IT is now strongly challenged by the transformations that drive IT to a historical change of directions and focus areas. This means significant adjustments for IT in the areas of business‐focus, application‐portfolio, job‐models, project‐ and delivery processes and IT organization. This is RETAIL 4.0
25.2 The IT Challenge
The evolution of retail business over the last two years forces IT divisions to rethink their mission and strategy to achieve a digital retail readiness. Why – because retailers can follow the developments in the business described above only if they have a powerful IT platform in place, which is able to deliver the right solutions for these business requirements.
The main challenge for IT divisions is to establish a digital strategy, a digital organization and a digital architecture. A historic opportunity for IT divisions in this scenario is to take over the leadership in digital retail innovation.
25.3 The Digital Division‐How to
The entire development in the retail business, moving into a digital real‐time retail era and the fact that digital is a domain of IT divisions, shifts IT from a supporting to a strategic business entity.
For a successful journey to the digital division it’s essential to focus on the entire future digital ecosystem and develop along the following streams: 1.Explain the Digital Impact and Opportunities
2.Transform the IT Organization Digital Ready
3.Develop a Digital Innovation Network
4.Establish the Digital Platform
5.Take over the Digital Strategy
6.Become the Digital Division
25.3.1 Explain the Digital Impact and Opportunities
To achieve understanding of how digital will influence the retail business IT must be the incubator for translating digital into the language of retailers and show, how and why technology is the key success factor in the near future.
Examples from other business areas like automotive could help to understand the effect of creating customer value by using technology and real‐time customer focused business models.
Already existing digital solutions as benchmarks and best practice must be shown to support common understanding of what digital means on business level.
A specific digital readiness assessment is an effective exercise to show areas of strengths and weaknesses and provides a starting point for strategic development. From experience the outcome motivates the business to change mindset and strategic priorities.
IT divisions and CIO proactively must start initiatives in PRESENTING, STRATEGIZING, MEDIATING and DIRECTING.
To support a rethinking of traditional retail business a model must be introduced, where the traditional, more inside oriented retail processes are detached from the future, outside oriented. The future strategic business areas in retail are potentially Digital Customer Experience and New Analytical Processes by Business Intelligence.
Strategic areas for digital business development are shown in Fig. 25.1.
Fig. 25.1Development Areas
25.3.2 Transform the IT Organization Digital Ready
Until now, IT organizations followed more or less the PLAN – BUILD – RUN model, which is the baseline for structure, processes, strategy and the mindset. For future challenges of IT, this model has to be extended and adjusted to the new strategic requirements, priorities and opportunities.
To enable the IT division to drive digital inside the enterprise, a culture of entrepreneurship, digital leadership and digital commitment has to be driven by the IT management. Focal area is the people area where new job opportunities and personal requirements for the digital environment must be shown and offered.
The organizational structure has to be extended by a strong architecture entity and a strategic innovation team. Both new parts of the IT organization have to be connected very close to the CIO to guarantee a strong strategic focus and make them able to overcome traditional conditions.
The traditional RUN and BUILD areas have to be split each into a ERP and a DIGITAL part to enforce digital ecosystems. Essential for a winning development is, to discover and utilize the right people for the new assignments.
The model DO – ENABLE – THINK, as shown in Fig. 25.2, offers the right setting to combine the traditional (ERP) and the new digital IT workforce and enable IT to drive and support the entire business.
Fig. 25.2DO‐ENABLE‐THINK Model
In the THINK area, the future of the business is the focal perspective. Plan and establish the right IT architecture is essential to support innovative projects. Having the right architecture in place when needed is a prerequisite for short‐time‐to‐market projects.
The digital innovation team is widely self‐contained and must be driven in a disruptive mindset and working methodology.
25.3.3 Develop a Digital Innovation Network
To drive the digital evolution inside the enterprise, IT can act as an incubator to motivate and enable business to understand and execute digital opportunities.
Precisely because IT divisions are familiar with development, project execution and experimental environment, IT can offer methodologies and experience to the business to support, drive and lead digital innovation initiatives. An innovation team out of selected open‐minded people with the right spirit and ability to execute like a start‐up is the key success factor for this approach.
Sustainable senior management support, to connect this storming team with enterprise strategy and resources enables the team to influence the business by showing realistic and disruptive opportunities.
Beyond internal engagements, an open collaboration with business partners, who are supporting common innovation projects, will open completely new opportunities by connecting knowledge and ideas from different business levels. A perfect teamwork between retailers and technology driven companies can lead to outstanding business solutions, which are only achievable out of this framework.
25.3.4 Establish the Digital Platform
After the digital tsunami has reached retailer’s business, priorities are step by step changing and activities are started in the new strategic areas DIGITAL CUSTOMER EXPERIENCE and NEW ANALYTICAL PROCESSES BY BUSINESS INTELLIGENCE. However, existing platforms representing the traditional ERP architecture cannot fulfill the business expectations.
The challenge in this area is to setup a future‐proof architecture for new solutions, integrate the legacy environment and establish a strategy to plan and execute. Due to the fact that the number of Applications (APPS) is growing fast and wild, the new architecture must deliver a centralized, high‐flexible, digital backbone of business‐functionality which acts as service‐provider for all the business APPS. This digital backbone is connected to the legacy application environment and this is the one and only way, how digital APPS can access the ERP environment.
25.3.5 Take over the Digital Strategy
From experience, companies do not focus on the digital wave. They are either driven by external influencers or they react on digital conditions step by step as they appear. The IT division is in most cases effected first by digital requirements. Out of this situation, IT is the more probable candidate to initiate the strategic preparation of the digital era on enterprise level. After showing what digital means, a proper and high‐level picture must be provided together with a raw strategic orientation of activities to move from theory into practice.
IT has to act very proactive in this role and should offer methodology and structure to create a digital enterprise roadmap. In this scenario, a holistic picture considering also the legacy stuff is important to guarantee the right strategic balance.
25.3.6 Become the Digital Division
Summarizing all the activities, IT is able to execute a movement from the business supporting into a strategic enterprise entity. Main objectives of this new r
ole is to be the first reference for digital affairs inside the enterprise as well as for external partners.
This means a significant change for IT divisions because beyond digital competences and strategies, IT has to improve the way to communicate and behavior that is more focused on business strategy and digital innovation driver.
From a retailer’s perspective, IT has to join the strategic circle of sales and marketing.
25.4 Unleashed Real Time Retail
After the IT organization and the IT platforms are digital ready it’s time to deploy business functionality and show the retail business how the future will work.
Reflecting the digital platform, a highly flexible, time‐to‐market focused infrastructure has to be in place. This means technology like in‐memory databases, cloud solutions and new dimension of customer relationship management (CRM) environments.
Fig. 25.3 shows the combinations that will be described in the next paragraphs.
Fig. 25.3Real Time Customer Experience Platform
25.4.1 The Basic Steps
In our specific case, we extended our long‐term architecture approach. In a first step, we set up an in‐memory infrastructure of a strategic software partner to have this in‐memory technology in place. Furthermore, be ready to use business solutions for real time retail, which are consequently only available on this future oriented technology.
Next step is to implement a customer‐experience‐engine for a 360° customer experience service to fulfill a complete customer journey online, store and mobile. The platform is highly connected to all business and customer relevant systems and is acting as business‐intelligence and customer‐experience‐provider.
Beyond the functional improvements, this architecture will possibly solve historical lacks and issues in the existing architecture because it’s an opportunity to hide historical complexity for new requirements and systems and act as an accelerator to simplify technology and provide speed and flexibility.
A powerful platform allows storing all relevant data along the customer journey and a real‐time communication with the customer whenever he touches our retail business.
25.4.2 Digital Customer Experience Solutions
Cool technology is of course the enabler for digital customer experience, furthermore impressing digital touch points are ultimate success‐factors to generate competitive advantages and benefits. These digital touch points must support and inspire the customers and push them, to appreciate our services and our offerings. For all solutions in this area it’s a must to think and design from the customer’s perspective and celebrate a strict outside‐in‐approach.
A very tight collaboration between sales, marketing and IT in a corresponding environment with innovative processes and methodologies is the baseline and a winning approach.
The following solutions should show prototypes for innovative retailers to support them to understand the capabilities they could have in hand with a digital ready IT division and real‐time technology.
The examples are partly well known out of the online business but here the focus is the physical store. It should demonstrate that also in physical environment digital steps are an opportunity, possible and realistic.
25.4.3 Solution #1 – the Extended Brain
The extended brain is a customer experience solution where in the moment, when the customer is touching a shopping‐touch‐point, a custom‐made real‐time shopping list is provided.
The content of this shopping list is assembled out of the customer’s manual online shopping list, shopping‐proposals out of historical purchases and sequences matching the customer’s current needs. Moreover, just‐in‐time promotions are aligned to the shopping‐proposals and predicted customer desires.
Technology: Via mobile app, beacon technology and the customer‐experience‐engine, the customer is identified when he enters a store. In real‐time, historical purchases are analyzed to discover patterns in products and sequences and predict the articles the customer needs at the moment. After merging the manual and the predicted shopping list, a promotion engine aligns current offers and potential additional needs out of the information of the shopping list. In the last step, the availability of the proposed articles in the specific store is checked and in case of not‐in‐stock substitutes can be proposed. The maximum of value generation in shopping stimulation.
Assuming the proposal fits the customer’s expectations on high‐level, a customer experience like the support of a living, personal shopping assistant, who is reading the customer desires from his eyes, is in place.
25.4.4 Solution #2 – the Virtual Physical Store
Retailers and especially food retailers are facing two developments in the market. First, more and more different and specific products enter the market and the frequency of change is becoming faster than in in the past. Secondly, customers focus on specific brands, types and quality of food and health conditions are influencing the customer’s shopping expectations.
These developments are stressing retailers and customers. Retailers are investing much to find the right presentation and the best location for the specific article out of several factors of influence. The customer on the other side is suffering to find his preferred type of articles in the store out of thousands. Here, a digital, mobile solution could simplify our life.
In a mobile App, customers can create their specific world of articles using various selection options – for example vegan, sugar free or specific brands – and get a mobile shopping layout out of articles in the selection area which are right‐now available. They get a virtual store layout where they could check their current location in the store and see “their” articles only. Additionally, the customer gets support via a mobile in‐store navigation to make him very easy to find his preferred products.
Technology: Again, the customer‐experience‐engine delivers the customers product‐world. It assembles out of the real‐time stock‐information and the store/product shows the virtual assortment and virtual store layout.
25.5 Summary
In RETAIL 4.0 IT is facing the main challenge to establish a digital strategy, a digital organization and a digital architecture. This chapter showed a roadmap with six steps on how to develop an IT digital division to ensure real‐time data availability and a unique digital customer experience.
In order to pro‐actively support customer decisions and to identify customer needs before they even have identified it by themselves, it is highly recommended to connect the customer “live” to business processes. Moreover, depending on the business strategy of a retailer, and again especially in the food sector, a personal communication with the customer could be a key‐success‐factor to create an exciting shopping experience.
Having a look on the possibilities in Solution #1 and #2, retailers can apply this digital knowledge for direct and personal communication. Customer related information can be provided real‐time when the customer enters the store on a mobile device of the shop‐assistant. The shop‐assistant then knows the specific expectations and regulations of the customer, the current shopping list and of course he gets relevant promotions based on real‐time customer data. A perfect setting to positively attract the customer and show a perfect, individual service.
When being digital ready in the described way, having technology, knowledge and first‐of‐all the right digital team in place, then the possibilities to improve retail have no limits.
With a mindset to follow digital opportunities and with the ability to understand the interaction of physical and online business, retailers could be able to deploy an inspiring customer experience and improve business results.
© Springer-Verlag GmbH Germany 2018
Claudia Linnhoff-Popien, Ralf Schneider and Michael Zaddach (eds.)Digital Marketplaces Unleashedhttps://doi.org
/10.1007/978-3-662-49275-8_26
26. Privacy Preserving Personalization in Complex Ecosystems
Anders Andersen1 and Randi Karlsen1
(1)UiT The Arctic University of Norway, Tromsø, Norway
Anders Andersen (Corresponding author)
Email: [email protected]
Randi Karlsen
Email: [email protected]
26.1 Introduction
A typical user access and consumes products and services from a wide range of providers through many different channels. In a given example, music is streamed from a streaming service through a mobile network using a smart phone application distributed through the App Store of the smart phone platform. The discovery of the played music might be based on music reviews, news articles, friend’s recommendation, search services, different forms of (internet) radio and TV, and automatic recommender systems. Even in this simple example it is difficult to get a complete overview of all the potential participants (companies, people, software) involved. Many of these participants might collect and provide data relevant for the user. Such data are both valuable and sensitive. From the provider’s perspective such data can be used to create a product or a service that better targets the users. From the user’s perspective such data can be used to improve the quality of received product or service. This is personalization.
Digital Marketplaces Unleashed Page 35