How to Rewire the Organization for the Internet of Things

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Success in the IoT requires new levels of speed, agility, and flexibility, not just from the systems delivering IoT services but also from the people charged with making those services happen.

Hyperconnectivity, the concept synonymous with the Internet of Things (IoT), is the emerging face of IT in which applications, machine-based sensors, and high-speed networks merge to create constantly updated streams of data. Hyperconnectivity can enable new business processes and services and help companies make better day-to-day decisions. In a recent survey by the Economist Intelligence Unit, 6 of 10 CIOs said that not being able to adapt for hyperconnectivity is a “grave risk” to
their business.

IoT_Isbel_QA02IoT technologies are beginning to drive new competitive advantage by helping consumers manage their lives (Amazon Echo), save money (Ôasys water usage monitoring), and secure their homes (August Smart Lock). The IoT also has the potential to save lives. In healthcare, this means streaming data from patient monitoring devices to keep caregivers informed of critical indicators or preventing equipment failures in the ER. In manufacturing, the IoT helps drive down the cost of production through real-time alerts on the shop floor that indicate machine issues and automatically correct problems. That means lower costs for consumers.

Several experts from the IT world share their ideas on the challenges and opportunities in this rapidly expanding sector.

qa_qWhere are the most exciting and viable opportunities right now for companies looking into IoT strategies to drive their business?

Mike Kavis: The best use case is optimizing manufacturing by knowing immediately what machines or parts need maintenance, which can improve quality and achieve faster time to market. Agriculture is all over this as well. Farms are looking at how they can collect information about the environment to optimize yield. Even insurance companies are getting more information about their customers and delivering custom solutions. Pricing is related to risk, and in the past that has been linked to demographics. If you are a teenager, you are automatically deemed a higher risk, but now providers can tap into usage data on how the vehicle is being driven and give you a lower rate if you present a lower risk. That can be a competitive advantage.

Dinesh Sharma: Let me give you an example from mining. If you have sensored power tools and you have a full real-time view of your assets, you can position them in the appropriate places. Wearable technology lets you know where the people who might need these tools are, which then enables more efficient use of your assets. The mine is more efficient, which means reduced costs, and that ultimately results in a margin advantage over your competition. Over time, the competitive advantage will build and there will be more money to invest in further digital transformation capabilities. Meanwhile, other mining companies that aren’t investing in these technologies fall further behind.

qa_qWith the IoT, how should CIOs and other executives think and act differently?

Martha Heller: The points of connection between IT and the business should be as strategic and consultative as possible. For example, the folks from IT who work directly with R&D, marketing, and data scientists should be unencumbered with issues such as network reliability, help desk issues, and application support. Their job is to be a business leader and to focus on innovative ideas, not to worry for an instant about “Oh your e-mail isn’t working?” There’s also obviously the need for speed and agility. We’ve got to find a way to transform a business idea into something that the businessperson can touch and feel as quickly as possible.

Greg Kahn: Companies are realizing that they need to partner with others to move the IoT promise forward. It’s not feasible that one company can create an entire ecosystem on their own. After all, a consumer might own a Dell laptop, a Samsung TV, an Apple watch, a Nest device, an August Smart Lock, and a Whirlpool refrigerator.

It is highly unrealistic to think that consumers will exchange all of their electronic equipment and appliances for new “connected devices.” They are more likely to accept bridge solutions (such as what Amazon is offering with its Dash Replenishment Service and Echo) that supplement existing products. CIOs and other C-suite executives will need to embrace partnerships boldly and spend considerable time strategizing with like-minded individuals at other companies. They should also consider setting up internal venture arms or accelerators as a way to develop new solutions to challenges that the IoT will bring.

qa_qWhat is the emerging technology strategy for effectively enabling the IoT?

Kavis: IT organizations are still torn between DIY cloud and public cloud, yet with the IoT and the petabytes of data being produced, it changes the thinking. Is it really economical to build this on your own when you can get the storage for pennies in the cloud? The IoT also requires a different architecture that is highly distributed, can process high volumes of data, and has high availability to manage real-time data streaming.

On-premise systems aren’t really made for these challenges, whereas the public cloud is built for autoscaling. The hardest part is connecting all the sensors and securing them. Cloud providers, however, are bringing to market IoT platforms that connect the sensors to the cloud infrastructure, so developers can start creating business logic and applications on top of the data. Vendors are taking care of the IT plumbing of getting data into the systems and handling all that complexity so the CIO doesn’t need to be the expert.

Kahn: All organizations, regardless of whether they outsource data storage and analysis or keep it in house, need to be ready for the influx of information that’s going to be generated by IoT devices. It is an order of magnitude greater than what we see today. Those that can quickly leverage that data to improve operational efficiency, and consumer engagement will win.

Sharma: The future is going to be characterized by machine interactions with core business systems instead of by human interactions. Having a platform that understands what’s going on inside a store – the traffic near certain products together with point-of-sale data – means we can observe when there’s been a lot of traffic but the product’s just not selling. Or if we can see that certain products are selling well, we can feed that data directly into our supply chain. So without any human interaction, when we start to see changes in buying behavior we can update our predictive models. And if we see traffic increasing in another part of the store in a similar pattern we can refine the algorithm. We can automatically increase supply of the product that’s in the other part of the store. The concept of a core system that runs your process and workflow for your business but is hyperconnected will be essential in the future.

qa_qPrivacy and security are a few of the top concerns with hyperconnectivity. Are there any useful approaches yet?

IoT_Isbel_QA03Kavis: We have a lot less control over what is coming into companies from all these devices, which is creating many more openings for hackers to get inside an organization. There will be specialized security platforms and services to address this, and hardware companies are putting security on sensors in the field. The IoT offers great opportunities for security experts wanting to specialize in this area.

Kahn: The privacy and security issues are not going to be solved anytime soon. Firms will have to learn how to continually develop new defense mechanisms to thwart cyber threats. We’ve seen that play out in the United States. In the past two years, data breaches have occurred at both brick-and-mortar and online retailers. The brick-and-mortar retail industry responded with a new encryption device: the chip card payment reader. I believe it will become a cost of business going forward to continually create new encryption capabilities. I have two immediate suggestions for companies: (1) develop multifactor authentication to limit the threat of cyber attacks, and (2) put protocols in place whereby you can shut down portions of systems quickly if breaches do occur, thereby protecting as much data as possible.

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A New Model for Corporate Learning

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A slow but steady revolution is occurring in the world of learning. If you have a child between the ages of 5 and 18 living at home, you’re probably seeing it unfold every day. Want to confirm you got your math problem correct? Just ask Siri. Need to understand how weather balloons work for a science project? Check out The Weather Channel Kids Web site. Forgot your homework assignment? Ask a friend to snap it and send it on Instagram.

SAP_Learning-Isbell_INQUIRY_image2400x1600_2The future of learning is here and it’s digital, social, continuous, and highly immersive. For companies, traditional training methods, such as classrooms, are still relevant, but they are no longer the prime delivery method for learning. They are slow to set up, are expensive, and consume too many productive hours. Many companies are beginning to view the classroom as a strategy for customized educational needs, such as corporate strategy or branding.

Static online-learning tools, such as asynchronous simulations and narrated slide decks, are not engaging enough to be effective as a replacement for live training, however. Meanwhile, many employees are unable to keep up with technological advances that affect their everyday work processes. Because knowledge becomes obsolete so quickly, people need continuous, always-on learning.

CGI, a global IT consulting company with 68,000 employees, was struggling with this very problem. Classroom training for consultants couldn’t keep up with the education required to service clients with sophisticated technology needs. CGI adopted a cloud-based learning platform to bridge the gap. The system, which can be personalized to the learner, includes video-based courses and online-learning rooms to foster social learning opportunities with other students and instructors. CGI is now training 50% more consultants, and learners are consuming 50% more training content than in the past.

The move to continuous, on-demand learning is also saving CGI money and enabling it to onboard new consultants faster. “It is a ‘moment of need’ reference tool that helps our employees in their day-to-day tasks,” says Bernd Knobel, a director at CGI.

Workforce and economic drivers for learning transformation

Learning needs are growing across all disciplines of content due to the speed of globalization, competition, and new disruptive business practices. During the fallout from the 2008 global recession, companies scaled back on organizational development, but that’s beginning to change as companies struggle to rebuild their businesses, says Josef Bastian, a senior learning performance consultant with Alteris Group.

The same forces that drove CGI to abandon the classroom are being felt across industries. The main drivers for change include:

1. Creating competitive advantage

SAP_Learning-Isbell_INQUIRY_image175px_1Uber, Netflix, Amazon, Airbnb, Bloom Energy, and health insurer Oscar are among the companies considered highly disruptive in their markets today. They achieved innovation and market share by looking ahead and taking advantage of new technologies faster than competitors or in novel ways. Digital learning enables companies to stay ahead of the curve. Companies need to understand the new technologies before they are even available, so that they can understand the impact on the business and even invent new business models.

2. Closing the skills gap

SAP_Learning-Isbell_INQUIRY_image175px_2We are now in an era that will rival the Industrial Age in terms of transformation. For example, a financial analyst today needs to know how to work with Big Data, including how to ask the right questions and how to use the related information systems. Jim Carroll, a speaker, consultant, and author on business transformation, uses the automotive industry as one rubric for change. “You’ve got folks who are struggling with all this new high-tech gear inside the car or the dashboard,” says Carroll. “And you look at a typical auto dealer or the person manufacturing a car, and the knowledge they need to do their job today is infinitely more complex than it was even 5 or 10 years ago.”

3. Retaining and motivating a new workforce

SAP_Learning-Isbell_INQUIRY_image175px_3By 2025, Millennials will make up 75% of the workforce, according to the Brookings Institution. Various studies have shown that Millennials crave learning and collaboration and will do whatever it takes to get the information they need expediently. “I’ve got two sons who are 20 and 22 and they seem to learn in an entirely new and different way,” Carroll says. “To borrow from Pink Floyd, it is short, sharp shocks of knowledge ingested. They won’t sit down and read 50 pages of a textbook.” Sophisticated learning programs are one way to keep this generation engaged. “Millennials will be an increasing challenge for companies to attract and retain because of their high expectations,” says Bastian. “They’re not interested just in money but also in a career path and the opportunity for diverse experiences.”

It’s risky to assume that your business isn’t in a prime spot for disruption (see “Corporate Learning Trends”). Companies will need to adapt or suffer the consequence of a disengaged and unprepared workforce. An Oxford Economics Workforce 2020 survey found that the top concern of employees is the risk of becoming obsolete; nearly 40% of North American respondents said that their current skills will not be adequate in three years, and only 41% of global respondents said that their companies are giving them opportunities to develop new skills.

Corporate Learning Trends

  • Nearly 40% of North American respondents said that their current job skills will not be adequate in three years, with the majority agreeing that the need for technology skills, especially in analytics and programming, will grow.
  • Less than half (47%) of executives say they have a culture of continuous learning. A similar percentage says that trouble finding employees with base-level skills is affecting their workforce strategy.
  • Spending on technology education in the Americas will have a compound annual growth rate (CAGR) of4.2% from 2014 to 2019, with the highest growth in the United States for collaborative applications (11.9% CAGR), followed by data management applications (7.8%).
  • The global e-learning market was worth US$24 billion in 2013, with predicted growth of $31.6 billion by 2018.
  • Of the $31.6 billion predicted worldwide spend on corporate e-learning by 2018, $22.5 billion will be on content.
  • A majority of chief learning officers (57%) say that learning technology is a significant priority for spending.
  • In 2014, 32.6% of training was delivered through e-learning (asynchronous and synchronous); 30.4% took place in the classroom, 18.9% was on the job, and 18.1% was “other,” which includes video and text.
  • E-learning is the preferred method for developing IT skills, said 34% of participants, compared with 29.2% for classroom training. For developing business skills, an overwhelming 57.3% chose classroom training.

Evolution of learning: personal, social, mobile, and continuous 

SAP_Learning-Isbell_INQUIRY_image2400x1600_3Online courses have become a standard way to gain knowledge, and that’s shifting to even more interactive learning through mobile, which is available anywhere and anytime. Like many large companies, SAP had created a vast library over time of more than 50,000 training assets, which was cumbersome to navigate and manage. The curriculum was organized across regions, lines of business, and disciplines. As a result, mapping learning to broader business goals was difficult.

To modernize its learning environment, SAP deployed a cloud-based learning management system and a social collaboration tool. Today, more than 74,000 employees can create personalized training through a combination of online self-study that incorporates video and documentation, social learning tools for exchanging ideas with other employees, and hands-on practice using SAP applications in a sandbox environment.

Now the company is engaging four times more employees in learning activities than it did with the older on-premise learning management system (LMS). The new approach is also creating between €35 million and €45 million in increased operating profit with just a 1% increase in engagement. Administrative costs have decreased by €600 per new content item added. Managers and employees alike can create and access learning paths much more easily and track progress from their personal pages. This integrated, simple-to-use online-learning approach is an example of how learning departments need to evolve to stay relevant.

There are several characteristics of digital learning transformation:

  • Micro-learning. The concept of breaking lessons into smaller bites minimizes productivity disruptions and mirrors consumer behavior of watching three-minute videos and reading social media to get information on anything under the sun. Micro-learning is perfect for learning how to write a business plan, develop code in Ruby on Rails, or learn about a manufacturer’s latest appliance before a service call, for example. It can mean segmenting a longer course into small lessons, which the employee could view over lunch or in the evening from home. Several Alteris clients are now looking to deploy mobile learning apps, ideal for micro-learning, as the main delivery platform, says Bastian. These apps work best when integrated with the LMS and HR systems and push relevant material to users based on their learning profile.
  • Self-serve learning. Just-in-time learning is critical when learning needs accelerate. Companies can help by providing continually updated tools and content that can be accessed from any device, at the moment of need. It’s the best way for learning departments to keep up with employees’ needs; you can schedule only so many Webinars and classroom training courses.
  • Learning as entertainment. Gamification has been hot in marketing for a few years and is also a viable tool for corporate learning. New employees at Canadian telecommunications company TELUS earn badges as they complete different orientation tasks, such as creating a profile on the corporate social network. Leaders can spend eight weeks coaching a virtual Olympic speed-skating team, competing against colleagues to earn gold medals. Winning requires demonstrating the leadership behaviors that TELUS values.Training is also starting to incorporate virtual reality. For example, the U.S. military is using a gaming platform that incorporates avatars to create simulations that train soldiers to deal with dangerous or problematic situations. “This is more immersive and has the potential to help with the human connection failings of online learning,” says Joe Carella, managing director of executive education at the University of Arizona. Regardless of the method, adding an element of fun and recognition for reaching milestones is important for capturing the attention of younger workers who have grown up on games and apps.
  • Social learning. Learning is an emotional experience and most people don’t want to be alone when they learn. In that regard, social media models can be profoundly valuable because they foster sharing and collaboration, which helps employees retain the knowledge they gain through formal training programs. That’s why social collaboration platforms have become as important to the overall learning strategy as the specific types of training delivery methods themselves.
  • User-generated content. A common theme spanning all of the previously mentioned areas has played out in mainstream media and social media over the past few years. “What learners value the most today is the raw, user-created content over the highly polished corporate-created content,” says Elliott Masie, founder of The MASIE Center, a think tank focused on learning and knowledge in the workforce. “What’s really fascinating is that this trend is creating a town-square model where learners are ripe to learn from others.”
  • Video. “Almost anyone can produce a training video, and it’s technically more convenient than ever before,” says Cushing Anderson, a VP and analyst focusing on HR and learning at IDC. “Digital learning is often about substituting convenience for perfect quality.”

Universities and MOOCs: What We’ve Learned So Far

Degrees and certifications have been going online through massive open online courses (MOOCs) for a few years, reflecting the changing needs of students as well as the escalating costs of traditional education.

Threatened with disruption from independent MOOC startups such as Coursera and Udacity, universities and colleges have scrambled to keep pace. More than 80% now offer several courses online and more than half offer a significant number of courses online, according to the EDUCAUSE Center for Analysis and Research. The survey found that more than two-thirds of academic leaders believe that online learning is critical to the long-term strategic mission of their institutions.

MOOCs have delivered a transformation of higher learning that wasn’t possible a decade ago, when access to a Harvard professor was available only to the elite few who had earned their place in those hallowed halls and who could afford the stratospheric tuition.

However, MOOCs have not been proven out yet as an effective replacement for traditional degrees, much less the acquisition of knowledge. Completion rates for courses are low, and MOOCs so far seem best suited for technical or tactical topics or as a supplement to the classroom, observes Joe Carella, managing director of executive education at the University of Arizona.

Yet MOOCs are playing a growing role in companies. Getting access to real business experts, such as a well-known speaker like Jim Collins, is especially valuable for a small or midsize business that couldn’t afford to hire that individual otherwise.

Making the shift

For decades, corporate learning departments have delivered education through a fairly narrow, top-down funnel: curriculum is designed months ahead of time and learning paths are structured for targeted roles in the organization. In moving toward accelerated, continuous learning, chief learning officers will need to help foster a culture of accountability and excitement around learning, as follows:

  • SAP_Learning-Isbell_INQUIRY_image1600x2400_1Develop a close alignment between learning departments and senior business leaders to understand skill gaps, customer needs, and employee shortfalls.
  • Become a content curator and take on a customer service role in the business.
  • Ensure that learning is specific to the individual and relates to specific business and career goals.
  • Have managers help by motivating and guiding employees through the tools, helping them develop personalized plans, and monitoring their progress.

In most cases, companies should be relatively hands-off when it comes to employee learning, says Eilif Trondsen, director of learning, innovation, and virtual technologies at Strategic Business Insights. “It is the responsibility of the workers to learn and acquire the needed skills and competencies for their jobs,” says Trondsen, “and it’s important to monitor the outcomes and not micromanage the process they use for getting there.”

However, it’s important that leaders motivate employees to learn by setting a good example. At TELUS, a company vice president started an internal online community and his own blog to share information about working in his division. The company views corporate learning not as curriculum but as a set of experiences, including classroom courses, online training, coaching, mentoring, and informal collaboration. TELUS measures the direct impact of learning through surveys of both employees and their managers. One metric reports on the learning tools that are most effective for acquiring different types of knowledge, while another measures return on performance from a specific learning program.

Measuring learning effectiveness is a difficult key performance indicator, just as customer engagement is, yet digital learning platforms often have built-in analytics to create a starting point. The analytics allows companies to run reports on usage to see what’s most effective and to retire those assets that aren’t being used. Ultimately, companies should work toward connecting the dots between learning outcomes and business outcomes, such as attrition, employee engagement, and sales growth.

The human equation of digital learning

Today and into the future, no matter the technology or method deployed, excellent learning depends on excellent instructors. They must have credibility with their audiences or the program will flop. For example, when Sun Microsystems (now owned by Oracle) first offered e-learning on its programming language, Java, customers balked because they wanted to know who the expert behind the course was, just like in a classroom. So Sun included a video introduction by the original developer of Java, James Gosling, and the program took off.

Another caution with digital learning is that it can never replace the five senses one gets in a physical setting and lacks spontaneity. “With e-learning, you can pause the course whenever you wish, but sometimes breakthroughs happen when you are out of your comfort zone and challenged,” Carella says. A discussion can merge into a novel direction in ways that don’t typically happen when people are chatting online. Ideally, online learning should be interspersed with in-person educational experiences, whether that’s attending a classroom training or meeting with a mentor.

Blending formal and informal training, as well as offline and online training, is a historical trend that will continue, says Masie, who also leads The Learning CONSORTIUM, a coalition of 230 global organizations, including CNN, Walmart, Starbucks, and American Express. Incorporating multiple modes of learning is critically important for gaining knowledge that sticks.

“A learner who isn’t motivated will sit in front of the screen and complete a course but may never actually develop the skill,” he says. To close the loop, managers and learning departments can develop a process that includes practice, feedback, and on-the-job experience.

SAP_Learning-Isbell_INQUIRY_image2400x1600_1The long-term goal of digital learning: grow the business

As executives consider how learning and training should evolve, a grounding consideration is the level of commitment. Few companies spend enough on it, says IDC’s Anderson. Those with world-class training programs can gain an edge in hiring and possibly even in the market. Introducing innovative learning tools and programs that allow employees to study independently and experiment with new ideas is also motivating, which can lead to higher engagement, productivity gains, and even bottom-line benefits. In fact, says Masie, research has shown that organizations that invest at least 3% of income on learning have better stock performance and employee retention.

Highest ROI in e-commerce? Email remarketing and retargeted ads

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Digital marketers know they must measure and optimize all of their efforts, with the goal of increasing sales. They must also be able to prove a positive return on their investments. That said, digital marketers are constantly on the hunt for the latest technologies to help with both.

Shopping Cart Abandonment Emails Report Highest ROI

The highest ROI reported is from shopping cart abandonment emails. This shouldn’t be a surprise — 72 percent of site visitors that place items into an online shopping cart don’t make the purchase. Since they did almost purchase, cart abandoners are now your best prospects. And, a sequence of carefully timed emails will recover between 10-30 percent of them.

It’s these types of recovery rates that propel shopping cart abandonment emails to the top. They generate millions in incremental revenue for only a small effort and cost.

Retargeted Ads Complement Shopping Cart Abandonment Emails

The second most successful technique is retargeted advertising, a fantastic complement to shopping cart abandonment emails. Retargeted advertising works in a similar way, by nudging visitors to return to a website after they have left. And while retargeted advertising works across the entire funnel — from landing to purchase — the biggest opportunities lie where there is some level of intent to purchase, such as browsing category and product pages.

While the two techniques deliver a high ROI, they are definitely not the same. For example, brands using SeeWhy’s Conversion Manager to engage their shopping cart recovery emails average a 46 percent open rate and 15 percent click-through rate. Retargeted ads, by comparison, average a 0.3 percent click-through rate.

See the difference?

The real power comes when you combine the two techniques together — using retargeted advertising when no email address has been captured and email remarketing when it has.

Don’t “Set ‘Em and Forget ‘Em”

To achieve the highest possible ROI combining cart abandonment emails with retargeted advertising, you should plan to test and tune your campaigns. It’s dangerous to go live with your new campaign and then ‘set it and forget it.’ Testing and tuning your campaign can double or triple your revenues. SeeWhy tracks more than $1B in Gross Market Value ecommerce revenues annually and analyzes this data to understand what factors have the biggest impact on conversion.

A SeeWhy study of more than 650,000 individual ecommerce transactions last year concluded that the optimal time for remarketing is immediately following abandonment. Of those visitors that don’t buy, 72 percent will return and purchase within the first 12 hours.

So timing is one of the critical factors; waiting 24 hours or more means that you’re missing at least 3 out of 4 of your opportunities to drive conversions. For example, a shopping cart recovery email campaign sent by Brand A 24 hours after abandonment may be its top performing campaign. But this campaign delivers half the return of Brand B’s equivalent campaign which is real time.

Scores of new technologies and techniques will clamor for your attention, making bold claims about their ROI and conversion. But if they aren’t capable of combining shopping cart abandonment emails and retargeted ads, the two biggest ROI drivers in the industry, then they aren’t worth your time.

@JovieSylvia @ITChamps_SAP

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What Engaged And Disengaged Companies Do Differently

When there’s something you want to improve about your organization and its workforce, it’s only natural to look to the companies that are doing it right. And when it comes to employee feedback, that means looking to today’s most highly engaged companies.

The info-graphic below — created by Quantum Workplace, a company dedicated to providing every organization with quality engagement tools that guide their next step in making work better every day — narrows in on what engaged and disengaged companies do differently when it comes to one of the most important aspects of employee engagement: feedback. Some highlights include:

  • Employee engagement is important to leadership at 90 percent of highly engaged companies, compared to only 20 percent of disengaged companies.
  • Employee engagement is a year-round initiative for 78 percent of highly engaged companies, compared to only 30 percent of disengaged companies.
  • Disengaged companies are 15 times more likely to never have administered an employee survey, compared to highly engaged companies.
  • Highly engaged companies report seeing a higher percent of employees participating in their employee surveys (60 percent vs. 20 percent).

Check out the full info-graphic below to find out the main communication differences between engaged and disengaged companies — and what it means for your organization.

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Our Digital Planet: Rise of The Digital Worker The New Breed of Worker

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British-Australian mining giant Rio Tinto has employed autonomous trucks, excavators and drills recently to create the first workerless iron ore mine in Western Australia. The drivers – if they can still be called that – work out of a remote operations centre hundreds of kilometres away, where data scientists mine data collected from the vehicle’s sensors. This dynamic, known as the ‘human and digital recombination’, is but a single step on the path to a changed workplace, as connectivity and automation drive the transition to digital on an unprecedented scale.

digital_planet_02_image1Real-time analysis, together with emerging digital technologies and intelligent digital processes, have upended the workplace as we know it; and businesses are today subject to a deep cultural shift in work organisation, culture and management mind set. The impact is a shift towards workers looking at available information as opposed to ‘explorative surgery’ measures when the damage is already done.

Human and digital recombination, cutting-edge decision making, realtime adaptation and experiment-driven design are pushing this transformation, not just in manufacturing but in every conceivable area of the workplace. And while the technology has done much to facilitate the transition to digital, the challenges are many.

Fat tags

Aside from Rio Tinto’s automated vehicles, other software-enabled, manufacturing- friendly marvels are around the corner, such as kilobyte-rich radio frequency identification (RFID) tags. Basically position finders at present, tomorrow’s tags will have so much storage capacity that they will act like transponders and actually tell people what to do.

As Siemens’ Markus Weinlander, Head of Product Management, predicted: “[RFID tags] can make a major contribution to the realisation of Industry 4.0 by acting as the eyes and ears of IT. For the first time, transponders will be able to carry additional information such as the production requirements together with their assembly plan. All of this will be readable at relatively large distances.”

These ‘fat tags’ will do more than boost automation. They will also make companies more nimble-footed and, say experts, allow small businesses to compete with the giants. According to Weinlander, the new wave of RFID rags will greatly facilitate customised products because they will contain all the essential information for small runs. “To remain competitive in today’s global market environment, many companies have to be able to produce in tiny batches without higher costs”, he said.

Other practical benefits are likely. For instance, maintenance and repair work will be made simpler, faster and more timely. As BCG Consulting points out, technicians will identify any problems with a machine from a stream of realtime data and then make repairs with the help of augmented-reality technology supplemented, if necessary, by remote guidance from off-site experts. In this way, downtime per machine will be reduced from one day to an hour or two.

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Digital people

In this brave new world of hyperconnectivity, the ‘digital worker’ – a data-driven individual skilled in converting information into revenue – will stand in the middle and direct traffic, as it were. As SAP put it in its D!gitalistmagazine, the digital worker will “create instant value from the vast array of real-time data.”

Instead of the traditional approach of gathering, processing, and moving data around while spending valuable time creating reports, digital workers will be forced to move towards predictive, scenario, and prognosis-based decision- making. SAP’s article goes on to explain: “The speed of information and data is driving such significant change in how and where we work that the digital worker is becoming a critical resource in decision-making, learning, productivity, and overall management of companies.”

HYPERCONNECTIVITY HAS LED US TO A NEW ERA, WHERE PETER DRUCKER’S “KNOWLEDGE WORKER” HAS COME TO AN END AND THE “DIGITAL WORKER” NOW NEEDS TO STEP UP AND CREATE INSTANT VALUE FROM THE VAST ARRAY OF REAL-TIME DATA

In organisations where data-savvy individuals may know more about what’s happening than the boss, the top-down hierarchy will be overturned. In short, everybody will be a leader in their own particular area of expertise. “The traditional management and organisational model is quickly getting outdated in the digital economy, and true leaders are changing their management approach to reflect this”, said SAP. Senior executives will have to be more visible and approachable for employees and customers alike – in short, both colleague and captain.

“[Managers] must juggle a distributed contingent workforce with digital workers who require real-time analysis, prognosis, and decision making. At the same time, they must develop the next generation of leaders who will actively take responsibility for innovation and engagement”, said SAP.

If done properly, this new collaborative workplace could reduce the complexity that bedevils most large organisations in an era of globalisation. According to the Economist Intelligence Unit, 55 percent of executives believe their organisational structure is ‘extremely’ or ‘very’ complex and 22 percent say they spend more than a quarter of their day managing complexity. More than three-quarters say they could boost productivity by at least 11 percent if they could cut complexity by half.

More jobs

But will the superconnected workplace destroy jobs? BCG Consulting thinks not. In a study of German manufacturing released in October, the think tank concluded that higher productivity actually equals higher employment at home. “As production becomes more capital intensive, the labour cost advantages of traditional low-cost locations will shrink, making it attractive for manufacturers to bring previously off-shored jobs back home”, the study predicted. “The adoption of Industry 4.0 will also allow manufacturers to create new jobs to meet the higher demand resulting from the growth of existing markets and the introduction of new products and services.”

Experts such as Ingo Ruhmann, Special Adviser on IT systems at Germany’s Federal Ministry of Education and Research, agree with this finding. “Complete automation is not realistic”, he told BCG Perspectives. “Technology will mainly increase productivity through physical and digital assistance systems, not the replacement of human labour.”

However, it will be a new kind of human labour. “The number of physically demanding or routine jobs will decrease while the number of jobs requiring flexible responses, problem solving, and customisation will increase”, Ruhmann predicts. For most employees, tomorrow’s workplace should be a lot more fun.

How Big Data is changing e-commerce for good

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You’re going to have to get used to it: data is everywhere, we contribute to it constantly, and it has a huge impact on the retail industry. In fact, 80-90 percent  of all the data in the world was created in just the last two years.Big data is generally portrayed as having all the solutions to many of the biggest issues in retail (as long as it is mined and utilized correctly), but it still has a lot of quirks to work out.

A big chunk of the problem with big data comes down to how it’s defined. There are dozens of different takes on it, but let’s discuss it as the rapid increase of the creation of diverse and quickly transforming data through multiple channels that must be processed in innovative and strategic ways.

Global retail sales should reach $3 trillion this year, and big data has the potential to unlock a larger slice of the market share pie for retailers. How? Well, that’s the interesting part.

How Big Data Helps

Since it is defined so broadly, big data encompasses many types of information that are useful to retailers, both online and in-store. They say that you don’t know until you mine and that couldn’t be more true. We’ve all heard about the beer and diapers example in which Walmart learned that the two products were often bought together after analyzing data from in-store purchases. Retailers have many insights to gain from their customers’ purchasing habits, such as when shoppers buy the most, what they buy together, and which offers are most effective.

Retailers understand that they need data to win, as 59 percent identified a lack of consumer insights as their top data-related pain point. Big box retailers are already benefiting from big data. Walmart creates 1 million rows of transaction records each hour from a combination of in-store purchases, social data, and more. This gives the retailer access to massive customer insights to help target customers and merchandise more effectively.

How to Use Big Data

In the ever-changing world of retail, staying up-to-date is a challenge and a necessity. The top three things that retailers need to know are: how effective their pricing is, when shoppers are most active, and what items they buy together. These three key insights can be derived from big data, but consistent mining is the only way to really enjoy the benefits. I’ll break these down into pricing and shopping behavior to explore big data’s impact on each.

Pricing: Do you know the optimal price for each of your products? Unless you’re psychic, you will need to test slightly different prices to determine which one provides the sales and profit margins. Not all retailers are able to price perfectly the first time around and that “perfect” price rarely stays the same. A bathing suit in June will sell at a higher price than in December. Forecast demand based on historical sales data and price according to variables, such as seasonality and competitor prices.

Shopper behavior: Demand tends to peak during the evening and on the weekend. Retailers can alter pricing based on traffic and conversions to maximize sales and profit. Say it’s the end of the season and the retailer wants to make room in their warehouse for the upcoming season’s styles. Dropping prices when traffic is high will help products move.

On the other hand, raising prices slightly when demand is high will help pull in more profit margin from each sale. Similarly, promoting products that shoppers often buy together can boost your average order value and help products move more quickly. Automatically bundling these products can be a time-saver for busy shoppers and encourage them to buy by showing that getting all the items together is cheaper than buying them separately. Increase average order value while building loyalty.

Big data isn’t a new concept, but it is a resource to tap into sooner rather than later. All of the answers you need are there in front of you, it’s just a matter of crunching the numbers. The insights that big data offers can take your retail business from zero to 60 in no time. Mining, analyzing, and acting on data is the only way to make informed decisions to ensure the success of your retail business.

How have you used big data and what impact have you seen?

Prepare yourself—and your brand—for the creator economy

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When Henry Ford introduced the first assembly line for manufacturing the Model T, the price of a car dropped to $265 by 1925. This lower price threshold eliminated barriers to purchase for the average worker and signaled the start of the Industrial Era.

Industrial production became so efficient suddenly that companies found themselves in the position of needing to create demand. This demand-creation model ushered in the era of what was known as the consumer economy and the domination of mass media as a marketing tool.Consumers were suddenly bombarded with messages urging them to fill their lives and their homes with all manner of goods.

After the financial crash of 2008, Millennials, who grew up turning off the TV and ignoring web advertising, began to dominate the economy. Mass media found itself competing with social networks like YouTube, Facebook, and Twitter.

Modern consumers are savvy and highly engaged, and the demand personal attention and stellar experiences. They refuse to be passive “consumers” and actively seek out engagement, from editing Wikipedia entries, to sharing customer-service highs-and lows-on their social networks, and beyond this going for peer-to-peer services sharing their houses, cars, households items or leaving their dogs for a week-end to a host.

Welcome to the Creator Economy. Here are five guiding principles for this new era.

No 1: Change the Customer Relationship

Instead of keeping the customer under control, companies should embrace the paradox that the best way to retain customers is to set them free. They should engage with the customer on a one-to-one basis while bearing in mind that every point of engagement matters.

Each act of engagement, whether it’s a tweet, a click, a location check-in, and an IoT sensor reading can be used to not only optimize the customer experience in real-time, but to create the fundamental business value that drives business models in the creator economy. It’s all about engaging with the customer by sharing relevant content based on real-time context.

No 2: Change the Partner Relationship

The go-to-market strategy has to evolve from a traditional linear process to a multi-sided business model where transacting business with, through and on behalf-of third parties is key to the success of the business model.

Third parties see great value in those established customer relationships and recognize the service provider as a potential distribution channel for their own service offerings. For the service provider, this creates a virtuous circle inherent to the multi-sided platform opportunities. The value for end customers grows with combined offerings, customer loyalty increases, the customer base is broadened and consequently attracts more partners.

No. 3: Disrupt your own revenue models

Companies are transitioning from selling products to selling a personalized service, a specific experience or a negotiated outcome. While we are more familiar with subscriptions within the software industry, we see this model now arising in the manufacturing space with brands like Rolls Royce, Hilti, Lexmark, and even x-ray machines.

Selling an outcome becomes a new way of engaging with a customer. Rather than measuring the service delivered, instead the focus will be on gauging the actual business benefit. This requires companies to structure their business models to operate not based on what they can package, sell and measure, but rather based on what downstream benefits are generated and how much they contributed to that outcome. The focus must be on value, not revenue.

No. 4: Plan and build a secure, scalable infrastructure

Growth strategies will have implications that you have to take into consideration when considering your delivery process. Be prepared for:

  • Smooth and efficient expansion in new regions where currencies will be different, and payment habits will differ as well: improving local payments such as introducing invoicing rather than cash on delivery can be key to increase the check-out conversion rate.
  • Managing high volumes of customers and transactions that will grow by multiple orders of magnitude when moving from product to service.

No. 5: Agility should be part of your DNA

While constant efficiency improvements are a prerequisite for a healthy bottom line, it is no longer sufficient in the creator-economy landscape, which is an iterative and rapidly changing economy.

Companies have to go for simplicity, provide autonomy and embed intelligence directly into the production and business processes to help them adapt quickly to changing needs. Simplicity can take the form of a cloud delivery model, autonomy can translate into micro-services and APis to add/build new functionalities through a community of solution providers, and intelligence can be called sensors, analytics, predictive capabilities, and in memory database.

These five steps should set you on the way to become customer experience leaders in this creator-economy era.