2013 03-05 competitive advantage of digital transformation

Transform to the power of digital

COMPETITIVE ADVANTAGE OF

DIGITAL TRANSFORMATION

& SOCIAL CRM

Martin Hack

Head of Salesforce.com at Capgemini Consulting D/A/CH

Hannover, 5th March 2013

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Social Business and Digital Transformation – the mega trends are undoubted

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Digital Shopper Relevancy

Social Insights

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All Channel Experience

Realtime Personalisation

Copyright © 2013 Capgemini Consulting. All rights reserved.

“…develop a new business, which is not only selling skis, but also selling services and dreams” Rossignol (Ski Equipment)

“We’re creating a world, where the car becomes a friend to its owner” Toyota

“You have to be totally connected with anyone who touches your brand”

Burberry

We’re going to change the way banking happens” Commonwealth Bank “Become more social, both in terms of

how we communicate internally and how we communicate with our customers”

O2

“Linear interaction […] is not longer valid” Virgin America

“The social enterprise will be the differentiator on how we interact with our customers, our

employees and our partners” Hewlett-Packard

“We need to interact with customers the ways that work best for them

Activision” (Video Games)

“You need a view on all the touch points to understand the customer” GE

Glo

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Machine2Machine communication

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...but: is there a measurable impact on revenue, profit or shareholder value?

Capgemini Consulting and Boston MIT have teamed up to analyse why some companies successfully embrace Digital Transformation while others fail

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„Digital Transformation: A roadmap for Billion-Dollar Organisations“ is ranked among the top five best publications in the last 10 years.¹

ONE COOPERATION WITH

…OVER 450 INTERVIEWS WITH IT AND BUSINESS

EXECUTIVES

…OF MORE THAN 390 COMPANIES

…MANY OF THEM BILLION-DOLLAR ENTERPRISES

…THREE RESEARCH PHASES OVER MULTIPLE YEARS

Source: White Space – a leading institute for market research in the consulting sector, 2012


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We assess the Digital Maturity of organizations as a combination of two separate

but related dimensions: Digital Intensity and Transformation Management Intensity

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Digital Intensity: investment in technology-enabled initiatives to change the way a company operates ‒ customer engagements, internal operations, business models.

Transformation Management Intensity: creating the leadership capabilities necessary to drive digital transformation in the organization.

Location-based marketing

Digital Design

Connected Products

Mobile sales

Customer Service in Social Media

…

Digital Vision

Cross-silos coordination

New skills Cultural change

…


The two dimensions spell out four different types of digital maturity defining the

alchemy of success in Digital Transformation: Style and substance

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Transformation Management Intensity

Dig

ital

Inte

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BEGINNERS

Beginners…

…carry out some experiments, immature digital vision and culture

FASHIONISTAS

Fashionistas …

… have advanced digital features in silos but no overarching vision and coordination

CONSERVATIVES Conservatives…

… have few advanced digital projects, coordinated but underdeveloped vision

DIGIRATI

Digirati…

...have strong vision and governance. Digital initiatives generating measurable benefits.


We quantified the digital maturity of 391 companies and analyzed their financial

performance

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* Of the 391 companies in our sample, 184 were publicly traded

We analyzed financial data & interviewed top- executives from all the publicly-traded companies in our sample*

** Industry adjusted FY2011 financial performance for 184 publicly traded firms, controlling for geography

Transformation Management Intensity

Dig

ital

Inte

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Digitally-mature companies are achieving statistically significantly better financial performance**

Companies that are mature on the digital intensity dimension are better at driving revenue through their existing assets

Digital Intensity and Revenue Generation

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Basket of indicators:

Revenue / Employee

Fixed Assets Turnover (Revenues / Property, Plant & Equipment)

+6% +9%

-4% -10%


Companies that are mature in the transformation management intensity are more profitable

Transformation Management Intensity and Profitability

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EBIT Margin

Net Profit Margin

-11% +26%

-24% +9%


Companies that are mature in the transformation management intensity achieve higher market valuations

Transformation Management Intensity and Market Valuation

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Tobin’s Q Ratio

Price / book ratio

-12% +12%

-7% +7%


The digital transformation performance varies across industries – but in all

industries there are outperformers and followers


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Banking

Consumer Packaged Goods

Insurance

Manufacturing

Pharmaceuticals

Retail

High Technology

Telecoms

Travel and hospitality

Utilities

Average industry maturity:

Telcos Fast to launch digital initiatives Need to integrate and align initiatives

across silos Retailers Strong in social and mobile Need to focus on cross-channel

consistency, worker enablement and analytics

Manufacturers See less opportunity / threat in digital

transformation Need a transformative digital vision and

the leadership drive to develop impetus

Insurers Strong digital governance

capabilities, but Regulatory worries and a risk-

averse culture

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…so simple? Still our benchmarks and studies show: There is a gap between perceived need for action and reality


Social CRM – Hype or competitive advantage?

Example from our annual CRM Barometer: though digital and social CRM has high potential it is not fully leveraged up to now

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2/3 of the companies aim at creating a

uniform customer experience,

both online and offline…

... of which 55 % find it challenging to

harmonise the customer contact points

through all the channels

… of the companies see highest potential in

social CRM for winning additional customer

information…

... However 7 out of 10 companies

evaluate their present capabilities to be

insufficient for social media data analysis

For 8 out of 10 companies, the high

relevance of digital media and social media

leads to a relaunch of their CRM strategy…

… only 13 % of all the companies have

already integrated their social media

activities in their CRM strategy

…of the companies predict a further

increase in the relevance of social media…

... Only 8 % of the companies have

established practical business processes

for tapping the full potential of social CRM


There are patterns regarding areas of improvement that are typically targeted

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Digital Transformation offers a huge variety of potentials

for top-line growth and operational excellence

Customer analytics and insights

Service adoption and information

Crowd sourcing of ideas

Innovation management platforms for employees and partners

Collaboration platforms (internal/partners)

E- and mobile learning/training

Marketing, sales and service automation

Additional revenues through digital channels and ad-hoc services

Customer and brand engagement

Customer service in social media


Extended / smart products and services

Retention management through predictive / Next best action

EXA

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http://www.gettyimages.de/detail/foto/online-transactions-concept-stock-fotografie/BA60519

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The Customer Experience Transformation approach of Capgemini Consulting presents a structured and pragmatic way to create a strong Customer Experience

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Customer Experience Strategy

Customer Journeys

Customer Experience Transformation

Customer Measurement

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Customer Insight 1

Establish your desired perception

Analyze a sequential set of customer activities

Redesign processes & improve the experience

Optimize the Customer Experience

Get to know your customers


Marketing, sales and service automation

DEEP

D

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Additional revenues through digital channels and ad-hoc services

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Customer journeys allow organizations to view themselves from the customer’s point of view. They identify:

All touch points & steps that a customer takes

The current offer of the company at each of these steps

Customer journeys represent the end-to-end activities that are needed to satisfy customer needs and resolve questions, all seen through the eyes of the consumer

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Which interaction points are considered as most crucial by customers?

This is where companies should impress their customers

Customer journeys put companies in a customer-centric frame of mind

Moments of truth

I want to know which product suits my needs

best

I know which product to buy

I want to be inspired with

product images

I want to compare the products and see reviews

I need to choose what is important for

me

I want to speak an advisor

Be inspired by the website

with product info

Check reviews, comparisons , wikipedia &

youtube

Choose my essential

requirements

Receive advice to help me

with my choice

J1: Product Discovery

! !

Moment of truth

Awareness Discover Purchase Receive Use Get helpCancel /Renew

Customer Journeys 3


Examp

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Customers expect the same experience across the different channels, so companies need to consider all of their channels when designing customer journeys

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Awareness Discover Purchase Receive Use Get help Cancel / Renew

Touch point

x

EXAMPLE: Cross-channel customer journey

x

x

x

x

x

x x

x

x

Wow moment Channel switch

J1 Product Discovery J3 Seamless Update J2 Service Excellence

Illustrative only

Web-Site

Social Networks

Webshop/ Retail

At home

Customer Service

Align and synchronize all channels & install “wow-moments”


Customer Journeys 3

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As leader for digital transformation we work on extraction of the DNA of successful digital transformations – and how this can apply to you


Customer Experience Operational Processes Business Model

Step 1: Assess where you are with our Digital Maturity Assessment

based on industry benchmarks

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1) DMA = Digital Maturity Assessment

Structured questionnaire to assess the company’s

‒ Transformation Management Intensity

‒ Digital Intensity

Contains benchmarks of leading global corporations

DMA1 Tool

www.capgemini-consulting.com/dma

Are you

behind?

Customer understanding

Customer experience

Process automation Decision making

HR processes

Top performers of the industry based on MIT-CC survey Your positioning based on CC maturity model

Are you

aligned on priorities?

Vision

Engagement

Governance Skills

Ways of working

http://www.capgemini-consulting.com/dma



Step 2: Design the your transformation path depending based on

your specific context (various examples deliver orientation)

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Source: Capgemini Consulting – Digital Services Strategy – Technology Transformation (c) 2011


+6% +9%

-4% -10%

-11% +26%

-24% +9%

-12% +12%

-7% +7%

Start building a strong vision on digital:

how to leverage digital on our core assets?

For which objectives?

At what pace?

Which investment?

What are the key impacts ?

Then, start implementing new digital initiatives

In most cases, it will be necessary to

rationalize the firms’ digital landscape,

to build the right organization and governance towards digital,

before restart developing digital services.

Digital conservatives companies have already build strong vision focus on business areas and some digital services.

It will be possible to build on these solid roots to increase leverage of digital advantage at global scale

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DIGITAL MATURITY MATTERS

IT MATTERS IN EVERY INDUSTRY

AND THE APPROACHES THAT DIGITALLY MATURE COMPANIES USE CAN BE

ADOPTED BY ANY COMPANY THAT HAS THE LEADERSHIP DRIVE TO DO SO

THE FUTURE IS ARRIVING QUICKLY.

TAKE ACTION NOW TO CREATE YOUR OWN DIGITAL ADVANTAGE

Copyright © 2012 MIT CDB and Capgemini Consulting

For details on our Thought Leadership, please visit:

www.capgemini-consulting.com/think

For details on our Digital Maturity Assessment, please visit:

www.capgemini-consulting.com/dma

Martin Hack

Head of Salesforce.com – D/A/CH

Capgemini Consulting

Karlstrasse 12, D-80333 Munich

Phone: +49 151 4025 1418

E-Mail: [email protected]

http://www.capgemini-consulting.com/think






2013 03-05 competitive advantage of digital transformation

Business

transformation

digital maturity

digital transformation

strong vision

social crm

crm strategy

leadership

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