It’s not a surprise that rapid advance in digital technologies is causing every business to rethink its strategy and operations. What many businesses, especially those that deal directly with consumers, may not realize is how far consumers’ expectations have gotten ahead of their ability or plans to deliver in the short term. The point was driven home by Lori Mitchell-Keller, Global General Manager of Consumer Industries at SAP, in a key note at the recently held SAPPHIRE NOW http://events.sap.com/sapandasug/en/home. Lori was joined on stage by Steven Soderberg, VP of IT & CIO at Fitbit ( http://www.fitbit.com/about ). Here is a summary of key messages from their talk.
Are you playing catch-up? Lori started by noting that it was odd that her talk was titled “Digital at the speed of CONSUMER!” Since when has a human become a benchmark for speed? But looking back at her own expectations she concluded maybe it wasn’t that odd after all. She has often wondered wouldn’t it be great if when she walked into a grocery store, through her fitbit, the store knew her lifestyle and fitness habits and steered her to the right products. What if product packages themselves were “smart” and communicated with her personal tracker so that products compatible with her lifestyle were easier to locate? Wouldn’t it be great if her fitbit “saw” everything she ate, automatically figured out the nutritional value, warned her of allergies, told her if the products were sustainably sourced, and steered her to the right dinner choices to nutritionally balance out her day?
Re-imagine the possibilities: So it seems that consumers are thinking ahead as to how technology could change their lives. Retailers and brands should bridge the gap by re-imagining entirely new possibilities using technology … vs just putting a digital interface on existing touch points and processes.
The process of re-imagining begins with redefining the consumer experience. Lori’s example of the meal subscription service “Hello Fresh” really hit home for me. Hello Fresh thought through what weekday cooking experience is like for busy moms and how it can be fundamentally changed for the better. “If you are not rethinking how you could serve your customer’s needs in a fundamentally different way, someone else is”, Lori concluded.
Develop new internal capabilities: Delivering a renewed consumer experience requires doing things differently inside the company. If you want your customers to have personalized service in the store, you cannot have data and departmental silos that does not provide store associates a complete and current view of the customer. If you want to be able to fulfill a customer need as it arises, you cannot do your procurement 6 months in advance. If you want to provide your products as a service, you cannot think transactions. You have to change your processes to build a long-term relationship with your customer.
Monetize the value: A change in consumer experience and processes often create new sources of value that prompts a change in business model. As an example, Lori mentioned a comedy club in Barcelona that now charges customers based upon number of laughs during the show … this keeps the club totally focused on consumer outcome (laughs) and required change in internal processes & technology (e.g. cameras and facial recognition technology).
Have the right technology foundation: So how does a retailer or a brand re-invent its consumer experience, enable it with re-imagined business processed, and reap the reward through new business models? This can only be done by putting the customer at the center of all of business decision making. This requires a technology platform that allows a business to know its customers intimately across all channels, allows it to make decision based upon this real-time customer and business information, and allows all of the business functions to operate off the same data and not in silos. In essence a business needs a digital core. It’s not enough to have point solutions running individual processes as we have had in the past. It’s not enough having integration points between those solutions where data is not real-time and not shared.
The fitbit journey: Building on Lori’s comments, Steve Soderberg talked about fitbit’s journey to build and maintain leadership in the hot and competitive marketplace of wearable tech. Steve started with the origins of fitbit and the evolving functionality of its various trackers which now include functions like sleep, nutrition and stress management in addition to basic activity tracking. An exciting development just that morning was Fitbit’s acquisition of Coin, heralding fitbit’s foray into wearable payments. In 7 years, the company has grown from 0 to $2B in revenue, yet up to a year back there was no IT department! One of the early decisions that Steve made 6 months back was to use SAP S/4 HANA as the platform to manage this phenomenal growth into the future (especially internationally). A key factor in the decision was also the availability of S/4 talent. Steve pointed out that the “best and brightest” across SAP ecosystem were getting involved with S/4 world – now! Steve also painted a vision of SAP S/4 HANA as fitbit’s “digital core” connecting to various commerce systems, contract manufacturers, logistics providers, and Product Lifecycle Management systems.
Endless Possibilities: The piece that was most fascinating to Steve were the possibilities from connecting the IOT and biometric data from fitbit devices/users into the digital core. Fitbit has 25 million devices “phoning-in” every day, giving it access to the largest biometric database in the world. Combining consumers’ biometric/behavioral data with business data provided unprecedented opportunities for engaging consumers as well as for building new businesses. For example, based upon consumers’ usage of its devices and the change in that usage, fitbit could reach back out to consumers with advice and offerings to transform into more of a “digital health” company vs. remaining just a device company.
It was clear from both Lori’s and Steve’s talk that hyper-connectivity of consumers and the resulting data, provides companies with an unprecedented opportunity to completely reimagine their interaction with consumers and carefully consider what it means to their processes and business models. Having the right technology foundation is a fundamental pre-requisite without which none of this would be possible.
To catch up on all the excitement and great content for Consumer Industries at SAPPHIRE go to http://events.sap.com/sapandasug/en/home
Amit Agrawal (Twitter: @am_agrawal) is VP of Strategy for Consumer Industries, at SAP Industry Cloud.