Capgemini: Rise of the Insight-Driven business model

12 August 2015 Consultancy.uk

The development of the digital exploitation of Big Data is largely a ‘do or die’ situation, according to Capgemini. By developing the right digital transformations strategy, businesses may be able to get an edge in the competition by engaging with Big Data. However, IT integration issues and organisational challenges continue to withhold easy transformation, the consulting firm finds.

Every day, people are leaving larger and larger digital footprints. The data they leave behind can be used by companies to understand the needs of customers, as well as of other businesses. The data can provide businesses with an edge over their competition, research by Capgemini suggests. In its report, titled ‘Big & Fast Data: The Rise of Insight-Driven Business’, the firm finds that “to thrive, organisations need to make sense of this big and fast-moving data, to gain real-time access to powerful insights and deliver them to the point of action.”

To get a grip on how businesses are transforming themselves to take advantage of the data, the consulting firm surveyed 1,000 senior decision-makers from across nine industries and 10 countries worldwide.

Using Big Data

Structural competitive force
Of the respondents, 64% agrees that Big Data is changing traditional business boundaries and enabling non-traditional providers to move into their industry. Less than 10% say they do not agree. More than half (53%) expect to face competition from start-ups enabled by data, while just over a quarter (27%) expect competition from players adjacent to their industry, whose entry is opened up by their engagement with Big Data.

Given the competition which is driving an ‘adapt and survive or die’ situation, the consultancy notes that “few companies have any questions left about the ‘if’, or even about the ‘when’; everybody has realised it is time to move.” To meet this challenge, many companies have already started to deploy Big Data. The survey responses show that 50% of companies have implemented or are in the process of doing so, and a further 21% is planning to begin implementation within the next 12 months.

Embracing Big Data

“There is no alternative,” Capgemini notes. Just under two-thirds (65%) of respondents agree that they risk becoming irrelevant and/or uncompetitive if they do not exploit Big Data. In addition, 59% responds that they expect the data their organisation holds to become a core component of their market value. The forces of competition will require companies to engage the data. “Digital customer experience is all about understanding the customer, and that means harnessing all sources – not just analysing all contacts with the organisation, but also linking to external sources such as social media and commercially available data.”

The investment intention of the respondents also clearly highlights the continued importance businesses place on Big Data. Around half (56%) says that investment in Big Data over the next three years will outstrip their past investment in information management.

Future investment in Big Data in next 3 years

IT hindrances
Despite the fact that competition is driving the ‘digital revolution’ towards engaging with Big Data, a ‘best practice’ for analysing and engaging the information is yet to be developed, leaving plenty of room for innovation. According to a recent survey, only 27% of the executives surveyed described their Big Data initiatives as successful.

There are a number of issues holding back the speedy deployment of powerful analytic systems to develop a competitive edge. These are related to the current capabilities of the IT infrastructure, as well as the processes in place to roll out the demand. Almost half (47%) agrees that their organisations’ IT systems are not optimised to enable business decision makers in all departments to effectively do their jobs. The respondents also note (45%) that the current term for the development for analytic software and techniques is too drawn out and does not meet business requirements. A further 52% respond that the speed of developing insights is constrained by their current IT development process.

IT hindrances

Getting on track
To get an analytics programme of track requires a strong presence in organisation, governance and leadership, as well as in the technology itself. Leadership is already seen as an important part of transforming to a digitally enabled business, with 43% of respondents undergoing organisational restructuring and/or appointing people to senior Big Data roles.

The researchers notes that the strongest developers use a trial and fail approach – where new proofs of concept are rapidly tested, and if value is found, scaling rapidly – rather than launching multi-year programmes. Businesses start by addressing a few real business use-case opportunities, creating an open space for dialogue with IT. The value adding proof of concept will be taken to trial, where an entire business line may be transformed, creating a new digital environment with a focus on scalability, performance and adoption. The consulting firm concludes: “What sets the successful programmes apart, though, is that they take this incremental approach within the framework of a clear strategy, ensuring investments are aligned with long-term business objectives.”

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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.”