Creating the Successful Digital Transformation

Transcription

1 Creating the Successful Digital Transformation Challenges, approaches and business specific solutions Arvato Systems Empowering Digital Leaders.

2 Creating the Successful Digital Transformation Challenges, approaches and business specific solutions

3 Contents 1. Introduction 6 2. The four dimensions of Digital Transformation 8 3. Digital Transformation in real life: three examples Retail Media Energy Conclusion 32 5

4 1. Introduction Digital change continues inexorably forward. Digital Transformation has already changed how many companies do business work, and the disruption continues from new digital business processes relying on powerful business apps through to complete digital business models. Conditions for change have been created by technologies such as Big Data, Cloud Computing, Industry 4.0 and Enterprise Mobility some of them innovative in their own right and others building on each other s innovation. Taking the digital revolution into account means far more than some simple repositioning in the light of the new technologies. For companies who want to embrace Digital Transformation, a complete re-think of the organization is required. Are existing business strategies still working? Is the distribution of roles and tasks within the organization fit for the purpose of rising to the challenges of Digital Transformation? Do the tools and methods that people use to work together need to change? Do brand-new teams need to be created? Digital Transformation demands not only new, networked solutions but also a totally new company culture. This paper sheds light on Digital Transformation and offers practical ideas on how best to manage it. The approach is broken into four areas: Strategy, Structure, the Role of IT, and Corporate Culture. Using examples from retail, media and energy we show what changes these sectors are going through or have already gone through as a result of Digital Transformation, what challenges have arisen out of the process, and what solutions can be used to overcome these challenges. 7

5 2. The Four Dimensions of Digital Transformation Digital Transformation affects not only the IT department, but the whole company. If Digital Transformation is to be successful, companies need first and foremost to understand that the process is multi-dimensional and a holistic approach needs be taken. New challenges need to be fully analyzed, and clear strategies and approaches need to be developed. This is ideally achieved with a central pooling of skills from across all departments. The next section discusses the four dimensions of Digital Transformation, and looks at what actions companies need to take within each of these dimensions. 8 9

6 Strategy When the same sector and same company undergo multiple processes of change and development, the question needs to be asked whether the company strategies that have been followed until now are relevant on-trend even. It is important to keep constantly abreast of developments and changes in technology. When new trends such as Omni-Channel commerce or smart machines appear, it is vital to see how these translate into new challenges and opportunities for the company. Strategies and solutions that enable the company to deal with these challenges should be reflected in a revised corporate strategy. Other factors as well as technology play an important role in the development of a new business approach. Changes in customer requirements for example: does the current business strategy cope with customers wish to have fast, complete and constantly available information? The question that needs to be asked is: What do I need to change so that the company can respond to customer demands? The Role of IT As outlined in the previous section, dividing the IT department into two areas of responsibility makes sense. However, this is not the only change that needs to take place. The CIO, in his/her role as the expert on Digital Transformation, needs to be included in management decisions, working hand in hand with the top levels of management to develop an IT strategy that respects the demands of Digital Transformation and responds with a practical solution-based approach. IT competencies need to be improved at management level and across all departments. The CIO needs to work alongside the different departments supporting, advising and encouraging them as they implement their digital change projects. From the point of view of technology, new digital technologies need to be integrated into the existing IT infrastructure. The skills of the IT team and the will to accept change across all departments are essential prerequisites. Structure Corporate Culture New technologies, new (customer) requirements and new strategies mean that corporate structure also needs to change. This involves looking at different ways for staff to work together. Lines between previously separate divisions become blurred as skills from a range of different departments across the company flow together into the digitalization team. The company needs to be structured so as to promote agile working and to target fast results: this is the only way to be able to position new offerings on the market rapidly enough. In this context, an important aspect of structural change is to raise the level of automation across the company, using software solutions to assist and replace manual activities as far as possible. This enables companies to respond rapidly to market developments, while leaving time available to deal with the other tasks needed to complete Digital Transformation. Another key step is to split the IT department into two areas of responsibility, essentially into two separate departments. One IT department will be concerned with practical support for the company and the departments within it during Digital Transformation. This will include the development and implementation of digital processes and new business models. The second IT department remains responsible for traditional IT and has the important task of ensuring that IT operations continue to function. For changes to take place in technologies, roles, responsibilities and ways of working together, employees need to be open to change and there needs to be a strong resolve to adapt to the new ways of working. This means that one of the most important prerequisites for a corporate culture undergoing Digital Transformation is professional change management. When staff are prepared in good time for the change process normally via a series of workshops - they are not only included on the journey to Digital Transformation, but can also be motivated to contribute their own ideas for digitalization. A completely new project culture needs to develop within the company, ready to support the full potential of Digital Transformation. Many organizations lack the know-how and resources needed to enable all aspects of Digital Transformation to flow completely into the corporate culture and it is advisable for them to rely on external specialists for expertise, inspiration and support throughout the process

7 3. Digital Transformation in Real Life: Three Examples What Digital Transformation really means, and what needs to be done as part of the transformation process have been covered in previous sections. We now look what Digital Transformation means in practical terms for various industries. The next section looks at three sectors: retail, media and energy and asks what the real-life effects of Digital Transformation are for each of them. The three sectors we have chosen have already - each in their own way - undergone extensive transformation. For each area, we attempt to answer the following questions: What do the change processes look like? What are the challenges and demands that come with change? What industry-specific solutions are available? 12 13

8 3.1 Retail The customers that today s retailers meet are not only extremely well informed, but thanks to mobile devices and apps they are also able to shop anywhere and at any time, choosing different sales channels depending on the situation they find themselves in; whether sitting on the sofa at home checking websites on a laptop for example, or using a smartphone on the bus to do some shopping en route to an evening out. The result of this always-on, always-informed culture is that there has been a dramatic rise in customer expectations. Consumers expect the retailer to provide a fast, hassle-free service, regardless of the device and sales channel used. Retailers need to make sure that their product lines include detailed information including quality, price and stock levels and more. Personalization plays an important role: modern customers assume that the retailer knows them, and they expect to receive personalized communications and tailored product suggestions. Customer services need to be fully up to date in all areas, so as to be able to provide knowledgeable and customer-specific information in communications such as phone calls. Retailers who want to live up to these expectations need to have seamless, rapid information sharing with their partners (including logistics partners, or third-party fulfilment agencies), and are reliant on the implementation of smooth IT systems where all data is always up to date

9 Solution An example of an Omni-Channel Commerce Management solution is what s known as an Order Management System (OMS). The OMS enables retailers to control the complete sales process (reservation of goods, order, payment, delivery logistics and returns) and also launches subsequent dependent processes as required, across all sales channels and backend systems, dealing with all components of the system within the existing IT architecture. With an OMS, all systems are integrated. Data flows across the OMS from all different departments, making it the central point for all information related to the sales process. The system has access to and integrates data from across the organization, including customer data, orders and order history, product information, availability information and above all processing logic, based on business rules. Data in the OMS is gathered from many sources: from the Online Shop: What orders are currently open? What orders have been fulfilled in the past? What has the customer reserved and in which shops? What product did the customer buy from what product category? Which are the customer s preferred methods of delivery and payment?... from the store: What stock is available? Which reserved products have been collected by customers? Which sales have known customers completed? What articles have been returned? The all-encompassing, all-knowing service that consumers now expect is because of the huge amount of data and processes involved - a serious challenge for retailers. Consumers have similar expectations of all retailers, regardless of their size. While it might be easy for a global player, such as Amazon to react quickly and simply to customer demands this is far more difficult for smaller retailers, especially those who also have bricks and mortar stores to manage. In order to be able to deal with the whole range of customer requirements, and to be able to offer customers a consistent shopping experience throughout the customer journey, retail companies need to have smooth internal processes as well as a solution that brings all relevant commercial systems and processes together into a single central platform, with the customer as the central point: i.e. an Omni-Channel Commerce Management solution. from the Customer Relationship Management System: What customer interactions have taken place and when? What segment does this customer belong to? What customer master data has been updated? from Third Party Suppliers: What orders are outstanding? What is the status of the orders? What returns have been received? What is the stock level of each product? from Logistics: What incoming goods need to be registered? Which returns have already taken place? What is the current stock level and what products are in which warehouse? and from the Accounts Department: What invoices are outstanding? Have reminders been sent yet? What incoming payments have been recorded? 16 17

10 By linking this data and managing it centrally, an in-depth customer history is created, meaning that a consistent and personalized shopping experience can be created for each customer. Information, flowing into the OMS, is available at all points of sale and can be reviewed and updated by everyone, from the online customer services team to the staff in the bricks and mortar store. If, for example, a customer returns an item to a store, then wants to follow up on the status of the item by telephone or online, there is a single consistent service across all channels. An OMS also provides a clear view of stock levels a great advantage, where there are multiple warehouses and staff want to see where a product is located. Staff are easily able to respond with the correct information to customers who want to know about an order or a product reservation. Customers are also able to find information for themselves in their own area in the online shop with the correct information delivered by the OMS. The OMS is able to review each sale and process it according to individual requirements offering different prices depending on discount rules and customer voucher input. However, the single biggest advantage of an OMS is that existing systems do not need to be changed. Existing functionality is retained: the only difference is that systems are linked to one another via the OMS. Implementing an OMS ensures faster, more efficient sales processes without the need for the company to build a complete new infrastructure. It s important to note too, that partner companies should also be linked to the OMS so that the product portfolio can be amended and updated quickly and flexibly, as and when needed. SUMMARY The OMS contains data gathered from all the retailer s relevant commerce systems and therefore acts as a control center for process management as well as a central source of information for providing individual service to customers. The availability of all relevant information whether via the website or mobile device during the call to customer services or while a customer is being served in a shop ensures that the company as a whole is able to react to new developments and demands in the market, fulfilling customer demand at all times with fast, seamless and professional services

11 3.2 Media Disruptive transformation has been more heterogeneous in the media industry than in many others. The music industry, for example, has already achieved dramatic changes moving from physical recording media (CDs) to downloads (mp3) and then to streaming services (e.g. Spotify) while both publishing and TV find themselves currently in the middle of their transformation process. In order to secure their future, book publishers have opened up to new formats such as e-books, while newspaper and magazine publishers are in competition with countless online offerings, and at the same time are under pressure to develop new revenue models. TV operators need to work out their positioning against new players such as streaming services (e.g. Netflix, Amazon Prime), creating the strategies they need to survive in an increasingly fragmented TV landscape

12 A level of business convergence is also under way: publishers and TV broadcasters merge into international media enterprises able to offer the full range of TV programming, newspapers, books and online content. Because of these radical changes from new technologies and innovative business models to changes in the way media is consumed, companies need to establish flexible, digitalized processes capable of ongoing change and modification as they react to changing market conditions. Solutions Media companies, already under enormous cost pressure, face the challenge of implementing innovative business models and providing Return on Investment (RoI) on their intellectual property. For many companies the first step is to implement flexible, modular solutions to support the needs of their core business: The amount of content available to the consumer is rising at a staggering pace. Media companies find themselves with a dual role: not only producing and offering content, but also selecting and prioritizing content for individual users. Today s media consumer expects to be able to find content and information rapidly across all channels, and regardless of time and place. The huge quantity of diverse content has also been increasing with the addition of User Generated Content. Advances in technology and platforms have enabled many users to develop from being consumers into what are known as prosumers. The prosumer is already established in many areas of media, as is evidenced by the flourishing of business models such as YouTube. Using this type of social network, independent users are able to reach a public of millions relatively quickly and simply. They often stand directly in competition with traditional media companies and are seen as influencers by advertisers. Asset Management A powerful and complete (digital) Asset Management System increases transparency in production and distribution processes, giving users tighter control over individual assets. TV broadcasters, for example, use a Broadcast Management platform to manage the complete life-cycle of their products, from concept and budget through to production and playout. System interfaces enable external applications such as editing software or business intelligence systems to connect and share information. Intellectual Property Management A substantial part of the daily work of a media company is concerned with the buying and selling of licensing. An efficient program and rights management system helps publishers and TV companies to make the most of their intellectual property. A publisher using this type of system, for example, will have a clear view of the print rights of a book, any associated e-book formats as well as the image rights for any graphics contained in the book and will be in a position to market these for a profit. The media industry is also deeply affected by cross-media convergence. On the one hand, this is shown by the need to ensure that content is available consistently across all channels for consumers. TV broadcasters show their content on TV and also make it available on the internet, while newspapers have long had online versions of their product in a bid to reach their audience via internet. As technological convergence has enabled all formats to be available via a single device (e.g. TV broadcasters, radio and online articles can all be accessed by smartphone), many media companies have also brought their different production and creative teams together

13 Customer Experience Management Today s customers expect an attractive and crucially consistent experience across all channels and devices. Key prerequisites for building customer loyalty include a highly usable interface and constant availability of content, all within a responsive web-design. Innovative IT solutions can provide companies with a customer experience for them to distribute their content, making full and effective use of all the various sales channels. Monetization Long-term success for both publishers and TV broadcasters depends largely on their ability to monetize their offerings, and this in turn requires effective advertising sales. A planning and marketing system integrated with a CRM can give media companies a better understanding of their customers and enable them to create more personalized, targeted advertising. External and internal constraints, such as the German limit of twelve minutes of advertising per hour, can be embedded into these systems ensuring that advertising placement is optimized and is in accordance with the regulations. There is a great potential for media companies to optimize the use of the opportunities provided by technology as well as selecting and connecting relevant services. Cloudbased systems provide maximum flexibility, are available in cost-efficient Software as a Service versions, and their integration into existing systems is normally straightforward. External experts, experienced in media sector Digital Transformation, can provide valuable support and advice in the selection and implementation of the most appropriate solutions. SUMMARY Radical change in the media industry, bringing new technologies and business models as well as new patterns of consumption, mean that digitalization has become essential. Flexible, modular solutions including Asset Management systems, program and rights management systems, customer experience and personalized advertising all offer huge potential for those media companies who harness the power of Digital Transformation to stay constantly in tune with new and changing market conditions

14 3.3 Energy The energy market has been increasingly volatile for some years. As the energy revolution continues, traditional methods of producing energy, such as coal-fired power plants are no longer cost effective. Renewable energy sources such as wind power and solar energy cover a certain proportion of energy demands, but production levels fluctuate significantly and to date the solutions for managing these variations have been of limited practical use. The role of the customer is also changing: consumers are becoming self-sufficient energy providers (also known as prosumers) with for example, solar panels on the roof of their home and batteries for energy storage in the cellar. These developments mean that energy production is becoming more and more decentralized. Energy providers need to become energy service providers: as well as delivering energy to their customers, they need to offer additional services to optimize energy consumption and support self-sufficient energy generation

15 For network operators and energy suppliers who have to provide a safe and reliable energy supply, this is a major challenge. For them to be able to guarantee secure energy supplies in the future, they need new processes to control their energy systems today, and they need to be able to add flexibility to all processes including energy production, demand and storage. Information from intelligent energy networks (Smart Grids), the creation of additional technical facilities and short-cycle measurements provided by smart meters all add to the huge quantity of data to process. Changes in business and communications behavior in society as a whole also need to be considered. Today s energy service providers must be able to use digital methods to gain new customers, provide them with services and build their loyalty and these methods must be built into the IT infrastructure. Another challenge is that energy suppliers need to build new accounting processes in order to accommodate the new, innovative business models. All of these developments mean that IT services are more important than ever for energy suppliers. The energy revolution demands modern, innovative solutions. Powerful IT solutions are required; systems that are able to capture and validate data in near real-time. A high-performance highly-scalable data and information management system based on the power of the Internet of Things (IoT) and big data solutions makes it possible to work with the increased quantity of data, building the foundations for effective energy management processes. Solutions Energy companies who want a successful Digital Transformation need to look hard at their internal structures. A general rule of thumb is: have the courage to innovate and tailor the service portfolio to fit current market conditions. A good example of Digital Transformation in the energy industry is the rollout of intelligent metering systems, known as smart meters. Direct and constant communication between the smart meter and the energy provider s IT systems means that network management processes can be automated, matching supply to demand and also that data analysis and forecasting methods can be embedded into an automated process

16 The current tendency is to create separate IT solutions for each and every new business model that arises, such as the optimization of self-sufficient energy creation. This approach however is both cumbersome and time-consuming. A more effective method is to implement powerful IoT and Big Data platforms, which are easily able to map to many different types of use and which also enable the coordination and control of thousands of devices measuring and controlling energy production and consumption. In this area Arvato Systems has its own solution; a modular Smart Energy platform which integrates flexibility products as well as solutions for energy, network and load management. Individual service products such as energy efficiency or smart meter applications can be easily mapped into the platform without the need to create or buy in multiple individual software systems. Thanks to integrated Big Data technologies, information from many sources including weather data, data from sensors and technical facilities as well as usage data can be gathered, prepared and utilized efficiently. This makes it possible to optimize energy production and load management in response to reliable forecasts of energy usage and supply. Basing decisions on this data, energy suppliers can expand their portfolio with digital, data-driven business models offering their customers genuine value-added services, in such areas as self-sufficient energy production or services around energy leasing models. SUMMARY The energy revolution, the changing role of the consumer, decentralized energy production models and the increased quantity of data are all challenging for energy service providers, who need both innovative business models and new, more flexible, accounting systems. Fresh state-of-the-art IT solutions need to be implemented: new intelligent metering systems such as Smart Meter are able to match supply with demand. Powerful IoT and Big Data technologies mean that thousands of power supply and power usage units can be simply and effectively controlled

17 4. Conclusion Many different types of change process arise out of Digital Transformation. For these processes to be successfully implemented, organizations need to rethink their corporate strategy, their company business models and review their entire corporate structure. New kinds of internal team working need to be created, which will respond to the demands of today s market. The role of IT also needs to change: innovative, digital technology must be implemented and CIOs need to become cheerleaders, consultants and supporters working hand in hand with the departments around the organization as they implement their own digital change and transformation projects. A new corporate culture is needed for Digital Transformation, one where staff are excited by and ready for change. With professional change management in place, workshops are a useful tool in ensuring that everyone is prepared in good time for changes that will affect many, possibly even most, areas of the company. Our three examples, from the retail, media and energy industries demonstrate how far-reaching the changes that happen as part of the Digital Transformation can be and how these can be managed using new business models and powerful IT solutions. Retailers use Omni-Channel commerce management solutions to provide customers with the fast, seamless service that they expect nowadays. Media companies respond to the changing requirements of their industry with flexible, modular solutions such as asset management systems. And in the energy industry new business models and new accounting systems as well as new IT models and solutions such as the Smart Meter, are all supporting the Digital Transformation. Companies need not face the challenges of Digital Transformation alone. External service providers help companies to successfully manage the whole breadth of Digital Transformation change, from providing advice on establishing new internal processes to offering support and consultancy in selecting the best IT solution for their needs

18 Arvato Systems Empowering Digital Leaders. As global IT specialists Arvato Systems is focused on solutions to support our customers in their Digital Transformation. A unique combination of industry-relevant expertise and manufacturer-agnostic technology knowledge has enabled us to deliver successful projects to major companies around the world. As part of the Arvato network, owned by Bertelsmann, we have the capability to create complete value chains. Our team creates integrated, future-proof business IT solutions, integrates appropriate digital processes and can manage both system support and system operations. We offer: - Many years of experience around Digital Transformation - Comprehensive IT solutions for industries such as retail, media and energy - Expertise in BPM, Cloud Computing, CRM, Mobility, Omni-Channel and E-Commerce as well as IT-Outsourcing and Infrastructure - In depth technical knowledge in many key areas including Microsoft and SAP Publication Details Published by: Arvato Systems GmbH, An der Autobahn 200, Gütersloh Web: By: Marcus Metzner, Chief Marketing Officer Photos: Fotolia-Nr : dragonstock Pictures from: gettyimages-nr : Morsa Images gettyimages-nr : Eric Audras Fotolia-Nr : contrastwerkstatt Fotolia-Nr : fergregory Fotolia-Nr : Aania Fotolia-Nr : Nmedia Fotolia-Nr. Contact us directly at: info@arvato-systems.de The publication Creating the Successful Digital Transformation: Challenges, approaches and business specific solutions is available in both printed and electronic formats. The latter can be downloaded from IT.arvato.com/digitalization This present publication is based in part on the Lünendonk Whitepaper Five Minutes to Midnight: The Digital Transformation won t wait. Digitalization curse or blessing? A clear answer. This additional whitepaper on Digital Transformation is a joint publication from Arvato Systems and Lünendonk GmbH and is also available for download at IT.arvato.com/digitalization 34 35

19 Creating the Successful Digital Transformation Digital change continues inexorably ahead, bringing disruption and revolutionizing how companies work - for example, with the introduction of new types of digital business models and processes. Working with the digital revolution means far more than a repositioning in the light of new technologies. For companies who want to embrace Digital Transformation, a complete re-think of the organization and corporate culture is required. What are the challenges facing the company? How can they be successfully managed? How can IT solutions support Digital Transformation in areas such as retail, media and energy? Creating the Successful Digital Transformation provides a concise overview of these challenges and their solutions. IT.arvato.com Arvato Systems Empowering Digital Leaders.