Capgemini & Publicis.Sapient to develop McDonald's digital solutions

31 August 2017 Consultancy.uk

The international consulting firm Capgemini have entered into a multi-year agreement as IT strategic providers to fast-food giants McDonald’s. With support from Publicis.Sapient, another global professional services provider, Capgemini will work to overhaul the restaurant chain’s digital capabilities. The plan to accelerate McDonald’s digital transformation of their restaurants comes as employees of UK branches took the historic decision to strike for improved working conditions and an end to zero-hour contracts.

Global technology consulting specialists Capgemini have been unveiled a new multi-year IT strategic provider agreement with McDonald’s Corporation. Publicis.Sapient, another global leader in consulting services, will cooperate to provide McDonald’s strategic IT solutions for their evolving restaurant and digital capabilities. The international food and drink behemoth has launched an aggressive transformation strategy aimed at improving profitability through implementing digital technologies to the core of their business.

Capgemini plans to open a new Global Digital Retail Center in Chicago to support the relationship, develop and showcase industry-applied business innovation, and attract talent to its growing North American operations. With the agreement to involve Capgemini in the process, McDonald’s will hope to leverage the companies’ combined expertise to accelerate digital technology innovation and transform the restaurant experience for customers, however the move will also fuel further speculation that the restaurant is aiming to demobilise staff looking for improved pay and conditions.

Capgemini & Publicis.Sapient to develop McDonald's digital solutions

According to Paul Hermelin, Chairman and Chief Executive Officer, Capgemini Group, “As we continue from the foundation of our strategic relationship that goes back 10 years through our IGATE heritage, we appreciate McDonald’s vision and trust. We look forward to supporting their growth plan by developing new ways to dramatically enhance the customer and employee experience, and restaurant operations.”

“As a strategic provider, Capgemini enhances our ability to bring speed, scalability and disruptive innovation across our restaurant and digital technologies as McDonald’s continues to transform the customer experience through greater convenience and personalization,” said Jim Sappington, Executive Vice President - Operations, Digital, & Technology Systems, McDonald’s Corporation. “Capgemini has proven its ability to understand our business, our industry and our customers, and has the ability to deliver the highest levels of scalable technology innovation.”

Arthur Sadoun, Chairman and CEO of Publicis Group meanwhile said, “The McDonald’s brand has been a household name for generations and has continued to lead in its category by introducing new products that are uniquely informed by the needs and wants of its customers.”

Automation race

Last year McDonald’s saw global comparable sales increase by 3.8%, including positive comparable sales across all segments, while returning $2.2 billion to shareholders through share repurchases and dividends in the fourth quarter and $14.2 billion for the full year. This marked the successful achievement of the Company's targeted return of $30 billion revenues for the three-year period ending 2016. In spite of this, the corporation continues to strive to cut back on spending, with labour expenses earmarked as one key front on which to do so, in line with the increasingly competitive food and drink sectors of the UK and US. Automation is seen by the company as a long-term method of delivering these savings, with innovative technologies becoming decreasingly expensive as corporations across all sectors invest in digital and AI solutions, from finance to airlines – both areas Capgemini are already involved with projects in.

Average UK wages meanwhile were reported in the same year to have fallen by as much as -10%, and workers at two McDonald’s restaurants in the UK will go on strike on 4 September, the US Labor Day holiday, in an attempt to coordinate action against the fast food giant with allies around the world, while calling for £10-an-hour wages and an end to controversial zero-hour contracting. As fast-food workers across the US took action in order to improve their conditions, former McDonald’s CEO Ed Rensi, sparked fears of a race to the bottom, by claiming that if low skilled employee insist on having an increase income in the US, their employers would be forced to replace them with more productive and cost-effective robotic innovations. Plans for automation of some 2,500 restaurants across the world later confirmed in 2017, with McDonald’s looking to meet its "Experience of the Future" drive by year-end, including digital ordering kiosks which will target a decrease in human labour across its restaurants.

Some research has suggested that rather than making employees obselete, AI in the workplace could boost their efforts. Data, gathered between February and March 2017 by Capgemini themselves, found that 40% of respondents believed machine learning would likely have a positive impact in the workplace along with 32% expecting the same from robotics. Only 10% of respondents felt  that automation would have a negative impact.

An exhaustive 150 page analysis published by consulting firm McKinsey & Company, meanwhile, concluded that by 2055, just under 5% of jobs would likely be completely replaced by technology, while over 60% of all work activities could be automated by 2055. While the report suggested that this might lead to an overhaul of labour relations that could lead to greater leisure time, with the global workforce still conceivably being well paid for its lessened responsibilities, leading to an improvement in quality of life as well as productivity and profitability. However, the combative tone of McDonald’s past and present executives suggests this will not be the case here.

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Four ways digitalisation is transforming car brands and dealers

16 April 2019 Consultancy.uk

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”