Can you imagine running your business without an ERP system? How about performing demand planning without at least a spreadsheet? How long did the monthly close process used to take? How about manual paychecks? Technology positively impacted all of these areas during the first “Technology Revolution.” At the dawn of a third revolution, industry veteran John Rossi, vice president of consumer products, retail & distribution at Capgemini Consulting, explains how consumer goods executives must prepare with smart IT investments.
Q: How does technology impact business processes in the area of IT?
ROSSI: In today’s world, you can’t separate IT from the business process or vice versa. All consumer goods companies have technology completely embedded within their critical functions. Technology is required for ERP, planning, trade promotion, shopper experience, human resources — the list goes on and on.
Many are working on “digital” or “digital transformation” and mistakenly see this as a separate capability and stream. It is not separate; it needs to be embedded in every aspect of the company. Reaching the shopper and consumer by creating terrific journeys and experiences will change the industry and technology will be a gigantic enabler of this evolution. Functions and processes will change greatly, empowered by a combination of existing and new technologies.
And what was the second technology evolution? The Internet’s emergence as a business tool.
Q: How have solution and service providers adapted their offerings to meet new demands and trends?
ROSSI: Service providers are experiencing a disruption in their typical models.
Consumer goods companies themselves cause part of the disruption and their supply chains — i.e., their people — cause another part. Service providers are all touting digital transformation capabilities but, in reality, many have very little digital experience — let alone expertise. Carving out one small portion of a large initiative and calling the entire project “digital” could be construed as deceptive and hurts everyone, especially the service providers who actually do have digital expertise.
Service providers are adapting — some quicker than others, and many via targeted acquisitions. These undertakings are great for everyone. The service providers increase their capabilities through targeted acquisitions while the consumer goods industry gets what it needs: truly experienced people. As a consumer goods executive, look for services that have added capabilities — especially in consumer experience; digital marketing and commerce; analytics and insights: and building consumer-driven supply networks.
Consumer goods companies are driving another service provider disruption: rationalization. Companies are looking for their service firms to provide more and more capabilities, which lets them reduce the number of vendors they need. The desire for economies of scale and “one throat to choke” is driving the present cycle. We are seeing firms who only provide one major service (such as infrastructure, or application development/ maintenance, or business process outsourcing) under tremendous pressure to provide at least two and often three or four major services.
The last major disrupter is the need to provide end-to-end capabilities. Not in the consulting-plus-technology-plus-BPO sense, but in the consumer and customer lifecycle. Service providers can’t just focus on supply chain, or trade promotions, or HR/ finance. The service provider of the future must be able to create and enable the end-to-end journey, especially for the consumer. Service firms providing this level of capability will be the major winners over the next decade. Silos must be eliminated.
Q: Recent research finds that IT budgets have increased slightly for the first time in many years. What are the most strategic technology investments that a consumer goods company can make today in IT infrastructure?
ROSSI: The most strategic investments are in direct-to-consumer technologies, especially ones related to marketing. For true leaders, e-commerce should be at the top of everyone’s list. Some basic building blocks that are a “must have in the budget” include a consumer data hub and a digital asset management platform.
These are important pieces for creating a better consumer experience. Many believe creating this experience is more important for the retailer. But if you want to be a consumer goods leader, it’s important to create the consumer journeys and experiences that can build direct relationships with your shoppers and consumers.
In the operational areas, look at technologies related to the IoT to create better data visibility and drive business functions toward using near-real-time data. Having increased visibility, coupled with changing your processes, will create an opportunity to significantly reduce supply chain and manufacturing costs.
Lastly, invest in service providers that utilize machine learning to help reduce their labor costs — especially related to support activities. In 2017, that may require funding a few proofs of concept, but these investments will allow consumer goods companies to reduce future technology costs.
Solution providers recognized in this article: Dunnhumby, E2open, EnVista, Epicor, IBM, Infor Global Solutions, IRI, JDA Software Group, Market6, Microsoft, MicroStrategy, Nielsen, Oracle, Retail Solutions Inc., SAP, SAS, Tableau, Teradata, Qlik