Grow Omni-Channel Profitability And Innovate In Retail
Innovation in retail is at an all-time high, as witnessed by over $17 B spent in ecommerce M&A over the past 12 months. Retail industry has transitioned to a phase that can be defined as the retail singularity, in which retailers are facing completely new market dynamics, constantly rising consumer expectations and disruptive competition. Just think about the opportunities that IoT commerce will bring to the market, threatening, at the same time, traditional direct revenue streams.
Or think to when consumption will fundamentally change from ownership to use and service, with the setup of new cross-brand offering ecosystems and totally new KPIs to consider. And think about pure online players acquiring brick and mortar retailers, counting on advanced AI solutions for customer experience personalization and leveraging a highly capillary distribution network.
To thrive in the singularity context, retailers should leverage innovation opportunities geared around three main attributes:
- Insights: into customers and products, to understand the context across complex and dynamic customer journeys and product lifecycles.
- The speed of change: in other words, the pace of implementing innovation at scale, is the second key strategy.
- And lastly agility: which means the ability to be flexible and efficient when responding to changing business requirements, customers’ expectations and competitive dynamics.
To plan and execute innovation on the base of these three attributes, retailers need to adopt a structured process: starting from defining what is the strategic mission for innovation, identifying the programs that will deliver the mission, and then the use cases that will enable the program’s objectives.
According to IDC Retail Insights’ recent “Innovation in Retail Survey, 2017”, only 7% of retailers have an innovation strategy in place. At the same time, 39% of retailers find a challenge in both identifying the right innovation model to leverage and building a retail omni-channel commerce platform.
IDC has developed a Retail Innovation framework that provides a guide to the planning of innovation programs based on three target innovation missions:
- Contextual innovation: aimed at driving incremental business benefits and contextual to the current business model of a retailer.
- Disruptive innovation: aimed at driving transformational opportunities and new business models.
- Ecosystem innovation: retail innovation in extended value chains means participating in new business ecosystems or creating new ones, leveraging industry collaborative clouds.
Once the innovation mission has been defined, the framework guides retailers through the path for discovering the available innovation sources, selecting the adequate innovations on which focusing the efforts, and then piloting, implementing and scaling successful innovations.
The pilot, implement and scale phases are fundamentally enabled by the retail omni-channel commerce platform, critical asset to grow omni-channel profitability in the short-term and achieve innovation missions in the long-term (IDC MarketScape: Worldwide Retail Omni-Channel Commerce Platform 2017 Vendor Assessment). The platform relies on four channel-agnostic core capabilities: customer experience, single commerce engine, order fulfilment, and content optimization. All of these elements result in connecting data, applications and external services through an open API layer.
We need to always consider that innovation is first a cultural fact. Innovation strategy must be shared across all the levels of the organization, interiorized and executed by every single person among operations, management and executives. If this is missing and the company only relies on technology, then it will be more complex than expected to drive a successful innovation process.
Given this scenario, IDC Retail Insights has decided to join numerous international retail executives in attending Shoptalk Europe 2017, to be held in Copenhagen from 9th to 11th October. In the last year, we have seen an interesting development on how Shoptalk Europe has built a European community centered on innovation in retail and ecommerce. We think that events like this favor constructive and inspiring conversations among retailers, brands, IT vendors, investors, media and industry analysts. The innovation theme is at the center of retailers’ agendas and, as a matter of fact, Shoptalk Europe is gathering a growing number of attendees – as is also happening for Shoptalk U.S. – interested in learning from and collaborating with the broader retail ecosystem.
IDC Retail Insights’ analyst Giulio Raffaele (Senior Research Analyst) will be glad to meet you in Copenhagen, to exchange experiences and visions about innovation in retail.
BT and Facebook Launch UK Centre for Start-Ups to Get Involved in Developing Telco Infrastructure
Last week BT and Facebook jointly hosted a launch event at BT Tower for the UK’s TIP Ecosystem Acceleration Centre (TEAC). TIP (the Telecom Infra Project), launched by Facebook at Mobile World Congress 2016, and with most of the world’s major telcos now included as members, is an initiative aimed at developing new, disaggregated approaches to building telecoms infrastructure. From Facebook’s perspective, the aim of TIP is to enable the currently unconnected part of the world’s population to access internet services, by making it cheaper and quicker to provide them with connectivity.
The TEACs are facilities set up by member telcos to host selected start-up companies doing innovative work that could further the aims of TIP, and to provide venture funding to help them develop their technology. BT’s TEAC is the first to launch; Korea’s SK Telecom and Germany’s Deutsche Telekom have announced that they also intend to establish TEACs.
The UK launch event took the form of a competition in which six start-ups pitched for the three places in the UK TEAC that were on offer, as well as access to a £135 million venture capital fund. The three companies that won give some flavour of the kind of innovation that the TEACs are aiming to foster. They were:
- KETS, which is developing technology for small, lightweight security appliances based on the principles of quantum computing
- Unmanned Life, developer of a system for managing the connectivity requirements of fast-moving, autonomous objects
- Zeetta Networks, which provides an operating system for provision of services with full control and QoS over heterogeneous networks, through on-demand network slicing
TIP is interesting for several reasons, one of which is that it marks a new phase in the evolution of relationships between telecoms network operators and Facebook. Initially, telcos came to view Facebook (along with other “OTTs” such as Google and Netflix) as a company exploiting their investments in network capacity to reach telcos’ customers over their heads, and to usurp their relationship with those customers. Telcos’ wariness increased as Facebook started to offer communications services, and as those services started to substitute for usage of telcos’ communications services. As the extent of Facebook’s popularity became clear, telcos have sought to move on from their wary attitude to Facebook, and instead to seek partnerships through arrangements such as zero-rating the data used by customers to access Facebook’s services. However, although such partnerships give telcos some scope for competitive differentiation, their main beneficiary is Facebook.
The relationship between BT and Facebook through TIP feels much more like a partnership of equals, with complementary interests and mutual benefits. The goal of providing connectivity infrastructure that can be deployed and operated more cheaply and flexibly than traditional networks is crucial to the strategies of both players. BT needs to maintain its margins, as connectivity revenue growth gets increasingly difficult, and it needs to provision connectivity to customers in remote locations for the lowest cost possible. For Facebook, business growth depends on growth in user numbers, and as growth in adoption slows down in developed markets, it will be increasingly important to Facebook that people who currently have poor or no internet access should gain good access, so that they can start using Facebook’s services.
Of course, TIP is far from being BT’s only forum for innovative research and development. We saw many examples of the advanced ideas being developed and trialled by BT and its partners at the Adastral Park research centre, when BT held its Innovation Day in June this year. These included some new ideas for provisioning access (and backhaul) in remote locations such as the “Air Mast”, a tethered balloon equipped with a small-cell base station. Facebook has a lot of cachet among software start-ups, though, and if the level of interest in places is any indication, its joint sponsorship of TIP and the UK’s TEAC is proving a powerful draw.
If you want to learn more about this topic, or have any question on European Mobility, please contact John Delaney.
Blockchain In Insurance Kicking Off A New Era Of Hassle Free Sales And Service
For an industry that is rooted on the principles of trust and utmost good faith, recent pilot projects involving blockchain can be looked at as great ways to improve customer confidence and loyalty. After all, offering a frictionless/hassle free service at the ‘moment of truth’ in insurance (i.e. claims) is the real test of an insurer’s promise of cover to their customers. It is obvious that any technology that can support this can’t be ignored for long.
In September, global insurance giant AXA launched fizzy, a 100% automated, 100% secure platform for parametric insurance (insurance that pays out in response to defined triggers) against delayed flights. When customers buy flight delay insurance on the fizzy platform, it records the purchase in a tamperproof network, the Ethereum blockchain. This smart contract is connected to global air traffic databases, so as soon as a delay of more than two hours is observed, the platform triggers direct automatic compensation to the policyholders.
Bajaj Allianz General Insurance in India has launched Travel Ezee recently, leveraging the blockchain technology to bring the customers and suppliers to the same platform thus expediting the claims settlement process. The solution initiates the claims process automatically and notifies customers about the payout eligibility.
Impact on Different Lines of Business
Blockchain being a distributed, decentralized, secure public registry can help address current challenges around speed of data exchange, security, underinsurance and lack of reliability about what is covered in the execution of large commercial contracts involving multiple stakeholders.
In June, American International Group (AIG) announced the issuance of a multinational smart contract-based insurance policy, a first of its kind to manage complex international coverage using digital ledger technology in partnership with Standard Chartered and IBM. The solution aims to present a shared real-time view and a single version of truth about coverage, premium payment and other aspects to all stakeholders involved. It also offers automated notifications to all network participants including third parties such as brokers and auditors at the onset of insured events.
In personal lines insurance, blockchain can enable a seamless customer onboarding and policy binding experience with solutions involving immutable data entry and digital cryptography. Blockchain in combination with mobility and Internet of Things (IoT) can help address delays in claims response through predefined triggers coded in smart contracts thus enhancing process efficiency and fraud management. Flight/Train delays, Crop/Agriculture, and Event Day cover are some areas that can benefit from this. Use of smart contracts can boost the peer to peer insurance models as it offers transparency in the actions of all participants involved.
The Challenges
Indeed, this is a largely unknown territory for insurers and comes with many issues. Blockchain solutions can help reduce human intervention in claims handling but lack of human intervention can sometimes be a drawback in resolving disputes around policy wording or claims settlement in large and complex insurance contracts. Regulatory frameworks and legal protocols are yet to be firmed up so are technical/business standards of operations (efforts of the B3i or Blockchain Insurance Industry Initiative may eventually address this at least partially). Another factor is the quality and reliability of data to trigger payouts – something many insurers would come across as a major hurdle due to their large, siloed legacy landscapes. Insurers would also need to invest in new infrastructure and computing power to make the most of this technology.
Future Outlook
Initial use cases and pilots based on them reveal that the technology could help insurers address the requirements of a highly demanding customer community and challenging market place. It can also empower insurers to uphold the digital trust and stewardship which is a critical priority of financial institutions across the globe in the wake of evolving risks like cyber threats. Innovative players who are testing the waters now are doing the right thing and others must follow suit before it is too late. Blockchain may not solve all the problems that the industry needs to address, but it does hold the potential to support its efforts to deliver frictionless sales and service to improve customer trust, loyalty and retention.
To get more insights about worldwide insurance strategies, please contact Sabitha Majukumar.
Big Data Analytics Is a Key Building Block in Value Based Healthcare
When speaking about new reimbursement models where quality is rewarded, it is essential to have the capability to monitor, measure and act upon clinical data. Most healthcare organisations monitor productivity data today, and to change that capability into a more complex situation can be a challenging task. Healthcare executives must initially decide the big questions:
What is quality? What is it to the patient, and what key performance indicators (KPIs) represent that quality? Essentially it is more of a clinical than a technical discussion. Once that is set, the hospital CIO must look at how to monitor progress and quality — preferably in real time.
Big Data analytics (BDA) capabilities are therefore a key component in a value based healthcare model. When we look at IDC survey data, the current adoption of BDA solutions is homogenous in Western Europe, with "reporting on quality of care" the number 1 implemented use case (IDC European Vertical Markets Survey).
The rich and broad healthcare datasets are now leveraged through BDA applications to improve efficiency in operations and to predict patients' progress. We are on our way, but Western Europe still lacks enterprisewide adoption of these analytical and clinical reimbursement models.
When BDA is used in a quality-driven healthcare organisation, the following indicators are primarily used:
- Mortality (in hospital and after hospitalisation)
- Availability (waiting times, etc.)
- Public health (e.g., proportion of physically active and proportion of children and adolescents, screened for obesity)
- Readmittance and reoperations
- Unnecessary hospitalisation and hospital activity (including the extent of emergency procedures)
- Process quality (e.g., time from meeting in emergency reception to initiated investigation)
- Infection rates (and other forms of patient safety)
- Professional/clinical standards (the ability to follow and comply with best practices and evidence)
- Death rates
For healthcare executives that want to move to a quality agenda, BDA is a prime technology to consider. Besides technical capabilities, data integration and aggregation, there are also some organisational and clinical implications that need to be addressed. If it were easy we would already have done it.
Advice for Healthcare Executives
- Build a cross-functional team with representatives from the clinical, financial, quality and IT organisation.
- Explore and decide what value is for your healthcare organisation — include patients and their perspectives.
- Develop quality-driven KPIs.
- Engage with IT and financial services at your healthcare organisation to develop and implement IT to start monitoring the quality KPIs.
For more information, contact Charlotte Poulsen, VP, IDC Nordic, at cpoulsen@idc.com