On building a modern marketing organization in a multi-channel world

The next BriefingsDirect business innovation thought leadership discussion focuses on building a modern marketing organization. Marketing today is a different game. Today’s buyers are more connected and informed than ever, and that’s creating major upheaval in the way companies promote their brands.

Social media and business networks have taken the lead in shaping perceptions about brands, products, and companies -- and savvy businesses are embracing these new channels and technologies both to increase their brand awareness and to drive sales.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy.

We’re here with two experts to talk about these changes and how they are shaping the future of marketing. To learn more, please join me in welcoming Alicia Tillman, Chief Marketing Officer at SAP Ariba, and Pete Krainik, Founder and CEO of The CMO Club. The discussion is moderated by me, Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: Let’s begin our conversation at a fairly high level. What are the trends, the competitive pressures, and the technology changes that are prompting companies to have to seek new and better ways to market themselves, Alicia?

Tillman: There are two things, Dana. First, when we think about trends or even new ways to market in particular, we're faced with the fact that social media, and networks have taken the lead in shaping perceptions about brands, products, and companies.

Tillman

On one hand, there’s no shortage of information, and that’s a good thing. But on the other hand, it’s really causing companies to get out ahead of that as quickly as possible, because the reality is that today’s buyers aren't struggling to find information. And so many buying decisions are made about companies and products before any interaction with a member of the sales team.

Companies are recognizing that all of the channels in the social media space that companies are going after to find information is key. Making sure that marketers are driving information in a consistent manner across these channels will aid in feeling as though your company’s value proposition and brand are being embraced and accepted in the ways that you want them to.

My second point is in terms of the competitive pressure. All companies are mostly trying to compete on a product, a piece of technology, in a lot of ways, and oftentimes your competitors are saying they already have or are about to innovate on the same thing. So companies need to force themselves to innovate beyond products. There are a lot of opportunities, in particular, thinking about how you differentiate on things such as thought leadership or standing for a particular cause.

How do you take a product and how do you use it to benefit the world in terms of driving higher good in some way? So between social media and networks, embracing those channels and then separately thinking about how you differentiate beyond just the basics of products are certainly the opportunities that companies are faced with today.

Social media

Gardner: Pete, with social media, we're more exposed than ever. People can point at whatever they see about brands or companies. How is this trend shaping the new marketing and competition?

Krainik: I think Alicia is spot-on. I host dinners with chief marketing officers (CMOs), and I'm chatting behind doors on these issues around the new competitive landscape. If you look at the pressures faced by CMOs, you still have the same process or the same thought -- I need to sell more products, I need to differentiate myself, I need to get leads, I need to close, I need to build the brand. Those things and concepts haven’t changed, but you have a whole new wave of extremely agile competitors now, like Uber, like Airbnb.

Krainik

How is the cloud impacting that? You have the new players that you never had to deal with before. You have new media channels, new influencers. In the past, media mostly meant working on press releases. But the whole world has changed. You talked about it, and Alicia again talked about social.

And then, this whole issue of speed of change and how to keep up with it is interesting. How do I, as an organization, keep up with all the changes?

Marketing is completely different than it was five or 10 years ago. There are just too many choices, too much noise, too much outbound. CMOs are getting hundreds of emails a day from someone selling some product and they're not even looking at it. Those kinds of pressures are building, as Alicia said, and taking the competition to the next level. Those things are top of mind right now for CMOs.

Gardner: Alicia, in this environment of disruption, of fast-paced change, of so much noise and information, you recently completed a significant update of the Ariba brand, and you’ve launched a new name and logo. Why did you do that at this time and how did you go about that differently than you would have done 5 or 10 years ago?

Tillman: Ariba was founded some 18 years ago, and at the time, the company had set out on a mission to build a single solution to help companies manage their spend. If we reflect on the past 18 years, you see all the ways in which our business has evolved, in which buyer needs and the economies have evolved, and how our business has worked to evolve and be ahead of that. Today, Ariba is the world’s largest marketplace for all business-to-business (B2B) transactions.

We have two million companies and $1 trillion in commerce that run through the Ariba Network. When we think about some of the significant change that has happened notably in the past four years, number one, we were acquired by SAP. SAP is a global leader in enterprise application software. It has an incredible brand, and is an incredibly sound and operationally and financially stable company known throughout the world. It’s really important to us to take that brand reputation into our identities.

First, we've added the SAP name to our brands, now calling ourselves SAP Ariba. And secondly, the logo, the mark, or the bug as some people like to call it, that fits alongside the company name is equally important. The visual representation of our brand needs to well support the business we're in and the value proposition we offer.

Pete said it really well. When we think about the marketplace that we're in today, there are new competitors, new influencers, and so many choices that we have an obligation as marketers to help buyers clear through the clutter, understand where the differentiation exists within companies, and associate themselves with a company that is most relevant to their needs.

Showcasing customers

So, we evolved our logo and made it into a mark that really showcases our customers, which are both buyers and sellers. Within our logo there's a connection there that’s reflected to support how Ariba brings those two buying populations together.

In addition to that, we've worked to adapt a new tone in our messaging. Messaging got simple and clear to piece point about all the choices that exist. You’ve got to focus on a simple and clear message, and one that is very understood and very relevant for your customers.

Gardner: Pete touched on this issue of so much information available, and research confirms that consumers are looking at multiple channels when they make a purchase. They have much more of an ability to do research and to get social commentary. I myself find, in my own buying, that I'm ready to push the button to buy something, but then I'll glance at the comments or some of the recommendations, and actually back away. So this is really a big deal.

So how do we, as marketers, think about different ways to accommodate these new behaviors by buyers, and how do we then provide information to them as sellers to help them along the way?

Krainik: One thing some of the top CMOs or top brands are doing is moving away from a campaign-focus to 360-degree coverage. I was a CMO before I started The CMO Club, and the profession has moved beyond kind of the "blah, blah, blah" to true focus. There’s the ability to make sure that the content is relevant, that the stories are there, that you’ve identified the advocates, and people underestimate the value of that.

Everybody is driven by mobile now. It's truly a mobile workforce. We're always doing everything on mobile.

You talked a minute ago about how you check on social media or with people you know or respect, and they say, "This product is good, this product isn’t, or I had a great experience here." How do you spend the time making sure you know who those advocates are, who the influencers are, how to engage employees, and really focusing on getting to that. It’s such an important thing that I think people don’t think about as much.

Another piece that there’s not enough focus on: Everybody is driven by mobile now. It's truly a mobile workforce. We're always doing everything on mobile. So making sure when we talk about multichannel and we talk about going where the customers are, we need to be sure it’s in the format they want as well. We want them saying that we have this great website, this great digital space. If you’re not going to mobile, then you’re missing the boat.

Gardner: Alicia, anything to offer on ways marketers need to do things differently to accommodate these new buyer behaviors?

Tillman: I think a lot about the power of consistency and how marketers need to have their finger on the pulse of the channels that their customers are getting information from. Pete’s organization, The CMO Club, hosted a fantastic CMO roundtable a couple of weeks ago where the topic was how to stay ahead of the digital transformation, and how marketers are embracing digital transformation.

One of the questions was how much of our budget is dedicated to a digital platform to support our marketing? Certainly, the percentages were quite high, but we also found that there is still budget being invested in your more traditional channels, including things like print and events. Events in particular, because of the face-to-face communication that occurs and how business is still done over a handshake, and we can’t underestimate that.

Strong balance

Striking a strong balance between your digital marketing channels as well as your traditional marketing channels is key. Keeping the message consistent in how we market between those channels is also quite key, and then understanding the various buyer personas that you speak with. If you’re creating a digital campaign for the CIO audience, the messages are going to be different from how you would market to a chief financial officer (CFO) audience.

As an example, and it’s really important, back to an earlier point I made around relevancy, you’ve got to stay consistent, but you also have to make sure you’re being relevant, and then taking into account a strong balance between the new digital channels that exists, but also not underestimating the power that still remains with some of our more traditional channels.

Krainik: Alicia, I think you're spot-on. I loved the comment about staying true and consistency, and you’ve demonstrated that with what you’ve done. I know you talked about what we actually see in the market. It’s the importance of creating the brand story and being consistent to that story.

It’s more important now than ever, because then you can get your employees, your advocates, and all your stakeholders supporting that brand story, regardless of the channel. Brand consistency is more important now than the actual advertising campaigns. You’ve done a great job and I think you're spot-on with that. It makes the multichannel execution easier, if you’ve got that nailed, as opposed to chasing it campaign to campaign.

Brand consistency is more important now than the actual advertising campaigns.

Tillman: Yeah, absolutely.

Gardner: Well, Alicia, at this point, where we have these challenges, we're also facing some great new tools in the marketplace, ways to get more information, get customization, use big data, and leverage cloud models to extend our reach, but also to gather more information in better ways. Tell me what you think some of the strong tools are, and I am going to imagine that the SAP Hybris marketing suite is among them.

Tillman: I'd start by ensuring that you have a strong marketing automation platform. It's becoming commonplace in most marketing organizations, large or small, for the past five years or so and it’s certainly growing in size in terms of marketing organizations that are raising the technology.

Essentially, this technology allows you to automate the lead generation process to help you manage campaigns in an automated way, help you nurture the leads that are coming through your demand waterfall in an automated way. The leads that you’re handing off to sales are more qualified than they ever had been before.

You have such an extreme ability to nurture these leads using digital campaigns in these automated ways. That’s my first recommendation: you need to pursue marketing automation technology.

The other thing that exists within these technologies is not just an ability to help you manage your campaigns and manage the nurture strategies within them, but it’s also the data that these technologies provide.

As you integrate them with your company's sales customer-relationship-management (CRM) system, it gives you really unprecedented abilities to show where the demand is being created, and how you can most effectively demonstrate the support of marketing to the ultimate growth of the pipeline, and then of course, to the growth of the business.

Focus on measurement

So it is a must-have that you focus on that in particular. That’s the leading place that I would start. Then, there's all of that getting into the analytics. Every marketer should always be focused on measurement. Measurement is the sole thing that has enabled me to grow my team, whether that be headcount or investment.

When you're not sitting across the table from your CEO or my president talking in terms of numbers and data that are showing the true impact as marketing’s existence on the companies thought of mind, you’re essentially not having a conversation, and you will not have an ability to grow your team. So I highly advise that you look at strong marketing automation and data and analytical structure to enable you to help support your programs.

Gardner: What’s super powerful these days about the data is that we're not only gaining a 360-degree view of customers, but we're able to react in near real time, and then target them with precise customization. How are those tools being used, from your vantage point, that sort of feedback loop and an instant ability to know what a customer is doing, learn inference, compare that to other datasets and then offer something back to them, which really should engage them?

Data is what needs to be at the backbone of your operations within the marketing organization, because it really informs everything.

Tillman: Obviously, being part of SAP, I could spend all day talking about the advanced analytical tools that exist, and having the sort of in-memory computing technologies like S/4HANA, which is the backbone of SAP. These tools have the power to look at large datasets quickly. There are many cloud sales applications that work to provide customer information that marketers need in a central location, it’s available at a glance, and it’s delivered in context that’s truly most important for marketers.

There’s so much flexibility in the cloud. Companies can pull together information in real time or live, as we like to say here at SAP, pulling from so many sources. Data is what needs to be at the backbone of your operations within the marketing organization, because it really informs everything from where you can innovate and where campaigns are having the most success, to what that next big thing is going to be to help propel the company forward. And that’s a big part of what’s the core of a marketing organization.

Gardner: Pete, any additional thoughts about what you’re hearing from your CMO audience about use of these data tools?

Krainik: I’ve seen a shift among CMOs in the last year to two years on how they approach data tools. They used to approach it by looking at the tools currently available and choosing one that catches their eye. Now, there are a number of really bright CMOs out there who are actually taking the approach of assuming that they have total visibility, total velocity, and can get total value at their fingertips from a design perspective, whether it’s for demand and lead generation or a campaign. So they start with that assumption, then they design what that ideal tool would be. And then they evaluate the tools’ capabilities and processes.

By the way, what’s equally is important, I found out talking to CMOs is that you can have the great tools, but if you don’t have the right team and expertise to run it, post implementation, it can cause a problem. That’s an interesting approach. If you could have any piece of information what would like to begin with, what would you like to have to know about your customers? It just opens up some interesting ideas to really stretch the envelope versus force fitting, and I am sure, Alicia, you are seeing that too with some of your customers.

Tillman: Absolutely.

Gardner: Alicia, looking to the future, what do you see as some of the greatest challenges that marketers are facing? I'm thinking the perhaps the user experience is going to become more important over time, but how do you see that?

New opportunities

Tillman: There are a couple of things. The war to differentiate and to bring new opportunities, new leads, into the business is always going to be a reality for marketers. They're always going to need to have a very clear brand, a very simple message, and one that’s differentiated and relevant.

So focusing on your brand story and ensuring that that brand story is consistent across all of the buying and marketing channels, and is relevant and is compelling is always going to be a reality for marketers, because your brand drives the growth of your business’s bottom line. It’s what fuels your pipeline; it’s what fuels the sale of your product; it's what enables you to tell your story around differentiation. So, there always needs to be a clear focus there.

The other thing too, and I had mentioned this in one of my opening comments, is around this notion of differentiation and thinking beyond products in ways in which you can differentiate yourself. As an example, I work in a B2B space, but think about some of the best consumer brands in the world, and those that we support in our personal lives.

Often, I like to reflect on the brands that I support in my personal life, and when I think about what the similarities are between those brands and why I am so loyal to them, not only are their products best in class, but they’ve actually put their products to use beyond what the day-to-day objective is.

If you think of a brand like Tom’s or Starbucks, they have filled brand promises around where they source their materials, where they donate portions of their revenue. And when we think about the millennial population as one, but any buyer, there is a much greater desire for them to partner with organizations that stand for something versus ones that don’t. B2B organizations, in particular, have a tremendous opportunity to think beyond the level in which they’re competing with day after day, and think about what is that higher good.

It’s really how we're taking our value proposition and using it to create higher good in the world around things that people care about and really mater at the end of the day. That’s the real opportunity for marketers.

When we talk about visions, vision statements should be operational, and it’s really how we're taking our value proposition and using it to create higher good in the world around things that people care about and really mater at the end of the day. That’s the real opportunity for marketers.

Gardner: Pete, what advice would you offer the CMOs as they think to overcome these challenges in order to reach this vision of a brand-driven and customer-centric world?

Krainik: The two most important things are, first, that I would put my energies around making sure that I have a marketing organization that has the new marketing skills and new technical skills needed for success. Number one, get the best and the brightest.

The other thing, in addition to the differentiation that was discussed, is this whole issue of ecosystem of innovation: creating an ecosystem, understanding how I am going to look to the outside to bring in new ideas, new startup capabilities, new energy. Those are the two essentials for success. If you don’t do those, I think people are going to be in trouble long term.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy. Sponsor: SAP Ariba

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SAP Ariba and Tradeshift executives on cloud, competition and the rise of business networks

The next BriefingsDirect innovation thought leadership discussion focuses on the rise of business networks and how that requires new models of buying and selling as well as new ways of discovering and relating to customers and partners.

Quite rapidly, we've entered a business world where unprecedented connectivity leads to instant analysis. These insights across entire industries provide powerful new ways for businesses to innovate and to adapt to markets, supply chains, and customer demands.

All things being equal, the companies that best leverage this data-driven innovation and these business network effects will surely win in their markets. We’re joined by two experts to discuss the future of enterprise software and the role that business networks will play in creating new models for sustained success.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy.

To learn more about doing business best in our digital and connected world, please join two digital business competitors, Alex Atzberger, President of SAP Ariba, and Christian Lanng, CEO and Co-Founder of Tradeshift. The discussion is moderated by me, Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: We've had this ongoing confluence of cloud, mobile, big data and we’re seeing streamlined business processes happen as a result of these -- and it seems to be accelerating and empowering business-network effects. So, my first question to you, Christian, is how is this disrupting businesses and how do they turn that disruption into a benefit and business agility?

Lanng: As you mentioned initially, the confluence of cloud, mobile -- all of these things -- is happening and it’s a massive disruption for the Fortune 500. We’ve never really seen anything on this scale, but I want to point out two key areas. If you go back 10 or 15 years, what you were doing with your supply chain was very batch-driven. It was very large-scale business, and was all about reducing the cost of transactions. We saw the rise of business BPOs where you did a lot of outsourcing of your processes, a lot of outsourcing of transactions.

And it was all about a cost-steady supply chain. If you look at today, the main paradigm has switched completely. What you will see is that it’s all about agility. It’s all about the speed of data. We find that a lot of the solutions we implemented in the '90s and the early 2000s tended to focus on reducing cost, and that very often came with the flip side of increasing the cost of change, because we put everything into very rigid process and very rigid structures.

Full supply chain

One of the things that business networks are transforming right now -- both on Alex’s side of the table and our side of the table -- is that we're now wiring the full supply chain. We're connecting all of the processes and bringing in all of the data in real time. That’s an extremely fundamental switch from a world where everything used to be faxed via paper, up until, actually, quite recently.

It’s a tremendous disruption, probably the biggest we’ve see in business software in the last 30 years, and it’s very exciting to be here, because we're just at the very tip of the iceberg for this whole revolution.

Gardner: Alex, disruption can be a negative, but disruption could also be something that creates opportunity. How are you seeing the current market as an opportunity rather than destruction?

Atzberger: All customers are realizing that digitization, the confluence of the different trends that were spoken about, present absolute opportunities to change the business model of companies. And that if they don’t do it, they will die.

Atzberger

If you look at the Fortune 500, versus what it was 20 years ago, you see such an enormous change. It doesn’t matter which of the industries you're in -- retail, financial services, consumer products. You need to adopt a strategy of thinking about how can you use digital technologies for your benefit, because if you don’t, you will fall behind.

But the other fundamental thing that has changed, and it’s actually an opportunity for companies, is that the user has moved to the center of the conversation. So the aspects of the consumer technology that we are bringing into the business context have fundamentally changed people’s requirements on technology.

But it's also people’s adoption rates of technology. The reason why companies like SAP Ariba or Tradeshift are growing and seeing a lot of demand for our solutions is because we see that companies are embracing the change. They know embracing is the only way forward.

Gardner: And of course, we've seen the disruption on the business-to-consumer (B2C) side of things with eBay years ago, Uber now, and Airbnb changing industries rapidly. How does this affect the business-to-business (B2B) interactions of commerce? Is it the same, or do we just extend what we've seen in B2C, to B2B? Why would B2B commerce be different or more challenging?

Lanng: It’s absolutely impacting. I'll start with a point that Alex made that the consumer, the user, has moved to the center of the conversation. It’s about usability, ease of use. If you take something like Tradeshift, we focused very early on making everything mobile first because we realized that the future of B2B processes were all mobile.

If you take a country like China, there’s 97 percent smartphone penetration and 60 percent PC penetration. If you want to run your supply chain there, you want to be mobile-enabled, you want to be mobile-centric, and you want to create whole new user experiences. The other area where the consumerization of B2B is happening and increasing is what I call apps.

Easy to add apps

In the past, big enterprise systems used the concept of modules. You could load new functionality, but it was very hard to do. It required your IT department. It was very complex and challenging. Today (and Salesforce was really the pioneer), we have platforms like Tradeshift that make it very easy to add a new app to get a new set of functionality going really, really quickly. And it’s easy for the customers to change very quickly and adapt to the business environment.

Lanng

The last area of active consumerization hitting the enterprise is on insights. When I use Twitter or Airbnb, I get real-time feedback. If I send a tweet, I will immediately know the reach, how many users saw the tweet. I can go in and see that limits of the tweet, and I can make a decision, as a consumer, based on that feedback loop.

In the enterprise, in the past, a lot of the business intelligence and analytics we built, were more like centralized reports going to the top and not benefiting the people who were sitting in the front line doing the work of the business.

Where we're going today is rebuilding using network data, using the real-time data, and going to a real-time level with these people. That’s the last huge disruption you'll see in the enterprise: real-time insights, the use of the apps as a driver and a method for delivering new folks. Now, you'll see another whole new paradigm for user experience and user friendliness.

Gardner: And, Alex, for companies that have a hard time adapting rapidly -- that are still using legacy software, that prefer on-premises deployments, that are just now moving past paper-based processes -- how do we encourage them to recognize the change and adapt?

Atzberger: One expression I tend to use with companies is to say that solutions need to be consumer-simple, as well as strong. What I mean by that is that when you're in the B2B space, you need to obviously recognize that the requirements for security, the requirements for integration, the requirements between data and other pieces have a different level of complexity than when you use eBay or Twitter.

The role of technology companies today is to remove friction as much as possible for companies so that they can enjoy the same benefits as a user in the consumer would. At the same time, providers have to obviously ensure that there is a business strength to the solutions that gives companies the comfort to move to a cloud environment.

The role of technology companies today is to remove friction as much as possible for companies so that they can enjoy the same benefits as a user in the consumer would.

So if you're a financial services institution and you've worked on on-premise software all the time, you obviously had full control of making changes to the software. You knew the way it was running, etc. As you're moving this to the cloud, you're gaining the benefits of fast innovation, but you can’t give up on the necessity for security, for instance, and for sound information.

That’s often where we see customers choosing companies like SAP to go with because of the experience we have managing data, ensuring the integrity of the information, and ensuring that security. But a lot of conversations that we have with companies are about how you, on one hand, deliver that wonderful consumer simplicity, but at the same time deliver on the business strength.

This is especially relevant in procurement, because you can make it so easy, through an app, to order products. But if you're in procurement, you don’t want your employees to just buy things randomly -- just because it’s now easy to do it. You want to have the controls and compliance in place to manage your spend, have visibility on the spend, and manage your company.

That’s where the crux of the matter is, and if we solve this, I think customers are ready to move to the cloud.

The right balance

Gardner: Christian, it sounds as if Alex is calling for a balance between the governance and benefits of traditional software and business applications, while also exploiting the newer agility from mobile, from feedback loops, from the consumer-centricity. It’s almost as if we have two companies within one now. How are you seeing that balance and how do you help companies achieve the right balance?

Lanng: It’s quite natural, and Alex and I also can probably recognize that we come from both sides of the equation here. Alex is trying to transform what traditionally has been an on-premise company and going toward the cloud. I come from a cloud-first company, and I'm trying to break into some of these complex use cases. Alex is spot on; security is still a massive issue especially with the data we deal with here.

So, it's about finding that balance. It’s also why we can’t use the consumer apps, since consumer apps need to have security models, and we need to have a lot of things. But this stuff is also getting very robust. You saw some recent breaches last year. There was the Sony story with all of the emails that were leaked. That was an on-premise system that was penetrated. I'm quite sure if that has been a cloud-based provider like Google or Microsoft, that penetration would have never happened.

We have to question ourselves that, in a trade environment like today, can each individual enterprise actually uphold the security that’s required? Are we seeing that cloud companies like mine or Alex’s, in a way, become specialists in securing all domains and securing the data within that domain?

Alex is trying to transform what traditionally has been an on-premise company and going towards the cloud. I come from a cloud-first company and I'm trying to break into some of these complex use cases.

Also, when we talk about this balance, when we talk about compliance for instance, there are two paradigms. You can have control and compliance upfront, but obviously you limit adoption and thereby limit impact on the business-case side.

Another thing, as Alex says, is that we can’t just have people going in and randomly buying everything. Can we guide them better? Can we give them real-time data to show them the consequences of what they could do instead, rather than put up a wall as the first step? That’s where there’s a lot of innovation happening right now, and a lot of thinking.

Gardner: Let’s revisit this notion of business networks. It seems to me also that, as we move toward cloud models, as we look to systems of record as services, the data becomes more transferable, shareable, and manageable, not siloed or isolated.

It seems to me that the more data and access to process information you have, the more of an advantage we have by being able to actually analyze these things in context and in total, rather than isolated as in the past.

So, how do we as suppliers to enterprises help them recognize the benefit of combined network efficiencies -- of looking to a provider to actually help them integrate and understand all of the data that’s at their disposal? Let’s start with Alex. How do we help make business networks palatable to organizations and trust the vendor to do more when it comes to bringing these sources of information together?

Exciting topics

Atzberger: This is an exciting topic, because if you look at it, obviously networks have a network effect. This means that, as more people are connected to a network, the more valuable the network overall becomes to its participants That’s something that we see very much in the Ariba business model.

Today, we have 2 million companies connected to the Ariba Network. When I go into certain markets, and we talk to certain customers about their supplier base, it makes a difference when 50 percent, 70 percent, 80 percent of those suppliers are already connected to the platform.

If you step back and think about point-to-point connections like EDI that existed in the past to create connections between companies, now you suddenly have a network where you have the baseline to add additional services to a network to actually enrich the experience for everyone who actually participates in the network.

At the same time, the data needs to be secure and companies need to feel they actually do business with other trusted entities.

It’s very, very important to understand that from our perspective. When we talk about procurement, I also look at the supplier as a customer. So there’s value on both sides. When we talk, for instance, about mobile apps, the mobile apps don’t just exist on the buyer side; they also exist on the supplier side -- and that’s a very, very important part of this.

As you bring in new services, payments, supply chain information, and forecast information into the network, these are some of the most rapidly adopted solutions that we see, because people already have the network in place and can now do more with it. It’s very similar to social networks that started pretty much with the status update, and today, you can share more and more of your lives and do more and more things on a network. That’s the power of it.

At the same time, the data needs to be secure and companies need to feel they actually do business with other trusted entities. This brings in the whole topic of supplier risk, of having transparency, into who the suppliers actually are that you do business with, but also identifying new sources of supply. That becomes very powerful, and then underneath, everything is the actual data that sits there. Opening up that information in the platform for companies to analyze and benchmark themselves is extremely powerful.

I often talk about the application, the network, and then the data-play as the three dimensions that company should be thinking about as they embrace business networks strategy.

Gardner: A whole greater than the sum of the parts. How do you see organizations take advantage of it?

Multi-Enterprise Grid

Lanng: First off, this is one of the areas where Alex and I wholeheartedly agree. When Gartner came out with the new hot topic for Procure-to-Payment, one area that they pointed out was a whole new category called Multi-Enterprise Grid, and that’s of course, a mouthful to swallow, but what they really said was that the future for enterprise connectivity is something brand new.

It’s not the business networks in the sense that we know them today, it’s not the EDI networks, but it’s something where information can flow in all directions. It’s a full stack of information, not just transactional data, but also, as Alex talked about, real-time insights, analytics data, logistics data, collaboration, and so on.

There were only two providers mentioned in that category, which is rated by Gartner to be one of the most impactful over the next five to 10 years. And the two providers were Tradeshift and SAP Ariba. As a company a third of the age of Ariba, we were proud to be in that category. But I think it shows the focus that both of these companies have in this area.

The long tail of the supply chain will become increasingly important for networks as we move forward.

One thing we did well, and I also think it points to the future of this, is that we started out as a supplier network. Before we built any buyer functionality, we actually designed a completely functional supplier network, and we helped suppliers join for free, get access, and run all of these services. Then, we slowly built out our enterprise portfolio. And that meant that from the beginning, Tradeshift has always been network-first.

Every single feature we built on the enterprise, every single aspect of our platform, we designed with this idea of how we would utilize the network, how we would bring collaboration into it, how our partners and app partners would use these things. To the point of the openness, Tradeshift was born with a completely open set of APIs so that anybody can develop on the platform and put out applications.

The long tail of the supply chain will become increasingly important for networks as we move forward, because as we're moving into much more complex transactions and move into much more complex data, we will need to connect every single supplier. If you take something like risk – as one of the examples that Alex mentioned – you are as exposed to the tiny, tiny supplier as you are to the big North American supplier you’ve been doing business with for 10 years, maybe even more.

If you ask me what the future of networks, I think it will be three things. It will be connect everyone, rather than to connect the top 10 percent. It will be a Multi-Enterprise Grid, which means it’s moving in all directions and data are connected in all directions both from the supplier side and from the buyer side. Finally, it will be open, but to echo Alex, open but secure. People will be able to build and innovate on top of these platforms, but within a secured framework and secured context.

Gardner: Alex, SAP has been around for quite some time, and conventional wisdom nowadays is that if you're a legacy provider you're somehow at a disadvantage in the cloud environment. Yet SAP recently reported very strong growth, and I think this validates a somewhat different approach or a different perception of a legacy vendor. Tell us why you think SAP is growing while other vendors are struggling?

Technology cycles

Atzberger: Dana, if you look at it as a company that has been in business for 42 years, we know one or two things about going through different technology cycles. Each technology cycle requires you to transform your company. What SAP did right in this transformation is that it acquired businesses to move the business forward, and a significant investment in outside R and D basically by bringing in capabilities into SAP.

But then, when the companies got acquired, each company is actually managed as an entrepreneurial entity inside the business. For me, that’s a very important. I belong to a family where my father had his own business. I believe that it’s really important that companies focus on innovation and actually have a capability to have an entrepreneurial mindset, and a commerce mindset inside a business.

I respect companies like Tradeshift and other companies that are emerging very much because of that commerce mindset of those businesses. The power is the scale at which you can impact change at a company like SAP, and that’s where actually so much of the transformational capabilities are coming from.

With 250,000 customers on the SAP side touching 70 percent of the world’s transactions, imagine what type of base this gives to Ariba, which today now facilities $1 trillion worth of commerce, to expand and build on it, and all the technical capabilities that come with it.

As a company that has been in business for 42 years, we know one or two things about going through different technology cycles. Each technology cycle requires you to transform your company.

I always like to say that I want SAP Ariba to be the fastest growing startup inside a large company. And how do we do this? It’s by both focusing on that innovative mindset of a startup company and combining it with all the assets that come from a larger company. That’s a very valuable proposition both for the customer as well as for having passionate employees to actually deliver the best results.

Gardner: Christian, there’s also conventional wisdom that says if you're an agile newcomer that you can run circles around the incumbent companies. How does that work for you, and how do you see that playing out?

Lanng: I want to start by saying that we're the challenger to SAP Ariba in this market. It obviously has its advantages. But I also want to say that Ariba is obviously one of the competitors that we respect the most. Alex has been doing an excellent job also of really integrating a company like Ariba, which is 20 years old.

You have to remember, moving from a whole new stack and a whole new sort of solution also has its advantages. Sure, we're a challenger, but we're not that new anymore. We actually have 500,000 companies on our network. We have total global coverage. We have some of the largest companies in the world also on our customer list, but obviously not as big as SAP.

But it’s true that we can probably move a little faster and innovate a little faster, and maybe also sometimes tease Alex and friends on social media a little faster. But I think we’ve done it with a lot of respect, and I definitely see that’s the place for us as a competitor and challenger in this market. It’s a very healthy competition, because we're both striving to really do better for our customers.

Attracting innovators

One thing as a challenger is that we've also been attracting a lot of innovators within this industry. Other players have focused much more on companies where Ariba was today and not really innovating. I think that’s the wrong way to think about what you want to do.

We always came with being-first principles. We wanted to build something different. We've done that within procurement. We've done that within our risk offering, within our network. It’s very, very different. Also, there is a choice in the market and that’s actually really healthy. We're also tracking customers that like that innovation, and are thinking of new ways for supply chains.

At the end of the day, my biggest integration partner is still SAP. I don’t know if you want to talk about friendly competition here, but it’s certainly a market that has multiple angles.

Atzberger: If I can make one more comment on that, it’s also important to understand that often times for customers, it’s important to see that a trend, a movement gets validated by multiple companies. When the cloud came about some of the innovators, Salesforce for instance, had become absolutely mainstream. All companies have different sorts of cloud offerings, and that's good to hear.

It’s also important to understand that often times for customers, it’s important to see that a trend, a movement gets validated by multiple companies.

That’s actually important because companies know that when they invest in something, it’s actually a concept. That’s why you're talking to two innovators in this space and that gives more companies confidence to invest in something new and to say, "We want to go on this journey. I think this is good that you're taking this topic on this call today, because I do think it’s a massive trend of going forward."

Gardner: I am a big fan of showing and not just telling and doing that through a use-case or a customer example. So, Christian, I wonder if you could relate to us, maybe by name or maybe just by generic description, a customer scenario that demonstrates Tradeshift’s approach and value?

Lanng: I absolutely can, and I'll take a very recent example. We just announced, about a month ago, a big international customer, Zurich Insurance Group. It's a huge global company, very conservative industry. It's been around for 150 years and, of course, has very sensitive customer data. They were having a lot of struggles with this whole process, and they got the people inside the company engaged around actually driving impact and value in these processes.

We showed them at the time our brand new procurement platform called Tradeshift Buy combined with the Tradeshift network. There were three things that stood out for them. The first thing we addressed were rogue buyers; people who are going outside procurement rules, and we said, “Hey, these are actually people who are passionate about their company, who are trying to drive value and even willing to take enough risk that they are not always following the rules. Let’s try to give them some tools so they at least participate, and we can get the spend under control.”

The second thing we did was we showed collaboration aspects with the supply chain and showed how, in real time, you can collaborate with your suppliers around categories and also the procurement department, because in a lot of companies procurement departments get a little alienated; they become the enemy. If I'm trying to do something, they're the bottleneck. One person said, "We are the Department of Cheap."

Strategic part

I don’t think that’s the case. They are actually a strategic part of driving value in your business. So we really try to build a procurement platform where suppliers become equal citizens and became helpers, so that if you are trying to buy something to try to solve the problem, you can engage with them in the solution phase, not just when it’s the last step and you got us in the purchase order (PO).

The last step was the ability to roll out locally for their supply chain. They are a huge global company and needed confidence they could get the onboarding rates. They looked at a lot of solutions and what it comes to down to today is that there is only reach through two network solutions in the world. Those are Ariba and Tradeshift. The rest don't have all of these platform capabilities and this broad scope.

Gardner: Alex, the same question to you. Do you have a use case example, by name or generically, that illustrates the power of the composition of SAP Ariba? 

Atzberger: Absolutely. I'll give you couple of different examples. If you take a company like AIG, the insurance company, I urge you to look at the YouTube video talking about how they saved about $300 million through the Ariba platform. That was driven through -- taking all categories of spend actually on to the Ariba platform including, by the way, legal services, which is something where a lot of companies say, you can’t actually bring this into an e-sourcing environment. So that’s an exciting case.

In the last quarter alone, we enabled another 80,000-plus suppliers on the network. That’s where a lot of the power of the community and the network comes from.

Another one, for instance is, Auchan the French Company that actually went to suppliers and said, if there's no Ariba, there's no business. Basically, you need to be on Ariba in order to do business with them. It's a strong business-driven case of what actually it means if you have a strong procurement department to lead the change and do this not just in France, but across Russia, China, and markets where they operate.

Take companies like BHP Billiton in Australia and Singapore. They drive more than 90 percent of their spend over the SAP Ariba platform and connect their suppliers to it. It's one of the best-in-class examples of a sourcing and procurement organization. Also, they're going into China to identify new sources of supply and that’s something where we're working with them and really extending their reach, which is becoming so important to global sourcing strategies.

Then, I'd point out new customers that we're excited to have as part of the SAP Ariba community, like First Data. First Data has the largest IPO last year in the US. It’s a payment company, but really a technology company as well. If I look at what they want to do with the platform and also what we are doing in partnership with them around B2B payments, it's a very exciting uses case as well.

When you look at the some of the names I just gave you, at the size of those companies and the suppliers, we're talking about tens of thousands of suppliers that those companies have. In the last quarter alone, we enabled another 80,000-plus suppliers on the network. That’s where a lot of the power of the community and the network comes from.

Lanng: I just wanted to add one thing to what Alex said, because I think what he's also showing with his cases is the breadth of industries and global reach of this customer base and who can use networks. We see exactly the same within airlines, such as Air France, and companies in retail, fashion, manufacturing. I don’t think there is a single industry we don’t have on the platform, also new companies like LinkedIn within services and so on.

I just want to echo what Alex said. It's a really broad set of industries and customers who are trying to use live business networks. I don’t think there's anyone who won’t use this or, in the future, won’t have this. It will be a default, as having an ERP system as today.

Data feedback

Gardner: I think we've only begun to explore the depths of the data feedback and analysis capabilities within digital commerce, and within retail, for example, of the user experience and real-time interactions and customization impacts.

So before we close out, let's think about companies that might be resisting this notion of taking advantage of the network, and of starting to do the groundwork in order to be able to realize those feedback loops and analysis benefits.

Starting with you, Christian, what would you say to a company that is still somehow not interested in taking advantage of business networks, and what potentially could they miss out on if they don't start doing the groundwork now in order to be able to be a digital business with deep data-driven analysis capabilities becoming pervasive?

Lanng: We have to go all the way back to the beginning of this discussion, which is what also Alex pointed out, that companies that don’t change and innovate will be gone. We've seen more companies disappear out of the Fortune 500 in the last 20 years than we have in the history of business, and it’s accelerating.

If your supply chain is in such a way that you cannot react to that kind of disruption quickly, and if you can't acquire new suppliers that can help you find all of these threats, you are done.

There are three key things you miss out on if you don’t invest in networks. First is the ability to know and know fast. Today, knowing is way more important than just the cost of things or the cost of transactions. We see huge Fortune 500 companies shocking us with reporting their most basic numbers to their shareholders. You see the shareholders being more and more aggressive on having insights on how these companies are run.

The second thing is agility. Agility is probably the single most important strategic capability in 2016 and onward. And I think if you look at companies we are taking about they have new competitors coming up. You can take a company like P&G who recently got disrupted by the Dollar Shave Club, a company that spent less than a million dollars on marketing to take a shot at $13 billion market.

If your supply chain is in such a way that you cannot react to that kind of disruption quickly, and if you can't acquire new suppliers that can help you find all of these threats, you are done. Lastly is, if you don’t have a connected supply chain, you miss out on the advantage of getting new processes rolled out.

Social networks typically have a status feed. In our case, once you're connected on Tradeshift, once you have a supplier up and running, if you want to roll out any new business process, any kind of new connectivity, it is as easy as pushing a new app. Whereas somebody who doesn't have this technology and is rolling out a new business process, we're talking about a three- to five-year lifespan to get to the old supply chain. So agility, speed, and just not being disrupted are the three key reasons I will point to.

Gardner: Alex, Christian paints the picture of business networks as existential. You really don’t have a choice, but a lot of companies are still struggling with how to go about this. Is there an order to it? How should I begin rationally without getting caught up in complexity and losing control of my company? What advice, Alex, would you give companies on how to start the process of becoming a digital business, and to retain governance, but still get the agility benefits?

Back to basics

Atzberger: If your company is conservative or wondering about how best to take advantage of this, you know, you would have to go back to some of the basics. Of course there has to be a business case. Start with a business case around the benefits and the cost. What does the infrastructure currently cost you, the paper based processes cost you, to do business with your suppliers? What are the benefits that you would have, as Christian pointed out, if you could actually extend more and more capabilities over the network, and that itself is very good.

Then the second piece is to engage some things like Design Thinking, about envisioning what the future could be like. Bring together different people out of your companies cross-functionally to think about how you could envision doing more with the assets you have in actually creating new capabilities.

And that’s where things get really exciting, when you think about maybe we shouldn’t be thinking about the network just as something where we have a buying from, but maybe it is something that we become a supplier into. We have many customers, by the way, who do both, who are both buyers and suppliers on the network, and they are valuing that as well.

Anything that you digitize doesn’t mean that your business becomes somehow less involved, somehow detached from your suppliers. It’s actually the opposite.

Finally, it’s about understanding. Anything that you digitize doesn’t mean that your business becomes somehow less involved, somehow detached from your suppliers. It’s actually the opposite. You become more relevant. You, as a buyer, become a customer of choice to your supplier.

That’s very powerful, because at the end of the day, you can argue that, as a consumer, you start to prefer those companies that have a digital relationship with you. That’s what networks have built and allow you to do -- build a digital relationship between your suppliers and the buyers.

As far as conservative companies, I'm happy to talk to them, Dana. If you have any names, send them my way. We love to engage and we love to have that conversation, but it comes back to the fact that there is a real value in this, and it gives all the things that Christian talks about with the agility and other benefits as well. It both makes sense strategically, as well as from the business case, and if those things come together, companies have a great future.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy. Sponsor: SAP Ariba.

You may also be interested in:

• SAP Ariba Chief Strategy Officer on the Digitization of Business and the Future of Technology
• Procurement in 2016 -- The Supply Chain Goes Global
• Is 2016 the Year that Accounts Payable Becomes Strategic?
• Winning the B2B Commerce Game: What Sales Organizations Should Do Differently
• Can Great Design Really Impact Global Commerce?
• Ariba’s digital handshake helps Caesars up the ante on supply chain diversity
• Detecting and Eradicating Slavery and Other Labor Risks Across Global Supply Chains through Business Networks
• Ariba elevates business user experience with improved mobile apps and interfaces
• Ariba's product roadmap for 2015 leads to improved business cloud services
• Networks: The new model for B2B business, a panel discussion
• Big Data Meets the Supply Chain -- SAP's Supplier InfoNet and Ariba Network Enable Companies to Predict and Manage Supplier Risk

Extreme Apps approach to analysis makes on-site retail experience king again

The next BriefingsDirect big-data use case discussion explores how technology providers have teamed as an ecosystem to deliver new dynamic and rapid analysis capabilities to the retail industry.

We’ll explore how the Extreme Apps for Retail initiative places new knowledge in the hands of on-site sellers -- to the customized benefit of shoppers at the very point of sales and in real time.

By leveraging power of SAP HANA big-data software infrastructure, Hewlett Packard Enterprise (HPE) hardware, and Capgemini targeted analysis and intelligence, these Extreme Apps are designed to make the physical retail experience king by leveraging the best of online assets – all brought to enhance the user experience at the mobile edge.

Listen to the podcast. Find it on iTunes. Get the mobile app. Read a full transcript or download a copy.

To learn more about how individual buyer information and group buying behavior inferences combine to customize the buying experience anywhere and anytime, please welcome Frank Wammes, Chief Technology Officer, for Capgemini Continental Europe. The discussion is moderated by me, Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: We’ve had so much change over the past five years in retail. It’s a vertical industry that’s under lots of pressure with a need for innovation. What, in your mind, are the top trends driving this desire to use big data to better enhance users’ ability -- at the retail site -- to get customized buyer experiences and customized deals based on their individual needs and wants?

Wammes: Retail indeed is one of the industries which is most impacted by the outflow of financial crisis in 2007-2008, where a lot of companies struggled. They ask: “Okay, how are we going to revive our business?” It's been an industry where you could see the winners and the losers very clearly. But there are a few things that everybody in the retail industry is now thinking about and need to answer.

Wammes

First of all, the big opportunity that retailers have is leveraging the whole big-data movement. There is so much data that retailers have about their customers and the consumers, structured and unstructured data, that they can benefit from. The only question is how they'll do that and they're going to make sure that all the data that they processed comes to action in order to create better experiences in the store or on the website.

The second big trend is how to gain the loyalty of your buyers? We see that it’s very easy for consumers to switch between different brands, between different retailers, between different stores, and loyalty is something that came in the past but it’s something that will not come automatically now or in the future.

But if you give a client a real custom experience, and they know that every time they come to you they'll get the same experience and they’ll get the benefits because of their loyalty, they'll adapt their needs in real time and will keep their loyalty towards your brand. So the second question is how do you increase their loyalty.

And third, it’s really the combination of the online and physical retail experience, the only general experience that people have. How do you make sure that during the buying journey of a customer, they continuously have the same experience?

Wowing the buyer

We always joke that if you go to a retail outlet in your specific country, how many retailers, when you have bought something online and you want to cancel it and you want to buy something in the store, can you go to that store, cancel that order, and make sure that you can take a physical good out of the store? In 95 percent of the cases, that will not be the case. It’s very easy to surprise your customer if you can do it. So how can you wow your buyer and give them the real experience?

Those are the three big things: leveraging all the data to increase the loyalty in both online and offline worlds.

Learn More
On Extreme Applications for Retail
Built on SAP HANA

Gardner: It’s interesting that we're using big-data and intelligence to, in effect, combine what happens online with what happens in real-time and real space. Until fairly recently, people expected their online shopping experience to be the one where analysis was being derived from their actions, from their history, their clickstream, and so forth.

It's fascinating that we're able to now bring analysis to the physical site, and it seems that shopping is one of those things where so much more can be done when you're actually in touch with the goods, to be able to feel them, see them, try them on.

Why have we had a problem getting to this point where we can combine the best of online analysis capabilities and data gathering with the physical world? What have been some of the problems that needed to be solved in order to get to this point?

From an online perspective, we've been able to give you much more personalized offers or a better experience towards your needs using the intelligence and the big data.

Wammes: Once you went online, people could capture where you came in from through your IP address. So if you consistently came through that IP address you didn’t even have to have a loyalty card. We knew that you were a returning client.

We probably knew that you bought something. That was the reason why, from an online perspective, we've been able to give you much more personalized offers or a better experience towards your needs using the intelligence and the big data.

The issue was that in the physical store, once you entered, we didn't know who you were. Probably at the counter, at the moment that you already made your purchase, you drew your loyalty card. That was the moment that we could do something for you, but that was already at the end of the purchase.

A lot of the technology has changed. One of the things is that you can have your sales agents in the stores, or your sales representatives in the stores, and have them use tablets.

So once people are shopping in the physical store, I can create a contact moment and I can probably ask them for their loyalty card or if they've bought something, yes or no.

Beacon technology

Even more important, one of the other things that you can do now is with beacon technology. Once you come in with your phone and you already have a connection to the company because you're in some kind of a loyalty program, you already downloaded an app from that specific store, at the moment that you enter, we know that you entered.

We can upload a picture on the sales rep's mobile device, so that he can proactively approach you and say, "It’s so good that you came back again. How was the coat that you bought last time?"

The moments that we can have in these interactions with our customers within the retail store gives us the possibility to the leverage from the insights and the big-data capabilities. That's something that we didn’t have in the past.

That is the thing that helps. Now, we have the capabilities and the technologies to crunch all that data in real time. It's good that I can recognize my customer, but more importantly, I now have the technology to instantly, in real time, crunch all the data so I can give him this personal experience.

Gardner: I can see why you are calling it “Extreme Apps.” It really is powerful and interesting that you can do all this now –- to have someone greet me and recognize my last purchase and follow up on that. Clearly, with my opt-in at a store,  I'm giving them information, but I'm getting a lot back in return. It really is groundbreaking.

This is something that we're also actively looking into, making sure that the retention of the consumer will be increased.

Is this something that we're seeing only in retail or are there other vertical industries, not to go too far a field from our discussion, but is this something that’s applicable beyond retail and is that something you’ve considered?

Wammes: There is a little bit of retail in a lot of different industries. We initially focused on hardcore retail. The reason we did it is because we looked the industries where so much transactional data is coming in that we can crunch the data and use the power of in-memory analytics. That was the starting point.

Then you can look at utilities, because with the utilities there are so many streams of information and so many transactions that you can crunch the data and get a personal experience, particularly now with the deregulation of the utility industries. This is something that we're also actively looking into, making sure that the retention of the consumer will be increased.

The banking industry, the insurance industry, all have this kind of retail perspective. On the other hand, we're also are in talks with some oil companies that have their retail outlets, sometimes directly or sometimes indirectly.

We had some discussions with a very large beverage producer. We said they could perhaps offer analytics as a service towards retailers, so that the retailer themselves don’t have to buy the analytical capabilities. The companies could offer this as a service so that they have more influence and insight on what’s happening with their product. Perhaps they could put that into the hands of an independent party so that the retailer doesn’t see all this insight.

We see the retailer as the starting point because of this experience, the customer experience, that you directly can enhance. But there is a lot of retail kind of experience in the banking and insurance industries. So the opportunities are more diverse, and it all leads to how can I optimize the personal experience the individual buyer has with our company.

New combinations

Gardner: It’s fascinating. We're really combining the physical world, the mobile tier data, across existing industries in really new ways.

Let’s explore how that “Extreme” experience benefit on the front-end is made possible by some extreme technology on the back-end, so to speak. We have several different players involved here: SAP, HPE, and Capgemini. Explain to me how these partners in this ecosystem have come together, and what each contributes to the ability to deliver these capabilities.

Explore How
HPE and Capgemini Collaborate
On Business Solutions

Wammes: Definitely, because it is extreme, but it also required some extreme engineering of new technologies in order to create it.

What we have done is a combination of some very strong partners of ours, where we try to leverage the new technology. First of all, it started with SAP HANA. It was also the question that SAP posed to us. We have HANA as the in-memory engine, but we have it just as an engine. Can you, with your creativity and your industry knowledge, create some solutions on top of it? That’s where this whole Extreme Apps started.

SAP comes in with their traditional Business Suite, but the Extreme Apps are explicitly built into the SAP HANA platform.

SAP delivers the HANA technology, and what we also offer, but this is optional. We also say that if you don’t have a proper back end to provide you all this data and to capture all the data and all the transactional data, Capgemini has built a retail template on top of the SAP Business Suite. So we have a preconfigured retail solution for those companies that don’t have a proper or a state-of-the-art enterprise-resource planning (ERP) system yet Capgemini’s One-Path solution.

First of all, SAP comes in with their traditional Business Suite, but the Extreme Apps are explicitly built into the SAP HANA platform. HPE delivers the hardware and the services, the hybrid cloud expertise. Together with SAP and HPE we look at the architecture, because you always want to have all your data in memory mode. We also took in technologies like Hadoop to make a distinction between the hot data and the cold data that we work on in our analytics space.

What Capgemini added on top of it basically was the algorithm. We leveraged on the algorithms that we had to put into this Extreme environment. It runs now on the Capgemini data centers, on the HPE systems , but we can leverage this in multiple ways.

You can host it in the Capgemini data center, you can have it installed on-premise, we can have it in the cloud, and we can also deliver it as the normal traditional license and transaction price. But we also engineered it together with SAP and HPE so that you can also have it in a price-per-month scenario.

Gardner: So in addition to this flexible-deployment capability -- where you can bring these Extreme Apps anywhere, anytime, anyplace -- you also have a set of APIs available so that this can be customized and adapted to a mobile, web, point of sale, and so forth client. Tell me about the role of the API and the ability to customize apps and delivery.

Two big scenarios

Wammes: If you look at the Extreme Apps that we have right now, we have two big scenarios. We've already built other analytics around it, but there are two big scenarios. One is the Market Basket Analysis and the other is the Next Best Action.

The Market Basket Analysis is the tool for the merchandise agents. They want to know whether if they make a promotion, does it really add to the margin of the company, or if they look at a certain promotion, why is it performing better in location A compared to location B?

You want to leverage a lot of the analytics and the visuals that are already on the web, but that’s through your normal web browser. It’s the professional user using it. We deliver the standard analytics and the standard visuals. There isn't a lot of tailoring around it.

The Next Best Action is a completely different ballgame, Dana. You want to provide the capability to offer something while the user is making his purchasing decision, and that can be through all different kind of things. It can be when a client is shopping on your web site and then you want to have this engine immediately promoting something that is relevant for the user.

It could also be that he walks by your company, and this is an example that we had with a lingerie store. They said when they have the telephone number of a client and they know through our beacon technology she is walking somewhere around our store, we give her a promotion. So we give her a 10 percent discount if she comes into the store and buys within an hour.

We already said it’s good that you give the 10 percent promotion, but wouldn’t it be much better if you give a very explicit promotion based on her buying pattern and based on the buying patterns of others who bought similar kind of products? Then, the promotion really becomes valuable. You want to have the promotion on your mobile. For your sales reps, you want to have it in a specific function, which gives them the opportunity to have a good conversation with the client while they are in the store.

We have developed some standard screens already, whether it's for mobile, tablet, the web. More importantly, all these companies already have their mobile apps, or already have a sales representative outlet. We need to create an API so they can embrace it and incorporate it within their own existing environment, so that they really can start quickly and don’t have to do a complete rebuild of their environment.

This is the way the API works. Through the API they can get the promotion data and can incorporate it in their existing applications.

Gardner: Frank, where are we on the roll-out or milestones for this Extreme Apps for Retail initiative? Tell us a little bit about that: when it started, where we are now, and when we should expect to see more of these apps in actual use.

Adding value

Wammes: It began about two years ago when we had the discussion with SAP, where they first started to build applications on top of HANA. How can you add value from an industry perspective towards this technology platform? That’s where we started. We built it.

We also crafted it together with a clothing retailer. It was not just created within the buildings of Capgemini and with the help of HPE and SAP with no client. We built it together with a client. We immediately knew the issues that they had, and not only leveraging our own industry expertise. So that was basically the first client.

And then we went into a do-it-yourself retail chain, where we implemented it. We saw that when the users, and particularly the professional users of the application, saw what the potential is, what you can do with real-time, in-memory capabilities, immediately additional questions emerged.

We started with these two applications, but then the question was, "If you have my point- of-sale-data, can I also create a report so that I can show my CFO what the daily sales are, but in a very advanced graphical way?" By the way, we leverage all the standard visualizations that you get with HTML5. So you can set up many libraries.

If a client installs one of the main scenarios, we already provide them with the reports that we have and that we build from the other clients.

So quickly, we had four or five additional reports that were built, because we already worked on the past data. This is where we are right now. We have the two main scenarios. If a client installs one of the main scenarios, we already provide them with the reports that we have and that we build from the other clients.

We have some additional algorithms and test environments where we continuously are in discussions with our clients. Which algorithm is most valuable to your business? We said, "If you're an SAP dominant client, and you're already leveraging the power of the Extreme Apps, we'll make sure that we extend the scenarios that we have with that algorithm that you have."

We can anticipate that, in the coming year, we'll build more based on the proof of concepts (POCs) that we will do with our clients, where first we'll test the algorithm and then we'll build it into the HANA platform, thereby enhancing the portfolio of the different Extreme Apps scenarios.

Gardner: Given that these services, these apps, are available and are proven in the field, if an interested organization wanted to start leveraging these capabilities, how long does it typically take, and what's involved in getting this actually in implementation?

Wammes: That’s the cool thing. There are a lot of aspects, which you also already have recognized, that required Extreme Apps for Retail. Perhaps the most Extreme is the implementation time.

We leveraged the environment that we have within the organization, the combined Capgemini-HPE environment. If you deliver your data in the data structure that we ask, then we can store your data into Extreme Apps, and within two weeks, you can start experimenting to see whether the technology works for your company.

Improving promotions

Give us your data, and we'll load it into the Extreme Apps environment. For your Market Basket Analysis, you can already do the first analysis, where you can see where you can improve your promotions, whether you are making the wrong decisions and putting items in promotions which negatively affect each other.

We can already provide you environment where you can do your proof of value to showcase that, within a very short time, you can have a return on investment (ROI).

Because we have this API, we can also immediately integrate it within your existing environment, whether it’s your app, your web browser, or your Internet page. You can already start experimenting by giving a little bit more advanced, more analytical capabilities.

So it’s not only that you recommend this product because other people who bought product A also bought product B. Rather, because you bought these series of products, I compared it to people who also bought these series of products, but they then bought product B. So the advancement of the analytics is much bigger than the traditional, "If you buy A, then buy B, because others also bought B."

This is something that we can have installed very quickly, and once you want to go in production, it depends on whether you want to go on-premise, or whether you want to go hybrid. In the meantime, you can leverage the environment that both HPE and Capgemini set up in our own data centers.

It has also been a journey for us learning that it is not only the capability of doing the analytics, but it has changed the way that you can do your business models.

Gardner: So you can integrate to a retail organization’s website capability, their online marketing or marketplace and selling, and any buying capability -- and also reach out to their point-of-sale retail outlets in as little as two weeks?

Wammes: Exactly. I think the combination is now the cool thing that we see, and that’s also Dana, some things that we learned. We started off with the traditional model and we built the scenario. If we went to a client, they needed to buy the HANA license, they needed to buy the hardware, and they needed to buy a scenario from us. Then, we built it in a offering where you do it on a monthly basis. What we're now seeing is that together with other solutions, we can have it integrated in some engine.

So for instance, Capgemini has another piece of intellectual property (IP), which is called RM3. RM3 is a middleware solution where you can optimize your promotion, so you can mix and match the promotions to tailor it as much as possible to the individual need.

But now, we can put the Extreme Apps in it and make the promotion more advanced. We're in talks now with some other clients who have their own engines, where they give promotion capabilities through mobile apps, but they don't have a powerful analytics module behind it to make it personal. Now, they can have this Extreme Apps as the engine.

It has also been a journey for us learning that it is not only the capability of doing the analytics, but it has changed the way that you can do your business models. This applies both to the retailer, as well to the conglomerate that we are working with.

Better analysis

Gardner: Of course we know from the benefits of data and analysis that the more data and the longer period of time, the better the analysis. So, you're able to give your individual retailers more insight into individual behavior. They're able to see their own processes, promotions, and enticements work better, but stepping back, you're also, at the Capgemini level, getting a lot of insight into an even larger set of data across multiple retailers, multiple types of shopping environments, and multiple types of buyers.

Does that mean that you're going to get better algorithms and better insights from this larger historical set of data that can then be applied back into this set of Extreme Apps?

Wammes: That is a very good suggestion for an additional business model, Dana, to be quite honest.

Now, we separate the different environments. So, at this time, it’s the environment that we set up and the algorithm work for the specific individual client.

What we now do, which goes a little bit to your point, is that we learn from how the different clients that use our Extreme Apps leverage the Extreme Apps to optimize their promotions and their interactions with the client. That’s the first step.

At this time, we're not at the point that we say we can leverage the knowledge that we take from the multiple client sets. However, what you refer to is something that we've thought of already, but it comes back to the example that I gave on the beverage producer.

That’s where the learning on the multiple clients and multiple different retail stores will kick in.

If you, as a consumer goods company, can provide an engine to a retailer or to a multiple set of retailers, where you say, "We can help you in optimizing your promotions so that, in the end, you will sell more, and if you sell more, we will also sell more."

That’s where the learning on the multiple clients and multiple different retail stores will kick in. We've thought of that concept, but not so much offered the users of our Extreme Apps solutions. It's more in the context of whether consumer product companies can offer this as some kind of analytical capability towards different retailers?

Gardner: Perhaps, Frank, in a year or two we will have another conversation where we will talk about how synergistic shopping works. When you buy one type of product, it might mean you will be buying another soon, and some coordination and intelligence can be brought to that.

Wammes: Yeah, definitely.

Gardner: In the meantime, do you have any examples of either named or unnamed organizations that have put the Extreme Apps for Retail to use? What business benefits they get from it? Any measurements of success, such as, we were able to increase share of wallet, we were able to increase larger sets of purchases by certain buyers? Anything along the lines of proof points for how well this works?

Business cases

Wammes: Yeah. Well, I can mention some industries. We can't disclose specific types of retailers. When we looked at the business case that we got for the do-it-yourself company, their main business case was on the Next Best Action.

They saw the potential to do an increase of about 25 percent, because they could better target the promotions that they gave. It was also because we started to introduce the Next Best Action on the apps and on the website, which is a very growing business of course in that specific industry. So making sure that the up-sell and the cross-sell emerged was really the business case on the do-it-yourself side.

With the food retailer, it’s much more about the merchandized planning. What we saw particularly was the promotion. That was a business case where it was something about four percentage points of improvement that could be achieved easily. So there wasn't much action.

They saw the potential to do an increase of about 25 percent, because they could better target the promotions that they gave.

The benefit really was that, through the analysis, we could see which products had affinity with each other, but also what the potential financial benefit between those two products were if you would not put them into promotions again, or if you put them explicitly into promotions?

As an example, and I think it’s the most easiest example, but everybody understands it, if you sell crisps in your promotion, don't put your beer into the promotion, because there is such a high correlation between people who buy beer and will automatically buy crisps as well. So don't do that.

Through these kinds of correlations and affinities, we could have a four percentage point improvement on the revenue, making sure that people would not do the promotions again.

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We were able to reach a couple of percentage points because we could sell products which were very slow selling and where you could have issues on your expiry date. We could identify what kind of products they would sell. So if I have this low turnover of goods, but I put a promotion on high turnover of goods, with a high probability that the low turnover of goods would sell as well, then I would get rid of the inventory.

We also saw that the three percentage point potential was really about don’t put something on promotion where a product with a high affinity is out of stock.

These are the real examples that we have in the different industries.

Gardner: Now, these are benefits that are clearly significant to the seller. We're talking about retail, where it’s very competitive, and there are large revenue numbers involved. So a couple of percent is a lot.

But what about the buyer? Have you done any surveys or questionnaires, found out why the buyers are benefiting from this, and what it makes in terms of loyalty develop with them?

Personalized experience

Wammes: The research was really on the business case and the elements that I gave to you. So, I can’t give you the exact numbers on the loyalty.

However, in our interaction with our clients was that they said that it's the opportunity to give this personalized experience in a relatively inexpensive way. We always use some clients as the real best practice on how can you integrate your online and offline shopping experience.

So for instance, for us, Burberry is one of the stars in having a very integrated omni channel experience. What we see beside the business case effects that we just discussed is that they said the fact that they can really have a personalized conversation when somebody enters the store, with data already up front, gives high value. However, we didn't measure it.

I have a very good case in The Netherlands. There was a very large retailer that went bankrupt on December 31. They had 10,000 employees, and on the verge of the new year they got to hear that they are unemployed. They were one of the oldest big retailers in The Netherlands, big department store.

I've visited that department store a lot. The issue always was that when I came to the floor, there were no people that came to help me. They didn't come to advise me. They didn’t come to assist me. When I finally grabbed a product to buy, I had to stand in a big line, because there were only a few cash registers on this very big floor.

Technology is not threatening that. If you apply it in the right way, you strengthen it.

It’s a very bold statement, but I think their future would have been much brighter if somebody would have approached me and already knew that I bought something because they have a loyalty card and they knew what I bought in the past. They knew what my interests were. And they could have greeted me and said, "Mr. Wammes, it's so good that you're here again. Can I show you around because I noticed that you marked it as interest on our online store and let me show you?"

I could buy it from that person as well, because they have this integrated credit card mechanism attached to their tablet. That would really be a complete transformation of doing business in that department store. If so, 10,000 employees wouldn't have had that bad message at the end of the year.

Gardner: You're basically saying that the personal touch in the retail environment is empowered now and can come back. We've all noticed in the past years, even decades, that the amount of personalization, personal touch, and human interaction in sales has gone down; it's very much self-service. If it remains self-service, what's the difference between online and bricks and mortar? Not very much. So you really with this capability, this Extreme set of Apps bringing the relevant nature of person-to-person sales and service interactions back into vogue -- and making it very economically powerful.

Wammes: Exactly. You've hit the nail, as we say in The Netherlands. One of my colleague said it's all about relevant personal experience, and it should be relevant personal experience. Technology is not threatening that. If you apply it in the right way, you strengthen it. And I think that's really where we can have a great omni-channel, relevant personal experience delivered towards the consumer.

Gardner: We're just about out of time. I just want now for a brief moment look to the future. Now that we've taken this significant step into Extreme Apps for Retail, what comes next? What might we consider the next chapters in being able to leverage these capabilities around real-time, vast data being brought to bear, fast APIs for implementation and delivery of the visualization and other data, and then this newfound empowerment of that salesperson, that personal advisory service, at the retail outlet? What might we expect in the next months and years?

More artificial intelligence

Wammes: Well, let me start far in the future and then bring it back a little bit. If I go far to the future, bringing in even more artificial intelligence (AI) will not only even enhance the creation of strong algorithms that increase this relevant personal experience, but also AI, in contrast, will give robotics a chance to interact with us.

There are already some examples, for instance, robots driving around in airports to help people along the journey. But the sales agent will be supported by AI to give more relevant personal experience towards our client. AI is definitely something that will kick in in the coming years.

The roll-out of beacon technology, so that we really can recognize the individual consumer, is something that will be more broadly explored in the coming years in the industry.

The most powerful part of the solution is that we put a toolset into the hands of people who, in the past, were always limited by the IT department.

We've seen a lot of companies talk about big data, but a lot of retailers are still struggling a little bit with how to really apply it? What we've seen is with the clients who implemented the Extreme Apps for Retail is that because people were exposed to the enormous power of what in-memory, big data solutions can bring, all of a sudden the imagination is awakened.

In some of the examples that I gave earlier people said, "If you have this data anyway, can you then give us some very nice visual analytics to use that?" The most powerful part of the solution is that we put a toolset into the hands of people who, in the past, were always limited by the IT department, because it was difficult to build, it costs lot of money, and was very difficult to maintain.

With the new technologies, it's very easy to create stuff that is very visual and powerful. Therefore, the imagination becomes the limit of what we can do. That's perhaps the most surprising part, and that’s the thing I can't answer, because I don't know yet what kind of things people will come up with. But we're entering an area where imagination becomes a driving force of the things that we can do.

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Gardner: For those who are reading or listening to our conversation today, if they want more information about how to learn about this to start the journey towards understanding how it might benefit their organization, where would you point them?

Wammes: First of all, they always can contact me at frank.wammes@capgemini.com or go to my Twitter account, @fwammes. If you go to the Capgemini site, there's a section called Ready2Series, and Ready2Series is the solutions where Capgemini owns their own IP. Under the Ready2Series, you'll find more information about the Extreme Apps, and you can learn more from the solutions that we have there (https://www.capgemini.com/sap/sap-hana/extreme-applications-for-retail.

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