The Responsive Enterprise

Improving the Customer Experience Forever

Introduction

TCS_post1
‘We have entered an era of constant change.’ Yes, it has been said thousands of times, but what is different now? The rapid evolution combined with convergence of digital technologies. They are forcing companies to rethink their strategy and how they execute every year now. In the last few years companies have been consumed with trying to understand, apply, and manage social media, customer demands for mobile interactions, and the overflow of Big Data. Meanwhile, new trends and potential disrupts are reaching their tipping points.

In the middle of this constant technology and culture change, companies are trying to improve or recapture their competitive position with new business strategies. While this volume of Perspectives focuses on strategies for revamping the customer experience, many businesses are embarking on other large-scale, high-cost strategies. They range from reshaping an industry through ‘blue ocean’ ecosystems to overhauling business models. With the new wave of digital disruption, how do companies ensure their strategies are relevant?

While technology and market trends cycle faster, we saw during the first wave of digital disruption that many companies’ strategy development and execution approaches couldn’t keep pace. They were too slow to recognize relevant threats and opportunities, create and iterate strategies, and implement strategic plans. Historically companies are accustomed to laying out a business strategy and plan that takes years to execute. Today they must become responsive enterprises—companies that can sense and respond to the market as quickly as the market changes.

vol6_intro_img1_pg8 Customer experience has become a competitive advantage. Companies that excel at customer experience perform better in the market. Companies with poor customer experience ratings often struggle with implementing the technology needed to execute their customer experience strategies, and the results are unsatisfied customers and high churn.
A responsive enterprise senses the market by getting constant, actionable insight at all levels. It is designed to respond, meaning it can quickly iterate, refine, and execute strategic plans based on that insight. The latter requires companies to change systems, devices, data, process, suppliers, even people, very quickly.

Companies are improving their customer experience ‘sensing’ with ‘customer 360’ programs, social analytics, and other Big Data efforts. But the biggest challenge is becoming a truly agile enterprise that can act quickly on this insight. Let’s explore what is required to become a responsive enterprise.

  1. Source: Forrester Research, “The Business Impact of Customer Experience”
    1Watermark Consulting blog post, the firm tracked stock market performance from 2007-2012. It categorized ‘Customer Experience Leaders’ as the top 10 rated public companies in Forrester Research’s 2007–2013  Customer Experience Index studies, and the bottom 10 as the 10 lowest-rated companies, 2013 Dec, 2014 Sept.,
    http://www.watermarkconsult.net/why-Watermark.html#Loyalty-Lift
Authors
Tonya McKinneyTonya McKinney is a TCS Managing Partner focusing on Customer Experience and Digital Innovation and Solutions. Ms. McKinney has been an executive and advisor for both technology start-ups and multi-national, multi-billion dollar companies ranging from Newmerix, Get Satisfaction and Trada to SBC, Siebel and CA. Her focus is helping companies become truly Responsive Enterprises by applying TCS’ innovative work in digital technologies such as social, mobile, big data, IoT, natural language processing and cloud to…
Read more

First Substantiation, Then Transformation

Management’s Case for Action Must Be Both Airtight and Uplifting

Introduction

TCS_post2
Many companies must now transform themselves due to the digital metamorphosis of their industries. But this is a tall order. The high failure rate of corporate transformations during the last few decades about 70 percent, according to Harvard Business School, McKinsey & Company,97 and other sources shows the difficulty of any big change initiative.

A number of factors contribute to these transformation failures, all of which have been well articulated over the years, except for one: substantiation, or lack thereof. Making an irrefutable case for change at all levels of an organization is now elemental for the CEO. When one isn’t made, resistance can set in, even at the top. Employees at every level go through the motions, not believing in the case for change, and often not knowing exactly what is being asked of them.

This can and must be avoided. Doing so requires an executive team to substantiate the need for transformational change long before they plan and execute that change. As we put it: substantiation first, transformation second.

What Happens Without Substantiation

Why isn’t an edict from a CEO—even a forceful and intimidating CEO—enough to set a transformation initiative in motion? Skepticism and denial represent potent counterforces. Let’s start with skepticism. All the dire warnings about death at the hands of digital upstarts ignore the fact that not that many big companies have actually perished due to the digital attackers. Yes, Blockbuster Inc. is out of business, and so is book retailer Borders Group. But another bookstore chain, Barnes & Noble, remains very much alive and kicking, with revenues of $6 billion in its most recent fiscal year,98 and profits to boot. So does Eastman Kodak Co; the company is not extinct, as one might expect with all the post-mortems that have been written about it. In fact, Kodak had revenues of $2.1 billion in 2014 (although that was about half its 2010 revenues) with 7,300 employees, two years after surviving bankruptcy.99Just like the boy in the Aesop fable who cried wolf one too many times, doomsayers fuel skeptics’ attitudes.

But even if company leaders believe in such doom and gloom, they can still deny the warnings apply to them.

97McKinsey, 70% of Transformation Programs Fail, September 27, 2013, accessed July 23, 2015, http://www.slideshare.net/aipmm/70-26633757
98Barron’s, Why Barnes & Noble Could Double, May 24, 2014, http://online.barrons.com/articles/SB50001424053111904554304579573823704326750
Authors
Krishnan RamanujamWith more than 20 years of global consulting experience, Krishnan Ramanujam is an expert in the execution of complex, global transformational initiatives for Fortune 500 and Fortune 1000 companies.Krishnan focusses on driving profitability for organizations by spearheading their evolution from IT-centric to customer-centric models that streamline and align business functions. With a keen understanding and deep knowledge of key industries, market changes and client needs, he has directed the development of new products and solutions…
Read more

Sense and Respond: Finding the New Technologies that Really Matter

How to Filter Out the Noise and Focus on What’s Important

Introduction

TCS_post2
incresae-imageThe pace at which new information technologies hit the market has been accelerating this decade. Given that speed, how can big companies in all sectors determine which technologies have the potential to improve or transform their businesses? Spending time on the wrong inventions has a growing cost. If a company is late to adopt a game-changing technology, it will lose out to competitors and new market entrants. If it implements a bleeding-edge technology that fails to catch on, it has wasted time and precious resources on research and development.

This is no longer just a concern of the CIO or CTO. A recent survey found that more than anything else, the rapid pace of technological innovation keeps CEOs up at night.82

The current environment makes it difficult for executives to keep up with the tsunami of new technologies for three primary reasons:

  1. The number of technology companies is exploding.Venture capitalists invested $48 billion in 4,356 deals in the U.S. in 2014, an increase of 61 percent in dollar terms and 4 percent in the number of deals over 2013. Software companies represented the largest sector at 41 percent of the total deals and 40 percent of the investments.83

explode

      2. The barriers to entry for technology startups have fallen.Offshore software programmers, open-source software, and collaboration tools have lowered product development costs. Public cloud computing platforms have cut production and testing costs. Online downloads can erase distribution costs. Online search makes marketing less expensive. Crowdfunding hubs like Kickstarter ease fundraising. All of these factors make it easier for startups to bring new products to market, faster.

      3. When added together, new technologies’ impact can be potent.Consider Google Maps—the combination of mobile location services and data analytics enables Google Maps to derive the estimated time of arrival (ETA) for users in real time. The movements of thousands of mobile phone users across a city provide a useful representation of live traffic conditions. This data, along with speed limits, the actual trip durations of previous drivers, and historical average speeds combine in an analytics engine to project a user’s ETA, expanding Google Maps’ functionality.

  1. 82Fortune Magazine, 2015 Fortune 500 CEO Survey, June 4, 2015, accessed July 6, 2015,
    http://fortune.com/2015/06/04/fortune-500-ceo-survey/
    83National Venture Capital Association, press release – Annual Venture Capital Investment Tops $48 Billion in 2014, Reaching Highest Level in Over a Decade, According to the MoneyTree Report, January 16, 2015, accessed June 18, 2015,
    http://nvca.org/pressreleases/annual-venture-capital-investment-tops-48-billion-2014-reaching-highestlevel-decade-according-moneytree-report/
Authors
Nidhi SrivastavaNidhi Srivastava is the Global Head of the IT Consulting Group for Tata Consultancy Services. She oversees the growth and development of technology consulting services for Agile, Service Management Architecture and Information Management practice areas across the firm’s Global Consulting Practice.
Read more
Bhaskar TondaleBhaskar Tondale heads Next-Gen Architecture consulting as part of TCS's Global Consulting Practice. He has spent more than a decade providing consulting services in IT Strategy, Enterprise Architecture, Business Architecture, Operating Model Redesign and Digital Consulting. His experience cuts across multiple industries and regions across the globe, covering developed as well as emerging markets.
Read more

Shifting IT Delivery into High Speed

The Entire IT Organization (Not Just Half ) Must Be Able to Build Systems Rapidly

Introduction

TCS_post2
Just a few years ago, it might have been a stretch to think that a search engine company would make waves in the stalwart insurance industry. Yet earlier this year, Google announced the launch of its auto insurance comparison site72—its latest foray into financial services shopping tools—serving up travel insurance quotes, mortgage offers, and credit card comparisons. E-commerce expert Amazon today operates a formidable cloud computing service for businesses. Social networking site Facebook is trying to outdo media companies and become the world’s largest publisher of news.73 Gadget leader Apple aims to produce an electric car by 2020.74

When companies think about their biggest competitors, it is no longer simply industry rivals that keep them up at night. It is digitally native companies capable of responding rapidly to market opportunities.

In order to remain relevant, all companies must develop their information systems exponentially faster than in the past. They must be able to evaluate and implement a host of rapidly evolving technologies—including cloud, mobile, social, Big Data, robotics, and the Internet of Things—that may provide that next source of competitive differentiation. Gone are the multi-year IT projects of yore.

IT departments must be able to quickly respond to customer and business needs through rapid delivery of new products, services, and ideas.

That is something that companies like Google, Facebook, Amazon, eBay, and others—whose offerings and customer interactions are purely digital—have done from the start. They can build systems in days or weeks, and introduce incremental changes at seemingly hyper speed. Facebook operates in perpetual development mode with hundreds of software engineers making changes to front-end systems up to 500 times a day.75Amazon can deploy software changes into production in a matter of seconds.76Developers at Google make more than twenty code changes a minute with up to one change every second 77 during peak times. Long-established companies find themselves facing the same customer expectations for speed in improving business products and processes that are rooted in technology.

  1. 72TechCrunch, Google Launches A New Tool To Sell Car Insurance To U.S Web Searchers, March 5, 2015,
    http://techcrunch.com/2015/03/05/google-compare-car-insurance-us/
    73Fastcodesign.com, How Facebook Just Became The World’s Largest Publisher, May 13, 2015,
    http://www.fastcodesign.com/3046246/how-facebook-just-became-the-worlds-largest-publisher
    74Bloomberg, Apple Wants to Start Producing Cars as Soon as 2020, February 20, 2015,
    http://www.bloomberg.com/news/articles/2015-02-19/apple-said-to-be-targeting-car-production-as-soon-as-2020
    75Facebook,
    https://facebook.com//download/1411324735760067/devops.pdf
    76YouTube, Velocity 2011: Jon Jenkins, Velocity Culture, June, 20, 2011,
    https://www.youtube.com/watch?v=dxk8b9rSKOo
    77YouTube, Tools for Continuous Integration at Google Scale, August 27, 2012,
    https://www.youtube.com/watch?v=KH2_sB1A6lA
Authors
Nidhi SrivastavaNidhi Srivastava is the Global Head of the IT Consulting Group for Tata Consultancy Services. She oversees the growth and development of technology consulting services for Agile, Service Management Architecture and Information Management practice areas across the firm’s Global Consulting Practice.
Read more
Sorabh SinghalSorabh is a DevOps Leader with TCS’ IT Consulting Practice with over 16 years of cross-industry experience in enterprise IT process transformations leveraging Agile, DevOps, Lean, IT Service Management / ITIL, and CMMI approaches and frameworks. Sorabh also has experience in conducting enterprise architecture assessment, managing business requirements as a product owner, and leading and managing large and complex improvement projects. Sorabh is passionate about helping individuals and organizations become more effective in developing, deploying…
Read more

Preparing for Disruptive Competition

Making Business Model Innovation a Core Capability

Introduction

TCS_post2

Amid widespread digital disruption, business experts continue to urge executives in every industry to analyze their fundamental business model, and ask whether it needs revamping. This process, known as ’business model innovation,’ is a strategic capability—one that is especially critical today, thanks to the disruptive effects of digital products and services. Organizations without a proficiency in business model innovation are at significant and increasing risk. Yet it is quite easy for executives to get immersed in their current business model and develop tunnel vision, seeking opportunities for growth, efficiency, and improvement only within their tried-and-true business model.

Thus successful, established leaders in a number of industries suddenly find themselves fending off new competitors that rise, seemingly without warning, from the digital sea.

Examples of businesses derailed by business model innovators abound. Blockbuster’s movie rental business was upended by Netflix (movies supplied by mail, and later, streamed over the internet) and Redbox (videos dispensed by vending machines). Borders and other bookstore chains were unsettled by online book sellers like Amazon, and now digital books. Record stores like Sam Goody’s were disrupted by Apple’s internet record store (iTunes) and music streaming services. Coffee machine makers such as Sunbeam Products’ Mr. Coffee were upended by singleserve coffee machines from pioneers like Keurig and Nestle, and coffee consumption habits changed. In 2014, U.S. consumers spent a hefty $3.1 billion on single-serve coffee pods, up from $132 million in 2008, according to Mintel.63

Recent business model innovators include ride-sharing car service Uber, challenging the taxi industry, and electric car maker Tesla, challenging the automotive business with its distribution network (retail stores in shopping malls, not independent dealers) and novel maintenance scheme (updates via software downloads, not trips to a dealer’s mechanic).

In all these cases, part of the failure was organizational tunnel vision caused by the very success of the existing business model. This is not entirely surprising. As the basis of the company’s brand and the source of its revenue, the current model preoccupies executives. Understandably, they pursue growth, efficiency, and improvement around it. But in doing so, they may miss or dismiss transformational ideas, particularly ones that disrupt the current model.

Many organizations are keenly aware of the risk of not focusing on business model innovation. A 2014 survey by Boston Consulting Group (BCG) of 1,500 executives, found 94 percent of their companies ‘had engaged in business model innovation to some degree.’64

While most organizations recognize the imperative of implementing a formal approach to business model innovation and experimentation, they typically struggle with how to do it well.

The same 2014 BCG study found only about a quarter (27 percent) of executives said their companies were ’actively pursuing’ business model innovation.

  1. 63The Seattle Times, Single-serve coffee revolution brews industry change, February 15, 2014,
    http://www.seattletimes.com/business/single-serve-coffee-revolution-brews-industry-change/
    64Boston Consulting Group, Driving Growth with Business Model Innovation, October 8, 2014,
    https://www.bcgperspectives.com/content/articles/growth_innovation_driving_growth_business_model_innovation/
Authors
K. Ananth KrishnanK Ananth Krishnan, VP and Chief Technology Officer, TCS Ananth leads R&D and innovation at TCS and chairs the TCS Corporate Technology Board. A member of the TCS Corporate Think Tank since 1999, he has been a Principal Architect and Lead Consultant in TCS’ Architecture and Technology Consulting Practice. He has been a member of several advisory boards of software companies, industry bodies and government committees. Ananth has also served on the organizing committees of…
Read more

A Cure for Complexity

Slimming Down to Compete Against the Focused and Fleet-Footed

Introduction

TCS_post2
From the largest consumer product firms to the biggest global banks, companies are slimming down to focus on their core businesses. Those that succeed can more effectively channel their resources to compete against fleet-footed competitors unencumbered by distracting businesses and product lines, or slowed down by legacy IT systems.

For example, in July, consumer products giant Procter & Gamble (P&G) decided to sell off 43 beauty product brands to Coty Inc. in a transaction worth $12.5 billion. 1 After spending $80 billion over two decades building up a high-profile portfolio, P&G concluded that those fashionable brands were a distraction. “We start thinking we are a beauty company and we spend all our time at the Oscars or the Grammys or in Fashion Week … and we don’t stay focused on the consumer,” CEO A.G. Lafley said about the move.2

Similarly, HSBC, the $55 billion global bank based in London, announced in June that it would focus on Asia (where 78 percent of its 2014 pre-tax profits came from), cut annual costs by up to $5 billion, and shrink its 250,000-person workforce by nearly 20 percent.3 “We recognize that the world has changed and we need to change with it,” Stuart Gulliver, HSBC’s CEO, said in the bank’s announcement.4

Indeed, the business world is rapidly changing, and the signposts are everywhere. For example, in the blink of an eye, about 100 venture capital-funded companies such as Uber, Snapchat, and Spotify have built billion-dollar businesses in this decade.5 China has surpassed Japan as the world’s second largest investor in R&D, and at its present rate could pass the U.S. by 2022.6 Marketing everywhere is increasingly digital. Some 11 percent of 2015’s nearly $600 billion global advertising spend will appear on mobile phones, and 29 percent of total ad outlays will go through digital channels.7

Major changes such as these are making life difficult for companies burdened by complexity—too many products, too many aging business processes, and too many legacy systems supporting those products and processes. As a result, a growing number of companies have embarked on major programs to weed out products, processes, and technologies that are distracting them from their core businesses. We call these initiatives ‘business simplification.’

  1. 153 Procter & Gamble press release, P&G Accepts Coty’s Offer of $12.5 Billion to Merge P&G Beauty Brands with Coty, July 9, 2015, accessed July 13, 2015,
    http://news.pg.com/press-release/pg-corporate-announcements/pg-acceptscotys-offer-125-billion-merge-43-pg-beauty-brand
    2Serena Ng and Ellen Byron, P&G Faces Up to Mistakes in Beauty Business, The Wall Street Journal, July 9, 2015, accessed July 13, 2015,
    http://www.wsj.com/articles/procter-gamble-agrees-to-sell-beauty-businesses-1436444762
    3Chad Bray, HSBC to Shed 50,000 Jobs in Overhaul of Global Business, The New York Times, June 9, 2015, accessed July 8, 2015, accessed July 13, 2015,
    http://www.nytimes.com/2015/06/10/business/dealbook/hsbc-job-cuts-axe-25000-50000-savingdrive.html
    4HSBC Investor Update, June 9, 2015, accessed July 8, 2015,
    http://www.hsbc.com/news-and-insight/2015/hsbc-investor-update
    5Scott Austin, Chris Canipe and Sarah Slobin, The Billion-Dollar Startup Club, The Wall Street Journal, February 18, 2015, accessed July 14, 2015,
    http://graphics.wsj.com/billion-dollar-club
    6Battelle and R&D magazine, 2014 Global &RD Funding Forecast, December 2013,
    http://www.battelle.org/docs/tpp/2014_global_rd_funding_forecast.pdf
    7eMarketer, Advertisers Will Spend Nearly $600 Billion Worldwide in 2015, December 10, 2014, accessed July 14,2015
    2015, http://www.emarketer.com/Article/Advertisers-Will-Spend-Nearly-600-Billion-Worldwide-2015/1011691
Authors
Anantha P. SekarAnantha Sekar is the Global Head of Integrated Offerings. He and his team engage with customers on their business priorities, corporate strategy, and transformational needs to synthesize a compelling vision, coherent strategies and agile execution roadmaps. Anantha has over 25 years of experience across sales, delivery, alliances, and advisory services. He is one of the leaders who established TCS’ consulting capability over the last decade. Anantha established TCS’ Enterprise Architecture advisory services, and led it…
Read more
Nidhi SrivastavaNidhi Srivastava is the Global Head of the IT Consulting Group for Tata Consultancy Services. She oversees the growth and development of technology consulting services for Agile, Service Management Architecture and Information Management practice areas across the firm’s Global Consulting Practice.
Read more

The Care and Feeding of Data Scientists

Organizing, Engaging, and Retaining These Increasingly Vital Professionals

Introduction

TCS_post2

An enterprise that positions its data science and analysis talent improperly cannot derive maximum business benefit from it. An ill-advised organizational structure will create internal friction between groups. The company will spin its wheels analyzing data that doesn’t solve core business problems, and fail to provide an appealing career path to data analysis experts. The company’s more responsive competitors will be only too glad to hire these valuable data analysis professionals. How can your company avoid this fate? We will explore how to organize, engage, and retain a three-part data science team for maximum business results.

First, understand the stakes. Data science talent is today a competitive differentiator. Global spending on Big Data is growing at an average annual rate of nearly 30 percent and is expected to reach $114 billion in 2018, according to ABI Research.38

Organizations with advanced analytics capabilities are outperforming competitors. For example, consider Netflix’s success shaping its original content using analytics. The most prominent program, House of Cards, helped Netflix pass 62 million subscribers in the first quarter of 2015, setting a quarterly subscriber record.39

bigdata

Companies now more fully appreciate that all data, not just Big Data, has value and potential. This understanding has driven up demand for data experts in a variety of specialties. Creating the right organizational structure for the data team takes on added importance given today’s shortage of data scientists and analysts.

As companies seek data professionals, the challenge is two-fold, as noted in the TCS 2013 Global Trend Study, ‘The Emerging Big Returns on Big Data’: Companies need to find and hire data scientists who can manage large amounts of structured and unstructured data and find actionable business insights. Companies must also build trust between the data scientists and functional managers. Organizational structure can help build that trust, or damage it.

Without the right organizational chart, your company’s talent retention efforts are likely to fall short. If you can’t retain your data science talent, your competitors will recruit them and gain advantage. These are highly paid, highly sought after individuals. According to data science recruiting company Burtch Works, in the U.S. market, the 2015 average predictive analytics salary (non-managers) is $88,400 with a mean bonus of 11 percent, and for managers is $160,000 with a 19.1 percent bonus, with pay expected to keep rising. Data scientist salaries for non-managers average $120,000 with a mean bonus of 14.5 percent and for managers $183,000 with a 19.5 percent bonus.40

avg_salaries

  1. 38ABI Research, Big Data Spending to Reach $114 Billion in 2018; Look for Machine Learning to Drive Analytics, September 2013,
    https://www.abiresearch.com/press/big-data-spending-to-reach-114-billion-in-2018-loo/
    39Mashable, Original programming like House of Cards adds millions of Netflix subscribers, April 2015,
    http://mashable.com/2015/04/15/netflix-earnings-first-quarter-2015/
    40Burtch Works, Burtch Works’ Predictions – 2015 Analytics and Data Science Hiring Market, January 2015,
    http://www.burtchworks.com/2015/01/12/predictions-2015-analytics-data-science-hiring-market/
Authors
Dr. Gautam ShroffDr. Gautam Shroff, VP & Chief Scientist, TCS Innovation Labs. Dr. Shroff graduated with a B.Tech in Electrical Engineering from the Indian Institute of Technology, Kanpur, India, in 1985 and received his PhD in Computer Science from Rensselaer Polytechnic Institute, NY, USA, in 1990. His interest areas include Data Analytics, Big Data, Information Fusion, Artificial Intelligence, Software Architecture, Software Engineering, Scientific Computing.
Read more

Reinventing the Supply Chain for a Digital World

Responsive Enterprises Need a New Definition of Supply Chain Resiliency

Introduction

TCS_post2
Companies have traditionally judged a supply chain’s resilience by the ability to recover after black swan disasters and upheavals. Although preparedness for natural disasters is important, black swan events remain the exception, not the rule. A resilient supply chain in the age of the responsive enterprise must tackle a more complex challenge: it must help a company react to small, frequent changes such as those in customer expectations and demands, supply constraints, regulations, market variability, and competitor moves. This capability provides significant competitive advantage, by allowing companies to capitalize on fleeting opportunities and respond to changes in days or weeks, instead of months and quarters.

In the past, companies could manage the amount of variability their supply chains would confront, and develop strategies to deal with those variations. Today, however, business complexity is mounting relentlessly, and it is no longer possible to identify all scenarios from the start. For example, companies across vertical industry segments face ballooning product proliferation and micro-segmentation of customers. Also, supply chains have shifted from vertically integrated systems to virtual, global networks of partners. Consumer product companies, for example, that used to own manufacturing plants, distribution centers, and trucks, now outsource much of that work.

To meet today’s supply chain challenges, companies are building capabilities to predict changes, incorporate data from new sources, identify best courses of action, and implement decisions quickly.

Predictive analytics and simulation tools help companies assess and model the impact of changes and actions.

Increasingly inexpensive computing power is making it possible to use these technologies to manage supply chains at granular levels. Retailers, for example, can spot items selling faster at one location than at another and shift inventory to avoid stock outages and increase market penetration. This is an example of modern supply chain resilience: acting quickly on valuable data gleaned in everyday operations to prevent losses and promote gains. Often, however, the granularity of data being considered is not fine enough, given the availability of new data sources such as Internet of Things (IoT) devices, social analytics, and customer sentiment tools.

Reinventing the supply chain also requires overcoming significant talent hurdles. Let us explore the reasons why the supply chain wisdom of yesteryear does not work for today’s digital business, and determine how to overcome the barriers to a resilient supply chain.

The Trouble with Traditional Approaches

Traditional approaches can help companies build resilience into the supply chain through excess capacity, inventory, or expedited supply chain processes. However, this flexibility comes with additional costs, thus lower margins.

Many companies also divide their products into abstract, ‘manageable’ categories that miss a great deal of detail. This abstraction hides information available in the supply chain which could be used to predict supply chain issues or opportunities. For example, rather than trying to forecast and manage thousands of television stock keeping units (SKUs) at a store level, an electronics retailer may focus on a few product families or categories, such as smart TVs at a regional level like Texas, instead of 42-inch smart LED TVs at a particular store. Such abstraction loses a lot of the detail which could allow the company to spot supply chain issues or opportunities and thus build resilience.

The performance-to-cost ratio of computing power has steadily improved, making it possible to manage data at a more granular level and eliminating the need to manage by abstraction. Thanks to technologies such as in-memory computing and improved analytics algorithms, companies can now analyze complex supply chain questions that used to take days or weeks, in a matter of minutes or hours. For example, one major consumer goods manufacturer uses its Internet of Things data to replan production lines based on actual demand variation once or even twice daily. Cloud computing and managed services have provided options to take advantage of technologies without laying out large capital and large teams to maintain and support the systems.

In addition, granular data about customers is much more readily available. Social media and consumer analytics can surface changes in customer tastes, expectations, and attitudes about products and services, including competitive ones. Based on popularity trends shown by social media, product can be redeployed according to demand. Social data can also reveal sentiments about specific channel partners. Incorporating this unstructured external data into analysis, along with sensor data and IoT data, can provide further insights into supply chain changes or opportunities.

Another challenge companies face is traditional thinking of supply chains as monolithic processes where all pegs are square. A single physical supply chain needs to accommodate customer needs through various channels and customer segments. Different customer segments have different expectations on service levels and costs, which will lead to different supply chain policies and approaches. Amazon.com’s book division caters to everyone from casual fiction readers to students and professionals who need books in a hurry. Amazon does not have separate warehouses and trucks for each customer segment. Its supply chain is engineered to respond to different customer needs based on what they are willing to pay and how long they are willing to wait.33
amaZon

  1. 33Sam Jermy, How Jeff Bezos is aiming to revolutionise Amazon distribution network, SupplyChain Digital, October 14, 2014,
    http://www.supplychaindigital.com/procurement/3648/How-Jeff-Bezos-is-aiming-torevolutionise-Amazon-distribution-network
Authors
Pari AnnamalaiPari Annamalai is the Senior Director of Supply Chain at Tata Consultancy Services. He has over two decades of experience working with leading logistics, shipping, manufacturing, retail and distribution companies throughout Asia and North America on complex supply chain improvements. Pari has proven himself as an accomplished leader offering diversified leadership experience spanning supply chain management, engineering, operations and general management across various industries. Prior to joining TCS, Pari was the Vice President of Industries…
Read more
Raja ChandrashekarRaja Chandrashekar is responsible for driving Tata Consultancy Services’ (TCS’) supply chain management innovation, and transformation for TCS clients across the Electronics value chain spanning Hi-tech, Media, Telecom and Medical Electronics. In his role as Director, Supply Chain Center of Excellence, Raja helps companies define and devise supply chain strategies needed to drive breakthrough supply chain performance. Raja’s 16+ years of supply chain management experience involves designing, developing and implementing successful business solutions across a…
Read more

Reinventing Innovation for a World of Continuous Market Feedback

Listening is Everyone’s Job in a Responsive Enterprise

Introduction

TCS_post2
Organizations are besieged with ever-increasing volumes of data from internal and external sources, including new data types, such as social sentiment data and Internet of Things (IoT) data. An important attribute of this data is that it is available continuously as a stream of customer, prospect, device, and market data that can be analyzed together in real time, or close to it. To perform and compete effectively, companies need systems, processes, and organizational structures that let businesses listen to these constant inputs and quickly react to the customer and market intelligence within them.

Watchful monitoring and analysis of consumer behaviors and market trends is essential to innovating and to safeguarding the organization’s core value proposition. Gaps in a value proposition are sure to be revealed by these types of data. The risk of not monitoring these channels effectively is that other companies will. Depend on this: Someone will always find and exploit those weaknesses, bringing forth new and potentially disruptive innovations.

While Facebook, Twitter, and Amazon are touted as innovators living in a world of continuous market feedback, it is a mistake to think this mandate applies to digital businesses exclusively. Rather, the need for innovation based on this feedback is a challenge confronting all businesses, from consumer goods companies to industrial manufacturers to travel and hospitality companies. Consider Marriott or other hotel industry incumbents that are now tweaking strategies for a world that includes Airbnb or John Deere and General Electric (GE) listening to customers about pain points such as parts failures and how to prevent them.

To imbue an entire company with a passion for constant listening and analysis, CEOs will need to lead significant cultural change. IoT data, for example, can reveal unpleasant truths about how customers use products and services. In order to properly hear and react to market feedback, companies will need not only software tools for gathering and analyzing data, but also cross functional teams and a culture of listening. Without strong executive guidance, such significant organizational and cultural change will fail. Let us examine why and how you should adjust your organization’s commitment to listening to customer feedback.

Fundamental Shifts in Consumer Interaction

Why must all businesses reinvent innovation for continuous market feedback? Two new realities have caused a profound shift in how consumers interact with brands, and explain why all businesses must respond.

First, while humans have always shared information about themselves and their world—think of the Lascaux cave paintings in France, produced 50,000 years ago—the new element is that today’s information is persistent, available, and analyzable.

Until about a decade ago, a dissatisfied diner could only vent unhappiness to her waiter, the restaurant owner, and perhaps friends and family. In addition to being local, her feedback was ephemeral—in most cases it was gone before her next restaurant meal. Fast forward to today. Thanks to social media sites such as Facebook, Twitter, YouTube, and Yelp, positive and negative experiences with a brand, a product, or a service can be shared, instantly, with large audiences.

These public comments are available to other consumers, competitors, and startups. The harvesting of explicit consumer data (such as social media sentiment) and implicit consumer data (such as purchase and use patterns) is providing waves of insights about customers and prospects, influencing product development, customer service, marketing, and more.

Data flowing from IoT devices will further enrich the picture. Cisco Systems predicts 24 billion networked devices and connections globally by 2019, up from 14 billion in 2014 interactionproducing a flood of new information to augment purchasing and sentiment data.24 Real-time device data is already transforming the healthcare and insurance industries, for example. Devices in vehicles and at the patient’s bedside allow for usage-based pricing, a major strategic shift for both industries.25 What’s more, IoT data may offer more accurate consumer insights than purchase or sentiment data alone. For instance, a runner may buy each new generation of a fitness band and brag on social media that he runs five miles every day. However, the band on his wrist, which records actual daily mileage, may tell a very different story.

The second new reality is the emergence of the digital consumer in both B2B and B2C. The ability to track a digital buyer’s path across many interactions over time means the entirety of the value chain can be exposed, for the first time. For example, how did that hotel customer really find your company? What other options did he consider? What ratings sites did he consult? For some organizations, this type of intelligence may spark a fundamental rethinking of their value proposition, requiring them to adapt their products and services accordingly.

Listening and Leading

To innovate in light of these new realities, companies should take five key steps:

  1. Deploy mechanisms for listening to internal and external sources.
  2. Motivate the entire organization to listen. This creates a complete view of the market and the customer, rather than functional silos where it’s either marketing or service’s job to listen. It should be everyone’s job.
  3. Innovate for the end consumer, not just the immediate buyer, since value chains are in constant flux, being reinvented and disintermediated by existing competitors and newcomers.
  4. Lead the significant culture change required when business models are reimagined and business process are transformed as a result of the insights gained by listening.
  5. Organize for innovation and the reality of continuous market feedback.
  1. 24Cisco, Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update 2014–2019 White Paper, February 3, 2015,
    http://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-indexvni/white_paper_c11-520862.html
    25Forbes, The Internet Of Things Isn’t A Technology Fad, October 16, 2014,
    http://www.forbes.com/sites/groupthink/2014/10/16/the-internet-of-things-isnt-a-technology-fad/
Authors
K. Ananth KrishnanK Ananth Krishnan, VP and Chief Technology Officer, TCS Ananth leads R&D and innovation at TCS and chairs the TCS Corporate Technology Board. A member of the TCS Corporate Think Tank since 1999, he has been a Principal Architect and Lead Consultant in TCS’ Architecture and Technology Consulting Practice. He has been a member of several advisory boards of software companies, industry bodies and government committees. Ananth has also served on the organizing committees of…
Read more
Shashi BhusanShashi Bhushan, Chief Innovation Evangelist, CTO, TCS Shashi’s experience includes Innovation & Research Commercialization, Business Development & Management, Project Management, Consulting, System Programming, Strategy Formulation and Deployment, and Teaching. He holds a Masters in Industrial Management from IIT, Madras.
Read more

Operational Changes for Customer-Facing Functions

Creating a Unified Customer Experience Requires a New Level of Operational Agility

Introduction

TCS_post2
Sales, marketing, and service organizations need to transform in the age of the responsive enterprise. Companies have more data about customers than ever before, from sources ranging from social media to e-commerce transactions, but many don’t use it effectively. Companies must apply customer insights across the enterprise. In pursuit of this goal, companies should strive to break down internal silos while identifying new opportunities for creating and capturing value for their customers. But this customer-centric transformation tends to falter at the same level: operations.

Rather than creating a unified customer experience, companies create a series of customer experiences with marketing, sales, and service initiatives that may be innovative on their own but, as a whole, still fail to meet rising customer expectations. Existing business processes get in the way. Structural issues such as conflict between IT and sales, marketing, and operations leaders hinder progress. This requires intervention and guidance on cultural change from the CEO and other senior leaders of internal divisions.

The challenge is to react to the opportunity and the threat with urgency, but also in a deliberate, strategic way. A successful customer experience strategy breaks downs the organizational barriers of the past through the development of agile operations and delivery—to ensure a truly customer-focused, responsive company.

Companies should avoid taking a ‘big bang’ approach that tries to force multiple technological and organizational changes at once. Instead, approach innovation as a series of experiments, and iterate on the approach as you work toward an enterprise-wide plan. Companies need to be aggressive about getting to measurable results quickly, without rushing so much that they trip themselves up. A fast-paced but iterative approach, illustrated in Figure 2, is the best way of striking the right balance. Let us explore how to find that balance.

challenge
Figure 2: An Agile Approach to Transforming the Customer Experience

Why is Achieving Customer Centricity so Hard?

Executing a customer-centric, responsive enterprise strategy poses many challenges, with regard to culture, organization, and technology platforms.

Beyond replacing old business models and processes, achieving customer centricity means rethinking and reimagining the business. Data and groups that used to be discrete are now being connected in new ways to build value for the customers and the company. This requires an integrated approach, including a startup mentality that breaks down the existing barriers between customer experience (CX) and customer relationship management (CRM) to meet new and evolving customer expectations.

Delivering an integrated customer experience means treating marketing, sales, service, and operations as part of a continuum. Organizations must agree to participate in joint initiatives, share data, and maximize the value they create by coordinating their activities more tightly. Frequently, the biggest challenge is getting IT, marketing, sales, and service leaders working together rather than at cross-purposes. They often do not see business problems in the same way. Consider these common obstacles:

  • IT’s participation is essential, but IT should not drive business initiatives.IT needs to have the authority and budget to address legitimate concerns such as compatibility between new processes and legacy technologies, but IT should not be allowed to veto change just because it will be technically challenging.
  • Different parts of the organization often have very different understandings and definitions of who the customer is and the customer’s perceived value of the company’s products or services.differences must be reconciled, not only at the strategic level but also at the tactical level of database schemas and business processes that ensure consistent, high-quality service.
  • Job descriptions, performance management, and processes must change, in some cases radically.Unfortunately, change always provokes resistance. People are always at the center of disruption and change, making this more of a leadership challenge than a technological one.
  • Cross-functional processes seem threatening to organizational fiefdoms and their leaders.Many of these initiatives do not have a senior executive who has organizational authority across multiple functions or divisions. It is essential that a cadre of leaders be created who understand successful transformational methods. In some instances, organizational structures may need to be changed to include a Chief Customer Officer, with the backing of the CEO and the board, to drive customer-centric change despite all resistance.

Confronting these challenges is not optional. Customers now expect companies to recognize them as the same person across channels; for example, giving the contact center or retail store employee insight into the customer’s interactions on social media or in an e-commerce experience.

Customers appreciate multiple choices, but TCS research shows that when they switch from the channel that was their first choice to another, it is usually out of frustration.21

A good omnichannel experience may alleviate some of that frustration, but it is better to provide a strong positive experience in every channel, from the beginning.

Success requires understanding the core business outcomes you are trying to achieve and making sure they match customer expectations. In any interaction with a company, customers should be able to achieve their goals with as little effort as possible. Be ready to change your processes if you are not meeting that standard for basic customer service requests.

Authors
Lisa HagerLisa Hager, Global Head—Salesforce.com, Enterprise Solutions Lisa Hager is the Global Head of the Salesforce Practice for Tata Consultancy Services. She is responsible for the core practice operations including business development, delivery, alliance management and offerings, and solution development for TCS’ mature and emerging markets.
Read more