EDITOR’S QUESTION
Digital transformation will
disrupt customer engagements
Jenny Sussin at Gartner explains how traditional models of customer and
product engagements will be disrupted by digital transformation.
A
s the Internet of
Things and digital
transformation
progresses, what is your
reality check about the
risks and vulnerabilities
in this adoption phase?
Jenny Sussin, Research Vice President, Gartner.
E
very organisation strives to become
customer-centric, but how do you
keep your customers happy and
loyal, and how do you deal with their
problems quickly? We know that the
customer of the future will be different
than the customer we know today in many
ways – they will be keen to bargain with
their data; they may not even be people.
They might be software, and may also be
your competitors.
The accelerating pace of digital
business is leading to some levels of
transformation in organisations. Gartner
has identified two digital threats most
likely to cause the greatest disruption for
businesses over the next 15 years:
Changing nature of product and
service value creation
Customers will increasingly rely on
algorithms as the source of value-add to
customers for a product or service.
Consumption experience
Consumers will move away from sole
ownership of a product or service to the
increased use of shared access to consume
a product or service.
Today’s traditional businesses tend to
be situated near the intersection of these
two trends. They use some algorithms,
50
greater use of experts to create value, and
a mix of consumption experiences that are
both shared and owned.
As the access of products and services
become more open to enable greater
sharing, the ownership will become
ever more customised, and the use of
algorithms will explode, all happening
simultaneously. Businesses will choose
to pursue different customer-centric
scenarios. Two customer-centric scenarios
are shared below.
Platform business
Commerce is, and has always been,
about the consumer and the product, no
matter how many value-added layers of
intermediation are put between them.
Platformisation amplifies the focus on
the customer and the product to the degree
where the store, shipper or other value-
added intermediaries become ancillary,
and the only relationship is between the
consumer, the product and the platform.
Value-adds will no longer follow the
traditional models based around supply
chains and inventory accounting, but
instead will focus on the unique and
innovative bundling and personalisation of
offers or products.
Gartner estimates that only 10% of
today’s businesses operate within the
platform business model, but expects that
this will increase to 23% by 2030.
Take, for example, a grocery store.
Customers see a recipe they like, they cut
it out of a magazine, scan it on their device
or print it, then they make a list, go to one
or more stores, compare products, look for
bargains and coupons, and purchase what
they need to make dinner.
In a platform-centric world, customers
will still be buying based on a recipe, but
the act of buying groceries will change.
They will see a recipe they like online,
click, the I want to make this button, and
all the shopping will be done for them,
based on their preferences, from the
platform they trust.
Subscription business
IT and application leaders should
also realise that the ability to provide
shared access to increasing numbers of
underutilised products and services will
create new subscription-based business
opportunities. The switch constitutes a
massive change. In fact, the subscription
business scenario will impact the
whole business.
For example, financial systems will
need updating to bill differently; the
sales teams will need to be retrained
or new salespeople will need to be
recruited. In addition, the customer
service department will need altering,
and the recruitment and training of
employees will be run differently. Overall,
engineering might be the biggest area of
change for a company.
Before your business decides to
transition to a new model, challenge your
executives on what value the customer is
getting and what the consequences are
to move to a new model. Just because it
can be done and it will increase revenue
streams, does not mean that customers
want it or are willing to pay for it.
Issue 15
INTELLIGENT TECH CHANNELS