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The 15 Most Important Computer Security Startups Of 2013

Julie Bort

Computer security is a difficult problem that attracts some of the brightest minds in the tech industry who build some of the most innovative products.

We’ve assembled this list of the hottest, coolest security startups creating buzz for a number of reasons:

  • They’ve landed big finance rounds.
  • They have impressive founders.
  • They are solving a hard security problem.
  • They are approaching security in a fresh new way.

1.) Appthority: Protecting mobile app developers

Appthority CEO and cofounder Anthony Bettini

These days, everyone and anyone is a mobile app developer. But just because you can build an app, doesn’t mean it’s good or safe.

Appthority offers a cloud platform that checks to see if an app is secure so it can’t be hacked by the bad guys.

Appthority’s CEO and co-founder, Anthony Bettini hails from McAfee and was the technical editor for one of the best-selling hacking books of all time, “Hacking Exposed.”

2.) ThreatMetrix: Putting it all together to stop fraud fast

Reed Taussig, CEO, ThreatMetrix

Most businesses use a whole bunch of security products. If they find evidence of a hacker, that info isn’t easily shared between security products.

ThreatMetrix offers a cloud service that does all the big security stuff in one system and this lets it detect fraud the instant it happens, not sometime later.

ThreatMetrix landed on the Wall Street Jounal’s Top 50 startups of 2012 after it acquired another buzzy startup, malware detection firm TrustDefender, last year.

3.) Marble Cloud Security: Keeps hackers from fooling you into loading their malware

Dave Jevans, founder, Marble Cloud

Marble Cloud offers software for the bring-your-own-device phenom. Install it and if a user gets hacked, the malware can’t gain access to the company’s other data through the device.

It also protects people from bad stuff that could happen when they use a public Wi-Fi and from a growing threat known as “SMS phishing” where a text from the bad guys can fool you into installing malware or giving away your password.

Dave Jevans, founder and CTO, is also the founder of the Anti-Phishing Working Group, whose members include Yahoo, eBay, Google and Microsoft.

4.) AnchorFree: Safe and private public hotspots

AnchorFree: Safe and private public hotspots

David Gorodyansky, CEO and co-founder AnchorFree

AnchorFree offers software it calls the “Hotspot Shield” which gives everyone secure, anonymous, and private browsing on the Internet.

It came to fame during the Arab Spring, helping people in oppressed countries stay under-the-radar when using the Internet. That helped it land a $52 million investment led by Goldman Sachs last year.

AnchorFree has also attracted a whole bunch of famous angels including Flickr backer Esther Dyson, former Huffington Post president Greg Coleman, and Bert Roberts, the former CEO of MCI.

5.) Wickr: Your message will self destruct

Wickr: Your message will self destruct.

Kevin Smith/Business insider

Wickr’s mission is to let you use the mobile Internet and “Leave No Trace.”

It offers an app that gives you uber-control over your mobile messages — text, pictures, audio, video — with military-grade security to prevent snooping.

Then, at your command, the message self destructs and is gone forever.

Wickr isn’t the only one working in this area. Snapchat offers some of these features, as does Silent Circle.

Still, Wickr stands out for its co-founder, Nico Sell, who has started over 20 security companies over the past two decades and also helped run the yearly hacking conference DEFCON.

6.) Impermium: Making nasty comments go away

Impermium: Making nasty comments go away

Mark Risher did a lot of anti-spam work for Yahoo before cofounding Impermium

The Internet isn’t always a nice place. People and blog spammers write the nastiest comments and Tweets.

Impermium calls that stuff “Mal.content” and its tool finds it, deletes it and stops the spread of it.

Built by the former leaders of Yahoo!’s anti-spam and security teams, Mark Risher and Vish Ramarao, Imperium recently hired Sameer Bhalotra, the former White House senior director for cybersecurity, as its COO.

7.) Victrio: identifying bad guys when they call on the phone

Victrio: identifying bad guys when they call on the phone

Victrio cofounder Lisa Guerra (LinkedIn/Lisa Guerra)

What’s to stop fraudsters from calling a company on the phone and lying their way into obtaining forbidden information?

Victrio, that’s what.

Victrio has a very cool tech that does realtime phone fraud detection based on a “voice print.”  The tech is popular with banks, credit card companies, and any company that still does a lot of business through call centers.

Founder Tony Rajakumar and vice president of engineering and co-founder, Lisa Guerra, cut their teeth at BeVocal, a voice detection company bought in 2007 by Nuance Communications.

8.) Shape Security: Keeping people away from bad websites

Shape Security: Keeping people away from bad websites

Shape Security cofounder Sumit Agarwal

Shape is still in stealth mode and has been somewhat tight-lipped about its technology, but we know that it’s working on a way that makes it harder for hackers to trick people into visiting malware-laced websites.

The company has a whole bunch of Valley tech bigwigs excited enough to invest. It just raised $20 million (bringing their total to $26 million) from investors like Venrock, the venture-capital arm of the Rockefeller family; Kleiner Perkins; Eric Schmidt’s TomorrowVentures; and executives at DropboxFacebookLinkedIn, and Twitter.

Shape was cofounded by ex-Googler Sumit Agarwal, who was head of Google’s mobile product management.

9.) 41st Parameter: Taking a digital fingerprint of your PC

41st Parameter: Taking a digital fingerprint of your PC

Ori Eisen, founder, 41st Parameter

41st Parameter’s FraudNet has a creative approach to help retailers find hackers and fraudsters.

It invisibly scans the PC and creates a digital “fingerprint” of it. Even if a hacker has your credentials, if the person’s not logging in from your actual PC, 41st knows it and flags those activities.

The company was founded by Ori Eisen, who was the worldwide fraud director for American Express.

10.) CrowdStrike: Seeking to unmask and capture the hackers themselves

CrowdStrike: Seeking to unmask and capture the hackers themselves

George Kurtz

CrowdStrike is taking a completely different approach to security: find and identify the hacker.

Although CrowdStrike is technically in stealth mode, the company has created a ton of buzz for its aggressive stance on rooting out the hackers, as opposed to an emphasis on building defensive tech.

Its founders include George Kurtz, McAfee’s former CTO. Early employees are former FBI cybercrime bigwigs and a top U.S. information-warfare Air Force colonel, now retired.

11.) Tenable Network Security: Protecting the Department of Defense

Tenable Network Security: Protecting the Department of Defense

Ron Gula, CEO, Tenable Network Security

In September, Accel invested $50 million into Tenable, (YouTube/tenablesecurity) the biggest investment Accel ever made in a North American company.

Tenable isn’t that young (founded in 2002) and doesn’t make the sexiest security tech: Its flagship product is the Nessus “vulnerability management software” which helps companies manage all the security alerts and patches.

But it’s got a giant list of enterprise customers including a recently-signed huge contract with the Department of Defense.

12.) FireEye: Stopping the attacks that no one else can stop

FireEye: Stopping the attacks that no one else can stop

Ashar Aziz, founder, FireEye

FireEye solves two really hard problems: protecting corporate networks against so-called “advanced persistent threats” and against “zero-day” attacks.

APTs are very personalized attacks by hackers determined to get into a particular network.  Zero-day attacks are software holes that haven’t been fixed by the software vendor.

FireEye finds this stuff by flagging suspicious stuff and then opening it in a safe, virtual environment. For instance, its email appliance opens the suspected email attachment to see what it does. The whole process takes a fractions of a second and if the email contains malware, it stops it.

FireEye was founded by former Sun distinguished engineer Ashar Aziz who holds 18 patents on this tech alone.

13.) Co3 Systems: Helping companies recover after an attack

Co3 Systems: Helping companies recover after an attack

Ted Julian, chief marketing officer, Co3 Systems (Twitter/@eajulian)

Despite all the security companies buy, they can still get hacked.

When that happens, Co3 Systems solves an interesting problem: reporting that security breach. It makes sure a company meets its compliance obligations.

The company is run by a team of experienced execs including EMCs former director of engineering, Allen Rogers, and one-time IDC market research analyst, Ted Julian, who previously cofounded Arbor Networks.

14.) Bromium: Letting malware happen, safely

Bromium: Letting malware happen, safely

Simon Crosby, co–founder, CTO, Bromium

Bromium is doing for computer security what VMware did for servers. The company has created a technology called “micro-virtualization” that doesn’t care if potentially dangerous software gets installed on a PC because it runs in a safe container that can’t touch the rest of the PC.

In this way, PC users can download apps or open attachments without worrying about unleashing a virus on the company.

It was founded by Simon Crosby, who is known as the founder of XenSource, an open source competitor to VMware.

15.) CipherCloud: Encrypting data before sending it to the cloud

CipherCloud: Encrypting data before sending it to the cloud

Pravin Kothari, founder, CipherCloud (Twitter/@pkothari)

CipherCloud offers a service that just about every enterprise is going to need as it adopts the cloud.

It secures a company’s sensitive data in real time before that data is sent to the cloud. That means enterprises don’t have to trust the cloud provider to keep their stuff safe.

It was founded by Pravin Kothari, whose previous security company was ArcSight, which he sold to Hewlett Packard for $1.6 billion. In its first year in business, CipherCloud has already nabbed about 40 big enterprise customers, including two of the world’s top banks.

Plus, Andreessen Horowitz put $30 million into the company last month, raising its total to $31.4 million.

Please follow SAI: Enterprise on Twitter and Facebook.

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How Digital Supply Chains Are Changing Business

Dominik Erlebach

In the real world, customer demands change and supply disruptions happen. Consumers and collaborative business partners have new expectations. Is your supply chain agile enough to respond?

As technology expands and the Internet of Things becomes increasingly prevalent, a digitized supply chain strategy is moving into the core of business operations. Today’s high-tech companies must adapt – speed and accuracy are crucial, and collaboration is more important than ever. The right digital tools are the key to developing an extended, fast supply chain process. The evolution of the extended supply chain can be seen with McCormack and Kasper’s study on statistical extended supply chains.

Ultimately, however, everything comes down to the efficient use of data in decision making and communication, improving overall business performance, and opening a whole new world of opportunities and competitive differentiation.

The changing horizon of supply chains in technology

Supply chain management now extends further than ever before. Until recently, the task for supply chains was simple: Companies developed ideas, produced goods, and shipped them to distribution points, with cost efficiency as one of the most prevalent factors. As the supply chain evolves into extended supply chain management, however, companies must plan beyond these simple steps.

The Digitalist summarizes these new market conditions as collaborative, customer-centric, and individualized. New products need to hit markets much faster, and customers expect premium service and collaboration. Increasingly, the supply chain must meet rapidly changing consumer demands and respond accordingly. Management can now be conducted by analysis of incoming data or by exception, as discussed in a presentation by Petra Diessner. Resilience and responsiveness have clearly become differentiators in the cutthroat high-tech market. To keep up, high-tech companies must change their method of conducting business.

What is the extended supply chain?

The extended supply chain refers to widening the scope of supply chain planning and execution, not only across internal organizations, but beyond a company’s boundaries. High-tech companies must involve several tiers of suppliers, manufacturers, distributors, and customers. Some businesses also study the popularity and dynamics of a product directly, such as through mining social media data. To lead the competition, modern businesses must orchestrate the extended supply chain to keep up with consumer demands, as consumers now look for fully integrated service experiences.

What makes the supply chain work in extended form?

There are several key factors to consider when updating your supply chain model. The first, access to information, is essential to managing digitized extended supply chains and unleashes benefits that can help your company grow beyond traditional models. All companies gather information, but companies that use this information effectively will excel where others do not.

World Market Forum discusses this in its report on extended supply chains. Digitizing the supply chain process can help manage even an extended, complex network and provide key access to critical information. The success of digitization relies on gathering accurate, pertinent information in a format that can be readily applied and used.  While speed is important, it is not enough. The information itself must be applicable to the company’s needs and it must provide data that allows companies to make more informed decisions about product growth, marketing, and supply chain distribution.

Real-time information access is a primary benefit of digitized supply chains. Market trends become instantly visible with real-time data and cloud-based analytics, as Marcus Schunter notes in this analysis. This insight allows companies to plan for new products and platform development as the market shifts. Eliminating the need to wait months to access and analyze data is critical for the high-speed technology market and also allows for assessment of critical situations. Resolving problems as they occur is more efficient than post-mortem analysis and allows companies to act rather than react. In extending your supply chain, look for technological advancements that allow you to gather data and analyze it in real time.

Consolidation of digital information is another major benefit to the digitized supply chain. Localized digital information can be gathered and analyzed to form executable action plans. Data becomes part of the planning and problem-solving cycle, improving overall communication and allowing for fuller, more meaningful problem-solving and planning. With digitization, speed is a factor, but the relevancy and application of information separates successful companies from the pack. For companies looking to extend their supply chain, this is a key element when searching analysis tools and platforms.

Is your high-tech organization ready to meet the challenges of a complex market and navigate the digital economy?

To learn more about digital transformation in high-tech supply chain, visit here.

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More Resources, More Problems

Danielle Beurteaux

This is the second of a two-part series on resource volatility. As noted in the first post, globalization has created an environment of resource volatility. This post, with numbers 11 through 20 on the list, describes resources that are more stable than the previous 10. However, that doesn’t mean there isn’t turmoil, whether that’s environmental concerns in Indonesia’s palm oil production industry, or community organization for water rights in Chile. And, of course, whatever China does, the markets follow.

Top resources and trends

11. Natural Gas

According to the International Energy Agency, most natural gas comes from Russia, the United States, Canada, Qatar, and Iran, and the countries that use the most are the U.S., Russia, China, and Iran. There are sufficient reserves of natural gas, again according to the IEA’s projections, that should last past the year 2040. Liquefied natural gas, which is produced mostly by Qatar, with Australia set to overtake Malaysia for second place, has had a flat market recently. There isn’t the demand to keep up with increased production, so liquefied natural gas producers are looking for new markets, like cruise lines, to grow demand.

12. Tin

Most of the world’s tin comes from China and Indonesia. The tin market tanked last year because of less demand and lots of tin, although it did rally in July and then improve earlier this year, mostly because Indonesia is exporting less and easing the flood of tin on the market.

13. Gold

It seems like everyone’s crazy for gold right now. The precious metal is often perceived as a safer investment than other asset classes, and it’s up 20% this year. Famed investor George Soros just bought $264 million worth of shares in Barrick Gold. The Toronto-based gold-mining company is the world’s largest. Gold prices bumped down a bit while the market waited on the Federal Reserve’s meeting minutes, but some are saying gold will soon recover – and then some.

14. Nickel

Russia, Canada, and New Caledonia are the largest producers of nickel. Most is used to make stainless steel. Like several other commodities we’ve examined, there is more production than demand of nickel at the moment, which has led to depressed prices. China is a big consumer of nickel for stainless steel, and the country is using less because of a slowing real estate market.

15. Beef

The global demand for beef is up, but production is down due to a variety of factors. One is Australia’s decreased production due to drought conditions, which will mean 300,000 tons less beef for export this year. As Australia is a favored trading partner of the U.S., that will affect the American beef market. A recent study from Radobank predicts that China will increase live cattle imports for domestic processing, and Brazil will enter the U.S. market as well.

16. Wheat

It’s a good year for wheat. North American wheat production is doing well, although levels are down from the previous year, with five percent less planted in the U.S. and six percent less in Canada. According to the most recent USDA World Agricultural Supply and Demand Estimates report, total U.S. wheat supplies and use are up six percent and seven percent, respectively. Globally, the report projects a two percent increase in wheat supplies, and consumption will increase, too.

17. Iron Ore

Earlier this year, the iron ore market jumped, reportedly because of the Chinese government’s moves to help along the country’s economy. Things have settled down since then, with recent trading sending the per ton price downwards 22.9% from its high in April, which seems to be due to China’s increased crude steel production and also the government’s stopping speculative trading. They’ve also committed to transportation infrastructure projects, but there is still too much iron ore compared to demand.

18. Copper

As with iron ore, China’s announcement that it would be investing in transportation infrastructure affected the price of copper recently. This is likely a welcome piece of news, as copper had been trading at the lowest levels since March 2009. Output and demand are both projected for small increases this year. Chile has the largest open pit mine and the largest global reserves of copper, but it’s been facing difficulties in recent years including lack of water, which is essential for mining, and local community resistance.

19. Palm oil

Palm oil is a global big business to the tune of $50 billion, which is projected to increase to $88 billion by 2020. It’s in almost everything these days because it’s inexpensive, stable, and can be used for many applications. (It’s not always listed on ingredient labels as palm oil).  Most is produced in Malaysia. It’s also a bête noire of environmentalists – it’s linked to deforestation, the recent massive forest fires in Indonesia which were set, it’s thought, to clear land for plantations, and lost habitat for orangutans and increased worries about their extinction.

20. Aluminum

Aluminum rose overall in 2015, but took a dive in the last few months of the year. Market-watchers are hoping that China’s announcement that it will reduce aluminum output will help energize the market once oversupply is balanced. But one of the world’s biggest producers, Alcoa, is reorganizing, which could be an indication that the company is preparing for an era of depressed prices, despite continued healthy demand.

Digital transformation is affecting different industries at different speeds and on different scales. IDC reveals how in The Internet of Things and Digital Transformation: A Tale of Four Industries.

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Live Businesses Deliver a Personal Customer Experience Without Losing Trust

Lori Mitchell-Keller, Brian Walker, Johann Wrede, Polly Traylor, and Stephanie Overby

Trust is the foundation of customer relationships. People who don’t trust your business are not likely to become or remain customers.

The trust relationship has taken some big hits lately. Beloved brands like Chipotle and Toyota have seen customer trust ebb due to public perception of their roles in safety issues. Consumers continue to experience occasional data breaches from large brands.

Yet these traditional threats have short half-lives. The latest threat could last forever.

Most customers claim they want personalization across all the channels in which they interact with companies. Such personalization should create long-term loyalty by creating a new level of intimacy in the relationship.

sap_Q216_digital_double_feature3_images2But that intimacy comes at a high price. For personalization to work, brands need to gather unprecedented amounts of personal information about customers and continue to do so over the course of the relationship. Customers are already wary: 80% of consumers have updated their privacy settings recently, according to an article in VentureBeat.

Companies must get personalization right. If they do, customers are more likely to purchase again and less likely to switch to a competitor. Personalization is also an important step toward the holy grail of digital transformation: becoming a Live Business, capable of meeting customers with relevant and customized offers, products, and services in real time or in the moments of customers’ choosing.

When done wrong, personalization can cause customers to feel that they’ve been deceived and that their privacy has been violated. It can also turn into an uncomfortable headline. When Target used its database of customer purchases to send coupons for diapers to the home of an expectant teen before her father knew about the pregnancy, its action backfired. The incident became the centerpiece of a New York Times story on Target’s consumer intelligence gathering practices and privacy.

Straddling the Line of Trust

Customers can’t define the line between helpful and creepy, but they know it when they see it.

Research conducted by RichRelevance in 2015 made something abundantly clear: what marketers think is cool may be seen as creepy by consumers. For example, facial-recognition technology that identifies age and gender to target advertisements on digital screens is considered creepy by 73% of people surveyed. Yet consumers were happy about scanning a product on their mobile device to see product reviews and recommendations for other items they might like, the survey revealed. Here’s what else resonates as creepy or cool when it comes to digital engagement with consumers, courtesy of RichRelevance and Edelman Berland (now called Edelman).

Creepy

  • Shoppers are put off when salespeople greet them by name because of mobile phone signals or know their spending habits because of facial-recognition software.
  • Dynamic pricing, such as a digital display showing a lower price “just for you,” also puts shoppers off.
  • When brands collect data on consumers without their knowledge, 83% of people consider it an invasion of privacy, according to RichRelevance’s research, and 65% feel the same way about ads that follow them from Web site to Web site (retargeting).

Cool

  • Shoppers like mobile apps with interactive maps that efficiently guide them to products in the store.
  • They also like when their in-store location triggers a coupon or other promotion for a product nearby.
  • When a Web site reminds the consumer of past purchases, a majority of shoppers like it.

There are no hard-and-fast rules about which personalization tactics are creepy and which are cool, but trust is particularly threatened in face-to-face interactions. Nobody minds much if Amazon sends product recommendations through a computer, but when salespeople approach customers like a long-lost friend based on information collected without the customer’s knowledge or permission, the violation of trust feels much more personal and emotional. The stage is set for an angry, embarrassed customer to walk out  the door, forever.

sap_Q216_digital_double_feature3_images3It doesn’t help that the limits of trust shift constantly as social media tempts us to reveal more and more about ourselves and as companies’ data collection techniques continue to improve. It’s easy to cross the line from helpful to creepy or annoying (see Straddling the Line of Trust).

Online, customers are similarly choosy about personalization. For example, when online shoppers are simply looking at a product category, ads that matched their prior Web-browsing interests are ineffective, an MIT study reports. Yet after consumers have visited a review site to seek out information and are closer to a purchase, personalized content is more effective than generic ads.

Personalization Requires a Live Business

Yet the limits of trust are definitely shifting toward more personalization, not less. Customers already enjoy frictionless personalized experiences with digital-native companies like Uber, and they are applying those heightened expectations to all companies. For example, 91% of customers want to pick up where they left off when they switch between channels, according to Aspect research. And personalization is helpful when you receive recommendations for products that you would like based on previous in-store or online purchases.

sap_Q216_digital_double_feature3_images-0004Customers also want their interactions to be live—or in the moment they choose. Fulfilling that need means that companies must become Live Businesses, capable of creating a technological infrastructure that allows real-time interactions and that allows the entire organization—its structure, people, and processes—to respond to customers in all the moments that matter.

Coordinating across channels and meeting customers in the right moments with personalized interactions will become critical as the digital economy matures and customer expectations rise. For instance, when customers air complaints about a brand on social media, 72% expect a response within an hour, according to consulting firm Bain & Company. Meanwhile, an Accenture survey found that nearly 60% of consumers want real-time promotions; 48% like online reminders to order items that they might have run out of; and 51% like the idea of a one-click checkout, where they can skip payment method or shipping forms because the retailer has saved their preferences. Those types of services build trust, showing that companies care enough to understand their customers and send offers or information that save them time, money, or both.

So while trust is difficult to earn, once you’ve earned it and figured out how to maintain it, you can have customers for life—as long as you respect the shifting boundaries.

“Do customers think the company is truly acting with their best interests at heart, or is it just trying to feed the quarterly earnings beast?” asks Donna Peeples, a customer experience expert and the former chief customer experience officer at AIG. “Customer data should be accurate and timely, the company should be transparent about how the data is being used, and it should give customers control over data collection.”

sap_Q216_digital_double_feature3_images-0005How to Earn Trust for a Live Business

Despite spending US$600 billion on online purchases, U.S. consumers are concerned with transaction privacy, the 2015 Consumer Trust Survey from CA Security Council reveals. These concerns will become acute as Live Businesses make personalization across channels a reality.

Here are some ways to improve trust while moving forward with omnichannel personalization.

  • Determine the value of trust. Customers want to know what value they are getting in exchange for their data. An Accenture study found that the majority of consumers in the United States and the United Kingdom are willing to have trusted retailers use some of their personal data in order to present personalized and targeted products, services, recommendations, and offers.
    “If customers get substantial discounts or offers that are appealing to them, they are often more than willing to make that trade-off,” says Tom Davenport, author of Big Data at Work: Dispelling the Myths, Uncovering the Opportunities. “But a lot of companies are cheap. They use the information but don’t give anything back. They make offers that aren’t particularly relevant or useful. They don’t give discounts for loyalty. They’re just trying to sell more.”
  • Let customers make the first move. Customers who voluntarily give up data are more likely to trust personalization across the channels where they do business. Mobile apps are a great way to invite customers to share more data in a more intimate relationship that they control. By entering the data they choose into the app, customers won’t be annoyed by personalization that’s built around it.
    For example, a leading luxury retailer’s sales associates may offer customers their favorite beverages based on information they entered into the app about their interests and preferences.
  • Simplify data collection and usage policies. Slapping a dense data- use policy written in legalese on the corporate website does little to earn customers’ trust. Instead, companies should think about the customer data transaction, such as what information the customer is giving them, how they’re using it, and what the result will be, and describe it as simply as possible.
    “Try to describe it in words so simple that your grandmother can understand it. And then ask your grandmother if it’s reasonable,” suggests Elea McDonnell Feit, assistant professor of marketing at Drexel University’s LeBow College of Business. “If your grandmother can’t understand what’s happening, you’ve got a problem.”
    The use of data should be totally transparent in the interaction itself, adds Feit. “When a company uses data to customize a service or offering to a customer, the customer should be able to figure out where the company got the data and immediately see how the company is providing added value to the customers by using the data,” Feit says.
  • Create trust through education. Yes, bombarding customers with generic offers and pushing those offers across the different Web sites they visit may boost profits over the short term, but customers will eventually become weary and mistrustful. To create trust that lasts and that supports personalization, educate the customers.

Procter & Gamble’s (P&G’s) Mean Stinks campaign for Secret deodorant encourages girl-to-girl anti-bullying posts on Twitter, Facebook, and Instagram. The pages let participants send apologies to those they have bullied; view videos; and share tips, tools, and challenges with their peers.

P&G has said that participation in Mean Stinks has helped drive market share increases for the core Secret brand as well as the specific line of deodorant promoted by the effort. Offering education without pushing products or services creates a sense that companies are putting customers’ interests before their own, which is one of the bedrock elements of trust. Opting in to personalization seems less risky to customers if they perceive that companies have built up a reserve of value and trust.

“Companies that do personalization well demonstrate that they care, respect customers’ time, know and understand their customers and their needs and interests,” says Peeples. “It also reinforces that interactions are not merely transactions but opportunities to build a long-term relationship with that customer.”

Laying the Foundation for Live, Personalized Omnichannel Processes

sap_Q216_digital_double_feature3_images-0006Creating a personalized omnichannel strategy that balances trust and business goals starts with knowing the customer. This can happen only when multiple aspects of your business are coordinated in a live fashion. But marketers today struggle to collect the kind of data that could drive more meaningful connections with customers. In an Infogroup survey of more than 500 marketers, only 21% said they are “very confident in the accuracy and completeness of their customer profiles.” A little over half of respondents said they aren’t collecting enough data overall.

Collecting enough of the right types of data requires more holistic data-collection techniques:

  • Take advantage of the lower costs for processing and storing terabytes of data, and develop a data strategy that combines and crunches all the customer data points needed to drive relevant interactions. This includes transactional, mobile, sensor, and  Web data.
  • Social media analytics is also a central tactic. Social profiles and activity are rich sources of data about behavior and character, merging what people buy or look for with their interests, for instance. Such data can feed predictive analytics and personalization campaigns.
  • Experiment with commercial tools that can filter and mine the data of customers and prospects in real time. This is a significant step beyond basic demographic data collections of the past.

sap_Q216_digital_double_feature3_images-0007Once the necessary data is available, companies need the technology, processes, and people to make sensible use of it in an omnichannel personalization strategy. Only when a company is organized as a Live Business can that happen. Here’s how your company can move toward being a Live Business:
Be live across channels. Having a consistent customer journey map across channels is core to omnichannel personalization. It requires integration across multiple systems and organizational silos to enable core capabilities, such as inventory visibility and purchase/pickup/return across channels. This integration also constitutes a major chunk of the transition to becoming a company that can act in the moments that matter most to customers. If all channels can sync in real time, customers can get what they want in the moment they want it.

Free the data scientists. Marketing rarely has full control over the omnichannel experience, but it is the undisputed leader in understanding customer behavior. While data science is part of that understanding, it has traditionally played a background role. Marketers need to bring the data scientists into efforts to sort through the different options for digitizing the omnichannel experience. The right data scientists understand not only how to use the tools but also how to apply the data to make accurate decisions and follow customers from channel to channel with personalized offers.

Walgreens’ Technology Approach to Personalization

Walgreens is a leader in building the kind of technology base that can enable real-time, omnichannel personalization. Its digital transformation is 16 years in the making, according to Jason Fei, senior director of architecture for digital engineering at Walgreens. At the heart of its infrastructure is a Big Data engine that feeds many customer interaction and omnichannel processes, including customer segmentation. The company adds third-party systems in areas such as predictive analytics and marketing software. Walgreens has a cloud-first strategy for all new applications, such as its image-processing and print-ordering applications. Other elements of the drugstore chain’s technology platform include:

  • Application programming interface (API)-driven architecture. Walgreens’ APIs enable more than 50 partners to connect with its apps and systems to drive customer-facing processes, including integrations with consumer wearables to drive reward points for healthy habits, as well as content partnerships with companies such as WebMD. “With APIs we can be an extensible business, allowing other companies to connect to us easily and help in the digital enablement of our physical stores,” Fei says.
  • Responsive Web sites. The company’s Web site is built using responsive and adaptive design practices so that the site automatically adapts to the consumer’s device, whether that is a mobile phone, tablet, or desktop computer. “We have a single code base that runs anywhere and delivers a consistent, optimized experience to all of our customers,” Fei says.

Making the Most of the Technology Base

This technology foundation has allowed Walgreens to push forward in personalization. For example, according to Fei the company uses sophisticated segmentation and personalization engines to drive outbound e-mail and text campaigns to customers based on their purchase history and profile. “We don’t blast out messages to customers; we use our personalization recommendations to be relevant,” says Fei.

The next phase of this strategy is to develop live inbound personalization tactics, such as recognizing customers when they come back to the Web site and tailoring their experience accordingly. These highly automated, self-learning systems improve over time, becoming more relevant at the moment a customer logs back in.

“When you search for a product, the Web site will take a good guess of what you might actually want. If you always print greeting cards at the same time of year, for example, the system would automatically deliver content around that,” Fei explains. “Everyone comes to Walgreens with a mission, so we can be very targeted with our communications.”

Walgreens’ mobile app combines real-time personalization with convenience. You can scan a pill bottle to refill a prescription, access coupons, send photos from your phone to print in the store, track rewards, and find the exact location of a product on the shelf.

Walgreens also recently deployed a new integrated interactive voice-response system that includes a personalization engine that recognizes the individual, says Troy Mills, vice president of customer care at Walgreens. The system can then predict the most probable reason for the customer’s call and quickly get them to the right individual for further help.

How to Get Started with Live Customer Experiences

sap_Q216_digital_double_feature3_images-0008As Fei can attest, getting Walgreens’ omnichannel and personalization infrastructure to this point has involved a lot of work, with much more to come. For companies just now embarking on this journey, especially midsize and large companies, getting started will mean overhauling an outdated and ineffective technology infrastructure where duplicate systems and processes for managing customer data, marketing programs, and transactions are common.

A bad internal user experience often transcends into a bad customer-facing experience, says Peeples. “We can’t afford the distractions of the latest app or social ‘shiny penny’ without addressing the root causes of our systems’ issues.”

Live Business Requires Striking the Right Balance

The boundaries of trust are a moving target. Sales tactics that used to be acceptable decades ago, such as the door-to-door salesperson, are unwelcome today to most homeowners. And consumers’ expectations are unpredictable. At the dawn of social media, many people were anxious about their photos unexpectedly showing up online. Now our identities are tagged and our posts and photos distributed and commented on regularly.

But while consumers are getting more comfortable with online technology and its trade-offs, they won’t put up with personalization efforts that make use of their data without their knowledge or permission. That data has value, and customers want to decide for themselves when it’s worth giving it away. Marketers need to strike the right balance between personalization and a healthy respect for the unique needs and concerns of individuals. D!

 

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Lori Mitchell-Keller

About Lori Mitchell-Keller

Lori Mitchell-Keller is the Executive Vice President and Global General Manager Consumer Industries at SAP. She leads the Retail, Wholesale Distribution, Consumer Products, and Life Sciences Industries with a strong focus on helping our customers transform their business and derive value while getting closer to their customers.

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Digital Transformation Needs More Than Technology (Part 2)

Andreas Hauser

In my last blog, I explained why design, design thinking, and experience matter in digital transformation, which goes beyond pure technology and business skills. The credo is to engage with your customers, and most importantly, with the users right from the beginning, in an iterative, user-centric design process.

Digital transformation is more than a one-time project; it is a journey. Ultimately, enterprises want to prepare their organization for a sustainable design-led digital transformation.

But how to achieve this? That is the focus of today’s blog.

Foster a design-led innovation culture

Changing a company culture is not easy. If you don’t want your company ending up like Nokia or Blackberry, you better start sooner than later experiencing new practices. More and more companies are training their people on design thinking and want to establish a culture of design-led innovation.Slide3.JPG

My formula for innovation culture is people + process + place.

You need to have the right skills in your organization (people): Business, technical and design skills to better understand the needs of customers and users. Business and technical skills are typically not the problem. But how many people with design background do you have in your organization? This is why more and more companies start hiring designers and train their employees on design thinking.

It is not just about having the people with the right skills. You also need to change the way (process) how you engage with customer and users. To be successful, you need to combine design thinking with agile methodologies. The process is pretty simple: You need to get people with the right skills together working as one team and iterate from the beginning to the end with the customers and users. Sounds simple, but it is sometimes difficult to execute in large global organizations.

Let me tell you a story.

We have trained about 300 people (business + IT) at one of our customers in design thinking and helped to establish five design thinking coaches in their organization. This was the most interesting outcome: After the exercise, seven out of 10 IT projects were initiated by the business. The customer told us that this was the first time where business proactively wanted to work with IT. This is a great start to improve a relationship which in recent years has gotten separated in many organizations.

In our experience, the place where people work together also has a huge impact on creativity. Therefore, we have established at SAP “customer-facing” co-innovation spaces – called SAP AppHaus – where customers and SAP collaborate and co-innovate as partners. Establishing creative spaces within your organization gives the cultural change a face. Skills and new ways of working are often not very visible. The space is physical and people see and feel that your organization is changing. Check out our virtual walk-through our AppHaus in Heidelberg.

In my last blog, I discussed our co-innovation journey with Mercedes-AMG, which paved Mercedes-AMG’s way to a sustainable digital transformation. Based on my experience, you first need to show with a lighthouse project that this methodology creates business value for the company. You can then build on this success and start the journey to establish a sustainable design-led culture in your organization.

Be prepared for a long journey. It takes time to change and influence the way how organizations work. There has never been a more exciting time for designers, because the industry is starting to see the huge value they can bring to organizations and the value they can bring for a successful digital transformation.

Have a look at a more detailed presentation and a video recording about the concept that “digital transformation is more than technology.” Learn more about customer success stories on the UX Design Services web page.

Stay tuned for more articles as part of this blog series, in which you can explore further perspectives on digital transformation and its various aspects, learn about organizational readiness for design thinking, and assess how ready your organization is to embark on this journey.

Read Part 1 of this discussion: Digital Transformation Needs More Than Technology.

This article originally appeared on SAP Business Trends.

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Andreas Hauser

About Andreas Hauser

Andreas is global head of the design and co-innovation center at SAP. His team drives customer & strategic design projects through Co-Innovation and Design Thinking. Before he was Vice President of User Experience at SAP SE for OnDemand Solutions.