White Paper. Accelerating Digital Transformation in Retail. Searchlight Consulting

Transcription

1 White Paper Accelerating Digital Transformation in Retail Searchlight Consulting May 2017

2 Contents 1. Introduction & Context Opportunities, threats and challenges Creating a Disruptive Digital Vision Embrace Minimum Viable Product, Prototype and Learn Integration Teamwork and Communications... 15

3 1. Introduction & Context Integrating the Customer Journey The digital revolution is changing the world. And the customer is firmly at the centre of that change. The rewards are high for customer facing businesses that get it right. And conversely, getting it wrong can spell disaster. So what are the key elements to a successful digital strategy? How can digital transformation be accelerated and the customer journey integrated? And how can challenges be overcome? In this White Paper, Searchlight Consulting will consider: The digital opportunity offered by placing the customer at the heart of business, the perils of getting it wrong and the implications digital transformation has for business organisation. The constraints most organisations need to deal with which are often seen as blockers to changing the way they interact with customers. How to get started; the key building blocks and selecting the right approach. Throughout, we ll consider challenges to overcome and lessons learned from our own experience of helping clients with accelerated digital transformation. 3

4 2. Opportunities, threats and challenges Digital can be seen as both an opportunity and a threat. An opportunity if businesses invest in capability to ensure they are continually innovating and competing, and a threat if they do not invest and the competition does. Argos launched its first website in Since then it has continued to innovate and in 2015 became the first multichannel retailer to generate 1 bn of m- commerce revenue in a year. Burberry has become the top digital luxury brand with a strategy started in 2006 that includes clientelling (where a customer s in-store experience is tailored using their history with the retailer) to RFID tags in clothes enabling accurate stock checking and video mirrors in changing rooms. In the third quarter of 2016, digital outperformed, with growth in all regions. Searchlight Consulting has worked with top online sports retailer Wiggle on a major capability upgrade programme that has put the customer at the heart of the operation and transformed them from a home-grown entrepreneurial company to a global platform. Searchlight have also worked with Costa Coffe to insource their digital innovation capability alongside till, financial, integration and manufacturing transformation. It is clear the rewards of successful transformation are great. And it is also clear that failing to embrace change can be disastrous. 4

5 Traditional businesses are being disrupted by younger, smarter and more agile businesses, enabled by new and emerging digital technologies. Examples such as Clinton Cards, Blockbuster, and Kodak are a case in point. Digital cards from Moonpig and others disrupted the traditional card industry and impacted Clinton Cards, which at its peak had over 1,000 stores and 25 per cent of the greetings card market. But by the time it launched its own ecard business, it was too late. Now, with new owners, it has shrunk to around 400 stores. The rapid rise of online streaming offered by the likes of Netflix and Lovefilm (now Amazon Prime) led to the fall of Blockbuster, which has now vanished from UK high streets. Kodak too, failed to spot the potential of the digital camera until the mid 2000s, despite the fact it had been invented by one of its own employees, Steven Sasson, as far back as Its late entry into the digital market failed to stop its decline, and in 2012, it filed for bankruptcy. Kodak still survives and thrives, but as a radically different business. The key with Digital is that the customer is king. Although it has always been the case that if they do not like a company s offer they will use someone else, now it is easier than ever before. A sale can be won or lost in the time it takes to click a button. For this reason, it is important to get it right and get it right at speed. Competition and disruption has never been greater. This has a number of implications for business today to ensure success. In essence: Businesses need to understand customers better than ever and deliver customer insight from having deep customer data at their fingertips. Strong business alignment across the organisation is essential; the technology function alone cannot drive digital. Similarly, the business should not be allowed to declare UDI from the IT function. IT needs to be embedded in the business and sponsored by the board. Businesses need to invest in enabling capability and technology. Capability like product management, user experience and expert technical delivery. Rates of change will need to be increased by adopting modern development practices like Agile and lean. The type of technology adopted will be different. Much better to use cloud technology as a service than the more traditional methods of installing and configuring on premise packaged solutions, which takes too long to change. Now is the time to replace legacy applications that are not digitally compatible - stop de-prioritising legacy replacement projects. 5 `

6 Digital change also means that the nature of the IT function is changing. More than ever before the IT function needs to work in partnership with other business functions. It needs to understand the customer; this is not just the role of the Marketing function. It needs to take seriously the demand to go quicker. It needs to ensure that staff understand clearly the latest trends and emerging technologies. It will need to hand over some accountability to other business functions and be comfortable with this for instance product management. It cannot be stressed enough that digital change involves a major shift in thinking about every aspect of the business for the entire company. And this is one of digital s major challenges. Many organisations recognise the need for a digital strategy but do not understand the fundamental changes to every aspect of the way they operate that it demands. Thinking digitally means starting with the customer and building the business around what they want and how they want to get it. In some cases, it might mean a radical change of offering, structure, or direction; it will certainly mean a great deal of hard work. Digital thinking is bold, radical, challenging and transformative. But in today s market, it is essential. Because digital disruption is no longer a trend. It is the norm. 6 `

7 3. Creating a Disruptive Digital Vision The digital vision will drive ambition and power the journey on the road to transformation. Quite simply, it is an overall view of how the business will operate in the future in order to engage tech-savvy customers in a multi-channel environment. However, the difference between where the business is now and where it needs to be in the future may challenge existing business thinking and involve a significant amount of disruption, so the digital vision needs to be clear and visual. Stakeholders need to be able to understand and to be able to challenge from different perspectives. Ultimately it needs to be a shared vision that the leadership team collectively own and engage their teams with. Once agreed, it must be broken down into a road map showing the new capabilities to be delivered focusing on fundamental capabilities, differentiating processes and innovative products or services. These are a basis for understanding the gap in capabilities that need to be addressed to achieve the vision. In practical terms, this can be broken down into five key perspectives: Business of the future Step forward in time. Consider how the business will operate in the future and how it will compete in a more technologically advanced world. Customer centric How will the organisation look when it is focussed on the customer? How can it be structured so that customer experience is enhanced at every step of their journey to drive repeat sales, loyalty and profits? Omni-channel Current multi-channel marketing involves everything from bricks and mortar shops to print ads, websites, mobile, and word of mouth. Omni-channel connects them together to create a seamless, personalised, customer experience. Technology enabled - Technology is the key to achieving this. So the CIO and their team need to understand what technologies are capable of now, what they promise for the future and be able to navigate marketing hype. Insight and data driven When considering technology, it is important to remember that in the future, customer interaction will be based on the actionable insight gained from data obtained each time the business interacts with them. So deciding what information is needed, and how it can be gathered and interpreted, is vital.

8 Understanding the Customer Journey The steps the customer goes through in their interaction with businesses are becoming ever more complex. The path to purchase is no longer a straight progression from identifying a need, to consideration, information gathering, trial/review and decision making. These days, it is more of a cobweb, with people interacting with companies in multiple ways at multiple times, interspersed with interactions within their own social networks. Their expectations are higher and the opportunities to delight or dismay them are higher too. In order to support these customer journeys, to present relevant content at the right place and right time, and to make sure the experience people have is the one they actually receive, the first step is to unravel the flow of data and information. Map the customer journey - The sensible way to do this is to review all the channels and physically map them out in a matrix. All the customer touch points and the steps they represent on the decision to purchase (or not) need to be understood, from the point of view of the customer, rather than the organisation. These will include everything from the physical store to your website, apps, call centre, review forums, social media, , snail mail, and even word of mouth. Assess the emotion - The emotion of the customer and how they feel at each touchpoint is critically important and needs to be fully recognised. What are their motivations? How do they feel at each stage of the process? Are there any potential points of frustration, or opportunities to delight? 8

9 Identify opportunities - When a journey is mapped out it becomes clear where a customer could be fully engaged or lost. If their attention is kept, a sale could be won, but if the conversation or flow is lost, the customer could be lost too. It is key to understand what could make a customer dissatisfied, to include this thinking in terms of opportunities to remove the potential dissatisfactions, hence maximising experience. Design the user experience - The next stage is to design the user experience. Usability and accessibility should be taken into account while ensuring a positive experience which fulfils the customer s wants and needs and fully engages them. Test & learn - This is the next stage. The only way to understand the user experience properly is to prototype, try it out and learn from the results. A prototype does not need to be complicated in order to gain important information. So how is this done? 9 `

10 4. Embrace Minimum Viable Product, Prototype and Learn When it comes to the design-test-learn cycle, the key elements are speed and agility. Using start-up mentality, the MVP (minimum viable product) should be identified essentially the most basic working demo that can used for testing in order to understand how it will be used in the market. The front-end can be prototyped using paper, then digital wire frames (simple visual representations of the user interface without design or branding). This should then be tested in the market to obtain more information and adapt the design. Let us look at this process in a little more detail. The secret of a Minimum viable product is to ensure a focus on the most important features for the customer; only prioritise what is necessary. Time and money are valuable resources and should not be wasted. If the functionality of favourites, for example, is desirable but not needed to make an order, it should be left out and added later. An example of this is Uber the beta version of this was launched in 2010 as an app that simply connected drivers and iphone users and enabled credit card payments. It was tested on a small group of people in San Francisco for feedback before funding was raised. 10

11 Prototype First - To accelerate this process, rapid digital prototypes should be employed. These can be created using digital prototyping tools within a few days for testing in the market. Test in Market - To understand how the digital interaction will work with real customers, market testing is vital. Face to face interviews, landing pages, A/B testing and explainer videos are just a few of the ways to do this. Through this, people can indicate what they do and do not understand, what they would expect to see, what they do not like, and why they are doing what they are doing. It is often the case that what is expected to happen is very different to what actually happens. Learn & Adapt - Once learnings have been validated, the digital prototype should be adapted. Build Insight Finally, by seeing the digital flow in a real-life scenario, it is possible to identify points where customer insight can be collected. This information can be used for multiple purposes, including tailoring customised offers, targeting marketing and ad campaigns, and identifying products each customer is likely to want and the price they are willing to pay. The challenge with multiple channels is understanding the data that is available. What are the business questions that need to be asked? Clarity and integration - is essential for analytics; otherwise infinformation will simply be lost in a sea of data. 5. Integration 11 `

12 Customers demand a seamless experience across all channels. And the digital prototype can create the look and feel of how this should work. But linking channels to create a holistic customer journey is also critical in the sense that data can be used to further tailor and personalise their experience. Unless the channels are integrated, data cannot be fully understood. How can ROI on a Facebook campaign be obtained, for example. What insights is the business getting, and are they actionable? Companies transitioning from hitherto organic growth to a scaled and planned digital future face a dual challenge. They must not only integrate channels to make the customer journey consistent, but must ensure the data extracted from that journey can be shared, analysed and actioned rather than simply siloed. This needs to be done at speed, services need to be untangled without killing processes, and innovation and future proofing have to be built in to the procedure. 12 `

13 Integration will enable the capture and flow of a huge amount of data, both structured (eg transactions) and unstructured (eg in-store conversations, tweets, call centre interactions). The solution to storing this information is simple: use the Cloud. It is important to establish who within the organisation owns this data: the new General Data Protection Regulations coming into force in May 2018 will tighten the Data Protection Act by introducing new rules of accountability and this needs to be taken into consideration now. For more information visit 13

14 As already mentioned, organisations must ensure the right questions are asked when analysing data in order to obtain the information needed for decision making. This is a huge challenge. The solution is to carefully plan and design this from the outset. Start with a general hypothesis, sketch in an outline and then add detail based on facts rather than suppositions. The core information model should be built using Minimum Viable Product principles, with expert advice sought where necessary. Both conceptual and then logical data modelling concepts should be used. Essentially, a conceptual model is high-level, showing current issues and driving discussions around future possibilities. A logical model gathers information about the business needs to give insights into the decisions needed to reach its future goal. Next, an interface catalogue should be created that details each interface, its role in the process and its technical characteristics. Chart the business processes, mapping them to each interface used, identify areas for risk and required investment. This can be done quickly and simply, without the need for Enterprise Architecture. Communication between the various interfaces is achieved via a series of APIs, or Application Programming Interfaces basically pieces of code that enable data to move from one platform to another. Middleware is key to this and a number of good solutions are available. As the project will be carried out at speed, it is important to manage technical debt. Avoid unnecessary risks and do not get lured into a mindset that short cuts are acceptable i.e. inadequate functional or performace testing; ` 14

15 lack of focus on security; or not ensuring the data quality is appropriate. However, taking a risk based approach will be essential when working at pace, but uncontrolled, decisions at pace can lead to problems and costs further down the line. Project and design governance, clearly defined timelines, and reviews are essential. 6. Teamwork and Communications To bring this work together at speed, collaboration is essential. Teams often have competing priorities and objectives which can cause conflict. It is key that teams are aligned and understand what they need from each other, forming, in a sense a single collaborative unit travelling in the same direction and knowing how to work together. There is no place for siloes in the digital world. As a final aside, projects can be complex and difficult to communicate across the organisation. Many non-technical staff do not wish or need to understand technical detail and when time is in short supply, concise, easily understood visual information is an effective means of communication. Infographics and schematics are an effective way of presenting information clearly and quickly. 15 `

16 About Searchlight Consulting: Searchlight Consulting (the trading name for Searchlight Business Services Ltd) specialises in IT-enabled business transformation for customer-facing businesses, helping them connect with their customers, accelerate change, work smarter and increase value. Our services enable clients to align their IT and business strategies, define business and IT operating models, select and implement the right digital and enterprise solutions for their business journey. And, using our unique Beacon Delivery Framework, we help to Contact us: reduce the risk and increase the certainty of successful implementations. Searchlight Consulting was founded in 2008 by Steve Sharp (ex-xansa, Capgemini). After six successful years of trading, Steve teamed up with Bryan Oak (ex-csc, Xansa, IBM, Atos). Today, the company has over 300 senior level Associates who bring high quality experience across a range of business areas and a multitude of industries. Steve Sharp Mobile:+44 (0) steve.sharp@searchlightconsulting.co.uk Bryan Oak Mobile: +44 (0) bryan.oak@searchlightconsulting.co.uk twitter@uksearchlight 16