and goal-oriented senior marketing executive with broad and extensive experience & expertise in high technology and marketing. He has a BA from Yale and an MBA from the Duke Fuqua School of Business.