The Cloud And The Value Chain: Greater Customer Intimacy

Alexander Arnold

In my experience, customers don’t think much about the cloud—or software, for that matter—in terms of technology, but rather in terms of the business outcomes they can enable. For example, they do think about how to get closer to their customers. And they think about this because data is more available now than ever in history: 3.1 billion Internet users share their actions and preferences, 1.3 billion of them in social networks. Companies can analyze consumer behavior like never before. Billions of sensors in devices, machines, and products transfer volumes of data, allowing companies to engage companies in completely new ways.

The cloud offers companies the ability to use hyperconnectivity, connecting devices, Big Data, people, and so forth in unprecedented ways. And since most of these data points—i.e., customers posting comments about products and brands in social networks—are already on the Internet, it makes sense to work with them in a cloud environment.

The same is true for data being sent by sensors connected to the Internet. Consider the example of an asset such as a factory, or a machine in the factory. Traditionally, a service technician would analyze the machine, following certain procedures to maintain the machine and maximize its uptime. In case of failure, spare parts would be ordered and external service technicians might be called in.

What if this machine delivered this data to the manufacturer itself? The manufacturer could use the data from all of the machines worldwide to analyze patterns and make predictions about future failures much more efficiently than the owner of the machine could. And if the manufacturer feels confident about their ability to maximize uptime, they might decide to no longer sell machines, instead introducing a service guaranteeing a certain uptime and service level and billing the customer by usage.

Cloud technology is a natural deployment model for such a scenario. Many sensors from multiple machines are connected in a safe and secure way to the Internet, data is extracted and analyzed in real time, and appropriate actions can be triggered. So perhaps without even knowing or caring, many companies push the limits of their business models based on cloud-enabled scenarios.

Other industries, such as the automotive industry, are also quickly changing based on cloud technology. Insurers can connect to drivers based on data sent by individual cars and adapt their insurance rates and policies according to driver risk. The car manufacturer can monitor how the car runs and make suggestions based on the analysis of this information as well as that sent by all of the cars sold worldwide.

Consumer industries will change based on mounting consumer pressure for a better experience. Consumer goods companies and retailers will collaborate to provide a better in-store experience. Consumers will get more information about products based on their preferences when they show up in the store.

Consider the example of Vorwerk’s Thermomix. We have a Thermomix in our household, and it has greatly simplified our lives. The device enables our Nepali au pair to cook real German food by simply following the instructions on the display. My wife and I plan the week’s menu on our laptop or in the app provided by Vorwerk. The weekly plan then generates a shopping list, which our au pair consults to purchase the food she needs, and she can consult the device to check the week’s menu anytime.

It is easy to see the next steps: The Thermomix could send an automated order to the grocery chain of our choice. Even better, if the Thermomix is connected to the refrigerator it can use real-time data to replenish supplies. Based on promotions or health information, the Thermomix could make dietary suggestions.

All of this requires collaboration between the consumer, manufacturer, retailer, and consumer goods companies—a perfect cloud scenario. Of course, these business models involve more than just enabling technology; consumers need to make informed decisions about which data to share, and they should be protected by data privacy laws. We need to educate our kids to use technology wisely and create a positive environment for technological advancement in society.

The cloud brings new opportunities for customer interaction, which consumers will no doubt want to keep once they have them. I, for my part, am prepared to share my cooking plan with retailers or others. Now it is up to manufacturers, consumer goods companies, retailers, health care institutions, and others to build new models that break down the traditional silos that exist between industries. Technology is no longer the limiting factor.

For more insight on how the cloud is revolutionizing standard business practices, see The Cloud Is Gathering For Identity And Access Management.

Alexander Arnold

About Alexander Arnold

Alexander Arnold is Vice President Industries for Middle and Eastern Europe at SAP. He is based in based in Walldorf, Germany. His team provides industry and SAP expertise to help customers succeed in a digital world.