retail and consumer services · it leaders to give us their perspective on these business...

2018Client insights and CGI perspectives

on business and technology trends

RETAIL AND CONSUMER

SERVICES

An outlook on trends and priorities based on in-person conversations with business and

IT executives around the world

RETAIL AND CONSUMER SERVICES

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INFORMING STRATEGY THROUGH CLIENT INSIGHTS

Each year, CGI leaders meet face-to-face with business and IT executives to hear their perspectives on the trends affecting their organizations and the implications for their business. Our experts incorporate the findings and insights from these conversations into our annual strategic planning process and share them with clients through CGI Client Global Insights reports.

In this report, CGI presents the insights and perspectives from our conversations with retail and consumer services executives, who reveal that as customer demands for more seamless and personalized experiences grow, becoming digital organizations to meet their expectations continues to be the main focus.We thank the more than 1,400 commercial and government executives across the globe who participated in interviews this year, and we value the opportunity to help drive forward their future strategies and investments.


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Percentage of interviews by region

64%60%

35%

5%

36%

INTERVIEW INFORMATION

132 clients in the retail, consumer packaged goods, wholesale and consumer services sectors

Percentage of interviews by role

United Kingdom

North America

EuropeIT leaders

Business leaders


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CLIENT INSIGHTS

INDUSTRY TRENDSLaser-focus on improving the customer experienceGlobally, as customer demands for seamless and highly personalized experiences intensify, the importance of becoming truly digital organizations to meet these expectations continues to be the number one industry trend.

Protecting the enterprise through robust cybersecurity measures makes a significant jump and becomes the second top trend (84% compared to 70% last year). Optimizing operations, considered crucial to driving down costs and making the customer experience seamless, is followed by harnessing the power of data and predictive analytics as the next top trends.

Rounding out the top five trends, executives we interviewed identify the need to assure regulatory compliance while providing customers with transparency and sustainability (73%, rising from 53% last year).


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CLIENT INSIGHTS

2017All responses

All responses North America Europe

1

Becoming digital organizations to meet customer expectations 92%

89%93%

85%

2

Protecting the enterprise through cybersecurity 84%

87%83%

70%

3

Optimizing today’s operations with agile models that improve time to market 83%

84%81%

72%

4

Applying big data and predictive analytics 77%

73%78%

71%

5

Assuring regulatory compliance while providing transparency and sustainability 73%

69%74%

53%

2018 top trends


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CLIENT INSIGHTS

BUSINESS PRIORITIES

2018 top business priorities


1

Improve the customer experience 94%

93%94%

85%

2

Optimize today’s operations 88%

89%87%

82%

3

Harness the power of data analytics 80%

84%78%

71%

4

Collaborate across the boundaries of our organization 76%

80%73%

62%

5

Continue to develop apps, services, and third parties 71%

76%69%

55%

Enhancing customer experience dominatesFor retail and consumer services executives we interviewed, improving the customer experience remains the number one business priority. Other priorities center on optimizing operations, harnessing the power of data and analytics and collaborating across the boundaries of the organization. This year, executives also identify the development of apps and services, and providing information from third parties as a top priority.

We asked both business leaders and IT leaders to give us their perspective on these business priorities. Notably while business and IT leaders are aligned on improving the customer experience as the top focus, other business priorities differ significantly between them. For example, business leaders emphasize the need to harness data analytics and collaborate across organizational boundaries, whereas for IT leaders, optimizing operations is the key business priority.

Business priorityBusiness leaders

IT leaders

Improve the customer experience 98% 92%

Optimize today’s operations 83% 90%

Harness the power of data analytics 88% 76%

Collaborate across the boundaries of our organization 81% 73%

2017All responses


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CLIENT INSIGHTS

IT PRIORITIES

2018 top IT priorities


1

Improve customer experience through increased digitalization 87%

89%86%

77%

2

Drive IT modernization 83%

84%83%

75%

3

Protect through cybersecurity 80%

80%79%

68%

4

Deliver the benefits of big data and business insight 77%

78%76%

70%

5

Embrace new IT delivery models 70%

60%74%

70%

On the IT priority side this year, IT modernization, delivering the benefits of big data and business insight, and embracing new delivery models, such as software as a service and agile, are in the top five once again. The continued and fast-evolving threat of cyber risks makes protecting the business and customers through enhanced cybersecurity a growing concern.

Cybersecurity and data privacyIn 2018, cybersecurity and regulation figure prominently among business and IT priorities, increasing in frequency across all industries. In retail and consumer services, 64% of executives interviewed are focusing on employee training and awareness as the most common response in this area, along with identifying critical assets for management and control (also at 64%), followed by data asset discovery and tracking (61%).

2017All responses


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CLIENT INSIGHTS

9% 11% 11% 43%

6% 16% 13% 43%

10%

11%

16%

11%

DIGITAL MATURITYDriving partnerships across the ecosystemThis year, 61% of retail and consumer services executives interviewed have a defined digital strategy in place. Of those with a defined digital strategy, 31% are launching, have operationalized or are realizing results with a strategy that includes their ecosystem partners, while 35% are at similar stages with internally focused enterprise strategies.

Stage of digital transformation strategy implementation

For the entire enterprise extending to our external partners and suppliers

For the entire enterprise, with a scope focused on the internal organization

OtherDon’t knowProducing results Operational Launching Building

Top challenges 2018 2017

1 Cultural change and change management 88% 83%

2 Technology/legacy/agility constraints 78% 64%

3 Collaboration between business and IT 67% N/A

4 Cybersecurity concerns 52% 44%

Once again, cultural change and change management remains the top barrier to digital transformation for this sector. In addition, the lack of agility due to complex and aging legacy environments continues to hamper transformation efforts.

Interviewed executives provided more than one response.


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CLIENT INSIGHTS

14%

43%

5% 48%13%

10% 5%

Simple automation

Artificial intelligence (AI)

11%

17%

9%

25%

21% 12% 33% 8%

Omnichannel

8%

CIO and lines of business jointly

empowered

Digital capabilities being embedded into

lines of business

CIO

Team or role primarily responsible for driving transformation

64% 48% 45%

Improving the omni-channel experience and using analytics to enrich personalization continue to evolve, though both initiatives are well into the implementation stage. Retail and consumer services executives indicate that simple automation has been largely achieved. Looking to the future, they are eyeing artificial intelligence (AI) as a further enabler of digital change, with 58% either investigating, in proof of concept or in-progress with AI transformation.

This year, 64% of executives interviewed in this sector say they empower their CIO and lines of business jointly to drive digital transformation, while 49% say these capabilities are embedded in lines of business. Forty-five percent say their CIO has primary responsibility.

Investigating Transformation in progress Transformation achieved Not for us OtherProof of concept

Stage of technology transformation

23% 17%

Analytics and business intelligence (BI)

11%25%

Interviewed executives provided more than one response.

20%

4%

18%

DIGITAL MATURITY


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CLIENT INSIGHTS

Innovation investments stay at top of the agendaOperations and maintenance budgets remain flat in 2018; however, retail and consumer services executives interviewed report a 4.1% rise in budgets for new applications and investments in infrastructure. With innovation investments closely tied to IT and business priorities, leveraging predictive analytics to improve personalization and omni-channel enablement remain the top areas for investment, now and over the next three years. Executives also cite an increasing focus on investments to enable the adoption of the Internet of Things, artificial intelligence and automaton, as well as digital employee tools to enhance the customer experience.

Planned investments in innovation

Now Within 3 yearsLeveraging predictive analytics

64% 80%

Omni-channel customer experience management

71% 74%

Adoption of IoT/artificial intelligence/automation

56% 70%

Digital employee tools

65% 70%

INNOVATION SPENDING


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CLIENT INSIGHTS

BENCHMARKING IT SPENDING PATTERNS

The CGI Client Global Insights offer a wide range of benchmarking capabilities to support clients with their business planning. For example, in the area of IT spending, we asked retail and consumer services executives to estimate their IT spend as a percentage of overall revenue. While the average of their responses indicates that IT spend represents 3% of revenues, 58% of these executives cite that their IT spend represents 2% or less of overall revenue. Average IT investment percentages of revenue in this sector are below the overall average of 4% across the industries we examined.

Drawing on more than 1,400 interviews across 10 industries, the CGI Client Global Insights offer numerous benchmarks, including client priorities, investment plans, innovation activities, digital transformation, cybersecurity and data privacy practices, human capital and more. This data can be compared among peers and across industries and geographies. Through our client engagements, we draw upon these benchmarks to support the development of their strategies and publish CGI Perspectives to share the findings.

Total estimated IT spend as a percentage of overall revenue

Less than 1%

1%

2%

Average 3%

4%

5%

6%

7% or more

16%

13%

29%

16%

5%

8%

1%

11%

Data shown for answers providing a specific percentage only.Percent

of revenuePercent

of responses


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CLIENT INSIGHTS

Global average 6.1

Global average 5.7

Global average 5.9

Global average 6.3

Industry average 6.3




Business leaders 5.9




IT leaders 6.5

IT leaders 5.9

IT leaders 6.3

IT leaders 6.9

This year, business and IT executives interviewed ranked their satisfaction with their own IT organizations based on 10 key attributes of a world-class IT organization, providing a comparative view of business and IT satisfaction both within and across industries. In the Perspectives section of this report, we share how this data helps retail and consumer services organizations measure and benchmark their progress toward building a world-class IT organization.

On average, retail and consumer services organizations are aligned with overall global IT satisfaction levels. However, compared to many other industries, business leaders report significantly lower satisfaction levels with their internal IT compared to the satisfaction of IT leaders. The gap is particularly evident for delivery metrics and the alignment of services with the lines of business.

Business leader satisfaction vs. IT leader satisfactionScores from 1 to 10, with 10 most satisfied

Providing cost-effective service

Consistently introducing innovations

Delivering on time and on budget

Providing services aligned with the line of business

CGI can provide clients with a discussion of all available benchmarking, including each client’s positioning, on topics such as digital maturity, IT budgets, IT satisfaction, innovation investments and more.

BENCHMARKING SATISFACTION WITH THE INTERNAL IT ORGANIZATION


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CGI PERSPECTIVESIn this section, we present CGI’s viewpoints on the insights retail and consumer services executives provided this year.

INDUSTRY TRENDSDigitally enabling the future of the customer experienceRetail and consumer services executives continue to drive substantial change in a very disrupted, competitive and complex environment. As customers increasingly demand unique and seamless experiences, both online and in-store, executives are focused on becoming truly digital organizations to meet customer expectations, drive efficiencies and establish market differentiation.

Customer expectations of shopping anytime, from anywhere and on any device now extends to calls for new services such as one-hour delivery and hyper-secure, frictionless, mobile payment solutions. Digitalizing services to provide a seamless experience across all channels is now considered standard protocol. Reimagining services and ultimately offering 360-degree solutions is taking over as the norm. Meeting these demands for holistic solutions that create lifestyle and entertainment-related experiences is a key focus area and will be driven by collaboration, innovation and new technologies.

Our perspective is that entire ecosystem transformations will require truly integrated solutions and platforms not only externally but internally. Changing organizational structures, in particular, will require building partnerships across the ecosystem. Internally, retail and consumer services organizations are looking to empower employees with digitally-enabled tools to bridge the gap between the digital and physical words and enhance the experience across all touchpoints.

Not only do customers expect real-time information in a seamless and consistent manner across the omni-channel environment, they also expect high levels of personalization with contexualized and curated experiences. Harnessing the power of data will address these needs by providing an enhanced view of the customer, improved personalization and loyalty, and increased supply chain visiblity. Beyond enhancing the customer experience, data also plays a key role in optimizing operations to improve time to market and deliver real-time capabilities.

In an increasingly data-driven environment, cybersecurity is a growing concern. While customers are willing to interact digitally, they are looking for more proactive protection for the information they share. Among the executives we interviewed, while most have a security strategy in place, only 23% acknowledge they are managing risk proactively. As cyber threats continue to evolve, retail and consumer services companies need to better understand the implication of attacks that target physical installations as well as digital and connected devices.


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CGI PERSPECTIVES

BUSINESS AND IT PRIORITIES

Customer experience remains crucial, data and collaboration key enablersIn an intensely competitive environment, customer experience is often the clincher for choosing one brand over another. In the short term, retail and consumer services organizations will continue to focus on pinpoint solutions to offer an improved experience. However, longer term, they are keeping their sights on developing platforms to improve collaboration both internally and externally.

We believe staying ahead will require more integration, agility and real-time data across the entire ecosystem. It will also necessitate enabling employees with digital tools to create stand-out customer experiences. As executives continue to build partnerships to differentiate from e-commerce pure plays — delivering more apps, services and information from third parties — supply chains will need to become more agile to provide better visibility.

However, retail and consumer services executives feel the pain of legacy applications that can no longer support the requirement of sharing data in real time across the ecosystem. Seventy-four percent of executives interviewed rated what we term the “digital drag” of legacy IT as a top barrier to transformation. In the future, IT modernization and agility will provide the data capital needed to support true and sustained digital transformation.

Executives in this sector are keeping change management on their radar as using data from IoT and robotics, and harnessing emerging technologies and social media, pick up pace. The challenge will be how to deal with large volumes of new data and use it to offer relevant, contextualized experiences, provide real-time insights and improve personalization.


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CGI PERSPECTIVES

DIGITAL MATURITY

External partnerships to deliver complete customer solutionsExecutives interviewed are looking at more holistic change driving true digital transformation. This includes transforming their organizational and business models. In particular, they seek external partnerships that help them to deliver 360-degree solutions that will improve brand loyalty and retention. However, even though extending the digital strategy beyond their enterprise to include wider ecosystems of partners is moving forward, it is hampered by the

“digital drag” of legacy systems and outdated platforms, and at times, incompatibility between organizations.

Jointly empowering the CIO office and lines of business to drive digital transformation rises in executive mentions this year. In our view, creating a transformational roadmap to meet customer expectations should be a joint, collaborative responsibility between business and IT.

Simple automation in the industry has been largely achieved, with functions like “auto-replenishment” — the global driver of supply chain efficiency — in use for many years. As omni-channel customer management continues to mature year-on-year, executives indicate that they are further investigating the changes required to improve and enhance the experience. In particular, increasing importance is placed on implementing agile supply chains that enable cross-channel, real-time visibility across the omni-channel environment.

Artificial intelligence has been pegged as a game changer and is accelerating. We see it driving a number of improvements, both at the front end to improve the overall customer experience, and at the back end to optimize processes and drive down costs.


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CGI PERSPECTIVES

Bigger technology investments to drive modernization and personalizationRetail and consumer services companies are under pressure to keep operational and maintenance costs flat to fund more and larger transformational initiatives. Over the next three years, we see IT investments focused primarily on addressing “digital drag” concerns through modernization and building systems to create seamless, secure and data rich platforms.

Innovation in this industry is being driven by the ability to provide customers with new and exciting services and solutions that create value. This is reflected in innovation investments over the next three years that focus on predictive analytics, omni-channel enablement and digital employee tools.

Globally, data is the top IT spend driver for this sector as executives share the view that improving the customer and employee experience will require seamless, consistent data to be delivered to both.

INNOVATION SPENDING


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CGI PERSPECTIVES

PROGRESS TOWARD WORLD-CLASS IT

Today’s enterprises need world-class IT to compete in an increasingly digital worldWhen there are gaps between business and IT executive expectations, advancing the transformation agenda is challenging at best. To become a top-performing enterprise, there should be continuous interaction between the business and IT sides of the organization that focuses year-over-year improvement efforts on key attributes of successful IT operations.

As noted above, compared to many other industries, retail and consumer services business leaders report significantly lower satisfaction levels with their internal IT compared to the level of satisfaction felt by IT leaders. The gap is particularly evident for delivery metrics and the alignment of services with the lines of business. For many years, collaboration between IT and the business side has been insufficient. Now, more than ever, alignment is critical. As customers increasingly are dictating requirements, both the business and IT organizations must be closer to the customer, and to each other, to determine how IT will deliver new capabilities.

CGI asked 1,400 global leaders about their satisfaction with their own IT operations focused on the 10 attributes that define a world-class IT organization, providing a benchmark among industry peers and a foundation for continuous improvement. The resulting insights identify ways clients can bridge the gaps and align activities of business and IT leaders.

ABOUT CGIFounded in 1976, CGI is among the largest IT and business consulting services firms in the world. Operating in hundreds of locations across the globe, CGI delivers an end-to-end portfolio of capabilities, from IT and business consulting to systems integration, outsourcing services and intellectual property solutions.

In the retail and consumer services industries, we help clients digitally transform to provide seamless and secure omni-channel customer experiences, enhance personalization and meet customer demands for new offers, products and services, and solutions.

CGI works with clients through a local relationship model complemented by a global delivery network to help clients digitally transform their organizations and accelerate results.

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© 2018 CGI Group Inc. All rights reserved.This document may not be reprinted, reproduced, copied or used in whole or in part by any means without the prior written consent of CGI.

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