Three Steps Every CPG Company Must Take to Become a Digital Business
CPG companies are improving their understanding – and adoption – of digital disruption. Today, companies across the sector are developing integrated, cross-channel strategies to stay relevant in an increasingly interconnected world. And this adoption is timely, as digitally disruptive technologies and business practices continue to elevate the competitive stakes for companies that want to keep pace with rapidly changing consumer behaviors.
As consumers make digital technology a natural part of their lives, their shopping habits have evolved rapidly. Their expectations have become ‘liquid’. Given the chance to pay seamlessly for one product or service, they ask why they can’t pay seamlessly for everything. Once they experience personalization on one channel, they start to expect it across all channels.
However, digital transformation is hard work. CPG companies must re-imagine the consumer experience, aligning their people, processes and technologies behind the scenes to deliver this experience. This is especially complex and costly for global enterprises mired in traditional ways of working.
The right operating model and organizational design is the cornerstone of digital transformation. The organization and operating model need to enable that integration of the business, IT and enterprise processes required to deliver on the consumer experience which is in the genetic code of the most advanced shared services models.
The following are three critical steps to take towards digital transformation:
1. Feel the need for speed
Consumer goods companies will create competitive advantage by acting on new market opportunities sooner, launching new products quicker and deploying emerging technologies faster. By establishing advanced shared services, organizations can become more nimble – people can be coordinated across functions and geographies—physically and virtually—around common targets that drive the broader enterprise strategy. This alignment makes it easier (and faster) to incubate ideas and then deploy them to customers and consumers efficiently and effectively.
Consumer products giant Procter & Gamble (P&G), which has evolved a leading advanced shared services organization providing more than 150 services, is already reaping the benefits. As an example, Filippo Passerini, former P&G Group President, Global Business Services and Chief Information Officer, said “the use of virtual reality in the product life-cycle management increased speed-to-shelf for new products, and as a result, what used to take the company weeks to complete now takes days or hours.”
2. Look outside to see inside
Consumer centricity is the holy grail of the digital business. Seamless consumer experiences require seamless service integration with the consumer at the core. That integration is the essence of advanced shared services organizations.
The classic view of shared services is one of an efficiency play for back-office operations. Advanced shared services has evolved beyond this narrow scope to become an instrument of enterprise value, the transformation engine of the business. And, as reported in the Accenture Strategy paper, “Where’s your digital business DNA? In your advanced shared services model,” traditional functions such as finance, human resources and IT exist in more than half of shared services organizations today. But in just five years, supply chain, legal, facilities and real estate are expected to dramatically increase the use of this model. Front-office functions such as consumer services, logistics and marketing are also moving to advanced shared services.
Because they have evolved to the front office, advanced shared services organizations integrate the consumer experience into their service delivery model. When enterprise services meet front-office revenue generation opportunities, consumer (and customer) satisfaction is a mutual goal.
This evolution can happen only in an aligned, coordinated business model. Imagine an advanced shared services center that houses finance and sales functions. Invoices no longer signal transactions that must be reconciled—they signify customer and consumer relationships that must be cultivated.
3. Get the multiplier effect
Data insight at scale is essential for companies to deliver the hyper-personalized experiences that consumers expect. The challenge for global enterprises is that while they are awash with data, it exists in pockets. Without total data visibility, there is no true data insight.
Advanced shared services organizations have overcome this challenge. Purpose-built, they capture, store and analyze enterprise and customer data consistently. They do this at scale and low cost across functional areas, product lines, regions and geographies. Analyses happen not only with a functional view, but with a strategic enterprise view focused on creating value for the business.
With data visibility inside the business, the enterprise can share data externally across digital platforms, which is increasingly important in the digital ecosystem. Today’s digital networks allow CPG companies to collaborate in data-driven ways to broaden product and service offerings. An advanced shared services model gives companies an advantage in building these collaborative partnerships.
Seize digital opportunity today
Enterprises with advanced shared services organizations are primed for a digital business future. But driving a digital transformation can be overwhelming. The good news is that meaningful change does not have to happen all at once - a measured approach can be taken to build momentum.
A reality check is the place to start. It requires an honest look at shared services in your organization. While most CPG companies use shared services, few have fully evolved to the advanced state of being an enabler and a prerequisite for the digital business. Beware of the temptation to overestimate your shared services maturity.
Passerini, who advocates a comprehensive analysis, recommends that companies “objectively size the opportunity. Determine whether the organizational structure is truly blended or still operating in functional silos. Assess whether the model is organized around end-to-end services for streamlined delivery. Explore whether IT operations and service delivery are horizontally aligned across the business to increase scale and standardization. Also, take a look at whether resources are dynamically aligned to top business priorities.”
Doing this deep dive can help CPG companies set priorities around where the business most urgently needs to change. Take a dual focus on both advanced shared services opportunities and “sweet-spot” digital impact areas, the ones that really enable the consumer and customer experience. You will find that value creation—both quick wins and long-term results—sits at the intersection between the two.
Through all of this evaluation, planning, action and measurement, remember this truth—digital never stands still. CPG companies cannot either. Luckily, with an advanced shared services model, the building blocks will already be in place because your digital business future will be in your DNA.
As consumers make digital technology a natural part of their lives, their shopping habits have evolved rapidly. Their expectations have become ‘liquid’. Given the chance to pay seamlessly for one product or service, they ask why they can’t pay seamlessly for everything. Once they experience personalization on one channel, they start to expect it across all channels.
However, digital transformation is hard work. CPG companies must re-imagine the consumer experience, aligning their people, processes and technologies behind the scenes to deliver this experience. This is especially complex and costly for global enterprises mired in traditional ways of working.
The right operating model and organizational design is the cornerstone of digital transformation. The organization and operating model need to enable that integration of the business, IT and enterprise processes required to deliver on the consumer experience which is in the genetic code of the most advanced shared services models.
The following are three critical steps to take towards digital transformation:
1. Feel the need for speed
Consumer goods companies will create competitive advantage by acting on new market opportunities sooner, launching new products quicker and deploying emerging technologies faster. By establishing advanced shared services, organizations can become more nimble – people can be coordinated across functions and geographies—physically and virtually—around common targets that drive the broader enterprise strategy. This alignment makes it easier (and faster) to incubate ideas and then deploy them to customers and consumers efficiently and effectively.
Consumer products giant Procter & Gamble (P&G), which has evolved a leading advanced shared services organization providing more than 150 services, is already reaping the benefits. As an example, Filippo Passerini, former P&G Group President, Global Business Services and Chief Information Officer, said “the use of virtual reality in the product life-cycle management increased speed-to-shelf for new products, and as a result, what used to take the company weeks to complete now takes days or hours.”
2. Look outside to see inside
Consumer centricity is the holy grail of the digital business. Seamless consumer experiences require seamless service integration with the consumer at the core. That integration is the essence of advanced shared services organizations.
The classic view of shared services is one of an efficiency play for back-office operations. Advanced shared services has evolved beyond this narrow scope to become an instrument of enterprise value, the transformation engine of the business. And, as reported in the Accenture Strategy paper, “Where’s your digital business DNA? In your advanced shared services model,” traditional functions such as finance, human resources and IT exist in more than half of shared services organizations today. But in just five years, supply chain, legal, facilities and real estate are expected to dramatically increase the use of this model. Front-office functions such as consumer services, logistics and marketing are also moving to advanced shared services.
Because they have evolved to the front office, advanced shared services organizations integrate the consumer experience into their service delivery model. When enterprise services meet front-office revenue generation opportunities, consumer (and customer) satisfaction is a mutual goal.
This evolution can happen only in an aligned, coordinated business model. Imagine an advanced shared services center that houses finance and sales functions. Invoices no longer signal transactions that must be reconciled—they signify customer and consumer relationships that must be cultivated.
3. Get the multiplier effect
Data insight at scale is essential for companies to deliver the hyper-personalized experiences that consumers expect. The challenge for global enterprises is that while they are awash with data, it exists in pockets. Without total data visibility, there is no true data insight.
Advanced shared services organizations have overcome this challenge. Purpose-built, they capture, store and analyze enterprise and customer data consistently. They do this at scale and low cost across functional areas, product lines, regions and geographies. Analyses happen not only with a functional view, but with a strategic enterprise view focused on creating value for the business.
With data visibility inside the business, the enterprise can share data externally across digital platforms, which is increasingly important in the digital ecosystem. Today’s digital networks allow CPG companies to collaborate in data-driven ways to broaden product and service offerings. An advanced shared services model gives companies an advantage in building these collaborative partnerships.
Seize digital opportunity today
Enterprises with advanced shared services organizations are primed for a digital business future. But driving a digital transformation can be overwhelming. The good news is that meaningful change does not have to happen all at once - a measured approach can be taken to build momentum.
A reality check is the place to start. It requires an honest look at shared services in your organization. While most CPG companies use shared services, few have fully evolved to the advanced state of being an enabler and a prerequisite for the digital business. Beware of the temptation to overestimate your shared services maturity.
Passerini, who advocates a comprehensive analysis, recommends that companies “objectively size the opportunity. Determine whether the organizational structure is truly blended or still operating in functional silos. Assess whether the model is organized around end-to-end services for streamlined delivery. Explore whether IT operations and service delivery are horizontally aligned across the business to increase scale and standardization. Also, take a look at whether resources are dynamically aligned to top business priorities.”
Doing this deep dive can help CPG companies set priorities around where the business most urgently needs to change. Take a dual focus on both advanced shared services opportunities and “sweet-spot” digital impact areas, the ones that really enable the consumer and customer experience. You will find that value creation—both quick wins and long-term results—sits at the intersection between the two.
Through all of this evaluation, planning, action and measurement, remember this truth—digital never stands still. CPG companies cannot either. Luckily, with an advanced shared services model, the building blocks will already be in place because your digital business future will be in your DNA.
Christian Campagna is the managing director responsible for Accenture Strategy CFO & Enterprise Value, and Till Dudler is the managing director leading the consumer goods strategy team. Filippo Passerini, former Procter & Gamble Group President, Global Business Services and Chief Information Officer, contributed to the article.