Last week I was in Atlanta with our founder Ray Wang as well as with my colleague Alan Lepofsky. We were hosting a successful second road show event for Ray’s wonderful book – Disrupting Digital Business. During the event we were able to listen to leaders from Adobe and Infosys about how they are dealing with the rise of digital in their businesses. Of course we also heard from Ray on main stage about the key findings of his book. Click here for a link to the tour information.
Alan and I had the opportunity to host two round tables. Alan focusing on how these trends will impact the future of work and collaboration while I focused on retail and the supply chain.
As for my round table, both sessions had lively discussions around how this digital revolution is fundamentally changing the retail and overall supply chains. Here are some take aways:
- Digital is impacting the future of the store. What is the role of the storefront? eCommerce, mobile, social were a few areas that have had deep impact on how we trade and the role of the store front. We covered such areas as stores becoming multifunctional assets – acting as both traditional stores as well as distribution centers. Or even becoming primarily show rooms. One of the issues that this creates is how the financials will also have to change. Revenue per square foot may not be a true measure of a store’s usefulness with these new functions. Savvy CFOs need to be aware of this shift and figure out how to navigate those waters.
- Can players within the supply chain work to do a better job with data sharing? A question we have been dealing with as long as there have been supply chains. Anyone who has played the beer game can attest one of the biggest hurdles is to have better data exchange amongst all the players in the supply chain. While all the parties know that conceptually this would help all their causes, the ability and desire to actually share data continues to be an issue. Clearly based on our discussion at the round table this has not been adequately solved. An ever increasing infusion of digital technology within the supply chain is not a panacea. The ability to have players within the supply chain to share more information is all about process change, cultural transformation and trust. What digital and data can provide, are some hard numbers to demonstrate the value of being more open. But remains a challenge.
- Our shopping experience has only seen the beginning of disruption! We spent a good amount of time thinking ahead, what will the retail experience look like in 10 years. Everything from virtual reality shopping, similar to what Burberrys has attempted in London, to shopping experienced leaning on driverless vehicles that would whisk us from our homes and through stores to purchasing products in customized packages, quantities, sizes – true customization for the individual. All great examples, all that could come true due to the digital revolution we are in the midst of. Of course few CxOs are willing to invest capital in futuristic concepts that do not have a tangible ROI. As with many of these changes, CxOs need to focus on the use cases that can provide returns and benefits in the short term, build on these use cases to lay down the digital rail road tracks that will be necessary for the more futuristic opportunities.
A whirlwind tour last week, between being in San Diego and Atlanta, but the Digital Disruption tour was a wonderful event. Selfishly it was great to spend time with companies such as Coca Cola, Carters, Adobe and Infosys to name a few and discuss how digital is impacting their businesses. The road show will continue, now swinging through Europe. Well worth attending.
Digital disruption is all around us, how is that for a bold statement! But the reality is we are in the midst of a business and supply chain world that is being transformed, in ways we could never imagine, by the digital revolution that is underway.
We are all aware of these changes in our personal live – Uber, Facebook, Airbnb, Twitter, Amazon are a few examples of how digital has impacted our daily lives. But what about in our businesses and supply chains? In these areas we are also seeing disruptors emerge – 3D printing and IoT are the latest to capture the headlines. But we have already seen mobile, social, big data and the cloud have major impacts on our businesses and supply chains. These forces are both disrupting but also empowering the supply chains of today to move forward.
Join my colleagues Ray Wang and Alan Lepofsky in Atlanta on May 14th as we discuss how digital is impacting business. Ray will highlight and delve into his recent book – Disrupting Digital Business. While Alan will lead discussions on how the intersection of analytics and collaboration tools will power the next generation of productivity software.
I am excited for the event which will undoubtedly be a smashing success. If you are in the area and want to join us for what will be a lively discussion and enjoyable event click here to register.
The is open to VP or C-level executives and is free of charge.
The team at Consteallation Research and our sponsors from WiPro and Adobe look forward to seeing you there.
It is that time of the year again here in the United States…tax day. You know how the saying goes:
Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
I might add another certain to Ole Ben’s letter – supply chain disruptions. Unfortunately much like death and taxes, these disruptions are not something to look forward to. But much like taxes and death, the inevitability of their happening does not mean we shouldn’t plan for their potential impacts. By preparing for these events we can ensure that we emerge from these situations in the best shape possible.
During the first few months of this month I have heard the same concerns about our supply chains:
So what does this mean? When it comes to our supply chains we should focus on three rules:
- Embrace the growing amounts of data and sources of that data. While data is not the panacea for our ills, it can provide clearer picture of what is happening and where things are being impacted. The growth of data as well as what is producing the data (think IoT) opens the door for companies to get a greater understanding of their supply chain. This digital disruption will only continue to grow in importance – maximize the value for your supply chain.
- Constantly push yourself to keep an eye on possible new business models. Anyone who has been in business, gone to business school or just read a business publication knows that the secret is to always be ahead of your competitors with “paradigm” changing models. True. But not easy to identify. However within our supply chains we do not need to always identify but more – be open to discovering and leveraging these opportunities when they present themselves.
- Focus on what you can control. Understand what you cannot control and think about how it can impact your supply chain, but focus on what you can control. The data should help you better understand what is possible as well – but there must be a discipline as to what is controllable and what is not. Within the context of modern supply chains, this discipline is even more crucial.
Like death and taxes, disruptions to your supply chain will be a constant. The good thing is that new digital aspects have given supply chains a fresh arsenal of solutions and business processes to offer solutions to meet this disruptive realities.
It must be the season for analyst days, for the second week in a row I attended an event specifically for industry analysts, the media and financial analysts. These events are a great way to get a quick update, spend some quality time with executives and see old friends. Plus this one was a few blocks away in Boston! Software AG rolled out their executives to provide a recap on where they came from in 2014 and more importantly where they see the future for the German software giant.
Software AG stressed their transition to helping their customers’ transition to a digital business. Where does digital disruption come from? From Dr John Bates presentation, Software AG pointed out three areas they are seeing disruption come from:
- Connected customer: This is nothing new, but we are all aware that the consumers’ voice is growing in importance. Digital aspects such as social media, mobile, big data to name a few, force companies to seek a 360-degree view of their customers.
- IoT – the Internet of Things: In a way IoT is making machines and devices as connected as the customer. Having this level of connectivity brings great opportunity as well as potential additional IT strain to companies.
- Proactive risk compliance: This is particularly true in such industries as finance, but also in other verticals such as life sciences and even food and beverage.
In order to address these disruptors and empower their customers they are focusing on providing a digital business platform. An agnostic middleware that will allow developers to create applications that can be created “as needed.” All interesting ideas and make sense. The main question moving forward is how will Software AG balance their desire to remain neutral and agnostic, while trying to create the suite and ecosystem that can propel the software vendor in to a leadership position. Their belief is that the software industry has changed and that the old style that package application vendors went about developing solutions cannot meet the needs of today’s businesses.
There is some merit to this point of view. The fact software has “eaten” the world is the reality of the business environment we live in. Companies will look to have the flexibility and tools available to quickly spin up necessary applications. Solutions that are crucial for these companies to respond to their business needs. For example companies such as Turkcell can ensure they have the proper solutions in place to respond to their
Leaning on SAG to address customer demands
customer needs. Being capable of flexibly creating solutions that address demand creation and shaping are vital to drive their retail practice. Turkcell is dealing with the connected customer, where demands and needs are constantly evolving. The ability for Turkcell to have the flexibility to create solutions to address these ever changing needs is crucial. Taking advantage of this flexibility has offered Turkcell the ability to offer their customers the right promotion at a precise time, yielding $15m of additional revenue.
Software AG is heading in the right direction and is providing relevant case studies when it comes to creating a true digital business platform. The question is can they continue to be Switzerland (with regards to their neutrality) of the solution providers or will they eventually have to commit themselves to an ecosystem?
Last week I decided to escape the snowy and brutal winter that has blanketed Boston and head to a sunny and warmer location – Chicago. Ha, clearly I am suffering from cabin fever. The reality is Chicago was warmer and had barely any snow, but enough about the weather.
What brought my colleague Ray Wang and me to Chicago was to visit Capgemini and attend their well-organized analyst day. The theme over the two days was pretty clear – innovation is the future for Capgemini. Easy to proclaim, difficult to execute. So can Capgemini live up to their lofty proclamation? Only time will tell but here are three take-aways that indicate they are on the right path:
- Instilling the closed loop process to innovation: Innovation cannot be a one time event, something that falls into a to-do list that we can check off as complete and move on to the next task. Being able to innovate must be something an organization takes on as a habit. Similar to exercising – going to the gym or for a swim is okay as a one-time event, but making it a habit is where we draw the greatest benefits. Capgemini emphasized the importance of infusing a habit of innovating with not only their clients but within their own organization. They highlighted work they did with many of their customers to constantly seek and execute on innovative needs. One such customer is one of North America’s largest agriculture co-operatives, who highlighted two large-scale workshops they had leveraging Capgemini’s Accelerated Solutions Environment facilitated process. These resulted in some important changes as well as greater innovative process for the companies 17 divisions. The framework from Capgemini is simple but requires discipline and rigor to stay with the process:
- Discover – These are where the in person sessions are vital to flesh out where the needs are and what can be implemented.
- Devise – Think of this as the fail fast segment. Implement quickly and learn quickly as to what works and will not.
- Deploy – Take the successes from the prior stage and begin to deploy across the board.
- Sustain – This is the key closed loop element. This cannot be a one-time project but must constantly build on itself. Sustain brings you back to the Discover phase.
- Failure is just as important as success: It could be argued that failure is the foundation of success. The whole notion of “fail fast” is what allows you to get to the successes sooner. Capgemini highlighted an example of working with a large CPG to exploring greater efficiencies via using Google glass. Unfortunately, the project did not achieve the goals. But fortunately for all the parties involved they absorbed plenty of learning from the experience. As Capgemini stated, just because the project did not catch on, does not mean it will not resurface down the road. The use of the technology for the original goal did not get adopted, but the learning that came from the process was successful. Capgemini’s customer shelved what would have been a large expenditure, Google was provided with the feedback to improve their product and the findings from the experience provide the basis for potential similar projects in the future. As a client stated during the conference “The toe stubs are where innovation comes from.” Which is why the next take away is crucial to the innovation journey.
- Long term relationship, not speed dating: Capgemini clearly displayed that their mind set is to develop and maintain long-term relationships with their customer base. They truly want to be seen as a partner for their customers and not only as firefighters being brought on to put out fires. Capgemini highlighted a number of clients Hydro One, Syngenta, Jamba Juice and Coca Cola to name a few. Wanting to create a long term business relationship is the goal of most companies, regardless of their industry. But it is clear for companies such as Capgemini, Accenture, KPMG and TCS to name a few, the days of large one off projects to implement large package applications are dwindling. That revenue stream cannot be sustainable. Becoming a trusted advisor to navigate the continually shifting technology and business process landscape could provide a more reliable revenue stream. It certainly will not be easy, but marriage never is!
It is clear that Capgemini recognizes the needed to move from being an integrator to a trusted advisor. They provided some thoughts and some voice of the customer that seems to point to Capgemini being on the right path. However it will be interesting to see if they can make this innovation partnership a large enough chunk of their business. They did mention during the session that they did see lots of business from merger and acquisitions. These feel like firefighting opportunities. Companies need to consolidate systems and processes after a business event, but does that translate to long-term partnerships? To be determined.
The new model for innovation is about delivering a stream of innovation not just one great idea. The right strategic direction for the company, but the journey will not be without major difficulties. But nothing worth achieving is simple.
A common thread I heard last week at the NRF Big Show, was the importance of the edges of the network. I wrote in my #NRF15 recap about the importance of pushing data, insights and decision making to the edges of the network, click here for post. There is another aspect of the network edge that wasn’t prevalent last week in New York, but probably isn’t ready for prime time yet, and that is an enhanced ability to execute at the networks edge. When it comes to that extended level of execution, think 3d printing, better usage of hardware and software to better service customers…at the edges of the retail network.
The one advantage brick and mortar retailers have over the likes of Amazon and Alibaba is also what has been seen as their weakness – their physical stores. Stores offer a host of issues that are well documented – inventory carrying cost, limited SKUs due to the physical constraints of a store, overhead associated with labor as well as having real estate. However this disadvantage may have a silver lining – face to face interaction. The challenge for retailers is how to make that face to face more attractive to consumers than their laptops or mobile devices to transact. That is where being able to offer greater personalized and flexible solutions is paramount for retailers. How can retailers address this?
- Greater personalization…kind of like your online experience! We all know that the power of transaction online, other than being able to do so in your pajamas, is how customized the experience is tailored for us. One reason Amazon is so entrenched in our consumer life is that they know what we want…sometimes before we are even aware of it! The power of Google is that they will place those banner ads based on what they know we have been looking at and interested in. Online experiences with the likes of Nordstrom or Banana Republic are littered with suggestions on what else we need. Looking for a a new Peacoat? May we suggest these styles and brands. Oh and if you like that item…you might like this other item that compliments it. Of course this is possible because in the eCommerce world our digital finger prints are everywhere and can be captured with much more ease than in the physical world. This is starting to change. Slowly. As more service providers are focused on helping retailers capture, analyze and provide insights on all the consumer related data sources, physical retail stores will have the potential to be “smarter” in their customer interactions. Companies like Oracle look to offer their retail customers the ability to empower the edges of their network, with the data and consumer persona necessary to transform the in-store experience more on par with the online world. Oracle, like other service providers, realizes for retailers to protect their brand must understand how customers want to research – interact – transact. This can only be achieved with a more complete view of the customer. There is also the need to perform greater levels of analytics at the edge of the network – brick and mortar retailers cannot afford the potential latency associated with having to push data back to a centralized location. For example, Cisco is working on providing the communication hardware, platform and necessary analytics at the edge of the network. Don’t move the data unless you have to. That ensures that the data, and the analytics, are done as close to the customer and execution point as possible. Again, when we transact online there is not much latency when it comes to our profiles and what is being suggested. Retailers are striving to bring some online shopping experience to the store front. But what about getting your product?
- Fulfillment moved out of the traditional channels and pushed to the edges of the network. Having greater understanding of your customer and more insights at the edges of the network is wonderful, but if you cannot offer the inventory diversity or fulfill at that node, what have you gained? If retailers cannot fulfill better their stores not only become showrooms, but your store associates also become pitchmen. Not what you want in the brick and mortar world! I expect retailers to continue to focus on more flexible and intelligent manners to fulfill their customers’ demand. The first step for better fulfillment is being more savvy about your inventory. I was speaking with a former P&G executive while I was at NRF and the one issue he stated is still a headache is understanding inventory positions within a store – what is on the shelf, what is in the stock room and what item is about to have a stock out? All classic issues CPG and retailers struggle with. But to fulfill better, these need to be solved, and they cannot be solved by just looking at inventory data from your POS or warehouse system. Retailers must have greater and more reliable view of their inventory. That means being more digital with the in store management of the inventory. Service providers like Panasonic are bring such shelf level visibility to the market, something I wrote about in my last post. But it is not just about greater visibility of what is available to your customer – what about greater flexibility on delivering the customized product your customer wants? The story of how Coca Cola has rolled out their Freestyle machines, that puts a tremendous amount of control at the edge of the network, with the consumer. Other CPG companies like Maille mustard and vinegar has stores that allow you to come in and fulfill your mustard and vinegar condiments in the store. These are examples of more flexible inventory and product mix being provided at the edge. There is also the infusion of digital technologies such as 3d printing. Confectionery companies like Hersheys are rolling out 3d printing – need a special chocolate for your kid’s birthday party, have it printed in the store. Luxury retailers, such as jewelry stores, can offer on site 3d printed pieces – for customized jewelery. American Pearl is offering consumers the ability to have customized pieces created via their 3d printers. Granted they are doing this via their online channel, but brick and mortar channels could offer consumers the ability to have a design rapidly prototyped in the store and then produced. That would certainly make events like purchasing a wedding ring less stressful…well maybe not.
Whether it is better visibility and greater analytics or being more savvy in product delivery at the edges, retailers must focus here to maintain relevance for their physical stores. Simple truth – at the edges is where you find the customer. Retailers must make sure that they meet customers needs: eliminate the friction between demand, relationship, fulfillment and after sales.
This week I had the privilege of attending the Wipro analyst day in Boston. A large number of industry analysts and influencers were in attendance – it is always good to see old friends at these events. The day had the usual rhythm: general presentations in the morning followed by the speed dating process of meeting with individual members of the Wipro leadership team. One of these sessions that piqued my interest was a 1 on 1 with KR Sanjiv, Wipro’s Chief Technology Officer out of Bangalore. We discussed the emerging technologies he is focusing on for the next 2-5 years. Always a fun topic.
He gave us 5 key categories:
- Smart Machines
- Man – Machine interface
- Next Generation Architecture
What struck me the most were the middle three. Why? From my perspective these are part of a wave of digital disruption that is beginning to form in our supply chains – whether it be retail, CPG, industrial, life sciences, aerospace to name a few.
Smart Machines is really about the movement towards greater intelligence and analytics within machines. In particular wearables. I wrote a post recently that looked at this trend in supply chain management. Click here for post. There is an increasing segment of companies like Unvired from the software side and Motorola from the hardware side that are tackling the need for greater intelligence in wearable technologies that reduce friction in the supply chain. Think enhanced capabilities for pick packers in the warehouse or more decision making power for floor managers on the manufacturing floor. Wipro was showing off a device that is used to for personal health monitoring – think about how much flexibility and reach this gives health care providers. As well as the data it provides to ensure better monitoring and anticipating needs (similar to a retailer anticipating a consumers’ demand for a product).
Man – Machine interface – think of this as how we have evolved in our interactions with machines. The example we discussed was how Tom Cruise manipulates files in the movie “Minority Report.” Of course that was a movie, but the work done in this space will have a deep impact. Currently our interaction with machines, and the information they contain, is via a keyboard. More recently we have added touch screens. But this is still a flat method of interactions. When it comes to the real world…items have three dimensions. In addition to the ever growing mountains of data and information we produce and look to leverage to run our businesses and supply chains. As Mr Sanjiv stated “The new generation wants more intuitive and ‘human’ interfaces rather than the click and touch.” The amount of data that is needed to manage today’s supply chains only continues to expand – and seeing the information on a traditional screen isn’t optimized for the needs of today’s users.
Robotics is just what it sounds like. Using machines to fill in some needs gaps that humans are not capable or are not as efficient at doing as a robot. KR spoke at length about the usage of drones or even smarter robots to do jobs such as clearing sludge out of hard to reach pipes. Of course these are not ideas that other companies are not already exploring – think iRobot or Amazon with their drone project. Even DHL has announced using drones to deliver medicine to hard to reach islands in the North Sea – click here for story. Right now much of the talk of robotics is constrained to such areas test drones for delivery, using robots in utilities to fix infrastructure or companies like Kiva that are building robots to manage part of warehouses. However there is not question that robotics will have a important role to play in reducing the friction that is encountered in commerce and supply chain.
Overall a good day spent with some sharp folks from Wipro. The discussion of the pillars of emerging technology parallel much of what we are observing when it comes to addressing new disruptions and reducing friction points that are in Matrix Commerce. I will be interested to observe how Wipro’s work in these spaces come to fruition.