Digitising IT - reaching real-time
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The document discusses the crucial role of real-time business in digital transformation, emphasizing that customer expectations for immediate access to information are reshaping competitive dynamics across industries. A survey revealed that while 20% of executives recognize enabling real-time business as vital, only 10% of IT departments currently take a leadership role in this area, leaving significant unmet demand for proactive IT involvement. Companies like Brooks Brothers exemplify the need for real-time data to compete with market disruptors like Amazon, highlighting a shift towards continuous feedback and predictive analytics to improve customer experience.
Digitising IT - reaching real-time
- 1. 1 © The Economist Intelligence Unit Limited 2016 There is pent-up demand for real-time business at many organisations, and yet only one in ten IT departments is taking the lead When customers order a product online, they expect to know immediately when it will arrive. When executives ask for the latest sales figures, they mean the very latest. The digital revolution has led customers and employees alike to expect instant access to up-to-the-second data. The pace of business is now real-time. Failing to keep up with this pace carries a number of penalties in the digital economy. For one thing, online shoppers are fickle: if a company cannot offer the information or product they need instantly, their attention will inevitably wander. Similarly, the ability to process information in real time helps companies present an engaging digital customer experience that reacts to a customer’s online behaviour as it happens. No company wishing to compete in the digital economy can neglect its online customer experience: a 2015 survey by analyst company Gartner found that 89% of executives believed that the customer experience would be the primary basis for competition by 2016. In addition, monitoring business operations in real time allows companies to detect (or even predict) problems—such as an adverse market reaction to a new marketing campaign or a factory malfunction—sufficiently quickly so that they can fix them before the damage is done. Companies without this ability could gradually find themselves outpaced by their competitors. An article from the Economist Intelligence Unit
- 2. 2 © The Economist Intelligence Unit Limited 2016 Real-time business is seen as an important pillar of digital transformation. In a global survey of 812 executives, conducted by The Economist Intelligence Unit (EIU) and sponsored by SAP, one-fifth (20%) of respondents see “enabling real-time business” as one of the most important capabilities contributing to the success of their digital transformation initiatives. It is most likely to be seen as a key success factor among respondents from consumer products companies (26%) and utility providers (24%). This may reflect both industries’ heavy use of industrial machinery, whose performance can be greatly improved with real-time monitoring and analysis. While some facets of digital transformation are as much about culture and mindset as they are about technology, enabling real-time business is reliant on having the right systems and processes in place. However, relatively few IT departments are taking the initiative to lead real-time business transformation within their organisations, the survey reveals. Only 10% of respondents say their IT function has a leadership role in enabling real-time business. The IT departments of financial services companies are the most proactive in this regard, with 18% of respondents crediting their IT department with a leadership role, perhaps reflecting the finance sector’s strong appetite for high-frequency transactions. By contrast, just 3% of respondents from the public sector say the same. Many more would like to see IT take the lead: 30% of IT executives and 27% of executives from other functions say that, in an ideal world, the IT department would take a leadership role in enabling real-time business. Evidently, there is unmet demand for IT departments to drive real-time business within their organisations. Reaching real-time What role does your IT deparment currently play in enabling real-time business? And what role would it ideally play? (% of respondents) Would ideally play a leadership roleCurrently plays leadership role Energy & natural resources High tech/ technology/ software HealthcarePublic sector/ government Consumer products RetailFinancial services 18% 31% 9% 30% 11% 25% 3% 32% 7% 23% 12% 28% 11% 29% Source: The Economist Intelligence Unit.
- 3. 3 © The Economist Intelligence Unit Limited 2016 Continuous feedback One company where IT is taking the lead is US fashion chain Brooks Brothers. The retail sector has been particularly exposed to digital disruption by the likes of e-commerce giant Amazon, whose supply-chain management control is so efficient as to enable one-hour deliveries in certain geographies. For traditional retailers, this poses a major competitive challenge and helps to explain why over one-third of respondents (34%) in the sector believe that enabling real-time business should be the IT department’s highest priority. “Traditionally, retailers haven’t had a real-time view of inventory. It’s typically been an overnight batch process,” says Sahal Laher, CIO at Brooks Brothers. “But in that situation, while you might have a pretty accurate view of inventory at 8 am, by 4 pm that’s no longer the case. “That doesn’t work for today’s omnichannel retailer: if you don’t have an item in stock and a way to deliver it to the customer exactly when they want it, they’ll walk away. That’s the world we live in. Companies like Amazon have set the tone. They’re not an omnichannel retailer in the same way as we are, but their reach and influence on customer expectations is fascinating.” In order to compete, companies such as Brooks Brothers need to live up to the level of customer expectations set by the market disruptors. That’s where deployment of real-time analytics helps. “Free shipping and next-day shipping, and even same-day shipping, are very customer-friendly things, but they’re very hard to pull off without real- time information,” says Mr Laher. “You have to have that real-time view of everything and always be using the very latest view of data, because it feeds back into every critical process: merchandise planning, allocation, replenishment.” Mr Laher explains that having access to real-time data allows an organisation to constantly evolve its practices in response to fluctuations in demand. “It’s not just about making one sale better; you have to create a continuous feedback loop, so that when you look at a single customer interaction, you take learnings away and continue to get smarter about how you work in general.” Retailers are now looking towards predictive analytics—which relies heavily on real- time data—to optimise their offering. US company Bed, Bath & Beyond, for example, has recently established a new analytics department that brings together data from disparate internal systems. “In the future we will grow and extend the team’s reach within the organisation to provide valuable insights based on analysis and information from both external and internal systems,” says CEO Steven Temares. “For example, further utilisation of predictive modelling tools will enable us to achieve improved optimisation to markdowns, pricing and direct mail campaigns.” Reaching real-time
- 4. 4 © The Economist Intelligence Unit Limited 2016 Implementing real-time systems and managing the organisational change that arises as a result are capabilities that the IT department is best placed to provide. And as the survey reveals, a number of organisations see real-time business as an important enabler for digital transformation. In those companies, the IT department should be leading the real-time charge. Reaching real-time About this article: Digitising IT is a research programme by The Economist Intelligence Unit, sponsored by SAP. This article draws on a multinational survey of 812 senior executives, conducted in March 2016. Just under half of the respondents (49%) are senior IT executives, while the remainder represent a range of other functions. Respondents are drawn from a range of industries and from countries in Europe, Asia, North America and Latin America.